ARCHITECT SUCCESSES

SEE ALL
Payward Acquires Magic Labs Embedded Wallet Business
Payward Acquires Magic Labs Embedded Wallet Business

Transaction Overview
On July 27, 2026, Payward, the B2B crypto infrastructure parent behind the crypto exchange Kraken, announced a definitive agreement to acquire wallet-as-a-service business Magic Labs. Financial terms of the transaction were not disclosed.

Target: Magic Labs (Wallet Infrastructure)
Founded in 2018 and headquartered in San Francisco, Magic Labs is a wallet-as-a-service infrastructure provider that enables businesses to create non-custodial embedded wallets for their end users. The company was co-founded by Sean Li, Arthur Jen, and Jaemin Jin.

Magic’s core offering is a developer-facing SDK and API that provides embedded wallets with passwordless authentication via email, social login, passkeys, or SSO. The product suite includes 1) API Wallets for server-side management with security and customizable key sharding, and 2) Embedded Wallets for client-side non-custodial key management. As of July 2026, the platform supports more than 30 blockchain networks and provides a white-label UI, fiat onramps, and transaction signing.

As of July 2026, Magic Labs had provisioned more than 60 million wallets and served more than 200,000 developers across more than 18,000 applications. Clients include Polymarket, Naver, Helium, Forbes, WalletConnect, Mattel, and Immutable. During the 2024 U.S. presidential election, Polymarket processed over $3 billion in prediction market transactions with zero downtime, powered by Magic’s embedded wallets. Magic said it had supported over $8.9 billion in cumulative transaction volume for Polymarket as of November 2025.

Magic Labs has raised a total of $83 million in disclosed venture funding across 4 rounds, with significant investors including PayPal Ventures, Northzone, Tiger Global, Digital Currency Group, CoinFund, and Placeholder VC.

In November 2024, Magic Labs announced Newton, a chain unification network built in collaboration with Polygon Labs, expanding beyond wallet infrastructure into cross-chain protocol development. In November 2025, Magic Labs integrated the Newton Protocol SDK across its developer network. The company described Newton Protocol as “the authorization layer for on-chain finance.” These moves preceded the company’s decision to divest its wallet business and refocus entirely on protocol development.

Buyer: Payward
Founded in 2011 and headquartered in San Francisco, Payward is a private B2B crypto infrastructure holding company. Payward operates Kraken, one of the longest-running cryptocurrency exchanges, alongside NinjaTrader, xStocks, Bitnomial, and CF Benchmarks. The company is led by co-CEOs Arjun Sethi and Dave Ripley.

Most relevant to this transaction, Payward operates Payward Services, a B2B infrastructure platform that provides institutions with access to Payward’s trading, custody, settlement, and payments infrastructure via API. The acquisition of Magic Labs adds embedded wallet infrastructure to their offering. In April 2026, Payward launched a white-label fiat-to-crypto onramp through a partnership with Onramper, making embedded wallet infrastructure a natural adjacent capability.

Payward has been expanding beyond its core exchange through acquisition. In 2025, the company acquired NinjaTrader for $1.5 billion (retail futures, M&A Alert) and agreed to acquire Backed Finance (tokenized equities, Press). In 2026, it acquired Magna (token lifecycle management, Press), completed the acquisition of Bitnomial for up to $550 million (regulated derivatives, M&A Alert), and agreed to acquire Reap for $600 million (card issuance and payments, M&A Alert). Including this transaction, Payward has announced or completed 8 acquisitions since early 2025, committing several billion dollars to platform expansion ahead of its planned public listing.

For the full year of 2025, Payward reported adjusted revenue of $2.2 billion, a 33% increase year over year from $1.5 billion in 2024. Trading-based revenue accounted for 47% of the total, with the remaining 53% from asset-based services, including payments, custody, yield, and financing.

In November 2025, Payward raised $800 million at a $20 billion post-money valuation in a round backed by Citadel Securities, Jane Street, and Apollo Global Management, and confidentially filed an S-1 with the SEC ahead of a planned IPO. In April 2026, Deutsche Börse Group made an additional $200 million strategic investment in the company.

Transaction Parameters
Payward has signed a definitive agreement to acquire the wallet-as-a-service business of Magic Labs for an undisclosed amount. The transaction includes Magic Labs’ embedded wallet business, including wallet clients and associated infrastructure.

The transaction is part of a broader corporate restructuring in which Magic Labs is rebranding as Newton Labs to focus on the Newton Protocol. The two companies will remain independent following the close.

Architect Partners served as the exclusive financial advisor to Magic Labs.

Strategic Rationale
Payward is acquiring Magic’s embedded wallet business to augment Payward Services’ B2B offering. Payward Services gives partners a single integration point for trading, custody, tokenized assets, on/off-ramps, and derivatives. The wallet, the account layer where end users actually hold assets and interact with onchain products, was a critical piece partners still had to source from a third party. Magic brings that layer in-house with proven infrastructure: a TEE-based signing solution, an embedded integration layer, and a developer SDK that together have provisioned more than 60 million wallets and supported over $10 billion in stablecoin volume for 200,000+ developers.

On Day 1, Payward can offer fintechs, enterprises, and financial institutions a complete embedded onchain offering under a single provider, spanning wallet provisioning, onboarding, funding, trading, custody, and settlement, without stitching together multiple vendors. Every embedded wallet also becomes a distribution point that routes transaction volume into the rest of Payward’s infrastructure, deepening the non-trading, less volatile revenue that already accounts for 53% of Payward’s total as it heads toward a public listing.

Architect Partners’ Observations
This transaction marks the near-completion of a consolidation wave in embedded wallet infrastructure. In roughly one year, Fireblocks acquired Dynamics ($90M), Consensys acquired Web3Auth ($50M), Stripe acquired Privvy, Ripple acquired Palisade, and Paxos acquired Fordefi. Now each group has its own independent wallet infrastructure provider, and Payward has acquired the category’s pioneer. The market has reached a clear verdict: embedded wallets are foundational infrastructure for every onchain product, and they are a layer of a full-stack platform rather than a standalone business.

The logic is simple: the wallet is becoming the account primitive of onchain finance. Whoever provisions the wallet sits at the front of the customer relationship and routes the volume that follows. For platforms whose trading revenue is inherently cyclical, owning the onboarding layer converts market position into durable, recurring B2B infrastructure revenue.

Sources
Press Release, Payward Services, PitchBook

Alerts

Bitfarms acquires Stronghold Digital

Eric Risley
August 25, 2024
DOWNLOAD FULL REPORT

Bitfarms Acquires Stronghold for $175M Enterprise Value in All Stock

Transaction Overview

On August 21, 2024, Bitfarms (TSE/NASDAQ: BITF), a global vertically integrated Bitcoin miner, announced its all stock acquisition of Stronghold Digital Mining (NASDAQ: SDIG), for $125M in equity value and $175M in enterprise value. The deal is expected to close in the first quarter of 2025.

 

Target: Stronghold Digital Mining (NASDAQ: SDIG)

Stronghold Digital Mining is a crypto miner using coal refuse to generate electricity for Bitcoin mining while rectifying the environmental damages of the last century. Stronghold owns or holds options over 1,850 acres of land in Pennsylvania operating two major plants: Panther Creek and Scrubgrass. 

 

According to SEC filings, Stronghold reported $19.1M in revenue for Q1 2024. In recent years, the company generated $75M in revenue in 2023 and $110.2M in 2022, while incurring losses of $101.8M and $195.2M in those respective years. Stronghold currently has a hashrate of 4.1 EH/s and 165 MW with improvement potential post merger. 

 

Stronghold Digital Mining’s industry competitors include: Riot Platforms (NAS: RIOT) TeraWulf (NAS: WULF), MARA (NAS: MARA), and CleanSpark (NAS: CLSK) amongst others.

 

Founded in 2021 by Gregory Beard and Bill Spence, Stronghold now has over 110 employees. The company raised $85M in a Series A round led by MG Capital and $127M through its IPO in Nasdaq. Additional smaller fundraisings have brought the company’s total capital raised to $266.5M. Since Stronghold Digital’s IPO date (October 19, 2021), the stock has fallen 98% from a price of $253 per share. At its peak, the company’s equity was valued at $3.9B. 

 

Buyer: Bitfarms (TSE/NASDAQ: BITF)

Bitfarms is a Canadian crypto miner, established in 2017. Their main operations include a large-scale Bitcoin mining platform running vertically integrated operations with onsite technical repair, and proprietary data analytics.

 

The company has a presence in four countries, with eight industrial-scale facilities in Canada, one in the US, one in Argentina, and three in Paraguay. Bitfarms is focused on sustainable mining practices, with its data centers powered by over 75% renewable energy, primarily hydropower, and secured through long-term power contracts. Across these facilities, the company operates 65,400 miners, operating at 10.4 EH/s in self-mining using 310 MW of electrical capacity. With an enterprise value of $1.4B, the firm currently trades at 121x multiple of its operating EH/s and 65x its 2024E EH/s. The company is publicly traded on the Toronto Stock Exchange (TSE) and Nasdaq.

 

As of July 31, 2024, Bitfarm holds 1,016 Bitcoin, with a total value of $67.2M and an average of 8.2 Bitcoins mined per day, at a cost of $30,600 per Bitcoin. Bitfarms recorded revenue figures of $230.3M, $193.5M, and $198.9M in 2021, 2022, and 2023, respectively, with estimates projecting $234.6M in revenue for 2024 and a loss of $144.3M.

 

Founded in 2017 by Nicolas Bonta and Emiliano Grodzki, Bitfarms now has over 150 employees. The company had raised $627M over seven post-IPO private investment in public equity rounds (PIPE), with key investors including Riot Platforms, Galaxy Digital, and Dominion Capital. In 2019, Bitfarms went public on the TSE and on the Nasdaq in 2021.

 

Transaction Parameters

Bitfarms agreed to acquire Stronghold for $125M equity value in a stock-for-stock merger transaction, with the enterprise value being $175M including $50M of net debt. The deal is subject to regulatory approval and is expected to close in the first quarter of 2025. 

 

Stronghold shareholders will receive 2.52 Bitfarms shares for each Stronghold share they own, equating to $6.02 per share and a 71% premium over Stronghold’s 90-day volume-weighted average price on Nasdaq as of August 16, 2024. After the transaction, Stronghold shareholders are expected to hold just under 10% of the combined company, based on the current outstanding shares of both companies.

 

Strategic Rationale

The acquisition aligns with Bitfarms’ strategic plan by expanding and rebalancing its energy portfolio, aiming for nearly 50% of its power capacity in the U.S. by the end of 2025. The transaction could add up to 307 MW of power capacity, with a clear path to 950 MW by year-end 2025 and the potential to reach 1.6 GW in the future. The deal secures two sites with long-term expansion potential, positioning Bitfarms to diversify its operations beyond Bitcoin mining into areas like HPC/AI, enhancing energy efficiency and hashrate.

 

Architect Partners’ Observations

The thesis here is simple: Bitcoin miners are highly leveraged, asset-intensitve business in a market where rewards are limited, but competition is fierce. As we see in this case, with $50M in high interest debt and only $5M in cash, taking losses of over $100M per year was simply not sustainable for Stronghold. What will naturally play out is “surivival of the fittest” and only the best financed groups in the space will be able to survive and will subsequently acquire the assets of those that are not able to hold out. With 4.1 in EH/s, the company traded at 42.7x EV / EH/s, significantly lower than the peer group that trades at an average multiple of 146x. 

 

Sometimes the best defense is offense. In this case, Bitfarms has announced the acquisition of Stronghold along with management and board of director changes.  Hostile M&A is tricky and can have unintended consequences as is likely the case from Riot’s perspective here.  As a rule, hostile acquisitions are anathema to businesses that rely on the talent of people, which makes them very unusual in technology and financial services businesses.  However, Bitcoin mining is very different with physical facilities with access to electricity and widely available computing equipment the core assets.

 

The irony of this consolidation phase is that Satoshi Nakamoto’s initial vision was that anyone and everyone with interest could set up a computer to mine Bitcoin.  Everyone could run the Bitcoin network and no one would control a major proportion of the “hashrate”.  This is fundamental to the design and ensures that the blockchain is a consensus of many, not a few.  The implication of mining concentration remain to be seen, however, some like Jack Dorsey and Block, are seeking to reverse this concentration, building semiconductors and systems to support a return to mining decentralization.