Category Mining

Transaction fees, volumes and amounts transacted have decreased considerably in the past three weeks.

• Transaction fees earned by Ethereum miners have fallen by more than 85% in under three weeks.
• A smaller decrease has been observed in the total number of Ethereum transactions.
• The total number of ETH sent has also dropped by 74%.

Ethereum's average transaction fee (ETH) peaked at almost $ 12 last month, causing a major pain point for merchants and other ETH users. As a result, Ethereum miners have been accumulating record fees, earning a total of $166 million from transaction fees in September alone.

But now, things are back to normal. According to Glassnode data, the total Ethereum transaction fees earned by miners fell from a peak of 42,763 ETH on September 17, to 5,898 yesterday - equivalent to an 86.2% drop in less than three weeks.

In turn, the average transaction fee fell to a similar degree and dropped from a September 17 peak of $11.62 to $2.1 from yesterday. This makes the Ethereum blockchain cheaper to use.

It is not just transaction fees that have dropped dramatically in recent weeks. The absolute number of transactions on the Ethereum network also dropped considerably to reach 935,000 yesterday - 29.2% less since it peaked at 1.32 million in 2020 on September 17.

The total amount traded decreased even more. It fell from 6.5 million ETH on September 17 to 1.7 million ETH yesterday - a 74% drop.

The rate increases seen between June and September are largely due to the rapidly expanding interest in the decentralized finance industry (DeFi), which has seen platforms such as Uniswap, Curve, Aave, and several income projects like YAM, calling for attention. Since the Ethereum network is only able to process a limited number of transactions in each block, and can only handle about 10-14 transactions per second, competition for block space has increased dramatically leading to a gas war between those who needed their transaction to be confirmed quickly.

Now, the hype surrounding DeFi projects has eased somewhat and most of the major DeFi currencies have been at a staggering loss in the past week, including Uniswap (-27.6%), Yearn Finance (-41.2%), and UMA ( -28.5%). This should give Ethereum some much-needed breathing space.

source: decrypt.co

All other stories about Bitcoin price forecasting or speculation are centered on the narrative that increased investment by institutions and hedge funds will create value and fuel the price rally. However, a less popular narrative is that of the impact of mining pool concentration on Bitcoin speculative bubbles and Bitcoin price.

In September 2019, the concentration of mining pools was at its peak and the price of Bitcoin fell more than 25% from $10,600 to $8,500 level in 6 months. With a drop in the concentration of mining pools, Bitcoin's dominance has fallen.

The timeline overlaps with the initial plans to launch Libra and Alipay's ban on Bitcoin-related transactions. However, in addition to these external factors, Bitcoin's price was affected by the concentration of mining pools.

On-chain analysts predict the price of Bitcoin based on market cycles or pre / post halving, however, halving events are closely linked to Bitcoin mining. The increase in mining concentration reduces mining profitability, reducing, in turn, the supply of Bitcoin to exchanges. Speculative bubbles are created just before each halving, and the concentration of mining is the key factor responsible for it. Based on data from Glassnode, in its recent report on the cryptocurrency mining industry, Tokensight shared the perception that the change in miners' income is similar to the trend for the entire network hash rate. And the price is considered a measure of the hash rate here. Represents the fee paid by the mining pool to purchase the miners' hash fee.

In June 20, the mining difficulty returned to the level of May 20, and each time the difficulty exceeds 14.5 T, prices increase to increase mining profitability and capture more miners, reducing mining concentration.

Observations of the price x hashrate chart highlight that the increase in hashrate leads to an increase in price. However, the latest increase in the hash rate added 45% to the price, the previous one added 122%. It is possible that external factors such as the ICO bubble influence it. There were several speculative bubbles along the way to + 45% and these can possibly be attributed to the corresponding hashrate and mining concentration.

The current mining difficulty is 17.39T and, with an average of 100 days, it has been rising steadily since July 2020.

Although this is an indicator that the price of Bitcoin may increase with an increase in mining profitability, the concentration of mining pools is not high enough to fuel speculative bubbles in the price of Bitcoin.

source: eng.ambcrypto.com

Chinese bitcoin mining machine maker Ebang International has established a wholly owned subsidiary in Canada, paving the way for it to enter the country's digital asset trading business as it strives to diversify its revenue streams

The move comes just over a month after the US-listed company created a wholly-owned subsidiary in Singapore for its planned offshore exchange for cryptocurrencies.

The Canadian subsidiary received a monetary services business license from Canada's Financial Transaction Analysis and Reporting Center to engage in business, including foreign exchange trading and digital currency transfer in the country, Ebang said in a statement on Monday.

"Our new Canadian subsidiary lays a solid foundation for the company to enter North America, a market that represents high recognition of digital currency and a robust investment opportunity in digital currency trading platforms"

Ebang's president and CEO

In the first half of 2020, Ebang reduced its net losses to $6.96 million from $19.07 million the previous year, even with its 50.6% revenue over the previous year, to $11, 04 million, the company said in a filing with the U.S. Securities and Exchange Commission.

Ebang, which was listed on Nasdaq in June, said earlier that it will explore opportunities in blockchain and cryptocurrencies in an effort to reduce its dependence on sales of bitcoin mining machines that are vulnerable to fluctuations in the price of virtual currency.

source: caixinglobal.com

The Bitcoin network spent 18.5 million bitcoin in circulation. This means that less than 2.5 million remain to be mined.

Interestingly, half of that 2.5 million will be mined in the next 4 years alone.

Below is the description of the numbers as percentages:

• 18,500,000 extracted (88.1%)
• 2,500,000 not mined (11.9%)
• 1,250,000 to be extracted by 2024 (6%)
• 21,000,000 to be extracted by 2140 (100%)

2020, unlike previous years in the history of bitcoin, has seen remarkable interest in bitcoin and crypto with institutional investors substantially increasing their bitcoin allocations, regardless of short-term price drops.

Although Bitcoin's 2020 halving did not come with the expected post-halving rally, it doesn't seem to have deterred investors at all.

Interest in crypto comes largely from the belief that the market will improve with regulations for the crypto market becoming clearer in the future.

Here are some statistics that show the level of interest in bitcoin in 2020:

• Macro-investor and billionaire, Paul Tudor, confirms he bought 21,454BTC
• GrayScale Investments, now has about 500,000 (2.4% of the current bitcoin offering) under its management
• Bakkt, an ICE-regulated crypto asset custody platform, reports that BTC futures contracts trade more than $200 million daily
• Daily bitcoin contracts at Binance, the world's largest exchange by volume, amount to more than $2.5 billion
• The Norwegian Government Pension Fund, the largest cryptocurrency sovereign fund in the world with more than $1 trillion in assets, now has 577.6 bitcoins
• MicroStrategy, the world's largest smart business company, adopts bitcoin as its primary reserve asset by buying 38,250 bitcoins worth $425 million at the time of purchase
• Bitcoin is the 6th largest currency in the world so far with a market capitalization of over $200 billion.

As conversations about crypto regulation spread across the world and the global economic climate amid the Covid-19 pandemic continues to take hold, bitcoin will continue to be seen as a valuable and active hedge reserve and its value will only go up .

source: bitcoinke.io

Ebang International Holdings Inc., a Chinese manufacturer of bitcoin mining hardware, reported a net loss of $6.96 million in the first six months of this year, down from $19.07 million a year ago, as demand fell due to the coronavirus pandemic.

Revenue fell 51%, to $11.04 million, from $22.35 million previously, the company said in a results statement shared with the news. Bitcoin.com.

During the semester, Nasdaq-listed Ebang sold a total of 0.25 million tera hash per second (TH / s) of Bitcoin hash power. The figure represents an 86% drop from the 1.82 million TH / s sold in the same period in 2019.

Ebang's shares rose 0.3% to $9.88 on the Nasdaq Stock Exchange at the time of writing. The shares have fallen more than 30% since being listed on the stock exchange in June. Then, it was traded at a high of $14.95. Ebang hit a low of $3.80 during this period as well.

Dong Hu, Ebang's president, and CEO, blamed the loss of the Covid-19 induced global economic recession and Bitcoin's scheduled May 11 cut in supply, which cut miners' profits and reduced demand for equipment suppliers. mining. He stated:

"Measures to contain Covid-19, such as travel restrictions, mandatory quarantines and suspension of business activities, have caused serious disruptions and uncertainties to our business operations and have negatively affected our results of operations and financial conditions. Our chip suppliers have reduced their production capacity due to the impact of covid-19, resulting in a shortage of raw materials in the first six months of 2020."

For the review period, Ebang, which makes application-specific integrated circuit (ASIC) chips used in bitcoin mining, reported total operating expenses of $7.71 million compared to $9.60 million in the comparable period last year.

Bitcoin mining hardware manufacturers have seen a decline in demand due to the coronavirus pandemic. Competitor Canaan Creative recently reported that losses in the second quarter of 2020 decreased to $2.4 million from $5.6 million in the previous quarter, but demand also fell due to Covid-19.

Ebang's Dong Hu now hopes to take advantage of new crypto exchanges and online brokers that are due to open soon in Singapore and Canada. He said the company plans to "capture the entire value chain of the blockchain industry" through a combination of blockchain-compatible and conventional financial businesses

source: news.bitcoin.com

Bitcoin (BTC) and other crypto mining companies have been forced to employ various strategies to hedge risks, researchers at the Cambridge Center for Alternative Finance said, but most of these attempts are still "elementary".

The study argued that while mining pools are described as a hashrate aggregator (the computational power of a cryptographic network), they also buy hash hashers, thus contributing to their commoditization. And "as for any other commodity, the development of a spot market has led to the introduction of derivative contracts." Some companies have started issuing a set of financial products based on the hashrate, the researchers said, while "[m] iners can see this development as a hedging opportunity to better manage their risks and improve their cash flow situation".

According to this study: mining players have seen increased competition with each other, as well as tighter profit margins, which has led them to explore a number of different strategies to hedge risks and make additional cash flows. The study here highlighted the recent development of new financial instruments aimed specifically at miners, such as hashrate advances and difficulty futures (futures contracts trading against Bitcoin's future mining difficulty).

The study, however, described the miners' coverage strategies as "relatively elementary", consisting mainly of holding crypto assets (58%) or fiat reserves (41%).

The researchers concluded that,

"Only a handful of miners make use of sophisticated financial instruments, such as crypto (12%) or hashrate (14%) derivatives, or choose to collateralize their currencies (15%)."

In addition, American miners are twice as likely to use hashrate derivatives than those in Asia-Pacific (APAC) and six times more likely than European miners, the study said. In addition, APAC and North American miners are also likely to enter into crypto derivatives contracts. Regional discrepancies could be explained by certain factors, such as the availability of these financial products and regulatory clarity.

Here are some other top tips:

• Bitcoin is the most popular currency mined (89% of hashers surveyed), followed by Ethereum (ETH) (35%) and Bitcoin Cash (BCH) (30%).
• Bitcoin mining is prevalent in all regions, while other currencies appear more popular in certain areas than others, for example, Ethereum mining appears to be popular with Latin American hashers, while Bitcoin Cash is more popular in APAC and in North America.
• China accounts for 52% of manufacturers' total sales, outperforming other regions, including the USA (12%) and Canada (9%).
• The share of labor and maintenance costs does not appear to differ significantly between China and the USA.
• The vast majority of workers no longer pay residential electricity prices, but earn industrial prices through contractual agreements with energy generators.
• Hashers' operating costs can be reduced through government support, which can take the form of subsidies or tax exemptions, but only 23% of surveyed hashers reported receiving government support. 38% of them operate in China, followed by Kazakh (19%) and Canadian (12%) hashers.
• 76% of hashers use renewable energy as part of their energy mix, but the share of renewables in the total energy consumption of the hashers remains at 39%.
• For most profit-oriented miners, coin selection is generally guided by financial criteria, while welcomed hobbyists, mainly located in Europe and North America, are often driven by subjective criteria, such as ideology and personal affection.
• Data on the cost structure of Chinese and American hashers seems to confirm that Chinese hashers have a competitive advantage in acquiring mining machines, given the concentration of hardware manufacturers in China, and accompanying well-connected and shorter supply chains to hashers. Chinese, simplified commercial conduct and absence of overseas transportation fees.
• The seasonal advantage obtained through surplus electricity in some areas of APAC, such as China's Sichuan province, designed to give a competitive advantage in minimizing operating costs, is offset by less accessible electricity prices over the rest of the year, when hashers migrate back to their regions.

source: cryptonews.com

The Venezuelan government has legalized the mining of Bitcoin and other cryptocurrencies through a decree made by the National Superintendence of Cryptographic Assets and Related Activities (SUNACRIP), but with a caveat.

To regularize the activity, miners must register with the National Mining Registry (RIM). They must also inform the details of the activity, such as the import of specialized equipment. Illegal mining companies will be subject to “the measures, infractions and sanctions” provided for in a decree.

State mining pool

The most controversial point of the regulation is certainly the creation of a national mining pool of mandatory use. A mining pool is used to aggregate computing power from multiple machines. In this way, the gains obtained from mining cryptocurrencies are distributed proportionally to each one's contribution. This is because mining is very difficult to do individually.

The creation of a state mining pool aims to control the revenues generated from the activity, allowing the Venezuelan government to tax the cryptocurrencies mined. The risks of late payment and possible confiscation are also added.

These measures may seem unreasonable and detached from reality at first, but they can be absolutely ineffective due to the decentralized nature of Bitcoin and the internet. It remains to be seen how Venezuela will carry out the inspection of “clandestine” mining. How will the government know who is mining?

There are several techniques to maintain certain anonymity when carrying out any activity on the internet. And not even authoritarian measures, like the great Chinese firewall, can significantly affect people who don't want their lives online to be supervised and regulated by the government.

Venezuela is the third country in the world in the ranking of adoption of cryptocurrencies, behind only Russia and Ukraine. The main reason for this is the hyperinflation that has been installed in the country in the last 5 years. In public bathrooms it is common to find signs written: "Use paper, do not use money". Many residents were bartering for the exchange of products.

Cryptocurrencies have proven to be a highly effective way out for the country's population. In a documentary on YouTube, the BitMedia24 channel shows how it is already possible to buy basically anything in Venezuela using cryptocurrencies.

The “mecca” of global Bitcoin mining is without power.

China's Sichuan region, which concentrates most of the world's Bitcoin mining farms, is in short supply. As a result, miners are being forced to shut down their equipment.

Late rains

The lack of energy in Sichuan has been due to a delay at the beginning of the rainy season in the region. Thus, with a lack of rain, hydroelectric dams in the region operate with less capacity. Therefore, they are unable to generate energy in abundance to meet all the demand from miners.

According to a local government warning, released on May 18, the electricity load in the region has increased by 22% since May. However, the flow of water in local rivers has decreased by 20%, resulting in a deficit in the supply of hydroelectricity.

Under such circumstances, some areas may experience energy shortages during periods of peak demand. In addition, prolonged high temperatures further aggravate tension.

In this context, the document highlights that, although they manage to increase the supply of energy, the authorities would strengthen the monitoring of demand.

Although Bitcoin mining is not specifically mentioned in the notice in which operations are being monitored, it is an activity known for its dependence on an intensive use of electricity.

Bitcoin is not a priority

In the midst of this scenario, the local government has carried out actions that show that Bitcoin mining is not a priority in the region when it is necessary to “choose” who should use electricity.

Thus, according to some local mining farm operators, the delay in the rainy season has caused part of the power supply for Bitcoin mining operations to be “diverted” to serve residents and local businesses.

“Some farms have been out of power for more than three days and others can only be turned on during the night. Areas near the capital of Sichuan, Chengdu, such as Wenchuan, are experiencing severe power outages, while remote places like Ya’an and Kangding, with little electricity demand and sufficient rainfall, have few power outages”, said miners.

For miners, the unstable factors of the rainy season are well known and mining during this period is a risky business. The 2019 rainy season tortured miners as it started without rain in the first month and then storms ruined many farms.

For now, access to energy is the biggest impediment to Bitcoin mining. If the rainy season in the mining capital of the world refuses to arrive, more farms will be forced to shut down their machines. It remains to be seen to what extent the hash rate and mining difficulty of the Bitcoin network will be influenced.

Iranian officials are offering rewards to those who report government-subsidized bitcoin mining activity. Mostafa Rajabi, the spokesman for the Iranian Ministry of Energy, told IRIB News on Wednesday.

As reported by the local newspaper, the whistleblower can receive up to 20% of cryptocurrencies that are confiscated. According to the publication, the Iranian region has been targeted by bitcoin miners due to the low cost of electricity.

Iran's government subsidizes most of the electricity supplied to the population - even schools and mosques are not required to pay for their use.

However, a 7% increase in consumption drew the attention of local authorities. After investigation, several miners were caught using government-subsidized energy.

In June, for example, the Iranian government recovered more than 1,000 Bitcoins from clandestine miners, about $ 36 million today.

Mining and smuggling

Last month Iran's prosecutor even warned people about mining activity that “robs the capital of the country”. The agency even cited the entry of smuggled equipment in the country.

“These devices are wasting municipal and industrial electricity. In addition, investment in this area is not recognized by the government and citizens must be careful that their funds are not stolen. ”

According to Rajabi, to address recent problems of illegal use of electricity, new Iranian government regulations will encourage miners to set up their own cryptocurrency mining farms.

He added that the government can support these facilities especially if they use renewable energy sources.

Nvidia had more disappointing news for investors Monday, but for once the cryptocurrency mining slump was not directly to blame. In updated guidance released Monday, the graphics card manufacturer warned it now expects to report only $2.2 billion of revenue for its fiscal 2019 fourth quarter, which ends Jan. 31, down from a previous estimate of $2.7 billion. The earlier forecast had already factored in a drop in demand for graphics processing units (GPUs) used in crypto mining, Nvidia said, and sales of the extra graphics cards have kept pace with those expectations. “Exiting Q3, we estimated channel inventory would be largely depleted within one to two quarters, or between February and April,”  CEO Jensen Huang wrote in a letter to shareholders. “Our view of that today remains unchanged.” The problem is that economic woes and uncertainty, particularly in China, hurt demand for GPUs among Nvidia’s other customers – gamers and data centers. “Q4 was an extraordinary, unusually turbulent, and disappointing quarter,” Huang wrote. Nvidia will report its full fourth-quarter results on February 14. The company has been warning of a “substantial decline” in revenue from cryptocurrency miners for some time now. Nvidia anticipated bringing in $100 million during the second quarter of fiscal 2019, but only saw $18 million. “Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward,” chief financial officer Colette Kress said during an earnings call last summer. Its competitor, AMD, had likewise cautioned that a drop in demand for GPUs by miners would “materially” impact its GPU business. Source: www.coindesk.com