The Ultimate Resource For The Bitcoin Miner And The Mining Industry (#GotBitcoin)

How To Build A Crypto Mining Rig In 2020 To Earn Bitcoin And Ether.  The Ultimate Resource For The Bitcoin Miner And The Mining Industry (#GotBitcoin)

Mining with home rigs is back, so here’s what those interested need to know to put together their own rig at home.

It is not surprising that countries experiencing difficult political and economic situations have witnessed a boom in the purchase of GPU cards in recent months. In the region of Abkhazia, where all crypto activities have been illegal since 2018, citizens spent more than $500,000 on mining equipment over a period of six months.

Related:

Ultimate Resource On Bitcoin Mining Hashrate

Another factor that has worked to further popularize mining is strong crypto prices. Bitcoin (BTC) has risen by almost a third, while Ether (ETH), the most popular currency for mining, has added $150 to its price and the decentralized frenzy has meant that gas fees have reached unprecedented levels.

So, here’s how to design a cryptocurrency rig — and an exploration of whether it needs to be done at all, given all the associated risks.

Mining Rig Components

A cryptocurrency mining rig consists of a computer that has many graphics cards but no monitor. Computer cases are filled with GPU cards, a power-generating unit, a motherboard and a cooling system. If a monitor is connected, it can become a regular computer where a user can open a browser or play their favorite video game.

The Rig Is Connected To The Internet, And Thus, The Blockchain Network. The Network Operates By Itself To Conduct Monetary Transactions Using The Power Of The Graphics Cards. To Be More Specific, A Mining Rig Consists Of:

* An ordinary motherboard, which has the capability of linking to a number of connectors for GPU cards.

* A hard disk drive, or HDD, with 100 to 250 gigabytes of memory to house the cryptocurrency wallet, with an Ether wallet usually taking up 25 GB and a BTC wallet requiring 50 GB or more.

* Several GPU cards, which are the most important components in a rig because they are the base that defines the cryptocurrency that a user will mine, along with their future profit and its timeline.

* A power-generating unit. A rig with four GPUs often requires more than one power unit. Usually, miners have a few 750-watt units connected together.

* A power adapter for GPU cards. Video cards are connected to the motherboard using special extension cards called “risers.” There are many different types and models of risers, but the PCI-E 1x version 006 is the most popular.

* A power switch.

* A cooling system, and it’s preferable to have several coolers to provide additional airflow.

Another important detail is the frame for the rig. It is better to make a frame out of wood or aluminum. The size of the mining rig will be slightly larger than its frame due to protruding parts, adapters and a cooling system.

For example, a seven-GPU rig will be approximately 21 inches wide (53 centimeters), 12 inches deep (30 centimeters) and 12 inches high (30 centimeters).

After purchasing all the components of the rig, it’s time to design it, which is a rather easy task for a person who has experience with computer hardware. Additionally, there are plenty of guides on YouTube.

When a rig is ready, all that needs to be done is to install some software — i.e., to choose a program for mining the currency of preference. Another way is to find a mining pool, which is a popular way to mine, as it’s becoming harder to do so individually due to the rising complexity of crypto mining.

There are also some tools available such as TeamViewer, for remote control, and WatchDog, which automatically restarts the system if the program freezes.

Top GPU Cards

As a rule, one rig should include four to seven video cards — it’s a number that will not go beyond the framework of a stable operation, although there are exceptions.

Miners can connect 10 to 15 GPU cards to one motherboard, but seven is the optimal number because Microsoft’s Windows 10 operating system can detect only this number of cards. But there is a solution: specialized mining software based on the Linux kernel. In that case, the key is to choose the right motherboard, such as an ASRock Pro BTC+ series or similar.

Determining which GPU cards are best for mining is not so straightforward, as the answer depends only on the amount of money that the miner has. In general, it makes little sense to buy the most expensive, powerful GPUs for the price of two to three slightly weaker ones, as there is a greater chance the cheaper ones will bring more benefits due to their low power consumption and initial cost.

The highest income in mining is currently achieved with Nvidia GeForce RTX 2080 Ti and AMD Radeon VII cards, but it is more profitable to build a mining farm with AMD Radeon RX 580 and Nvidia GeForce GTX 1660 Super cards, as they will pay off much faster.

It should also be kept in mind that AMD RX series GPU cards can be flashed by changing the working time of the RAM, downvolting the core and overclocking. Programs such as MSI Afterburner and Sapphire TriXX can assist in making these manipulations, which will help GPU cards achieve maximum performance during the mining process.

Electricity In Question

In over 10 years, the mining industry has turned from something incomprehensible and rather cheap to a professional, high-tech venture that implies high barriers of entry, not only for the equipment but also for its maintenance.

After Purchasing Mining Equipment, Paying The Cost Of Electricity During Its Operation Becomes The Main Expense That Directly Affects Profitability. The Energy Consumption Of One Mining Rig Consists Of The Following Components:

* GPU cards, depending on the power and mining algorithm, consume between 360 watts and 1500 watts for a rig of six to seven cards.
* The motherboard, power unit, HDD and RAM consume up to 100 watts.
* The cooling system uses from 20 watts to several kilowatts when using air conditioning systems.

So, how can a miner reduce the cost of electricity? The main consumers of electricity are the GPU cards, and with the right settings, electricity consumption during mining can be reduced significantly. For example, when mining Ether, the main thing is to overclock the video memory.

The most optimal operating mode for GPU cards is setting the core voltage to about 830 to 850 millivolts for AMD cards and 650 to 850 millivolts for Nvidia cards. Lowering the voltage on the core of the card, in addition to reducing power consumption, decreases the amount of heat, which has a beneficial effect on the equipment.

Power-generating units can also use less power if they have a “gold” certificate, which means they save a large amount of electricity (about 15%) compared with power units that lack them.

Another way is to change HDDs to solid-state drives, which will increase the speed of loading the operating system and reduce the power consumption of each rig by five to 15 watts. Furthermore, modern RAM (DDR4 or DDR3L instead of DDR3) and processors can reduce consumption by another 10 to 20 watts.

A miner can also reduce consumption through slightly more complicated ways too, such as finding more economical electricity tariffs — for example, installing the rigs where there are reduced tariffs for consumers with electric stoves or electric heating and lower night-time prices.

If possible, miners can even reach out to a power plant that generates electricity to find out if it has surplus capacity. Some miners can create their own solar or wind farms and use them for mining, but not everyone can afford such an investment.

Mining In The Cloud

Keeping in mind the unstable situation in the economy, some may want to join the crypto mining community but cannot due to the high initial costs associated. Here’s where “hosted mining” can come into play, whereby cryptocurrencies are mined through a remote connection to equipment that has been rented out. Philip Salter, head of operations at Genesis Mining — a hosted mining provider — told Cointelegraph:

“Since mining is becoming more competitive, margins are shrinking and it’s harder for home miners to compete. Miners need to get every drop of efficiency they can, and that means growing the operation (economies of scale) and doing it somewhere where electricity is insanely cheap. […] Mining in the cloud seems like the only viable option for many.”

Hosted mining starts with a user choosing a provider of computational capacity. Then they enter into agreements with the company to connect to its equipment. After paying for computer capacity, miners are provided with access to remote mining of cryptocurrencies through rented equipment.

So, users only need a computer and a fast internet connection to operate. Hosted mining commissions are charged in accordance with the agreements established between the parties.

This type of mining has a number of advantages, such as not requiring start-up capital, not needing to connect equipment by yourself, no costs of maintenance and electricity, the ability to disconnect from work at any time, and not needing special technical knowledge and skills.

There are also risks in cloud mining, primarily because, like any young industry, many rogue actors seek to take over the funds of ignorant users. So, when choosing a platform, users should spend time and carefully study its history and reviews.

Also, hosted mining brings in lower income compared with mining using one’s own equipment. Nevertheless, this is a possible option for those who really want to get involved in mining because, in any case, no one will give up an opportunity for passive income, even if it’s not too significant.

Build It On Your Own

In summary, it can be said that today, mining seems to be an attractive way to make some income. If for some reason hosted mining is inconvenient, then setting up a personal rig is not too difficult. This will require an initial investment and a little time to figure out how the system operates.

Randy Ready, CEO and chief technology officer of Mining Rig Rentals — a hardware mining rental platform — believes that building your own system certainly is more interesting, adding: “I suggest going with a small rig and potentially going larger once you are familiar with mining and have a stable profit.”

Crypto mining giant Bitmain is launching two new models for its Antminer range of bitcoin mining devices, one of which is its most powerful yet.

Announced Friday, the Antminer S17e has a hash rate (mining power) of 64 terahertz per second and a power efficiency of 45 joules per TH.

The numbers compare favorably with the current most powerful model on sale. According to the Bitmain website, that’s an S17 with 53 TH/s and an efficiency rating of 45 J/TH in normal power mode.

The second new Antminer, the more budget-friendly T17e, provides a hash rate of 53 TH/s and power efficiency of 55 J/TH. This one appears to offer identical hashing power and lower efficiency to the 53 TH/s (45 J/TH) S17 model already on sale, but at a lower price point.

In Its Announcement, Bitmain Says:

“Both new models have been designed for more stable operations in the long-term to reduce maintenance costs for customers. This is made possible through the dual tube heat dissipation technology which improves how efficiently heat dissipates.”

They are also loaded with new software said to be “more secure” than previously in order to to prevent “malicious attacks.”

The new models will be sold in three batches from today till Sept. 11, and will be shipped through November.

The China-based miner maker is also saying it will compensate buyers with coupons if they should suffer a late delivery for the “e” models, “based on PPS rewards of the mining pool (electricity cost deducted).”

Updated: 9-27-2019

Bitmain To Launch Platform For Connecting Miners And Farms In October

Chinese crypto mining hardware giant Bitmain will launch a platform connecting global crypto miners with farm owners in October.

World’s First Resource To Connect Farms And Miners

The platform, dubbed World Digital Mining Map (WDMM), will be officially launched during the World Digital Mining Summit (WDMS) taking place in Frankfurt between Oct. 8 and Oct. 10, Bitmain announced in a blog post on Sept. 27.

According to the announcement, the WDMM will be the first global network to connect mining hardware owners with mining farms who will provide the available power resources to host them for a fee. In turn, network members will get access to a number of personalized services from Bitmain, including assistance with mining farm design, connections to foreign clients to host, and support with operations, purchasing, and construction.

Listing Applications During WDMS

In order to apply to be listed on the WDMM, mining farm owners will need to provide data on their current mining facilities and capacity to host other miners. Mining farm owners will be able to apply for listing on the WDMM during the WDMS event, the post notes.

Matthew Wang, Director of Mining Farm of Bitmain, stated that the WDMM will help make crypto mining more sustainable in the long term by providing a whole new way for connecting mining farms and hardware owners. Wang outlined the Bitmain’s commitment to leverage on-going support to miners throughout their hardware’s lifetime and to support the overall progress in the industry.

Top 10 Mining Farms

Additionally, Bitmain also plans to announce the winners of the world’s top 10 mining farms during the WDMS. According to the project’s website, winners will receive official certification and VIP tickets for the WDMS. According to the report, voting for the Top 10 Mining Farms is still open.

On Sept. 9, Bitmain launched two new Application Specific Integrated Circuit (ASIC) miners, the S17e and the T17e. According to the specifications, The S17e model has a hash rate of 64 TH/s and operates with a power efficiency of 45 J/TH, while the T17e offers a hash rate of 53 TH/s and a power efficiency of 55 J/TH.

Updated: 10-21-2019

Bitmain Launches ‘World’s Largest’ Bitcoin Mining Facility In Texas

Chinese cryptocurrency hardware manufacturer Bitmain has opened what it claims is the “world’s largest” facility for Bitcoin (BTC) mining in Rockdale, Texas.

In a news release published on Oct. 21, Bitmain revealed the project had been completed together with the Rockdale Municipal Development District and Canadian technology firm DMG Blockchain Solutions.

Pledges To Boost The Local Economy

The news release places a strong emphasis on working with the local economy of Rockdale, which is located in Milam County, east of Austin.

The facility — currently developed to a current 25MW capacity, with a 50MW facility remaining under construction — sits on a 33,000-acre site and can expand to a capacity of over 300MW in the future.

The site is reportedly owned by the Aluminum Company of America, Alcoa, and formerly served as the location for a smelter.

DMG, which is to provide hosting and management services for the Texas facility, will cooperate with Bitmain to expand the facility’s capacity and ensure the efficiency of the site’s mining operations.

Both firms will work closely to establish the facility’s on-ground team together with the local workforce commission, the Rockdale MDD.

Bitmain says it is committed to seeking local Rockdale suppliers to support the ongoing construction work and will also purchase energy directly from Rockdale’s electric grid operator, the Electric Reliability Council of Texas.

Aside from supporting the local economy, Bitmain also plans to launch educational programs and training on blockchain technology and mining data center operations, together with the Rockdale school district.

“Significant” For Bitmain’s Global Expansion Plans

As previously reported, Bitmain’s plans for its Texas site was first announced in Aug. 2018.

At the time, Bitmain said it expected to create 400 local jobs in the first two years, quoting $500 million as its total planned investment into the economy over an initial period of seven years.

This January, local reports alleged that the project was being downscaled, with reports of staff layoffs and suspended operations. Adverse market conditions were thought to be the reason for the purported cooling-off.

Clinton Brown, Rockdale Lead Project Manager for Bitmain, has today said the facility’s launch is “significant to Bitmain’s global expansion plans” and that the state’s stable and efficient energy resources will be fundamental to supporting what he believes is set to be the inevitable scale of growth of the mining industry.

Updated: 10-30-2019

Bitmain Quietly Files for Deutsche Bank-Backed IPO in the US: Report

China-based mining titan Bitmain Technologies has discreetly filed an application for an Initial Public Offering (IPO) with the United States Securities and Exchange Commission (SEC).

According to an Oct. 30 report from Tencent News citing anonymous “informed sources,” German multinational Deutsche Bank is sponsoring the application. The amount sought to be raised by the offering has not been specified.

Deutsche Bank Reportedly Sponsoring The Application

Tencent News further reports that the IPO plans have been dominated by Bitmain co-founder Jihan Wu and Chief Financial Officer Liu Luyao.

To bolster chances of success, the firm has purportedly hired Zheng Hua, former Nasdaq representative for China, as a consultant to the firm.
The SEC’s review process will reportedly entail three rounds of inquiries and last an estimated minimum of 1-2 months.

A further unnamed industry source, reportedly familiar with the SEC’s listing procedures, told Tencent:

“The SEC has no biased position toward the blockchain business, but is rather concerned about professional and technical issues.”

The source claimed that the company’s connection to the Bitcoin (BTC) fork Bitcoin Cash (BCH) is likely to be the largest obstacle facing the application.

Tangled Backstory

Industry onlookers will remember Bitmain’s earlier, ill-fated attempt to file a major $3 billion IPO on the Hong Kong Stock Exchange in September 2018, which lapsed after multiple controversies this March.

This week has been another eventful week for Bitmain with Jihan Wu revealing that fellow co-founder Micree Ketuan Zhan had left the company amid signs of internal company drama.

On Oct. 28, rival Chinese mining firm Canaan Creative filed for an IPO with the U.S. SEC to raise $400 million, eyeing a listing on Nasdaq under the ticker CAN.

Earlier this month, Bitmain opened what it claims is the “world’s largest” facility for Bitcoin mining in Rockdale, Texas.

Updated: 10-30-2019

Leaked Transcript Details Power Struggle Inside Bitcoin Mining Giant Bitmain

The Takeaway:

A partial transcript of an internal meeting at Bitmain on Tuesday details a long-running power struggle that led to the sudden ousting of co-founder Micree Zhan.

The conflict between Zhan and fellow co-founder Jihan Wu came to a head in December 2018 as the company pursued a round of layoffs.

In Tuesday’s emergency meeting called by Wu, he admitted the company has had a subpar 2019, exacerbating tensions among top executives.

The abrupt dismissal of Zhan comes just one week after Bitmain filed for another IPO attempt in the U.S., according to a report by Tencent News.

A transcript of a Bitmain staff meeting reveals an ugly power struggle inside the world’s biggest bitcoin miner maker that led to the abrupt ousting of co-founder Micree Ketuan Zhan.

CoinDesk has obtained and verified a partial transcript from the hourlong meeting on Tuesday. In it, Jihan Wu, a co-founder of Bitmain who started the company with Zhan in 2013, explained to all employees why he thought it was necessary to oust his long-time partner and former co-CEO.

After stepping down from day-to-day management in December 2018, Wu returned Tuesday as chairman of the company and executive director of the Beijing Bitmain subsidiary. He immediately made his presence felt.

Earlier in the day, Wu notified staff that Zhan had been dismissed from all his roles, effective immediately. During the subsequent all-hands meeting, he described a falling-out between the two executives late last year.

“Zhan escalated what should be a disagreement on an ordinary company business decision to the level of power struggle,” Wu told the staff.

Mounting Tensions

Wu said in Tuesday’s meeting that he and Zhan have butted heads since 2015.

However, things came to a head in December 2018 when Bitmain decided on a round of major layoffs. Wu pushed for the layoffs, while Zhan initially resisted.

According to Wu, he and three other founding members of Bitmain tried to persuade Zhan to reach a unanimous decision on the layoffs, which Wu and others viewed as necessary for saving the company.

Zhan remained unconvinced, however, and tried to rally other senior and mid-level management against the layoff plan, Wu said, only to find out that most supported it.

Wu Said In Tuesday’s Meeting:

“Everyone knows in 2018, the company spent unnecessary and hasty investment everywhere on research and development projects and hiring dozens and hundreds of people without a second thought. Everyone supported the layoffs.”

Still, Zhan ordered a second meeting on Dec. 17, arguing that he should be the sole CEO and threatening to void stock-option incentives for whoever wouldn’t back him up.

In the end, Zhan’s second attempt failed, Wu said, but the two came to an agreement to both step down as co-CEOs and Bitmain moved ahead with the layoffs.

“I know Zhan is an insecure person and can be bitter. I chose to take a further step back and let him take the glory role of chairman,” Wu said in the meeting.

However, the turmoil caused serious divisions within the company and spooked Bitmain’s trading partners, at a time when the crypto market was at its bottom, according to Wu’s account.

“Right on that day, we had suppliers calling us to push for clearing accounts payable. The Bank of Beijing already agreed to give us credit lines but that got cut the next day,” Wu said, adding:

“Had it not been the bounce-back of the bitcoin price in later months … the company may not have been able to weather through the winter last year.”

Missed Opportunities

2019 hasn’t been great for Bitmain, Wu said in Tueday’s internal meeting.

Even with bitcoin’s price rebound, Wu said the company didn’t fully seize the moment.

“Our mining equipment’s market share is declining,” he said. “Our mining pools’ dominance is also declining.”

Indeed, Bitmain’s major rival miner makers including Canaan, WhatsMiner and InnoSilicon have all been able to increase sales following the market boom this year.

Meanwhile, BTC.com and Antpool, Bitmain’s flagship mining pools, lost their long-time dominant positions to Poolin – founded by former BTC.com creators – and F2Pool. Poolin and F2pool are currently the top two mining pools in the world, based on the real-time hash rate distribution.

Calls to Zhan’s mobile number, as well as subsequent text messages requesting comment, were not answered. However, a Tencent News report said on Wednesday that Zhan has already started approaching lawyers in an aim to bring a lawsuit against Bitmain.

A spokesperson for Bitmain would not comment.

‘Crazy’ Ideas

Wu and Zhan seem to have sparred over what Wu called Zhan’s “crazy” ideas – namely doubling down on the company’s artificial intelligence (AI) business, which is unrelated to bitcoin mining.

According to Wu, some of Zhan’s ideas included getting finance and accounting employees in Shenzhen to take up sales roles for AI products.

“Who will be handling our book in Shenzhen? How are we going to present the financial data for [an] IPO?” Wu asked, adding:

“Recruiting 300 fresh graduates? How many staff do we have right now? Do we have sufficient resources to train them if we recruit this many people in one shot?”

He further alleged that Zhan recently proposed investing more in a business that was already “distressed” and had burnt out the firm’s core developers who are “sick at home.”

“AI is a venture investment for Bitmain,” Wu said. “It still needs a considerable amount of investment. We have to keep making money from our main business in order to have the venture investment in AI.”

Wu Added:

“Some said inside the company, I’m the one who handles business and Zhan handles technology. I want to ask, between Zhan and I, who really has a love for the technology? Zhan doesn’t love technology, he loves that feeling of fulfilling his endless desire for power. He doesn’t love technology, he loves vanity. Folks, we have no options but to keep Zhan away from this company.”

IPO Bloodletting
According to the Tencent News report, Bitmain has already filed an application in the U.S. seeking to go public again. The confidential filing was reportedly submitted one week before what the news outlet described as Wu’s coup.

The report added that on Oct. 28, one day before Wu’s email, Zhan was still attending a conference in Shenzhen on behalf of Bitmain to promote its AI products.

Zhan returned to Beijing after the news broke on Tuesday, but has been barred from entering the company’s offices, Tencent News said.

However, a major question remains unanswered: How did Bitmain manage to dismiss Zhan from all of his roles given that he was the chairman and major shareholder?

Prior to the December 2018 shake-up, Zhan held 36 percent of Bitmain’s holding company while Wu had just 20.25 percent, according to Bitmain’s 2018 IPO filing in Hong Kong citing data from September 2018.

Other major shareholders include founding members Yuesheng Ge (4.18 percent), Zhaofeng Zhao (6.26 percent), and Yishuo Hu (4.18 percent), as well as a trust that held 18.47 percent as the company’s employee stock-option incentive.

Other major external shareholders include Sequoia China Capital (2.7 percent), Richway Investment Limited (1.17 percent) and Sinovation (1.13 percent).

Updated: 12-12-2019

Bitmain Expands In South America As Its Market Share Drops To 66%

Bitmain, the world’s largest cryptocurrency mining firm, is expanding its distribution in South America by partnering with two crypto mining consulting firms.

The Chinese mining mogul will extend its global exposure with Fastblock, which will be the primary distributor in Brazil, and Bit5ive, a Miami-based firm that will be distributing Antminers to over 30 countries in Latin, Central America and the Caribbean, Bitmain announced Dec. 12.

Quick Take On Bitmain’s New Distributors

Bit5ive provides major crypto mining services — sells, hosts and supports crypto mining hardware — since its foundation in 2013. The company will be distributing Bitmain’s products using the official distributor license in South America, Bit5ive’s CEO and co-founder Robert Collazo noted.

Fastblock, which has been providing mining consulting services since 2014, intends to bring its blockchain expertise from managing over 20 mining plants, according to the firm’s CEO and co-founder Bernardo Schucman.

Antonio Oliveira, senior vice president and CTO at Bit5ive, declined to comment on the numbers or client purchase regions in an email to Cointelegraph.

Fastblock hasn’t responded to Cointelegraph’s attempts to reach out at the time of publication. This article will be updated pending any new information.

Bitmain’s Market Share By Hashrate Reportedly Dropped From 75% To 66%

The news comes amidst new reports revealing that Bitmain’s market share by hashrate has dropped from around 70% to 66% from June to early December 2019. The data comes from the study “The Bitcoin Mining Network” by London-based digital asset manager CoinShares shared with Cointelegraph Dec. 12.

Meanwhile, Bitmain’s own estimations claim that the company’s market share accounted for 75% of the global crypto hardware market as of 2017, the report notes.

While the Chinese giant’s dominance over crypto mining market has slipped since 2017, the overall trend of growth in China has continued. As reported by Cointelegraph, Chinese Bitcoin miners now control as much as 66% of global hash rate, which is the highest recorded by CoinShares since the firm started monitoring the measure in 2017.

Updated: 12-18-2019

Canaan’s Post-IPO Stock Plunge Reveals Sales Slump, Price War With Bitmain

Cryptocurrency mining computer-maker Canaan Inc. may have picked the worst time for its initial public stock offering, which valued the company at $1.3 billion.

The stock price has declined in all but four of the first 17 trading sessions since the Hangzhou-based company’s Nov. 21 sale of $90 million of U.S. shares. It’s down 35 percent since the start of last week.

Canaan’s performance is being closely monitored in the cryptocurrency industry. It was the first big maker of data-mining computers to sell shares publicly and its valuation serves many investors as a sector bellwether. The shares have tumbled even as the price of bitcoin, the largest cryptocurrency, has been mostly stable over the past month, currently around $6,500.

Its stock price drop is taking place “as bitcoin miners face a challenging environment,” wrote research firm TradeBlock in a report last week. CoinDesk reached out to Canaan’s management but no response was received as of press time.

Industry executives say the big makers of bitcoin-mining computers, colloquially known as “rigs,” are in a sales slump. That’s a surprising development since many observers predicted a frenzy of upgrades ahead of bitcoin’s once-every-four-years mining-reward halving, expected in May. When that happens, the reward for successfully mining a new block of data will get cut in half. It’s widely expected that prior-generation mining rigs will become unprofitable for operators who don’t have access to unusually cheap electricity.

Bitmain, the dominant industry player, recently announced a series of sales incentives to move backlogged or stale inventory, including promising limited price guarantees to buyers willing to commit to bulk purchases and in some cases renting out second-tier mining rigs under profit-sharing agreements.

Hashing Out Information On Their Own

It doesn’t help that investors are flying blind: According to the data provider FactSet, the stock has attracted no analyst coverage from Wall Street brokerage firms, forcing traders to generate their own models of the company’s profitability based on publicly available crypto-industry metrics like hashrate – a gauge of the amount of computer-processing power working to confirm new data blocks on the bitcoin network.

Over the past week, the bitcoin network’s hashrate has averaged about 90 quintillion operations, or exahashes, per second. Just a couple months ago, it hit an all-time-high around 100 exahashes per second, after averaging about 40 exahashes per second at the start of the year.

Matt D’Souza, co-founder and CEO of Blockware Solutions, which brokers mining-rig purchases, says that the surge in bitcoin’s hashrate during the first eight months of the year was a sign that operators were upgrading to faster, more efficient machines – leading to an increase in the network’s collective computing power.

The upgrades continued for several months even after bitcoin’s price peaked around $13,000 in late June.

But now, D’Souza says, miners are becoming somewhat more reluctant to invest in new machines until they see signs that bitcoin prices might start rising. That’s evident from the recent stall-out in the hashrate’s growth.

“They need to be assured that they’re in an environment for long-term profitability,” D’Souza said. “That’s why some of these guys have stopped buying.”

Price Cuts

Bitmain managed to build a dominant market share in the crypto industry, partly thanks to the runaway popularity of its S9 Antminers. But those are now at risk of becoming obsolete, and in recent months Bitmain has cut prices steeply on some of its top-selling models, D’Souza said.

Mike Maloney, chief financial officer at Coinmint LLC, a private cryptocurrency mining firm, says that the ultimate prize for these manufacturers is winning the loyalty of a growing cadre of large-scale miners who can shop for rigs in bulk and negotiate contracts for cheap electricity.

“This is a trend that we’re going to be seeing in bitcoin mining,” Maloney said in a phone interview. “Bitmain is taking the lead.”

Canaan has scheduled the release of its next-generation rig, the AvalonMiner 11 series, for early next year. But that machine is expected to be less power-efficient than the Bitmain S17+ model, which is already out, said D’Souza.

According to Bitmain’s website, its top-priced S17+ model, which ships in seven days for $1,930, can produce 73 terahashes (trillion operations) per second, at a power efficiency of 40 joules per terahash.

Canaan’s top-priced model, according to its website, is the “February batch” of the AvalonMiner A1166-68T machine for $1,978, providing 68 terahashes per second at an efficiency of 47 joules per terahash. In this case, a higher efficiency rating is worse, because it indicates more power usage and thus a higher operating cost.

“They’re in a tough position,” D’Souza said of Canaan. “They need cash and that’s because they need to upgrade their hardware and stay competitive with Bitmain.”

The Risks Were Disclosed

Canaan is led and controlled by its CEO and chairman, Nangeng Zhang, who was 36 at the time of the IPO, according to an offering prospectus filed with the U.S. Securities and Exchange Commission. Nicknamed “Pumpkin,” he received a master’s degree in software engineering from Beihang University in 2010, and from September 2010 through October 2013 he was pursuing a Ph.D. degree at the Chinese university.

As early as 2013, Zhang and his team were pioneers in the use of an advanced type of microchip known as application-specific integrated circuits, or ASICS, to mine for cryptocurrencies, according to the prospectus.

The offering was structured so that Zhang would own 15 percent of the total shares outstanding but retains about 73 percent of voting rights through his sole ownership of 356.6 million of the company’s class B shares, according to the filing. The IPO valued his stake on paper at more than $213 million, but the share-price slump has already cut that figure by about $96 million.

Even as Canaan prepared for the November IPO, its revenue this year was declining, and its costs were expanding: The company’s revenue during the first nine months of 2019 was just $134.2 million, down from $378.5 million during all of 2018; operating costs rose to $57.5 million during the first nine months of this year, from $52.5 million for all of last year.

The investment bank Credit Suisse, initially hired by Canaan to lead the U.S. IPO, dropped off of the underwriting team just weeks before the share sale, regulatory filings show. According to a Nov. 20 prospectus, Citigroup led the remaining team of seven underwriting firms, which also included the cryptocurrency-focused financial firm Galaxy Digital.

According to the filings, the deal was also downsized in the final weeks before the sale from an initial maximum target of $400 million.

Canaan disclosed in the prospectus that it planned to use the proceeds from the stock offering for research and development related to new computer chips and to expand its artificial-intelligence and blockchain business globally, “making strategic investments and establishing overseas offices.”

To its credit, the company also disclosed the risks when the market turns anemic. “Excess inventories, inventory markdowns, brand-image deterioration and margin squeeze caused by declining economic returns for miners or pricing competition for our bitcoin-mining machines could all have a material and adverse impact on our business, financial condition and results of operations,” according to the prospectus.

Analyzing bitcoin-mining computer stocks remains a murky practice. Just like manufacturers of oil rigs and mining bulldozers, they face the ups and downs of commodity cycles. Or rather, cryptocurrency cycles.

German Firm Unveils Mobile Eco-Friendly Bitcoin Mining Containers

Bitcoin (BTC) mining infrastructure firm Northern Bitcoin AG has announced the completion of tests for its new air-cooled mining container, which houses 144 ASIC miners.

A press release published on Sept. 9 outlined that the highly mobile container solution has been designed as a piece of flexible and efficient infrastructure that will enable the firm to establish mining pools in countries with year-round cool locations.

Setting Up Shop Anywhere Energy Is Cheap, Sustainable

Headquartered in Frankfurt am Main, Northern AG develops and operates Bitcoin-focused mining hardware that uses renewable energy sources and aims to attain optimal efficiency and sustainability.

The press release notes that Northern AG has developed and operated a mining pool with 21 water-cooled 41-foot containers — housing 210 ASIC miners each — in Norway for over a year.

The new water-cooled container has reportedly been developed with partners in Germany and will allow the firm to extend its operations, flexibly and at short notice, to new locations across Scandinavia.

Its 20-foot design — with a capacity to house 144 ASIC miners — has a significantly higher miner density than the earlier water-cooled containers. The firm says it is focused on deploying its mobile mining solutions in permanently cool locations where sustainable energy sources such as hydropower are cheap and abundant.

As the press release notes, efficient temperature control is critical for compute-intensive Bitcoin mining operations, during which the hardware required typically generates significant heat.

Bitcoin Mining Getting More Energy-Efficient

As recently reported, fresh data from aggregator Statista has indicated that Bitcoin (BTC) energy consumption is becoming rapidly more efficient, even as the global network’s hash rate continues to hit record highs.

Energy consumption as of July 2019 was 69.79 terawatt hours per year. In July 2018, the figure was 71.12 terawatts, while hash rate was almost 60% lower than at present.

A study in June found that three-quarters of Bitcoin mining activity is powered by renewable energy sources.

Mining hardware manufacturers such as Bitmain are similarly seeking to develop new solutions with greater processing capabilities and lower energy demands.

Updated: 11-19-2019

Bitcoin Mining Firms Merge To Build World’s Largest Purported Mining Farm In 2020

German Bitcoin (BTC) mining firm Northern Bitcoin has entered a merger agreement with United States-based competitor Whinstone to jointly build what will supposedly be world’s largest mining farm.

According to a Northern Bitcoin press release published on Nov. 18, Whinstone is already building the aforementioned facility which is expected to have a capacity of one gigawatt on an area of over 100 acres in Texas. The mining farm in question will allegedly be the largest data center in North America.

A Quick Construction Plan

The first phase of the construction — which is expected to conclude in Q1 2020 — will already have a capacity of 300 megawatts. Construction is expected to be completed in Q4 2020.

The first two clients that will take advantage of the upcoming facility will reportedly be two publicly traded corporations that will use a significant portion of its capacity for Bitcoin mining. Still, after its completion, the data center will also allow for the acceleration of video rendering and artificial intelligence applications.

Northern Bitcoin is a stock-traded company founded last year that specializes in sustainable Bitcoin mining. The firm operates a mining farm on renewable energy in Norway.

The idea of placing the world’s largest mining facility in the U.S. is interesting, given that China has so far been at the forefront of the cryptocurrency mining industry and hosts many of the leading companies of the industry, such as Bitmain.

According to a recent analysis, low power costs in addition to access to cheap hardware make China a competitive destination for cryptocurrency mining operations, despite the country’s legal environment.

Updated: 11-20-2019

1 Gigawatt Bitcoin Mine Under Construction in Texas Would Dwarf Bitmain’s

Bitmain, which recently broke ground on a massive bitcoin mine at a former Alcoa plant in Texas, will have competition for that “world’s largest” mantle.

A project broke ground this month that would start at 300 megawatts and expand to 1 gigawatt by the end of next year, dwarfing Bitmain’s mine that contemplates expanding from 25 MW to 50 MW to only 300 megawatts in its largest phase.

Data center developer Whinstone US, which owns a bitcoin mine in Louisiana and has been building in the Netherlands and Sweden, assembled the Rockdale project in partnership with GMO Internet, Japan’s version of GoDaddy.

A week after the ground-breaking on Nov. 7, Whinstone US agreed to be acquired by Germany’s Northern Bitcoin, which runs a bitcoin mine in Norway on renewable resources.

In the all stock deal, Northern Bitcoin will issue 3,720,750 new shares to Whinstone US shareholders, according to Northern Bitcoin’s head of communications.

On Wednesday, shares in Northern Bitcoin (ETR: NB2) jumped 42% to €23.60, valuing the company at about €180 million.

The data center will cost $150 million to build and furnish, Whinstone estimated when it unveiled the jobs-ready project to much locale fanfare on Nov. 1.

The mine would ramp up to full capacity through 2020, with 300 megawatts of power slated to come online in the first quarter and the full 1 gigawatt scheduled for the fourth quarter.

In fact, the dueling mining projects share a common landlord. Both inhabit real estate owned by Aluminum giant Alcoa which purchased the 33,000+ acre plot of land in the 1950s and turned the area locally known as Sandow Lakes Ranch into an industrial hub.

Northern Bitcoin said two listed companies have signed on as its first clients and they “will use a significant portion of the capacity for Bitcoin mining,” but the company declined to name them.

In a joint statement announcing their merger, Aroosh Thillainathan, co-founder of Whinstone US, said the deal could “shape the future course of the global mining industry” and Mathis Schultz, CEO of Northern Bitcoin AG, said the merger “catapults” his firm launched in 2018 to the top of the pack faster than planned.

In July, Whinstone’s previous proposed merger fell through after Hydro66 Holdings Corp., a Swedish data center builder, completed its own capital raise and backed out of the deal.

Updated: 11-24-2019

Russian Oligarch Turns Soviet Plant Into a Major Bitcoin Mining Hub

The largest data center in the former Soviet Union, BitRiver, opened about a year ago in the Siberian city of Bratsk and most of its clients use the facility to mine Bitcoin (BTC), Bloomberg reported on Nov. 24.

The data center allows cryptocurrency miners to take advantage of cheap energy in what once used to be the world’s largest aluminum smelter. The plant was built by the USSR in the 1960s with the still-active hydropower plant to power its operations.

Cold Climate, Cheap Energy

The data center’s location also benefits from a cold climate, allowing mining hardware to work at higher efficiency rates while cutting cooling costs.

Billionaire and president of the world’s second-largest aluminum company Rusal, Oleg Deripaska, is Bitriver’s biggest shareholder. He reportedly had the idea of building the data center about five years ago and directed his company Rusal alongside aluminum and power producer En+ to repurpose the facilities.

According to Bloomberg, Russian law does not recognize cryptocurrency mining. Because of this legal gray area, Bitriver does not directly engage in mining, but only provides equipment and technical services to its clients — including from Japan, China and the United States — operating like any other data center.

En+, in which Deripaska and his family own a 45% stake, supplies up to 100 megawatts of power to the facility, enough energy to sustain 100,000 homes. The plant is the largest hydropower plant in Russia and the data center allows it to constantly sell excess energy and diversify its client base.

BitRiver is paying for the power 2.4 rubles per kilowatt-hour, equivalent to about $0.038 without value-added tax and sells it at 3.5 rubles ($0.055) per kWh to miners. For comparison, the average price of electricity in the United States is about $0.12 per kWh.

Bitcoin Miners Unfazed By BTC Price Drop

Bitcoin and the overall cryptocurrency market saw a significant drop in price earlier this week, as BTC briefly fell under $7,000. Still, miners are seemingly keen to continue boosting their capacity.

“There is NO miner capitulation,” commented Bitcoin entrepreneur Alistair Milne on Sunday following a rise in network hash rate and expected difficulty hike. He continued:

“They are acutely aware of the upcoming halving and are apparently unphased by the recent dip.”

As Cointelegraph reported earlier this week, German Bitcoin mining firm Northern Bitcoin has entered a merger agreement with United States-based competitor Whinstone to jointly build what will supposedly be the world’s largest mining farm.

Updated: 12-11-2019

Why Bitcoin Mining Is Being Touted As A Solution To Gas Flaring

A Denver-based company that installs data centers at shale drilling sites to take advantage of excess natural gas supplies says it now has eight operations across the U.S. and plans another 30 in the first half of next year.

The centers are being touted as a way to solve the growing problem of gas flaring, where energy companies burn off excess gas. Flaring has risen to a record in Texas this year amid a lack of pipeline capacity.

Closely held Crusoe Energy Systems Inc. is harnessing some of the surplus gas at source to turn it into electricity, powering the data centers that in turn generate revenue by mining Bitcoin. The company will install 70 units next year, each with a capacity of about 1 megawatt, which would keep about 10 million cubic feet a day of gas from being flared, Chief Executive Officer Chase Lochmiller said in an interview.

“It’s a very creative way to solve an environmental and economic problem for the oil and gas industry,” said Alex Urdea, the chief investment officer of Upper90 Capital Management LLC, which has agreed to provide Crusoe with $40 million of project financing. The business model is attracting interest from large oil and gas producers, and it could eventually involve revenue sharing, he added. Crusoe also raised $30 million by selling equity to investors including Bain Capital Ventures.

Earlier this year, Crusoe raised $5 million of seed capital from investors including Winklevoss Capital Management LLC. Multiple units can be deployed at a single site to build scale. As the number of active units increases, Crusoe plans to start using some of that computing capability to develop a new artificial intelligence cloud-computing service.

Updated: 12-13-2019

Bitcoin Miner Riot Blockchain Announces Additional 1,000-Rig Purchase

Cryptocurrency mining firm Riot Blockchain announced the purchase of an additional 1,000 next-generation Bitmain S17-Pro Antminers on Dec.12. This completes the upgrade of its Oklahoma City mining facility, following an initial purchase of 3,000 units announced on Dec. 4.

The latest generation of Application-Specific Integrated Circuit miners from mining hardware giant Bitmain represents an approximate 50% improvement in hardware power efficiency compared to the S9 Antminers currently in use by Riot.

The company anticipates that the new miners will generate 440% of the hashrate of the S9s while consuming only 220% of the power.

Riot mined over 1,820 Bitcoins (BTC) in Q3 2019, posting a gross profit margin of 14% (excluding depreciation and amortization), and hopes to increase these figures when its new purchases are deployed in Q1 2020.
Full steam ahead

Assuming full utilization of the Oklahoma City facility’s 12-megawatt available electricity supply, and deployment of the total 4,000 new miners, Riot estimates the aggregate operating hashrate will be around 248 petahash (248 quadrillion hases) per second.

Riot reportedly paid around $1.35 million dollars for the additional 1,000 S17-Pro Antminers, or approximately $1,350 per rig. The retail price listed on the Bitmain web-store is $1401 per unit, although this is unlikely to include local sales tax.

In April this year, Riot Blockchain announced its intention to launch a regulated cryptocurrency exchange in the United States by the end of Q2 2019. To date, however, this has still failed to materialize.

Updated: 1-7-2020

SBI, GMO Reportedly Sign Deal with Operator of World’s Largest Bitcoin Mining Site

The operator of what is set to become the world’s largest Bitcoin (BTC) mining facility has reportedly signed a deal with Japanese financial services giant SBI and internet provider GMO.

A Jan. 7 BNN Bloomberg report claims that the two Japanese mega-firms have agreed in principle to process cryptocurrency transactions at a new mining facility — of unprecedented scale — now being developed in Rockdale, Texas.

The facility will be operated by Whinstone Inc., a subsidiary of the Frankfurt-based Northern Bitcoin AG.

Whinstone — which has been operating since 2014 and has its own mining sites across the Netherlands, Sweden and the United States — merged with Northern Bitcoin in November 2019 as the latter geared up to construct what is being slated as “the largest data center in North America and the largest Bitcoin mining facility in the world,” on an area of ​​over 40 hectares.

Neither SBI nor GMO immediately responded to Cointelegraph’s request for comment to confirm the partnership.
Texas: an emergent global mining hub

Northern Bitcoin AG’s new site will reportedly launch operations with an initial capacity of 300 megawatts, expected to hit 1 gigawatt by the close of 2020.

This would outstrip by almost three times the capacity of what is currently held to be the world’s largest crypto mining site, operated by China’s Bitmain Technologies Ltd. and situated on the former Alcoa aluminum smelter, also in Rockdale.

Alcoa, which closed in 2008, had been at the epicenter of the town’s once-thriving aluminum industry in the 1950s, and a key driver of population and economic growth, together with the nearby Sandow Power Plant, which shuttered in early 2018.

As per Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, an inflow of large cryptocurrency miners is now flocking to Texas, drawn by its abundance of cheap and renewable energy sources, particularly wind.

Wind-power accounted for over 20% of Texas’ electricity generation in 2019 and is expected to overtake coal for the first time this year, BloombergNEF data indicates.

Alongside Northern Bitcoin AG, U.S. mining startup Layer1 — backed by Peter Thiel and Digital Currency Group — is planning to set up a proprietary power sub-station on the plains of West Texas to generate solar and wind energy for its Bitcoin mining operations.

Investors Remain Bullish

On the heels of a volatile year for the cryptocurrency markets, McGlone commented on news of SBI and GMO’s reported involvement in the new mining site, observing that:

“Bitcoin is attracting more institutional investors and with the notion of limited supply and mass adoption — Bitcoin is winning this race.”

SBI, for its part, has taken a diverse, rather than maximalist, strategy as regards digital assets: it has a history of close involvement with XRP and Ripple, recently revealing it is considering the possibility of paying shareholder dividends in the token.

It also continues to work as part of the joint venture SBI Ripple Asia, which was formed to promote XRP’s usage in Asian financial markets in 2016.

Updated: 1-9-2020

Canada’s DMG Blockchain Installs 1,000 New Bitcoin Mining Rigs For US Client

Canadian tech company DMG Blockchain Solutions has installed 1,000 new Bitcoin (BTC) mining machines at its Christina Lake mining-as-a-service facility in British Columbia.

Per a Jan. 6 press release, DMG has purchased the new miners from Chinese mining giant Bitmain, with the total power consumption of approximately 1.5 megawatts.

Initially announced in December of last year, the newly installed mining equipment will serve a U.S.-based client, whose name was not revealed in the release. DMG operates as an industrial scale crypto mine hosting company, allowing clients to mine crypto through equipment stationed at its facilities in Northwest Canada.

DMG’s Crypto Mining Developments

DMG’s COO Sheldon Bennett said that “DMG made a decision to focus on attracting large scale hosting clients as profitable crypto-mining is a function of creating cost efficiencies, and our mining facility is well suited for industrial miners.”

Last October, DMG and Bitmain entered an exploratory agreement, under which DMG has been managing Bitmain’s Texas-based facility and set up nearly 15,000 next-generation miners.

In November 2018, DMG energized its new crypto mining facility, stating that the facility would start at 60 megawatts, and can expand its capacity up to 85 megawatts. The 27,000 square foot crypto mining-as-a-service operation occupies an area of 34 acres and is ostensibly one of the biggest such operations in North America.

Since the facility uses hydroelectric power — of which there is a surplus in Canada — the operation reportedly does not affect the power needs of local residents.

Crypto Mining Proliferates

On Jan. 8, digital currency mining firm Riot Blockchain began deploying around 3,000 new units of S17 Pro Antminers purchased from Bitmain as part of the full upgrade of its Oklahoma City mining facility.

Riot anticipates that, following the deployment of all 4,000 next-generation miners, its aggregate operating hashrate at the Oklahoma City mining facility will reach approximately 248 petahash per second, representing a 240% increase in hardware power efficiency compared to its mining hashrate.

Updated: 2-12-2020

Childhood Friends Battle Over Ownership of North America’s Largest Bitcoin Mine

Just four years ago, two lifelong friends from New Orleans turned a small initial investment into the largest crypto miner in North America.

When their company, Coinmint, bought a former Alcoa plant in upstate New York, they brought hope the new economics of cryptocurrencies would revive a region that suffered with the decline of American manufacturing.

But just as they should be preparing for the impending “halving” of bitcoin in May – an era-defining moment for the industry – the four-year-old company is now grappling with an existential threat: a lawsuit filed in a Delaware court by one of its two co-founders, who is seeking nothing less than the dissolution of the company and liquidation of its assets.

The business of mining bitcoin and other cryptocurrencies using high-speed computers is humming: Bitcoin prices are up 36 percent this year alone after nearly doubling in 2019. Mining firms are scrambling to raise capital from investors to set up large-scale data centers, upgrade equipment and expand processing power. The bitcoin network is months away from its next “halving” – a once-every-four-years occurrence that some analysts say could drive prices even higher. Before that happens, the partnership that owns Coinmint may itself be halved, along with the lifelong friendship of its co-founders.

Coinmint was started in 2016 when childhood friends Ashton Soniat and Prieur Leary each put $25,000 into the cryptocurrency prospecting firm. They would go on to develop a bitcoin mine in Massena, N.Y., that is now believed to be the largest such facility in North America; it draws some 80 megawatts of power, or the same amount used by roughly 60,000 average U.S. households.

Executives with the project have been lining up financing to install another 40 megawatts worth of capacity by May. The new production would come on line just in time for the halving, which under the terms of the bitcoin network’s original protocol will cut in half the number of bitcoins awarded to miners for helping to confirm data transactions on the blockchain. If bitcoin’s price surges, mining firms could win big. If it doesn’t, they would likely see a steep drop-off in profits.

Leary, a co-founder who until recently was Coinmint’s president, filed the dissolution suit in Delaware Chancery Court in December, claiming Soniat, who serves as CEO, unilaterally moved Coinmint’s headquarters to Puerto Rico and then shut him out of day-to-day management.

In phone interviews from his home in Miami Beach, Fla., Leary, 51, said he has put a lot of time, effort and money into Coinmint and he doesn’t want his investment at risk. He said Coinmint has received purchase offers from private equity firms at valuations above $80 million, but Soniat has thus far spurned any deal.

“I believe that it’s imprudent to risk your entire business on whether the halving is priced in or not,” Leary said.

In an email, Soniat, 50, said he is prepared to defend himself against the “spurious allegations” and that Leary’s claims are baseless. Soniat said he’s poured in almost all of the additional capital needed to fund Coinmint’s development and operations, and that Leary’s stake now amounts to just 18 percent. He contends Leary was fully aware of Coinmint’s conversion to a Puerto Rican limited liability company in 2018.

Leary’s actions are “simply another misguided attempt” to “bolster his financial standing at the expense of a company in which he owns an interest,” the statement read. “Despite the distraction of the lawsuit, Coinmint has continued to focus on, and is committed to, building a world-class cryptocurrency-mining enterprise.”

The dispute comes at a critical time for the crypto-mining industry, which has evolved in recent years from being dominated by hobbyists or small operators running one or a handful of computers in their kitchens or basements. With bitcoin and cryptocurrencies now gaining momentum, the business has become the province of big-money, institutional-scale developers, requiring wholesale electricity procurement contracts, large-scale site management and heavy capital investments in state-of-the-art data centers.

In an example of the rising costs of crypto mining, Coinmint went so far as to pay $15,000 a month last year to retain a New York-based public affairs adviser, Michael McKeon of the consulting firm Mercury. McKeon was a top communications aide and campaign adviser to former New York Governor George Pataki and also worked on former New York City Mayor Rudy Giuliani’s presidential campaign in 2008.

New bitcoin mining facilities sprouting up in Texas, Washington State, New York and some Canadian provinces are becoming so large they’ve been pitched as economic development projects to create jobs for remote communities with otherwise few opportunities.

Indeed, Coinmint Chief Financial Officer Michael Maloney said in an interview the planned expansion at Massena will add about 50 jobs, in addition to the roughly 100 employees who work there now.

Yet, as with many of the projects across the nation, there’s been an accompanying backlash. Nearby residents complain of elevated electricity bills. Environmentalists warn the extra draw on power from crypto mines could lead to more emissions from fossil fuel-burning generating plants, contributing to climate change.

From Big Easy To Big Difficulty

Coinmint’s story dates back decades before bitcoin was even invented. Leary and Soniat became acquainted as teenagers living in New Orleans in the 1980s.

“We went to different schools but we were in the same circles,” Leary recalled. “We were mostly party friends. We had a group of guys that all hung around together, and he was in our group.”

Soniat pursued a career in energy trading, working for the likes of Enron, TXU Energy and Deutsche Bank before starting his own firm in 2009. Leary went into the data-center business.

When Leary called Soniat in 2016 to pitch the idea of forming a partnership to start a bitcoin mine, it seemed like a natural fit. Both men had endured acrimonious breakups in prior business ventures that ended in courtroom disputes, but the cryptocurrency venture provided new grounds for optimism.

“It made sense,” Soniat said in a phone interview from Puerto Rico. “I looked at bitcoin mining as a play on electricity.”

Following the initial $25,000 capital contribution from each of the partners, Soniat provided nearly all of the capital needed for the buildout.

“Ashton was more on the financial side,” Leary said. “I’m the guy who found the sites and made it happen.”

The first two years were good for the business, Leary said, with bitcoin prices rallying 30-fold over the course of 2016 and 2017. Soniat, who lives in Puerto Rico, donated $150,000 to the island territory’s Sacred Heart University to strengthen a scholarship program, according to a February 2017 report from the Puerto Rican business-news website News Is My Business.

That same year, the pal-partners secured a lease on 1,300 acres at a former Alcoa aluminum-smelting plant in the town of Massena in upstate New York, not far from the St. Lawrence River, opposite the eastern end of Ontario, Canada. The town has been hit hard in recent decades by factory closures.

As of the most recent census estimates, Massena had an unemployment rate of some 21 percent, more than five times the current U.S. average.

But Massena boasts natural resources that are attractive to bitcoin miners like Coinmint. The regional electricity grid draws supply from nearby hydropower plants, once prized by the smelters. Another key feature is that it’s usually cold, with an average temperature of 44 degrees Fahrenheit (6.7 Celsius).

The chilly clime increases the efficiency and reliability of the bitcoin-mining computers, typically running 24 hours a day, 7 days a week.

In mid-2018, Coinmint said it would invest as much as $700 million in the Massena facility, creating an estimated 150 jobs over the ensuing 18 months, CNBC reported at the time. The plant has the potential for upgrades up to 435 megawatts of crypto-mining capacity.

“That was the original plan,” Leary said, “but the plan didn’t go the way we thought it was going to go.”

Bitcoin’s price tumbled 73 percent in 2018, raising questions not just about Coinmint’s prospects but about the very future of cryptocurrencies. As the partners deliberated over next steps, the friendship became strained.

Coinmint got hit with a lawsuit from a landlord in Plattsburgh, N.Y., where it was operating a separate, smaller bitcoin mine from space in a strip mall. Local residents complained their monthly utility bills were soaring because the operations were sucking up so much electricity. (Coinmint recently suspended operations in Plattsburgh, at least until March.)

In August 2018, Coinmint considered launching its own digital token to pre-sell batches of bitcoin mining processing power known as “hashrate” to buyers. Each token would be equivalent to one terahash, or a trillion computations, of bitcoin mining, according to a press release at the time. The token represented a potential new source of financing, but it has never been listed on a cryptocurrency exchange. A person close to Coinmint said none of the tokens were ever actually sold.

From Leary’s perspective, the Massena project has come to a crossroads where deeper pockets are needed to fund the next phase. He said the company is low on cash reserves, even as it needs a significant jolt of new capital to fund needed expansions and upgrades. He said many of the computers at the Massena facility are older-vintage machines that could become unprofitable following the halving.

“Bitcoin mining has become a big-money business,” Leary said. “Coinmint still has a great advantage, but if you want to compete with the Chinese, you have to partner with deep pockets or you have to have deep pockets yourself.”

Soniat loaned Coinmint more than $20 million, an obligation that until recently remained on the company’s books.

“Ashton is a trader,” Leary said. “He is more aggressive and a risk taker than me. To his credit, the company wouldn’t be where it is today without taking some risks. But we’ve reached a point where it’s too big and there’s too much risk. It’s not a fun situation for me.”

Last year, a private equity firm offered to buy a stake in Coinmint at a valuation of over $80 million; a few months later, a reduced offer valued the company closer to $60 million. In addition to the bids from private equity firms, Coinmint attracted interest from Chinese investors but Soniat didn’t want to engage.

“I kept pushing to do a deal,” Leary said. “He thought they were low-ball offers.”

By November of last year, relations between the childhood friends grew so strained that Soniat sent Leary an email saying he wasn’t sure he wanted to work with him anymore.

Leary traveled to Puerto Rico for two days to meet with Soniat, but his old buddy refused to talk with him.

Eventually, Leary’s lawyer, Ben Wolkov of the Miami-based firm AXS Law Group, recommended the dissolution petition.

“It’s a case of one partner just shutting another one out unlawfully, in our view,” Wolkov said in a phone interview. “This company’s going to have to deal with the industry waters, and the halving’s a concern, having to upgrade the equipment and the capital intensive nature of that endeavor. My client’s been left out in the dark.”

Soniat “went through the roof” when he found out the suit had been filed, and he sent out emails to Coinmint employees telling them not to talk to his partner, Leary said.

Soniat said in the phone interview he’s the majority owner of Coinmint, so decisions over a sale or new financing are his to make. He added that Leary’s description of the private equity offers is “categorically false.”

Coinmint is a private company and Soniat declined to disclose financial details, but noted: “I’ve provided the vast majority of money for the growth of the company through equity injections.”

Hashing It Out – Or Not?

In the meantime, Coinmint is moving ahead with an expansion of the Massena plant. Maloney, the CFO, who previously worked for the crypto-focused investment firm Galaxy Digital, said in phone interviews the company recently started installing more cryptocurrency-mining computers at the facility and expects the additional capacity to be ready by the start of May, just in time for the halving.

Last month, Coinmint revisited the idea of selling hashpower. It turned to BitOoda, a crypto-focused brokerage firm based in Jersey City, N.J., to arrange a financial contract with an unnamed counterparty for “the purchase and sale of large blocks of physically-delivered bitcoin hashpower,” according to a Jan. 27 press release.

Similar to commodity futures, the contracts allow mining firms to hedge against the risk of price drops while raising new financing in the short term.

Terms of the contract weren’t disclosed, but Maloney said the hashpower contracts should bring in funds to support the Massena expansion. BitOoda’s CEO, Tim Kelly, said in a phone interview he has investors lined up to buy “tens of millions of dollars” of the contracts.

“It’s difficult to get a loan from a traditional financial company like a bank,” Maloney said. “They don’t understand the nature of bitcoin.”

Leary, who wasn’t consulted on the BitOoda contract, says he really just wants a court-mediated solution to the whole affair.

“These partner-friend breakups can be the most unfortunate,” Leary said. “At the end of the day, my goal is to work this out. Hopefully he’ll read this article.”

Updated: 2-14-2020

Chinese Group Looking To Buy One of Latin America’s Largest Bitcoin Mines

Rocelo Lopes, CEO of Stratum, CoinPY, and one of the leading names in the Bitcoin and cryptocurrency market in Latin America, is negotiating the sale of Brazilian-owned, Paraguay-registered mining farm CoinPY, once a leading crypto company in Latin America.

According to exclusive information obtained by Cointelegraph, the negotiation is already advanced and the entire mining plant in Paraguay will be sold to a Chinese group that already operates similar farms in China.

Chinese Miners Concerned About Tightening Regulations

The group reportedly sought out Lopes for regulatory reasons, imagining a difficult scenario in China after the launch of any Chinese central bank digital currency (CBDC) that could cause a new wave of persecution in the cryptocurrency industry.

Tightening Regulations Cause Chinese Miners To Look Elsewhere

The move follows other Chinese miners looking for alternative locations to set up operations, as the world’s leading Bitcoin mining region is Sichuan. The rainy season there runs from April to September, and many miners move operations to Inner Mongolia, Xinjiang and Yunnan during the dry season to take advantage of the energy generated by thermal power companies.

Like Paraguay, countries like Kazakhstan and Uzbekistan are attracting Chinese mining companies looking to house older and less-profitable equipment like Antiminer S9, E10 and M3. In farms in China, they would stick to more cutting-edge equipment for logistical reasons.

Changes In Machinery And Management

In the case of the sale of CoinPY to the Chinese, all equipment at the Brazil-registered, Paraguay-based mining farm will have to be removed, according to sources speaking to Cointelegraph under anonymity. This way, Lopes would have until the end of February to remove all the machines he has in his space.

As CoinPY hosted third-party machines, customers have been notified of the destination they wish to give the equipment, mostly the Antminer S9. The negotiations also involve letting the Chinese consult with CoinPY for up to 8 years, which involves not only aspects of mining but governmental and regulatory relationships as well.

With the progress toward purchasing CoinPY, the Chinese would have already shipped their equipment to Paraguay and closed some plants in China. Cointelegraph asked the businessman for more details, but did not receive an answer.

While talking about Bitcoin mining on a television program, Lopes recently pointed out that mining has become more professional and that halving would permanently kill the possibility of any mining that not being done on a large scale.

As Cointelegraph reported recently, a Bitcoin mining farm in China was closed and all machines were shut down due to the Coronavirus outbreak.

Updated: 12-26-2019

Canaan’s New 5-Nanometer Chips To Escalate ASIC Arms Race With Bitmain

Chinese mining application-specific integrated circuit (ASIC) manufacturer Canaan will launch new, improved mining machines with 5-nanometer chips in Q1 2020.

Chinese industry news outlet 8BTC reported on Dec. 24 that the new ASICs will have significant advantages compared to the previous generation. The new firm’s 5nm manufacturing process is expected to improve performance, power and area scaling.
A significant development

The company expects to scale the production of this new product series faster than it did with its 7nm chips. The number of nanometers refers to the size of the features of the silicon chip, 5nm approaches what is possible with conventional electronics. For scale, 1nm is approximately equivalent to the width of two silicon atoms.

As the features in chips become smaller, it becomes possible to fit more transistors in a silicon die of the same size. At the same time, the electric current has to travel less distance in the circuit to perform a calculation, which means that efficiency is improved and the amount of heat is decreased when the features are smaller.

Canaan is one of the few cryptocurrency-related companies that managed to go public with a $90 million Initial Public Offering (IPO) held in November. As Cointelegraph recently reported, the firm’s shares have seen a 40 percent drop in value since the IPO.

Updated: 1-6-2020

Ousted Co-Founder of Crypto Mining Firm Bitmain Opposes Layoffs

Micree Ketuan Zhan, the co-founder of Bitmain who was recently dismissed by Bitmain’s current CEO Jihan Wu, has publicly opposed layoffs at the firm.

As Bitmain — the world’s largest cryptocurrency mining firm — is reportedly planning to cut its workforce by 50% before the next Bitcoin (BTC) halving, Zhan claimed that he is “firmly opposed to layoffs” in a Jan. 6 Weibo post addressed to Bitmain employees.

Zhan Argues That Bitmain Cannot Lose Its Leadership In A Highly Competitive Market

Apart from claiming that Bitmain does not need to lay off its team, Zhan argued that such a move would basically be suicide for the company. He wrote:

“To all employees of Bitmain: I am firmly opposed to layoffs! We don’t need to lay off people! We cannot play suicide!”

Zhan argued that Bitmain’s cash flow is healthy, and “there is a substantial amount of virtual cryptocurrency.” Zhan, who is Bitmain’s biggest shareholder with a reported 60% stake, outlined the company’s leading position in the highly competitive cryptocurrency mining market. He stressed that cutting Bitmain’s staff in half would just allow other mining firms to grab up Bitmain’s market share.

Bitmain Reportedly Started Cutting Staff This Morning

Meanwhile, Bitmain “staff optimization” allegedly started this morning, according to local reports on Jan. 6. Bitmain has reportedly provided its employees with a compensation plan, while some employees have signed a termination agreement. Additionally, a number of headhunters have purportedly started communicating with resigned Bitmain employees.

When reached for comment, a Bitmain spokesperson stated, “Depending on market conditions and business developments, we continue to make adjustments to our staff. As a result, we also are continuously on the lookout for new talent and welcome applicants from all walks of life.”

“Bitmain Drama”

The news brings a fresh twist in a series of events referred to as “Bitmain Drama” by the crypto community. After Zhan was dismissed by Bitmain CEO Jihan Wu in November 2019, the executive subsequently initiated court proceedings against the company in a bid to restore his voting control of the firm.

Meanwhile, Wu recently resurfaced as Bitmain CEO after both he and Zhan announced plans to step down from their co-CEO positions in January 2019.

Updated: 2-13-2020

Bitcoin Miner Canaan’s Shares Valued At $8.04 After Surging 80%

After steadily depreciating well into the last quarter of 2019, Canaan certainly rebounded slightly today.

The company was the first example of a large Bitcoin miner to go public on Nasdaq. However, after its initial public offering (IPO) on Nov 21, Canaan stock price values dropped nearly 40% within a few weeks.

Competition With Bitmain Helped Stocks Surge?

Some healthy competition may have helped the bitcoin miner to regain some traction in the market. Canaan came out ahead of Bitmain, another major China-based bitcoin miner, to become the first company traded in a US stock market. Unfortunately, this introduced Canaan to the United States with an IPO valued at under 75% of what was expected.

The mining giant’s stock took a beating from its original value $13 on the day of the launch to drop to $5.25 in mid-December. As of closing today, The Block reported Canaan’s shares are valued at $8.04, a surge of over 80% from its opening price of $4.42.

Canaan has been facing stiff competition from Bitmain and racing to develop technology to stay on top. Most recently, the company unveiled 5-nanometer chips to improve power and performance.

Updated: 2-16-2020

Bitcoin Mining Unit Manufacturer MicroBT Nibbles At Bitmain’s Market Share

Bitcoin miner maker MicroBT has rapidly expanded market share by selling over half a million units in 2019, chipping away at rival Bitmain’s dominance.

MicroBT sold about 600,000 units of its flagship WhatsMiner M20 series last year, Vincent Zhang, sales head of the Shenzhen-based company, said in an online panel hosted by Chinese mining pool Poolin on Thursday in a WeChat group.

These products generate a computing power of about 60 terahashes per second (TH/s) on average, he said. That means the newly delivered 600,000 units may have contributed over 30 exahashes (EH/s) of hashing power to the bitcoin network in 2019. (1 EH = 1 million TH).

Amid bitcoin’s price jump throughout 2019, the network’s two-week average computing power more than doubled from just 40 EH/s around the end of 2018 to nearly 100 EH/s in December. That’d mean close to half of bitcoin’s computing power growth in 2019 may have come from equipment delivered by MicroBT.

Zhang didn’t specify the precise average unit price of these batches, as they could fluctuate depending on bitcoin’s price over the year. But the firm’s various models in its M20 product line are generally priced between $24 to $30 per terahash, meaning the firm has brought home a high nine-figure revenue in U.S. dollars for 2019.

Bitcoin’s current computing power stands at 110 EH/s. That also means MicroBT may account for around 30 percent of bitcoin mining power sold right now, making it one of the largest and fastest-growing miner makers in the world.

Situation In Flux

Meanwhile, crypto research firm Coinshares estimated in a report on Dec. 12 that Bitmain’s dominance of sold bitcoin hash rate was about 65 percent at the time, already down from 75 percent in 2018.

But this number may already be slightly outdated as bitcoin’s computing power has since then grown by yet another 20 percent, jumping from 92 EH/s in mid December to about 110 EH/s at the moment.

Hangzhou-based Canaan Creative, maker of the Avalon miner, which went public in the U.S. in November, estimated in its IPO filing that it accounted for around 20 percent of bitcoin computing power sold for the first six months of 2019. The firm has yet to release its full-year results.

That said, Bitmain’s mining equipment still dominates the market, resulting from the successful sales of its AntMiner S7 from 2015 to 2016 and later its S9 model from 2017 to 2018.

According to Bitmain’s IPO filing in September 2018 in Hong Kong, the firm delivered about 500,000 bitcoin miners in 2015 and 2016, and further sold 3 million units from the beginning of 2017 to June 30, 2018, amid the crypto market’s bull run.

Halving Looms

While S9s – with an average 14 TH/s computing power – are still the most widely used miners, they are facing an increasing risk of becoming obsolete as bitcoin’s halving event approaches in May, which will reduce bitcoin’s mining rewards from 12.5 bitcoin per block to 6.25.

CoinDesk reported earlier this month that mining farms have been procuring the latest and most powerful miners to expand their facilities or replace older models in preparation for the upcoming halving.

While Bitmain its latest AntMiner S17 series last year to rival MicroBT’s WhatsMiner M20 product line, the latter has significantly outrun Bitmain in terms of mass production and shipments.

The two firms are also racing to deliver even more powerful machines in 2020 ahead of the halving event, namely, the AntMiner S19 and WhatsMiner M30. That said, the actual production quantity of these products still largely depends on the supply of wafers from semiconductor companies such as Samsung or TSMC, which, according to Zhang, is “very limited.”

Coronavirus’ Impact

Meanwhile, as the coronavirus outbreak in China delays manufacturing and logistics, bitcoin’s computing power growth has stagnated for the time being. In fact, data from mining pool BTC.com estimates that bitcoin’s mining power is poised to decrease by 1.78 percent in about eight days.

Zhang said in the WeChat group that MicroBT has resumed its production.

“Currently, part of the logistics has also gone back to work. … So now the supply of miners is not a big issue but not every mining farm is physically accessible,” he said.

“Large scale of investments may be affected because investors may not be able to do physical due diligence on facilities,” Zhang said.

2-27-2020

Ahead of Bitcoin Halving, Bitmain Announces Upcoming Antiminer S19

Leading mining hardware manufacturer Bitmain has announced two new upcoming miners — the Antminer S19 and the Antminer S19 Pro.

According to a press release on Feb. 27, the Antminer S19 will boast a hash rate of 95 terahashes per second (TH/s), and the Pro will offer 90 TH/s. However, Bitmain’s website claims that the Pro model can produce 110 TH/s.

Both miners will have a power efficiency of 34.5+/-%5 joules per terahash. No release date or price information has been announced for either model.

The S19 series will replace the Antminer S17 67 TH/s and the T17 55 TH/s as Bitmain’s flagship models. The S19s will weigh 3.5 and 4.5 kilograms heavier than their predecessors, weighing 15.5 and 16.5 kilograms. The S17 and T17 are priced at $1,567 and $939 respectively.

Bitmain’s press copy invokes the upcoming halving, stating: “with the price of block rewards to be reduced, the Antminer 19 series safeguard miners for future mining.”

Bitmain Miners Drive Riot Blockchain Expansion

On Feb. 20, the Nasdaq-listed crypto mining company Riot Blockchain announced the operational commencement of 4,000 Antminer S17s.

Riot purchased the Antminers during December 2019, 3,000 of which were deployed in its Oklahoma City facility during January. The facility is now fully operational — producing 240 pentahash per second and consuming 12 megawatts of electricity.

Competition Heats Between Bitmain And MicroBT

After years of Bitmain miners dominating hash rate, the company appears to be facing increasing competition from rival MicroBT.

MicroBT sold roughly 600,000 units of its flagship 60 TH/s WhatsMiner M20 in 2019 — outselling Bitmain’s S17 last year.

MicroBT plans to launch its forthcoming M30 with 88 TH/s capabilities, signaling fierce competition between the two companies during 2020.

Updated: 3-5-2020

Riot Reports 147% Monthly Growth In Average Daily Run Rate of BTC Mined

Nasdaq-listed cryptocurrency mining firm Riot Blockchain has demonstrated a remarkable monthly growth of average daily run rate of Bitcoins (BTC) mined, in February.

The United States-based firm has seen a 147% increase in the average daily run rate of BTC mined, against the average daily production run rate for December 2019, Riot revealed on March 5. Riot attributed the boost to its mining equipment upgrade. At the beginning of the month, it had 2,940 Bitmain S17s and 1,751 S9s machines, while by the end of the month, it was running 4,000 S17s.

Riot’s Mining Facilities Upgrade

Riot Blockchain started deploying around 3,000 new units of S17 Pro Antminers as part of the full upgrade of its Oklahoma City mining facility, in January. The company purchased the mining machines from Chinese mining giant Bitmain.

At the time, Riot anticipated that the upgrade would bring its aggregate operating hashrate at the Oklahoma City mining facility to approximately 248 petahashes per second, representing a 240% increase in hardware power efficiency compared to Riot’s mining hashrate.

Worth noting, Riot’s shares dropped by over 5% following the announcement that the company was planning to sell its cryptocurrency exchange, which was launched in the second quarter of 2019, to focus on BTC mining ahead of the halving in May of this year.

Updated: 4-7-2020

Investor Sues Crypto Mining Firm Riot Blockchain To Pay $728K In Legal Fees

An investor sued Nasdaq-listed cryptocurrency mining firm Riot Blockchain for $728,200 that the investor owes in another contract breach lawsuit.

According to court documents filed on April 3, the aforementioned sum is the money Riot Blockchain investor Barry Honig and consulting firm GRQ Consultants spent on the legal proceedings over the contracts between the parties. The filing reads:

“All of the agreements contain robust indemnification provisions which require Defendant to defend and indemnify Mr. Honig and GRQ against any subsequent lawsuits or claims ‘with respect to any of the’ securities purchases that they made, and/or ‘any violation or alleged violation by [Defendant] of the Securities Act, [or] the Exchange Act.’”

Securities Regulation Violation Lawsuits

According to the documents, in March 2017 Honig and GRQ — of which he served as a trustee — entered into securities purchase agreements and registration rights agreements with Riot Blockchain for $1,725,000 million. The next year multiple legal proceedings were moved against Honig and GRQ alleging that the securities transactions included in the contract violate the regulations. The filing reads:

“Honig vigorously denies each and every one of the claims asserted against him in those proceedings, and has expended significant sums to mount his defense.”

Still, while Honig believes the legal actions against him to be unfounded, he claims that those lawsuits trigger the indemnification obligations to him and GRQ. Riot Blockchain, on the other hand, refused to cover the legal fees in question, and the plaintiffs point out that the firm’s most recent quarterly report shows that it held over $20,324,000 of assets.

Lawsuits In Crypto

The cryptocurrency industry, as any other space with a large quantity of money involved, sees a large number of lawsuits. As Cointelegraph recently reported, seven cryptocurrency firms were targeted in lawsuits filed in the New York federal court on April 3.

Yesterday, Cointelegraph also reported that an entity representing the more than 100 victims of the alleged $35 million Q3 Ponzi scheme filed a class-action lawsuit against Wells Fargo Advisors.

Mining Issues In The Run-Up To BTC Halving

As Cointelegraph reported last month, major mining hardware manufacturer Bitmain announced two new upcoming miners — the Antminer S19 and the Antminer S19 Pro. Both miners will have a power efficiency of 34.5+/-%5 joules per terahash.

In the meantime, Alex de Vries, the founder of the Digiconomist, asserted that 98% of mining rigs will never verify a transaction, resulting in an enormous and unproductive electricity expenditure. De Vries explained:

“The shocking thing is the average lifetime of a bitcoin mining machine is one and a half years, because we have a new generation of machines which are better at doing these calculations. So the rest are just running pointlessly for a few years, using up energy, and producing heat, and then they will just get trashed because they can’t be repurposed.”

Updated: 5-3-2020

Pump And Dump Complaints Dismissed Against Crypto Mining Firm

Riot Blockchain’s lawsuits dismissed by a New Jersey judge, ending a 2 year lawsuit alleging the mining firm misled shareholders.

New Jersey District Judge, Freda Wolfson, granted seven motions of dismissal that ended a lawsuit targeting crypto mining firm, Riot Blockchain, on April 30.

The plaintiffs claimed that Riot had made false and misleading statements to its shareholders concerning its investments in crypto assets and blockchain technologies.

The lawsuit accused Riot of issuing misleading materials concerning shareholders who were selling their shares in the company, alleging that “related-party transactions” had not been adequately disclosed by Riot.

Riot Blockchain Escapes Class-Action Suit

Judge Wolfson found that the plaintiffs provided insufficient evidence to demonstrate that Riot’s press releases and public statements contained false or misleading information.

“I have examined all three categories of statements and find, for the reasons set forth below, that plaintiff has failed to adequately allege that those statements were false or misleading,” the judge said.

The plaintiffs first filed the class action against Riot, then known as Bioptix Inc, in February 2018, alleging that the firm made “material misstatements” to shareholders after the publication of a negative article from CNBC.

The judge noted that the lead plaintiff may refile a revised suit within 30 days of the order.

Riot Purchases 1,000 Anterminer S19’s

Also on April 30, Riot Blockchain announced that it had purchased 1,000 Bitmain Antminer S19 Pro ASIC miners for $2.4 million.

During April, Riot announced that it had struck a deal to relocate a portion of its mining operations into a New York facility operated by fellow mining firm Coinmint. The agreement saw recently purchased Antminer S17s moved from Riot’s Oklahoma facility.

The deal came after the mid-March crypto crash impacted the profits of many mining operations.

Updated: 3-5-2020

New York Power Plant Mines $50,000 of Bitcoin A Day

A New York power plant turns to Bitcoin mining in a successful bid to increase profitability.

Bloomberg reported on Mar. 5 that a power plant in New York’s Finger Lakes region now mines about $50,000 of Bitcoin (BTC) each day using the electricity it produces.

Atlas Holding, the private equity company that owns the facility, installed 7,000 crypto mining machines at the Greenidge Generation’s 65,000-square-foot power plant in Dresden, New York. The firm pointed out that since it produces the power consumed by the machines on its own, the mining operation is extremely low cost.

An Extremely Profitable Operation

Cryptocurrency mining is extremely energy-intensive. Mining facilities tend to concentrate where electricity prices are the lowest. In this case, the power cost is equivalent to production costs.

Atlas Holding’s mining operation consumes about 15 megawatts of the 115 megawatts of the power plant’s total capacity. In the past, the Dresden power plant used to operate only when there was higher-than-usual energy demand during summer and winter, but now it operates the whole year.

Bitcoin Block Reward Halving Is “Favorable”

The cryptocurrency community is afraid that Bitcoin mining will become unprofitable for most miners after the block reward will be cut in half in about little over two months. Dave Perrill, the CEO of colocation service for crypto miners, recently told Cointelegraph that the profitability of all but the most efficient mining operations will be greatly challenged after the halving takes place.

Still, the profitability of Atlas Holding’s mining operation is high enough to be safe after the block reward cut. Greenidge’s chief financial officer Tim Rainey said that he expects the operation will stay profitable after Bitcoin’s halving:

“We are in a favorable market position regardless of how the halving materializes. […] Due to our unique position as a co-generation facility, we are able to make money in down markets so that we’re available to catch the upside of volatile price swings.”

Updated: 3-5-2020

Canaan Faces Class Action Lawsuit Alleging Dubious Practices During IPO

Blockchain services and cryptocurrency mining hardware producer Canaan is facing a class-action lawsuit filed by investors following claims of dubious practices for attracting investments.

Investor rights-focused law firm Rosen Law Firm has initiated the suit on behalf of Canaan securities purchasers in the company’s initial public offering (IPO). The law firm claimed that Canaan investors suffered damages as the firm had made false and misleading statements and failed to disclose a number of issues.

Canaan Allegedly Misled Investors Regarding A Partnership

According to the announcement, Canaan did not reveal to its investors that a purported “strategic partnership” — apparently with Hong Kong Exchange-listed company Grandshores (HK 1647) — was actually a transaction with a related party. Also, Canaan allegedly did not provide the investors with correct information about its financial condition, which was allegedly been worse than was reported. Among other allegations, the lawsuit said:

“The company had recently removed numerous distributors from its website just prior to the IPO, many of which were small or suspicious businesses; and (4) several of the Company’s largest Chinese clients in prior years were clients who were not in the Bitcoin mining industry and, thus, would likely not be repeat customers.”

Rosen Law Firm is seeking restitution for affected investors.

Canaan carried out its IPO last November, wherein it raised $90 million — more than 75% less than was expected. Canaan has initially planned to raise considerably more, with a funding figure of $400 million circulating prior to the event.

The failure was purportedly a result of losing Canaan’s biggest banking partner, Credit Suisse, just a week before the IPO.

An Investigation Into Claims Against Canaan

Additionally, a shareholder rights litigation firm, The Schall Law Firm, has begun an investigation into purported violations of securities laws by Canaan. The law firm states that it is acting on behalf of Canaan investors and aims to indicate whether Canaan actually issued misleading statements and failed to disclose information pertinent to investors.

Both the investigation and lawsuit came in the wake of an analysis produced by Marcus Aurelius Value, which argued that the ASIC manufacturer had misrepresented its potential revenue for 2020 and that at least one of its customers is an alleged related party who is unable to honor a $150 million purchase contract.

The analysts based their claims on a highly irregular transaction relating to Canaan’s IPO on Nov. 27. This refers to the $150 million deal between Grandshores one month before the IPO, which would represent an equipment order almost equal to Canaan’s revenue in the past twelve months, which amounted to $177 million.

The analysts argued that Grandshores had no way of honoring the agreement, citing the company’s $50 million market capitalization and $16 million cash balance.

Updated: 3-12-2020

AsicBoost Dominates Bitcoin Mining, Solving Bitmain’s 2017 Controversy

Bitcoin (BTC) miners openly using AsicBoost are now comprising 63% of its network hashrate. This vindicates community concerns from 2017 that accused Bitmain of using the “covert” version of AsicBoost.

The statistic was highlighted on March 9 by Bitmex Research, building on a similar report from December 2018. Though the overt AsicBoost was only used by 30% of miners at the time, the analysts argued that the 2017 controversy was largely settled. They wrote:

“If covert AsicBoost was used by some miners to obtain a secret advantage, with significant adverse effects on Bitcoin, this problem now appears mostly solved.”

Bitmain was the target of strong criticism from notable Bitcoiners in 2017 after it allegedly introduced covert AsicBoost into its hardware. The company was also chastised for opposing the network’s Segregated Witness (SegWit) upgrade — a proposal which would have limited the usefulness of their covert AsicBoost tactics.

What Is AsicBoost?

AsicBoost is the name of a technique developed by cryptography experts, Timo Hanke and Sergio Lerner. The solution was patented under a framework named “Blockchain Defensive Patent License,” which was specifically designed to limit competitive advantages in mining and preserve network security.

In a Proof of Work system, miners must generate a cryptographic hash of some important block information, which is contained in the block header. In order to make it a difficult task, the hash must satisfy the “difficulty” condition, which generally requires it to be lower than a certain number. Since hash functions are completely unpredictable, the only way to satisfy the condition is to simply try many different combinations of input data.

AsicBoost exploits the fact that Bitcoin block hashes are created from separate chunks of 64 bytes of data. Since the entire header is 80 bytes, there are two chunks that need to be hashed during the mining procedure.

With the technique, one of the chunks can remain unmodified over multiple hashing attempts, which saves resources. The difference between overt and covert AsicBoost lies in which chunk is kept unchanged.

Under overt AsicBoost, the “version” bytes are used as an extra nonce to modify the resulting hash. Thus, the second chunk does not change for a number of attempts.

With covert AsicBoost, miners need to shuffle or even remove transactions in order to keep the last four bytes of the Merkle root — the signature of the block’s transactions — unchanged.

While the latter technique is less efficient, it is more difficult to detect and thus would allow a miner to maintain a competitive advantage. Crucially, the activation of SegWit would have broken the exploit.

Bitmain Criticized For Using Covert AsicBoost

In April 2017, news broke that Bitmain had implemented the covert AsicBoost exploit in its hardware. The discovery was made by Gregory Maxwell, at the time CTO of Blockstream.

The findings were used by the community to allege that Jihan Wu — Bitmain CEO and strong SegWit critic — had ulterior motives for his position.

AsicBoost was estimated to increase mining performance by 20-30%. Andreas Antonopolous and others argued that covert AsicBoost would eventually destabilize the network, as some miners would have an unfair advantage.

Bitmain Cleaning Up

The ever-increasing figure of overt AsicBoost miners, currently at about 63%, means that the advantage of using it covertly is dwindling.

Even if there are fewer incentives of foul play now, in a conversation with Cointelegraph, Kristy Leigh-Minehan noted that Bitmain “cleaned up its act” in preparation for the initial public offering (IPO).

The initial plans of the 2018 IPO were thwarted by a protracted bear market. Though a new attempt in late 2019 was discovered, internal company issues prevented it from continuing.

The pressure from the Bitcoin halving has allegedly forced Bitmain to slash over 50% of its staff. Even though some may have hoped for a halving-induced rally, the already-significant cut may not be enough to sustain the company amid a global market panic just two months before the upcoming block reward decrease.

Updated: 3-19-2020

Huobi’s Mining Arm Records 547% Surge in Operating Revenue In 2019

Huobi, the fourth-largest cryptocurrency exchange by daily trading volume to date, saw significant progress in its crypto mining business in 2019.

Huobi Pool, a cryptocurrency mining arm of Huobi, says its operating revenues surged 547% in 2019, reaching $320 million year-over-year from $53 million in 2018.

PoS Staking Continues To Be The Huobi Pool’s Most Profitable Business

Originally launched in March 2018, Huobi Pool released its first annual financial report on March 19, announcing the news for Huobi Group’s digital assets mining business and trading pool for the fiscal year ending December 31, 2019.

Alongside major growth in operating revenue, Huobi Pool recorded notable profits. According to the report, Huobi Pool’s operating profit jumped 218% from $2.5 million in 2018 to $6.3 million in 2019.

As outlined by the company, the two main triggers for Huobi Pool’s growth in 2019 were Proof-of-Stake (PoS) and Proof-of-Work (PoW) mining. Having accounted for 35.62% of the total net income, PoS continues to be the Huobi Pool’s most profitable business segment so far, the firm noted. Huobi Pool also projected that PoS will continue to be a focus in 2020.

PoW Consensus Is Also Still Contributing To Total Net Income

As reported by Cointelegraph, PoS is a consensus blockchain algorithm that operates on the basis of the validator’s stake in the network. PoS is opposed to PoW, which relies on physical miners instead of network validators.

Despite some blockchain projects like Ethereum trying to get rid of PoW consensus, the algorithm is apparently still profitable to date. According to Huobi Pool’s latest report, at least 23.5% of the firm’s total net income in 2019 was contributed by PoW mining. Additionally, PoW mining became one of the fastest-growing business segments of 2019 for Huobi Pool, as its Bitcoin (BTC) hashrate reached a high of 6,578 PH/s.

In the report, Huobi Pool also highlighted its Huobi Pool Token (HPT) as a central part of the company’s business model. In contrast to Huobi’s native token Huobi Token (HT), Huobi Pool Token is specifically designed for the company’s mining arm, acting as a reward mechanism for hashrate contribution as well as a way for users to participate in Huobi Pool developments.

As of press time, both Huobi Pool Token and Huobi Token are seeing significant surges over the past 24 hours, up nearly 15% and 14%, respectively. The growth comes amid a major green trend on crypto markets, with Bitcoin getting back above $6,200 and jumping more than 18% over a 24-hour period as of press time, according to data from Coin360.

Updated: 3-23-2020

Bitmain S19 Antminers Sell Out, Won’t Ship Until May 11

The world’s largest manufacturer Bitcoin ASIC miners, Bitmain, has sold out its first round of domestic Antminer S19 sales within 24 hours of accepting orders.

On March 23, Bitmain tweeted that it opened up its first phase of domestic sales for its long-await Antminer S19s — before selling out on the same day.

Antminer S19s Will Ship From March 11

The first version of the Antminer S19 will have a hashrate of 95 terahashes per second (TH/s) and an energy efficiency of 4.5±5% joules per terahash (J/TH), while the Antminer S19 Pro boasts a hash rate of 110 TH/s and an energy efficiency of 29.5±% 5 J/TH. The second version of both S19s will feature a reduced hashrate by 5 TH/s.

The regular S19 costs roughly $2,180 while the pro costs $2,920. Bitmain states that international sales will be coming soon.

Customers who managed to get in on the first round can expect the units to arrive between May 11 and May 20.

Bitmain Accused Of Front-Running Miners

With the Bitcoin (BTC) halving currently expected to take place on May 12, the estimated shipping dates for Bitmain’s S19s have drawn the ire of the mining community.

Many of the comments in response to Bitmain’s announcement insinuate that the company chose the date so that it could mine using its next-generation ASICs without competition before the next fork occurs.

Jason Urgo, The CEO Of Social Media Analytics Company Social Blade, Posted:

“Shipping May 11thish. Gee I wonder why you picked that date lol. I thought you guys said you didn’t use them yourself first before shipping them? Or is it just to make sure the ones you do have for you get the most out before you ship these.”

A user posting under the pseudonym ‘dua’ sarcastically added: “They don’t use it. They just stress test it for a ‘while’ for Quality assurance.”

Cointelegraph reached out to Bitmain but had not received a response as of press time. This article will be updated should a response come in.

Updated: 4-9-2020

Bitcoin Miner Maker Canaan Lost $148M in 2019

Chinese bitcoin miner manufacturer Canaan Creative disclosed a net loss of $148.6 million for 2019 on revenue of $204.3 million, reflecting declining profitability over the past three years.

On Thursday, the firm released its first unaudited earnings report since going public in the U.S. in November. Canaan said it sold computing power totaling 10.5 exhashes per second (EH/s), which accounted for roughly 20 percent of the Bitcoin network’s computing power growth last year.

Since its $90 million IPO, Canaan’s share price has been on a downward trend and is currently around $3.5 per share – 61 percent below its offering price.

The firm said it recorded $114.7 million in net loss in Q4 2019 alone, which widened its $31.2 million net loss for the first nine months in 2019.

Nangeng Zhang, CEO and founder of Canaan, said in an earnings call on Thursday morning Eastern time that, although the firm recorded sales uptick in October and November, it saw a “considerable drop” in volume in December amid volatility in bitcoin’s price.

“As a result of the impact of the COVID-19 outbreak, a widespread health crisis that adversely affected general commercial activities, the economies, financial markets, as well as the cryptocurrency market activities, we have lowered our expectations for business in the year of 2020,” according to the report. “For the first quarter of 2020, the Company expects total revenues not less than RMB60 million [$8.5 million].”

Also notable in the report is the increasing ratio of the “cost of revenues” for Canaan’s sales of bitcoin miners over the past year, which leads to declining profitability. In 2019, the cost of revenue for Canaan was $278 million, $78 million more than the total revenue made for the year, largely due to inventories and prepayments write down of $104.7 million in Q4.

Canaan’s cost of revenues generally include the costs of raw material, production and logistics for the manufacturing of mining equipment, as well as write-downs of prepayments and inventories.

Selling At Loss?

To put this into perspective, in 2017, Canaan’s total cost of revenues was $100 million with no inventory write-down, accounting for 54 percent of its $183 million revenue on the back of the crypto market bull run at the time. It brought home $53 million with a 30 percent net profit margin.

In 2018, its total cost of revenues went up to $307.4 million, taking up 80 percent of its $378 million revenue. But the total cost included a write-down of $110 million in inventories because the market downturn made it hard for Canaan to sell those machines.

The increase in the cost of revenues is perhaps also due to the fact that more advanced mining equipment relies on more costly chip technology.

According to Canaan’s IPO prospectus, the cost of its Avalon 10, the latest range of miner launched to help weather bitcoin’s halving event, is around $751, compared to $354 and $600 for its older Avalon 8 and 9 series. Prices had been around $1,200 in December for the Avalon 10.

Based on information advertised by Canaan’s authorized distributors, several Avalon 10 models are currently on sale, as a buying spree from investors has cooled down in recent months.

The firm has also recently been hit with a lawsuit filed by an investor who bought its shares and then accused the company of making misleading statements about its operations and financial data, and of violating the U.S. securities laws.

Updated: 4-10-2020

New York Power Plant Sells Bitcoin Hashpower to Institutional Investors

A Bitcoin-mining power plant in upstate New York has sold 106 petahash of its computing power to an undisclosed buyer using a “hashpower contract” settled in Bitcoin (BTC).

The contract — brokered by BitOoda Digital — first launched in January with the aim of providing institutional investors to purchase large blocks of Bitcoin hashpower in over-the-counter markets.

On April 10, The Chief Financial Officer Of Greenidge Generation Claimed That The New Instrument Provides:

“The same kind of time-tested hedging capabilities seen in traditional commodity markets […] bring[ing] the benefits of clean and energy-efficient bitcoin mining from Greenidge to institutional investors throughout the United States.”

A Sweet Deal For Investors?

The Greenidge power plant uses a pipeline bringing natural gas directly to the plant, thereby generating the power consumed by its mining facility — up to 100 megawatts of energy an hour — and lowering its costs. The firm argues that this set-up offers investors a chance to tap the profitability not only of crypto, but also the energy markets.

The new, regulated contract enables investors to own Bitcoin cheaper than the market spot price, with the instrument being physically settled — i.e. delivered in the Bitcoin generated at the power plant. For Greenidge, the deal provides upfront capital for expanding its mining operations.

Resources And Mining Profitability

As recently reported, Greenidge is owned by private equity Atlas Holding, which installed 7,000 crypto mining machines at the Greenidge 65,000-square-foot power plant in Dresden, New York.

Given the forthcoming 50% reduction in rewards for mining each block on the Bitcoin network — an event known as “halving,” scheduled for May 2020 — research by TradeBlock has indicated that access to efficient mining equipment, together with cheaper electricity and resources, can help the sector to ward against losses.

Updated: 4-12-2020

Are Bitcoin Cash Miners Driving Up the Price of Bitcoin?

Bitcoin (BTC) price has been a sight to behold over the last week. After successfully breaking through the resistance of $7,200 on Monday, April 6, all eyes were on the leading digital asset to hold $7K as fresh support, but as soon as the weekend was upon us, the price fell through this floor finding a new temporary bottom of $6,750.

So are these weekend dumps a sign that interest in Bitcoin is waning? Or is this simply whales taking advantage of thinner weekend volume to accumulate before the next big run?

Bitcoin keeps finding itself in a descending channel that formed 10 months ago. The last time the king of cryptocurrencies broke out of this channel, it encountered fierce resistance at 5 different levels ranging from $8,750 to $10,500.

Currently, Bitcoin is once more above this channel, with a new ascending channel taking form. From here Bitcoin needs to form support by closing the daily above $7,100 for history to start repeating itself, and this is not the only pattern repeating itself this year.

History Repeats Itself On The MACD

The Moving Average Divergence Convergence (MACD) indicator on the weekly timeframe looks almost identical to that of Jan. 14, which is when Bitcoin last closed above the descending channel. This resulted in a rally from $9,000 to $10,500.

However, much like the last few days, Bitcoin did fall back into the channel before pushing forward to the yearly high.

At the time this was attributed to the mining difficulty increasing every 2 weeks, a trend that seems to be returning.

Mining Difficulty Pushes Higher

After the Black Thursday event, which saw the price of Bitcoin plummet by 50%, the mining difficulty adjustment dropped by nearly 16%. This was one of the largest drops in a single period that Bitcoin had ever seen.

However, last week saw the difficulty increase by nearly 6% and the next adjustment is already looking to increase by 7%. With only 8 days left to go, it’s highly probable that this will wipe out the negative adjustment seen this year, so does that mean that price will follow?

If the price action at the beginning of 2020 is anything to go by, it might suggest another big price surge is due over the week ahead.

Are Miners Dropping Bch For BTC Driving The Price?

Last week Bitcoin Cash (BCH) had its halving and this caused a lackluster price spike of about 11% before the digital asset slowly settled back to its pre-halving price. However, as a result of the halving, the hash rate dropped off a cliff as can be seen in the chart above.

The most likely reason for this drop is due to the fact that those mining Bitcoin Cash use exactly the same hardware as Bitcoin miners. So when faced with a 50% reduction in profitability it would make more sense to point your miners to the real Bitcoin.

With more miners heading to the Bitcoin network, it would entirely make sense that the difficulty would start to rise. This is something that I expect to continue happening over the next 30 days ahead of the real Bitcoin halving.

However, this will also lead to the difficulty in mining BCH to plummet, so this little dance is something that will cause some very interesting price action over the coming weeks.

Bullish Scenario

If Bitcoin closes above $7,100 it will be incredibly bullish for the week ahead. Once more $7,200 is the first level of resistance, however, $7,400 and $7,700 are the next two levels holding Bitcoin back from breaking $8,000.

With the growing number of miners driving up the difficulty on the Bitcoin network, a run to $9,200 isn’t something that would be unreasonable to expect before the week is over.

Bearish Scenario

It still feels like Bitcoin is recovering too soon and the pullback this weekend doesn’t seem like it was enough. Should the weekly candle close below $7,100 I would first be looking at $6,750 and $6,500 as the last levels of support before opening up mid $5k range for buyers to step in.

Updated: 4-16-2020

Oil Companies Will Dominate BTC Mining in Five Years: Marty Bent

Mining Bitcoin (BTC) has often been criticised for its exorbitant power usage, but podcaster Marty Bent has embraced a solution that he says actually reduces waste in the oil and gas (O&G) sector.

In an April 15 blog post, Bent revealed that since last year he had been mining Bitcoin with the Great American Mining (GAM) company, using excess gas formed as a byproduct of mining oil to power the rigs.

GAM deployed their first small mining operation in the form of a shipping container in an oil field last December. Bent said it was the first step in encouraging O&G producers to become “some of the biggest miners within the Bitcoin network”.

He Elaborated On The Topic In A Podcast:

“What we’re trying to do and achieve at Great American Mining is to sort of have these oil and gas companies have the ‘aha’ moment and realize that they should be investing in this and building out a mining infrastructure on their field so that they can be more efficient with their wasted gas… and overall in the long term, help Bitcoin out, help protect Bitcoin, and distribute Bitcoin further from a mining perspective.”

The Concept

Bitcoin miners are looking for cheap and abundant energy sources, while O&G companies are looking to be as efficient and profitable as possible. GAM uses gas normally disposed of as a waste byproduct or sold off — sometimes at a loss — into a crypto mining energy source.

“If designed correctly, containers filled with Bitcoin miners have far superior uptime and are 5x more profitable (on average) than sending the gas to a pipeline to sell.”

Bent said there was no need to use warehouses or or build steel structures to mine Bitcoin when stacked ordinary shipping containers would do:

“You’re seeing a trend now, where even centralized locations are adopting. Instead of building like a large warehouse and doing all the infrastructure, they’re actually using the container model as the way to build on site…. a year or so ago, that wasn’t the case at all. And now you’re seeing very, very large places, you know, stack 40, 50, 60 containers… it’s just cheaper to do it that way.”

The concept is becoming more popular. The Winklevoss Twins have invested in Crusoe Energy Systems, a Texas company that converts the waste from surplus natural gas to mine cryptocurrencies. Up in Canada oil mining company Black Pearl Resources are mining Bitcoin to help offset operational costs. Another Canadian company Upstream Data sells and rents mobile mining equipment to O&G producers for the same purpose.

U.S. Doesn’t Have Much Mining Infrastructure

At present, China is the go-to destination for industrial-scale cryptocurrency mining facilities. With its affordable energy costs the country accounts for approximately 60-70% of the energy consumption from mining worldwide.

As of today, the Bitcoin network has an estimated annual electricity consumption of 73.374 TWh. As mining has become more expensive over time, its energy consumption will most likely also increase, leading entrepreneurs to look for alternative solutions.

Bent said that he believed that Bitcoin mining needed to be further distributed geographically — China currently dominates mining of the cryptocurrency. He said mining Bitcoin was a huge economic opportunity for the U.S. Oil and Gas industry:

“We are still very early in this game and on our personal journey at GAM, but we are confident that we will see this vision come to fruition over the course of the next five years. We could definitely fail (unless the government starts bailing out bitcoin miners), but we’re sure as hell going to try.”

Updated: 4-18-2020

Bitcoin Mining Hardware War Is Heating Up Ahead of the Halving

Shenzhen-based MicroBT is rolling out three top-of-the-line bitcoin miners amid heated competition with Bitmain ahead of the network’s halving event in less than 30 days.

Chen Jianbing, COO of MicroBT, announced in an online event on Friday that the three new models – the WhatsMiner M30S+, M30S++ and M31S+ – are available via both warehouse inventory and pre-orders that can be delivered in up to 30 days.

The move underscores MicroBT’s neck-and-neck competition in the multi-billion-dollar mining hardware market with major rival Bitmain, which is scheduled to deliver the first batch of its latest AntMiner S19 and S19 Pro miners in May.

At the event, Chen reemphasized MicroBT’s rapid growth in 2019, having achieved sales of 600,000 units of its WhatsMiner M20 series, which, as CoinDesk reported in February, has chipped away at Bitmain’s longstanding market dominance.

The COO said 2019 sales volume had also doubled compared with 2018, boosting its sold computing power to 35 million terahashes per second (TH/s). That accounted for 35 percent of the Bitcoin network’s total hash rate as of the end of December.

The new models add to MicroBT’s existing M30 product line, which includes the previously launched WhatsMiner M30S and M31S.

Efficiency War

With the latest equipment from both major manufacturers soon to start shipping, the bitcoin mining hardware market is now entering what Chen called the “3X era,” referring to a mining efficiency that’s below 40 watts per terahash (W/T).

For context, W/T measures how much electricity a mining machine consumes for each terahash of computing power. Since bitcoin mining is an energy-intensive computing process, a miner with a lower W/T ratio would be able to bring home a higher gross margin.

This metric has become considerably more important given the upcoming bitcoin halving, which will reduce the amount of bitcoin earned by the mining industry in a day from around 1,800 to 900 units.

According to the firm’s specifications, the M30S+ is able to compute at a 100 TH/s with 34 W/T efficiency, while the M30S++ can compute as much as 112 TH/s at 31 W/T. The previously launched M30S is claimed to deliver an efficiency of 38 W/T.

Meanwhile, the M31S+ and the earlier M31S both deliver an efficiency of 42 W/T. However, Chen said the new model has the option to switch to a lower voltage mode in order to improve the efficiency to below 40 W/T.

To put this into perspective, by Bitmain’s specification, AntMiner S19 and S19 Pro machines are said to be able to compute at 95 TH/s and 110 TH/s with an efficiency of 34 W/T and 30 W/T, respectively.

Tough Times

But arguably miner manufacturers are all facing a tough time selling equipment under current market conditions, with mining operations taking a step back to wait and see how bitcoin’s price will play out after halving.

Major manufacturers have had to mark down the prices of their mining equipment following bitcoin’s price crash on March 12, the largest sell-off since 2013.

Vincent Zhang, MicroBT’s head of sales, said during the launch event the WhatsMiner M30S is now priced at $1,962 – down from around $2,500 when it was initially released. For the new models announced today, the M30S+ and M30S++ are priced at $2,740 and $3,899 per unit, respectively.

Following the recent price cuts, manufacturers such as Bitmain have also had to partially refund customers who placed pre-orders at the higher price, a policy the firm has had in place for the past several years.

Zhang said MicroBT is now also enforcing such a policy in its bid to keep customers happy. Users who have placed pre-orders at a higher price than the retail value at the time of delivery will be compensated for the difference, like with Bitmain, in cash coupons. These can only be redeemed at up to 10 percent of the value of additional goods purchased by MicroBT.

Although MicroBT gained a large amount of market share in 2019, it had issues delivering devices on the timeline it had promised to customers, suffering up to several months of delays.

Zhang said the firm will now compensate customers in cash coupons worth 0.3 percent of the value of a pre-ordered machine for each day a delivery is delayed beyond the promised date.

Also notably, MicroBT will extend its warranty policy for the M30 series to one year post-delivery – longer than the industry’s average six-month warranty period.

Updated: 4-20-2020

Next-Generation Bitcoin Mining Hardware Arrives Just In Time For BTC Halving

MicroBT has unveiled its coming series of 100 TH/s miners for the post-halving block rewards, igniting competition with Bitmain.

Bitcoin (BTC) ASIC manufacturer MicroBT has revealed its new mining hardware, boasting a hash rate of 100 terahashes per second (TH/s). This product unveiling demonstrates that competition is heating up among major ASIC manufacturers, following Bitmain’s pre-sale of its S19 Antiminers.

MicroBT’s forthcoming M30 series of Bitcoin miners, the MS30S++ and the MS30S+, were revealed to 4,000 attendees of an online launch event on April 17.

The company says that its flagship unit (the ++ model, of course) is capable of 112 TH/s at a power efficiency of 31 joules per terahash (J/TH). The M30S+ reportedly clocks in at 100TH/s with 34 J/TH of efficiency. These miners will expectedly sell for $3,900 and $2,800, respectively.

They come with a 12-month warranty, as opposed to the 180-day coverage previously offered by MicroBT.

While the company estimates the hardware will ship throughout the month of June, supply chain disruptions as a result of COVID-19 have left many in the crypto community expecting delays.

Rising Competition Between MicroBT And Bitmain

Bitmain revealed its post-halvlng S19 ASIC series at the end of February, with its first round of units selling out within 24 hours of going on sale.

The Antminer S19 Pro boasts a hash rate of 110 TH/s at an energy of efficiency of 29.5 J/TH, while the standard S19 generates 95 TH/s at 34.5 J/TH. These units are priced respectively at $2,633 and $1,964 each, but shipping has been delayed from May until June.

MicroBT was founded in 2017 by CEO Yang Zuoixing, a former Bitmain employee who claimed to have acted as the lead director behind the Bitmain Antminer series, including its popular S7 and S9 series’.

By 2018, the company had sold approximately 90,000 M1 and M3 units, estimated to represent 7.2% of the total BTC hashrate at the time. Over the next 12 months, the firm would sell a further 300,000 M3 units, bringing its share of hash rate up to 9%.

MicroBT launched its M20 series in May 2019, selling 600,000 units and accounting for 35% of hashing power by the end of the year.

Updated: 4-25-2020

Bitcoin Mining Chip Producer Ebang Files for $100 Million IPO in US

Major mining chip manufacturer Ebang has filed for an IPO in the United States.

Major Bitcoin (BTC) miner manufacturer Ebang has filed for a $100 million initial public offering (IPO) with the United States Securities and Exchange Commission (SEC).

Ebang is seeking to distribute Class A ordinary shares at a face value $of 0.00013 per share. The firm plans to list on either Nasdaq Global Market or the New York Stock Exchange under the ticker EBON.

The move comes nearly two years after the company sought to conduct a $1 billion IPO in Hong Kong. After submitting its filing in June 2018, the offering had been halted by the end of the year.

Ebang Faces A Downturn In 2019

In 2019, 82% of Ebang’s revenues came from its application-specific integrated circuit (ASIC) chips and fabless integrated circuits for miners.

Ebang’s annual revenue was $109 million last year. Declining demand for mining hardware amid falling crypto prices resulted in a 66% drop in growth from $319 million in 2018.

Gross profits swung from $24.4 million in 2018 to $30.6 million in gross losses during last year Ebang’s chip sales fell from 415,930 at an average price of $737 to 289,953 chips for $304 on average.

Mining Hardware Demand Directly Correlates With Bitcoin Price Swings

Ebang’s filing asserts that demand for its products is directly tied to fluctuations in the price of Bitcoin:

Market demands and unit price of Bitcoin mining machines correlate with the economic returns of Bitcoin mining machines and are primarily affected by the Bitcoin price. A rise in the Bitcoin price will generally increase the market demand for Bitcoin mining machines, which in turn will allow us to price our products higher, and vice versa.

“The decrease in the Bitcoin price in 2018 and the first quarter of 2019 resulted in a material decrease in our sales volume and in the average selling price of our Bitcoin mining machines,” said Ebang, adding:

Although the Bitcoin price started to recover in the second quarter of 2019, our operations generally lag behind the increase of Bitcoin price.

Ebang Explores Altcoin Mining Chips

The filing states that Ebang has completed the design for its proprietary 8 nanometer (nm) and 7 nm ASC chips, adding that it is ready to mass-produce the 8 nm units “when the market conditions become suitable.”

Ebang is also working on the development of “proprietary 5 nm ASIC chips and mining machines” for altcoins, including Litecoin (LTC) and Monero (XMR).

The company states that it intends to begin “applying blockchain technology into non-cryptocurrency industries, such as the financial services and healthcare industries.”

Canaan IPO Falls Short Of Expectations

In November 2019, mining manufacturer Canaan Creative raised $90 million in an IPO — less than one-quarter of its $400 million target.

Since launching on Nasdaq for $9 per share, Canaan’s stock price has fallen over 50% to trade for $4.23.

Updated: 4-28-2020

Chinese Officials Support Renewable Energy-Powered Cryptocurrency Mining

Chinese officials from the Yaan municipality released a statement on the use of the local hydropower-derived electricity for cryptocurrency mining operations.

Chinese officials from the city of Ya’an in Sichuan have come out in support of using locally produced hydropower for cryptocurrency mining operations.

On April 20 the Municipal Economic and Information Bureau and the Municipal Development and Reform Commission of Ya’an announced an opinion statement on local crypto mining implementation. The document encourages the consumption of hydropower-generated electricity for mining operations.

The document stated that the municipality will build a “hydropower consumption demonstration zone” and “big data industry gathering area.” Officials believe the province will thus attract investment and development in blockchain companies.

Cryptocurrency Mining In China

China is known to be a major player in the cryptocurrency mining industry. According to a report released at the end of 2019, Chinese Bitcoin miners were at the time responsible for as much as 66% of the global hash rate, with 54% coming from the province of Sichuan.

Still — after the coronavirus pandemic struck the country — China recently started losing ground in the cryptocurrency mining space. As Cointelegraph reported earlier this month, Baite — the former top Chinese Bitcoin mining pool — decided to leave the Bitcoin mining business.

Furthermore, aging hardware is also taking its toll on the local mining enterprises, Recently the Chinese publication Securities Daily reported that over 40 mining operations were forced to stop their activity due to the fact that the now-old Antminer S9s Bitcoin mining ASICS were no longer profitable to operate.

Updated: 4-29-2020

Bitmain Earned Over $300 Million In 2020 Despite Rumored Problems

New report suggests that the Chinese crypto mining giant might be getting back on its feet.

Chinese cryptocurrency hardware manufacturer, Bitmain, made over $300 million in profit in the first four months of 2020. This news comes despite the COVID-19 outbreak and recent rumours about in-house problems, a recent report suggests.
Bitmain allegedly earns over $300 million, rewards employees with massive bonuses

According to the industry blog, Wu Said Blockchain, Bitmain announced internally that the company had earned over $300 million so far this year. Further, the mining giant reportedly regained some market share as it opened four new mining facilities and saw the hashrate increase on two of its mining pools.

Notably, the report mentioned that Bitmain’s Artificial Intelligence, or AI, business has also grown rapidly. The company entered the sector in 2018, planning to use its ready-made chip designs to power AI systems and software.

After a January report suggesting massive staff layoffs, the firm is now said to be rewarding its employees with individual bonuses of up to 70,000 yuan (about $9,900) on the Labor Day, which is scheduled for May 1. The bonus payments will amount to “millions of yuan”, as per the report.

New Report Contradicts Previous Rumours And Legal Problems

The new report might come as a surprise, given that Bitmain is considered one of the biggest victims of the “crypto winter”, and the upcoming Bitcoin halving is also expected to hinder mining profits. Along with the above mentioned job cuts, Bitmain experienced a noticeable market share decline in the second half of 2019.

The pandemic has also reportedly undermined the mining industry in China, although a Bitmain representative has previously told Cointelegraph that it prompted the company to explore alternate methods of working.

More recent problems for Bitmain include reports suggesting that its mining rig, Bitmain S17/T17 Antminer, has a high failure rate. There is also a well documented legal fight between two of its co-founders, Jihan Wu and Micree Ketuan Zhan. In October 2019, Wu ousted Zhan, who was Bitmain’s partner and chairman at the time, from the company. Additionally, Wu warned employees to cease any interaction with the ex-senior executive, threatening to fire those who disobey.

Since then, Zhan has filed two complaints against Bitmain and its AI subsidiary, Fujian Zhanhua Intelligence Technologies, attempting to regain his position as a shareholder. Bitmain believes that Zhan’s claims are baseless, and reassures that the results of the case will not have any impact on the company’s operation.

Cointelegraph has reached out to Bitmain for further comment, but has yet to hear back from the company. This story will be updated, should we receive a response.

Updated: 4-30-2020

Older Mining Machines Turn Profitable Again As Bitcoin Rises Ahead Of Halving

With bitcoin’s price jumping to a two-month high above $9,000, even mining equipment thought obsolete is becoming profitable again, at least for a short time.

According to the miner profitability index, tracked by mining pools PoolIn and F2Pool, older mining rigs, such as Bitmain’s AntMiner S9 or Canaan’s Avalon A851, can now generate a 10% to 20% gross margin at an average electricity cost of $0.05 per kilowatt-hour (kWh).

For those that have adopted miner efficiency improvement methods, such as merging two S9s into one or lowering voltage to boost efficiency, gross margin could increase to as much as 30% to 40% at bitcoin’s current price.

And as CoinDesk reported earlier this week, the upcoming rainy season in China – which is estimated to account for 70% of bitcoin’s total mining power – brings excessive hydropower that will result in electricity costs going under 3 cents per kWh.

Should bitcoin’s price and mining difficulty remain constant, older generation mining models like the S9s could remain marginally profitable at these utility rates even after the halving takes the daily number of newly mined bitcoin down from 1,800 to 900 units.

Meanwhile, major manufacturers’ flagship machines including Bitmain’s AntMiner S17 and S19 series as well as MicroBT’s WhatsMiner M20 and M30 series can bring returns of over 60%, even at an average 5 cents per kWh utility cost.

“Today’s price movement would bring back even those miners that were recently disconnected due to profitability concerns,” said Dmitrii Ushakov, chief commercial officer of Russia-based miner hosting firm BitRiver. “After halving, we believe that the price range of 3 to 4 cents [USD] is sufficient to continue mining profitably with S9 miners if the current price movement continues.”

Following bitcoin’s price crash on March 12, its worst sell-off in seven years, a wide range of older mining rigs have been forced to unplug from the network, resulting in a 16% mining competition drop in late March.

The mining competition drop, together with bitcoin’s price rebound after March 12, initially helped older miners become marginally profitable. As a result, Bitcoin’s total hash rate climbed to a near all-time-high of 110 exahashes per second (EH/s) over the past several weeks.

But during the same period, bitcoin’s price stagnated around $7,000 for weeks, which put pressure on farms relying on older models ahead of the halving and cooled the purchasing spree for more powerful and top-of-the-line equipment at large scales.

That said, bitcoin mining is a dynamically changing game. As bitcoin’s halving approaches in under two weeks, those relying on older mining equipment, without access to cheap electricity resources, face being squeezed out by those running efficient operations.

Mining farm operators previously estimated that older models like the S9 accounted for around 20% of the bitcoin network’s total computing power in March, which is a significant drop from a year ago because major players have been replacing these older models with more powerful new equipment during late 2019.

Updated: 5-4-2020

Iranian Authorizes Issue License For 6000-Rig Crypto Farm

Iran’s Ministry of Industry, Mining and Trade issued a license to Turkey-based company iMiner for operating in the province of Semnan.

Iran’s Ministry of Industry, Mine and Trade granted a license for cryptocurrency mining company iMiner to operate in the country. With 6,000 rigs, iMiner’s setup would purportedly make it one of the largest crypto miners in Iran.

According to an article published on April 29, the Turkey-based company has invested nearly $7.3 million into a Bitcoin (BTC) mining farm in the Semnan Province of Iran, where it will mine digital currency with 6,000 rigs capable of 96,000 terahashes per second (TH/s) in total. This equates to 16 TH/s per rig on average, the same as the Aladdin Miner listed on the company’s website.

In addition, iMiner will continue to offer trading and custody services for the Middle Eastern nation through Semnan and their offices in Tehran.

Crypto Mining In The Iranian Economy

The Iranian government authorized cryptocurrency mining as an industrial activity in July 2019, and has since issued over 1,000 licenses to crypto mining companies including iMiner. The country’s low energy prices make it appealing for miners, who are well known for having high electricity bills.

Iran’s economy is suffering both from the continuing pandemic the sanctions enforced by the United States and other western countries. Some military officials have suggested turning to digital currency to help facilitate trade while importing foreign currency and skirting such sanctions.

However, the push for innovative technology has led to smuggling unregistered crypto mining equipment. As Cointelegraph reported in November 2019, Iranian authorities even offered a bounty for those willing to expose unauthorized mining operations.

5-5-2020

Bitmain Produced Bad Batch of Units Ahead of Bitcoin Halving, Miners Claim

Chinese mining hardware giant Bitmain released a batch of Antminer products with a particularly high failure rate, according to a group of miners.

The Telegram group, started by Arseniy Grusha on May 1, co-founder of United States-based cryptocurrency consulting and mining firm Wattum, contains several complaints about Bitmain products, primarily the Antminer S17+. “I have never seen such defective production before,” Grusha wrote on his LinkedIn page on May 4. “In case you have a similar problem, I have created a telegram group where you can share your experience with the latest deliveries of these miners.”

30% Failure Rate Reported

In an interview with Cointelegraph, the mining entrepreneur explained that his company received 420 Antminer S17+ devices in March after a month-long delay caused by the COVID-19 pandemic. According to him, around 30% of the machines started glitching after only one month of use. Normally, defective miners account for just 5-7% of the whole order, Grusha noted.

Among the units, 32 stopped working due to ‘ERROR_SOC_INIT’ error, while 99 now only work using just one or two hashboards out of three, with 80% of the latter group ostensibly having this problem straight out of the box, according to Grusha.

“Part of the miners just stopped working,” he said, clarifying that all of the purchased miners have been using the latest official software from Bitmain. “The other part have bad hashboards and their power is lower by 30 and 60%.”

The Wattum exec has already contacted Bitmain, who apparently appointed him a specialist and new firmware. “Will have results in couple days,” Grusha told Cointelegraph, adding:

“But we still have 32% of bad units. They should be sent to China, and as a result, we lost money on mining before [the] halving and will [have to] wait two months for repair, which of course does no good for us.”

When Asked Whether He Was Considering Going To Court, Grusha Replied:

“I sent a request for compensation, and asked to send new miners instead of the bad miners. Let’s see what they answer first.”

Others in the group, which boasts almost 140 members after being created on May 1, reported somewhat similar failure rates. Mike Hamilton, chief technology officer at New York-based energy startup Griid, shared his experience after receiving a large batch of Antminer S17 50T units:

“We’ve got about 700/1800 machines with at least 1 hashboard down after 3 months. About 300/1800 with at least 2 hashboards down, and probably 150/1800 with all 3 hashboards and/or PSU failures.”

Matt D’Souza, CEO at Blockware Mining, recalled having a 19% defective rate after deploying a thousand Antminer S17+ units in a hosting facility based on freight containers. He got a much lower defective rate of 2% after launching another 1250 of the same model miners at a different facility.

Previous Complaints

Earlier in April, Samson Mow, Chief Strategy Officer of blockchain infrastructure firm Blockstream tweeted that Bitmain customers have a 20-30% failure rate with Antminer S17/T17 units. Mow also speculated that Bitmain CEO Jihan Wu blames ousted co-founder Jihan Wu for the problems and “is begging customers to give the S19 a chance.”

As previously reported by Cointelegraph, Antminer S19 were designed to produce increased mining output after the Bitcoin halving, which will make it more difficult to mine new coins. Bitmain sold out its first round of domestic Antminer S19 sales within 24 hours, while the units would not be shipped until May 11 at the earliest, which is roughly the same day the halving occurs.

5-6-2020

Ukraine Considers Using Nuclear Plants For Cryptocurrency Mining

Ukraine’s Ministry of Energy believes that using power plants for crypto mining could be one of the best ways to take advantage of a current energy glut.

Cryptocurrency mining is a contemporary and efficient way to use excess energy, Ukraine’s Ministry of Energy argued in a May 6 statement published on Facebook. According to the post, local nuclear plants have generated the surplus due to the COVID-19 lockdown.

The Course Toward Digitalization

The bureau is now looking to apply progressive solutions to avoid wasting energy as part of the government’s course toward digitalization championed by president Volodymyr Zelensky. Leaving the situation unchanged might create “conditions for corruption offenses, which will ultimately be paid at Ukrainian citizens’ expense”, the ministry warns.

Crypto Mining, In Turn, Could Prove To Be One Of The Efficient Solutions, The Post Continues:

“There is a way to transfer this ‘liability’ into an ‘asset’. One of the modern approaches for using excess electricity is to devote it to cryptocurrency mining. That would not only allow to maintain the guaranteed load on the nuclear power plants, but also ensure that companies can attract extra funds. Therefore, it would open the way to a fundamentally new economy, new approaches, a new market model.”

As previously reported by a Russian-language crypto news outlet Forklog on May 5, the acting head of Ukraine’s Ministry of Energy requested the state-owned enterprise Energoatom to study potential ways to implement cryptocurrency mining at the country’s nuclear energy generating facilities by May 8.

A Potentially Profitable Operation?

Power plants have been used for cryptocurrency mining before, although not on a government scale.

As reported by Cointelegraph in March, a privately-owned power plant in New York’s Finger Lakes region turned to Bitcoin (BTC) mining, adding about $50,000 worth of BTC each day to daily revenues.

Updated: 5-6-2020

Crypto Mining Giant Bitmain Confirms Problems With Antminer S17 Units

After several customer complaints aired on social media, Chinese mining giant Bitmain confirms that some of its Antminer S17 units have issues.

Chinese mining hardware company Bitmain has admitted to having issues with some of Antminer S17 units.

“Antminer is paying close attention to the issues of some products from the 17 series, which has recently been mentioned by the media,” a Bitmain spokesperson told Cointelegraph on May 6, adding:

“During this process, we have begun to negotiate solutions with customers who have encountered issues from the product. Antminer has always been adhering to the concept of placing customers first. If any customer has any product issues, please contact the official customer service of Antminer at any time.”

As recently reported by Cointelegraph, a mining entrepreneur started a Telegram group earlier this month after supposedly receiving a “bad batch” of Antminer S17+ devices, with around 30% of the ordered machines glitching or breaking down after only one month of use. The group, which now has over 160 members, contains several complaints of a similar nature.

Identical concerns were previously articulated by Samson Mow, chief strategy officer of blockchain infrastructure firm Blockstream. Mow tweeted last month that Bitmain customers have a 20–30% failure rate with Antminer S17/T17 units.

More Antminer Units To Be Shipped Out Soon

With the Bitcoin halving taking place in one week, Bitmain has recently sold out its first round of domestic Antminer S19 sales, although the units will not be shipped until May 11 at the earliest. The new product was designed to produce increased mining output in post-halving conditions.

Updated: 5-9-2020

US Mining Firm Plans To Nearly Double Hash Rate After Halving

Riot Blockchain has announced the purchase of an additional equipment for its post-halving operations.

U.S.-based mining firm, Riot Blockchain, has more than doubled the number of next-generation Bitcoin (BTC) miners it has purchased, buying 1,040 Antminer S19s from Bitmain on May 6.

The additional miners cost the firm $1.9 million, following Riot’s purchase of 1,000 S19s Pros, revealed on April 30.

Riot Predicts 80% Increase In Hash Rate After Deploying S19s

Anticipating that the units will have been shipped and deployed during the third quarter of this year, Riot expects the coming 2,040 S19s will increase its operational hashrate by 80% by 2021.

In total, the Riot predicts that it will command an operating hashrate of 457 petahashes per second while utilizing approximately 16.5 megawatts of electricity after deployment.

A spokesperson representing Bitmain in North American stated that the firm “has been working with Riot Blockchain for several years,” with Riot “using [Bitmain’s] Antminer products for operating their data centers.”

S17 Failures Cast A Dark Cloud Over S19 Launch

Riot’s near-multi-million dollar purchase from Bitmain came on the same day that the ASIC manufacturer acknowledged having problems with a recently shipped batch of S17s — with miners reporting failure rates as high as 30% among the units.

The company told Cointelegraph that it is currently in negotiating solutions with customers who have purchased defective units, encouraging affected users to contact it directly.

Riot Partially Relocated Due To Pandemic

After reporting that the COVID-19 outbreak had impacted the business activities at its facility in Oklahoma, Riot Blockchain relocated a portion of its recently purchased S17 miners to a facility operated by mining firm, Coinmint, in New York during April.

Last week, a New Jersey judge granted seven motions of dismissal ending a two-year lawsuit against Riot Blockchain alleging that the firm misled its shareholders at the start of 2018.

Updated: 5-10-2020

Binance’s Mining Pool Could Disrupt The Entire Mining Industry

Binance’s entrance to the Bitcoin mining industry could create a great disparity for the Bitcoin community.

Binance has launched its own mining pool. This could spell bad news for miners, but probably not for the reason you’re thinking of. We’re all aware that Binance is continuing to extend its reach across the industry. The exchange’s purchase of CoinMarketCap for a reported $400 million signaled a bold step toward grabbing attention at the top of the crypto funnel, and its recent foray into mining just ahead of the 2020 halving shows that Binance is also interested in having influence at the source.

By all accounts, the company culture at Binance appears to be one of innovation and experimentation. CEO Changpeng Zhao is known to be approachable, and when good ideas come from within the company, it is able to exercise its enormous user base and war chest to enter new markets.

The question is, what impact will Binance’s pool have on miners themselves?

To start with, the impact may be minimal. Binance’s initial target market will be miners who currently mine via the pools of other Chinese exchanges, such as Huobi and OKEx. There is fierce competition among those exchanges, and Binance launching a pool can be viewed through this lens. Binance even recruited directly from within Huobi as well as Bitmain to build its own pool’s business development team.

It’s still early days, but the change in global hashrate distribution since Binance launched their pool tells the same story. Both Huobi and OKEx have lost a couple of percentage points of share in global hashrate. OKExPool and Huobi fell from 6.74% and 5.92%, respectively in April 2020 to 4.5% and 4.0% at the start of May, while Binance has attracted 4.5% of the network’s hashrate since launch.

Meanwhile, established mining pools such as F2Pool and SlushPool have seen a growth in their share of hashrate during the same period.

Up until now, Huobi and OKEx have predominantly used their pools as a way to attract exchange customers and support the services already on offer. While the older pools compete in a different way.

Exchanges have massive reserves of Bitcoin and other liquid assets. They can operate at a loss, or close to cost, for extended periods of time.

Edward Evenson from SlushPool and Ethan Vera from Luxor recently discussed this short-term advantage on the mining pool-focused HASHR8 Podcast. They posited that Binance’s pool will be used as a loss leader because it can afford to drive prices into the ground. As Edward Evenson, director of business development at SlushPool, said:

“When you have 80,000 BTC on reserve, it becomes pretty easy to do whatever you want, especially when you’re vertically integrated across a bunch of different sectors of the industry.”

Another reason why Binance may be focused on the Chinese mining market is that the majority of their team, their base and their connections are still mostly in China. It also makes good business sense: 65% to 70% of the global hashrate is in China.

My concerns about this are not the typical narratives of over-centralization in China, as were recently expressed by Philip Salter from Genesis Mining. Indeed, as with the lessons everybody can learn from how Genesis handled their customers’ hashrate during the 2018 bear market, it’s much more important to focus on how you treat miners than where your company is based.

I’m of an opinion similar to my Australian colleague, Thomas Heller — global business director at F2Pool — who was also part of the debate on the HASHR8 Podcast. He underlined:

“The people who launched Bitcoin companies in Asia, such as pools or manufacturers, are Bitcoiners. They’re no different to Bitcoiners in Europe, North America or elsewhere.”

Bitcoin Mining And The Real Threat

Centralization is not a direct function of geographic location. Bitcoin doesn’t have a nationality, and pools don’t need to be labeled that way, either. As well as the increased development of farms in North America, large mining operators own and run machines in China, Russia, Kazakhstan and anywhere else with an abundance of low-cost energy — regardless of where the operators call home.

The fundamental risks in China are outside the control of Bitcoiners, and it makes sense for everyone who wants to profit from contributing to the security of Bitcoin try to find ways to not be dependent on single points of failure.

Economic factors such as the proliferation of hardware manufacturers and the logistical benefits of mining without having to export the machines halfway around the world will continue to support a disproportionate level of mining activity in that region.

Bitcoin mining is a permissionless, antifragile system where the barriers to entry are low-cost electricity and access to efficient hardware.

The future success of SBI’s focus on supplying hardware for large North American mining operations, or the potential entrance of even more well-equipped manufacturers like Samsung could change the mining landscape reasonably quickly. As low as electricity prices are in China now due to the lasting wet season, not even they can compete with some of the opportunities being explored by the likes of the Peter Theil-backed Texan’s Layer One or Greenidge Generation in New York.

So the threat that Binance poses is not geographic. The real threat is whether this crypto behemoth will drag down the circular economy that currently exists for the established pools.

SlushPool is the oldest pool, and it spends a large portion of its resources developing proposals such as Stratum V2. F2Pool had a loud voice in the SegWit 2x debates, and history suggests its founders came down on the right side of the argument. These kinds of pools make their profits by building up a reputation and experience in mining Bitcoin.

The real risk is Binance turning mining into a short-term game where the only rules are how low you can offer fees. What will be the consequence if pools focusing on the long-term success of their miners get squeezed out? As with everything within the beautiful game that Satoshi created: The market will decide.

Updated: 5-11-2020

Unprofitable Miners Already Leaving Bitcoin Network Ahead of BTC Halving

The halving is just a few hours away — and many miners are already shutting their soon-to-be unprofitable rigs, says Poolin VP Alejandro De La Torre.

With the halving scheduled to happen in just under four hours, unprofitable miners have already begun shutting down their equipment, vice president at major mining pool Poolin Alejandro De La Torre said in a May 11 interview with Cointelegraph. Per his estimations, these miners account for “15-30%” of the entire Bitcoin (BTC) hash rate.

“Mining farm personnel are shutting [their units] off as we speak since they will not want to do it after the halving — because then they’re losing money,” De La Torre told Cointelegraph.

The miners who are now fleeing will likely never come back online if they don’t upgrade their equipment or find extremely cheap electricity sources, because the mining reward will be halved once the event occurs:

“All older machines will no longer be profitable unless they are mining on nearly free electricity or if the price shoots up by 2x or more.”

According to De La Torre, unprofitable mining operations based in China will be the first to switch off. The halving will take place at early morning local time, which is why Chinese operators are now shutting down profitless units before punching the clock.

Hash Rate To Decrease Post-Halving, Bouncing Back Afterward?

This shutdown will affect the total hash rate, De La Torre added, since the soon-to-be unprofitable units generate “about 15-30%” of that number.

As previously reported by Cointelegraph, Bitcoin’s mining hash rate has seen major volatility ahead of the halving, and is likely to fall soon after it takes place — but could then start to bounce back as the new generation of mining machines gets shipped out.

Updated: 5-12-2020

New Cryptic Chinese Operation Instantly Becomes Sixth-Largest BTC Mining Pool

A new Chinese mining pool swiftly takes 5% of the Bitcoin mining pie, while its origins remain unknown.

New China-based mining pool Lubian accounts for 5.15% of the total Bitcoin (BTC) hash rate, just three weeks after processing its first block. The pool was originally spotted by BlockBeats, a Chinese blockchain news outlet, on May 12.

Lubian is currently the sixth-largest mining pool, with a 6.30 EH/s hash rate, data obtained from btc.com shows. The operation first surfaced on April 24, when it found block #627,441.

According to Dovey Wan, Primitive Ventures’ founding partner and industry commentator, Lubian could be an ex-private pool that has recently gone public. She tweeted:

“It must be a private pool before now reveals itself to be public as hashrate didn’t see a pop.”

Wan also noted that Lubian is picking up pace at an “interesting time,” since the Bitcoin halving happened yesterday. “Whoever owns the pool, must have owns the bootstrapping hashrate to start with as other pools didn’t see a major drop off,” she wrote.

Mining Industry Expects Major Changes

The mining sector is poised for major changes due to the Bitcoin halving, which has cut miner rewards from 12.5 BTC to 6.25 BTC.

Most miners operating older equipment are expected to leave the network, which in turn could lead to a 30% drop in the total hash rate. However, a new generation of mining devices, which will be shipped starting mid-May, could potentially drive the metric back to its previous levels and above.

Earlier in April, Chinese mining company Valarhash, which runs Bytepool and 1THash pools, suddenly dropped out of the BTC mining race in favor of altcoins.

Cointelegraph reached out to Lubian for additional details, but received no response as of press time.

Updated: 5-12-2020

4 Reasons The Bitcoin Halving Won’t Trigger A Big ‘Miner Capitulation’

Bitcoin miners are not likely to see capitulation and especially a “mining death spiral” after the 2020 halving due to four major reasons.

A popular narrative revolving around the Bitcoin (BTC) halving is that it may trigger the capitulation of miners. But, it is premature to suggest many miners will shut down in 2020 and bring the price of cryptocurrencies down as a result.

Some industry executives believe that the price of Bitcoin may drop following the May 11 halving. After the block rewards of Bitcoin miners get cut in half, their revenues also drop substantially. Typically, it affects overleveraged and small miners, forcing them to shut down their machines.

Digital Asset Manager Charles Edwards Said:

“This will be the most brutal Bitcoin Halving in history. Production cost is about to double to $14,000. 70% above the current price. During the last halving, the price was just 10% below Production cost, and Price & HR collapsed -20%. Without FOMO now, expect a big miner capitulation. 30%+”

A widespread theory is that as miners capitulate, they will begin to sell Bitcoin in the cryptocurrency exchange market and add significant selling pressure, which leads to more miners leaving and so on, resulting in the mythical “mining death spiral.”

This year, there are many variables that may prevent such a trend from occurring. Four main arguments against the capitulation of miners are: cheaper electricity in China decreased operational expenses due to weaker currencies, drop in energy price due to government lockdowns worldwide, and the adjustment of mining difficulty.

Cheaper Electricity In China & Less Demand For Energy Worldwide

China reportedly comprises roughly 65% of all Bitcoin computing power, according to the latest data.

Moreover, the Chinese province of Sichuan is soon to enter the rainy season. Many electricity service providers in the province rely on hydropower to generate energy. When there is an abundance of water, it allows hydro plants to generate more energy than usual.

The increase in the supply of electricity in Sichuan gives large-scale mining centers in the region the ability to negotiate electricity prices. For the next few months, big miners are likely to receive major discounted electricity rates, decreasing operational costs.

Worldwide implementation of stay-at-home measures and strict lockdowns further decrease the level of electricity usage. Major factories and millions of small businesses remained closed for around two months.

Low electricity rates, record low global oil prices and the tendency of industry-leading mining firms to maintain a large cash buffer tremendously reduce the risk of miner capitulation.

Weaker Currencies Result In Lower Operational Costs

According to Whit Gibbs, CEO at Hashr8, the decline of the ruble’s value may affect mining centers based in Russia.

The entire revenue of mining firms derives in the form of Bitcoin. But operational costs are often paid out in local national currencies. When the price of Bitcoin increases but the value of fiat currencies decline, it drops the expenses for mining firms as local fiat currencies lose value against BTC.

The geopolitical risks in the global economy and their possible impact on Bitcoin mining are not being accounted for. Hence, to state that miners are likely to capitulate in the latter half of 2020 can be premature.

Gibbs Said:

This halving COULD be the most brutal in history but it’s all just a best guess. There hasn’t been a comprehensive report in the last week to talk about current geopolitical and economic conditions, and how they’ll impact mining/ the price of bitcoin.

Bitcoin Mining Difficulty Adjustment

When the number of miners mining Bitcoin declines as a result of low price and fewer block rewards after the halving, the difficulty of mining BTC automatically adjusts to maintain a steady block interval.

The term “mining” refers to the creation of new Bitcoins as a reward for contributing computing resources to the network. The network automatically adjusts how difficult it is to mine BTC every 2,016 blocks if the computing power, also known as the hash rate, drops (or rises).

The mining difficulty adjustment mechanism stops a cascade of miner capitulation from occurring, as it will get cheaper to mine BTC when the hash rate drops.

Updated: 5-13-2020

Bitcoin Miner Riot Blockchain Racks Up $221 Million Deficit

Despite increasing revenue, Riot Blockchain’s first-quarter financials reveal that the company has relied on equity and debt financing to fund its operations.

U.S. mining firm Riot Blockchain has published its financial report for Q1 2020 — painting a picture of a company heavily reliant on equity and debt financing to fund its operations.

The firm reported recurring losses and negative cash flows from its operations, with Riot anticipating continued losses over the near term.

But the mining outfit is pinning its hopes on the arrival of 2000 next generation mining machines it believes will enable it to double its operational hash rate.

Riot Improves Year-Over-Year Performance

As of March 31, 2020, Riot Blockchain reported holding cash and cash equivalents worth $14 million; $5.3 million in crypto assets — predominantly Bitcoin (BTC) — along with working capital of $17 million.

In a press release, Riot emphasizes its improved performance when compared with the first quarter of 2019 — with its margin on mining operations up to $955,000 from a loss of $65,000. Revenue increased 68%, from $1.4 million to $2.4 million, when compared to Q1 2019.

The firm also emphasizes a sharp increase in corporate liquidity since the start of the year, with liquidity up to $19.2 compared to $11.3 million as of December 31, 2019.

Yeah, But About That $221 Million …

However, Riot’s accumulated deficit exceeded $221 million, with the company relying on equity and debt financing to fund most of its operations.

Further, the company “expects to continue to incur losses from operations for the near-term,” noting that the losses may be significant as legal and administrative costs, and expenditures associated with acquisitions, continue to mount. “The company is closely monitoring its balances, cash needs, and expense levels,” the report stated.

Riot Bets Big On Next-Generation Antminers

The firm notes that its Q1 gains in revenue and gross profit can be primarily attributed to changes in cryptocurrency prices and its recent deployment of next-generation cryptocurrency miners.

In December, Riot purchased 4,000 Antminer S17 Pro ASICs from Bitmain for roughly $6.3 million. While all of the units were deployed by the end of February, disruptions stemming from COVID-19 saw the firm relocate a significant portion of its S17s to a facility in New York operated by Coinmint in April.

Riot has recently purchased 1,000 Antminer S19s and 1,040 S19 Pros Bitmain, expressing expectations that their deployment will double its operational hash rate.

However, with debts exceeding $220 million, it remains to be seen whether the S19s will be able to significantly improve the company’s performance, especially after this week’s halving saw the block reward reduced to just 6.25 BTC.

Updated: 5-17-2020

Hackers Are Using Supercomputers To Mine Crypto

Hackers attacking supercomputers across Europe, trying to get their hands on mining crypto.

Hackers have attacked multiple supercomputers across Europe this week with the intention of mining cryptocurrency. Clusters of supercomputers have been forced to shut down in order to investigate the intrusions, according to a ZDNet news report on May 16.

These security incidents were reported in the UK, Germany, and Switzerland. Additionally, another possible attack occurred in a high-performance computer center in Spain, according to the report.

College Campuses Are The Main Victims

Most of the attacks appear to have targeted universities. University of Edinburgh,which runs the ARCHER supercomputer, reported the first incident on Monday.

Then, major universities’ high-performance computing clusters in the state of Baden-Württemberg, Germany also announced that they were attacked on Monday with similar security incidents, and had to be shut down.

More attacks happened in institutions in other parts of Germany, Spain, and Switzerland later in the week. Clusters in the Leibniz Computing Center, or LRZ, an institute under the Bavarian Academy of Sciences, the Julich Research Center in the town of Julich, Germany, the Faculty of Physics at the Ludwig-Maximilians University in Munich, Germany, and the Swiss Center of Scientific Computations, or CSCS, in Zurich, Switzerland were all counted amongst the victims.

SSH Logins Are Compromised And The Goal Is To Mine Crypto

The malware samples released by the Computer Security Incident Response Team were reviewed by a US-based cyber-security firm, says the news. The Computer Security Incident Response Team, or CSIRT, is a pan-European organization that coordinates research on supercomputers across Europe.

The cyber-security company said the attackers appear to have stolen university members’ SSH credentials in Canada, China, and Poland in order to gain access to the supercomputer clusters. Secure Shell, or SSH, is a cryptographic network protocol for operating network services securely over an unsecured network.

Chris Doman, Co-Founder Of Cado Security Explained That:

“Once attackers gained access to a supercomputing node, they appear to have used an exploit for the CVE-2019-15666 vulnerability to gain root access and then deployed an application that mined the Monero (XMR) cryptocurrency.”

As Cointelegraph reported previously, university campuses were ranked the second biggest miners of digital currency across industry.

5-17-2020

Critical Mining Hardware Manufacturer To Launch Second US Factory

Major mining hardware manufacturer TSMC has announced plans to build a $12 million facility in Arizona.

The world’s largest semiconductor manufacturer and third-largest chip manufacturer, Taiwan Semiconductor Manufacturing Co., or TSMC, has announced plans to build a $12 million factory in Arizona.

The move comes after TSMC suffered significant disruptions across its supply chain amid the coronavirus outbreak in China.

With Bitmain relying on TSMC for its next-generation chips and wafers, disruptions to TSMC specifically have been cited among the reasons for delays in shipping for its new Antminer S19 ASICs.

TSMC To Open Arizona Factory

The factory’s construction is slated to commence next year, with TSMC hoping the facility will begin producing 5-nanometer transistors in 2024.

Roughly 1,600 jobs are expected to be created through the factory’s creation, with TSMC expecting to invest $12 million into the facility between 2021 and 2029.

TSMC currently operates a factory in Washington and design centers in California and Texas.

Trump Administration Frames Factory As Security Victory

TSMC’s decision to launch the Arizona facility has been welcomed by the Trump administration — described the United State’s reliance on Asian semiconductor and chip manufacturers as a national security risk for several years.

U.S. Secretary of State Mike Pompeo applauded the news, tweeting: “The U.S. welcomes TSMC’s intention to invest $12B in the most advanced 5-nanometer semiconductor fabrication foundry in the world.”

“This deal bolsters U.S. national security at a time when China is trying to dominate cutting-edge tech and control critical industries,” Pompeo added.

Updated: 5-21-2020

Miner Revenues Crash, But This Has Always Marked Bitcoin Price Bottoms

The drop-off in Bitcoin mining revenue to 2019 levels show a macro bottom for BTC is near as the impact of the halving is starting to be felt.

The revenue of Bitcoin (BTC) miners dropped to early 2019 levels for the second time in 2020. Every time it declined to a multi-year low, it marked the start of a bullish trend for BTC.

The last time the daily revenue of Bitcoin miners hovered at around $7 million was on March 13, 2020. At the time, the price of BTC dropped to as low as $3,600 on BitMEX following a cascade of more than a billion dollars in long contracts.

After mining revenue plunged on March 13, the price of Bitcoin rose from $3,600 to over $10,000 with a 177% gain over the next month and a half.

Bitcoin May See A Similar Trend In The Coming Months

When Bitcoin mining revenue falls steeply, it indicates that over-leveraged miners are capitulating due to unfavorable market conditions.

From March 12 to March 13, the mining revenue declined as a result of a 50% drop in the price of Bitcoin in a span of 24 hours. This time, the drop-off is seemingly caused by the effect of the Bitcoin halving on the mining ecosystem.

Before the halving, miners were generating about 1,800 BTC per day in revenue. Today, miners are expected to make around 900 BTC per day.

But the price of Bitcoin is currently at a similar level as where it was before the halving was activated. For small or over-leveraged miners, the stagnancy in the price of Bitcoin following the halving is enough to cause a temporary halt in their operations.

Typically, this marks a bottom for Bitcoin because it indicates a peak level of fear in the market. Some unprofitable miners are shutting down while BTC is stagnant. Therefore, Bitcoin could see short-term volatility as on-chain data suggests the generational bottom before a new bull cycle is seemingly being established.

Other Macro Indicators Also Flipping Bullish

The Puell Multiple, a macro indicator that uses the daily issuance of BTC to measure the trend of the market, shows that BTC is close to its bottom.

While the Puell Multiple suggests there may be another minor pullback in the short-term, it is showing a 2018-esque trend wherein BTC is gearing towards a bullish trend as seen in early 2019.

From early to mid-2019, the price of Bitcoin rose from $4,000 to $14,000, and various on-chain data suggests BTC is now showing similar signs.

Technical indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) for large time frames also show that BTC is nowhere near the top following a 160% price spike.

Bitazu Capital Founding Partner Mohit Sorout Said:

“Notice how major BTC cycle top & bottoms were printed against the backdrop of peak volatility? Simple look will tell you $10k is a small hiccup.”

The price of BTC nearly tripled since March 13 from $3,600 to $10,085 and yet, historically accurate indicators are not showing a top-like structure for BTC.

Updated: 5-22-2020

Layer1 Stabilizes Texas Grids With ‘Bitcoin Batteries’

Layer1 Technologies has deployed its proprietary mining containers as electricity storage systems to stabilize Texas’ electricity market.

U.S.-based Bitcoin (BTC) mining datacenter operator Layer1 Technologies has deployed its mining containers as “Bitcoin Batteries” comprising large-scale energy storage systems.

Layer1 asserts that its bitcoin batteries will help stabilize Texas’ seasonally volatile energy market by releasing electricity to meet demand.

“By centralizing the consumption and release of multiple megawatts per data center container, Layer1’s Bitcoin Batteries stabilize national and local energy grids that frequently suffer from the demand shacks,” the firm stated.

Bitcoin Batteries To Stabilize Electricity Market

With the installation of the Bitcoin Batteries, Layer1 co-founder and CEO Alexander Liegl claims the mining firm is “the first company in the global Bitcoin mining industry that can curtail large amounts of energy consumption during times of market need and release it to the grid at the push of a button.”

We are the first company to perfectly align the economic incentives of large-scale energy consumption for high-performance computing, such as Bitcoin mining or cloud computing, and the need for grid stabilization by energy market regulators.

The firm plans to deploy energy in response to local spikes in consumer demand, such as during heat waves — where amplified use of air conditioning may threaten blackouts.

Layer1 To Repatriate 30% Of Global Hashpower

In February, Layer1 Technologies outlined an ambitious plan to repatriate 30% of Bitcoin’s total hashrate back to the United States by the end of next year.

Layer1 plans to comprise the industry’s first fully vertically integrated miner — boasting wholly owned electricity creation, proprietary ASIC chips, and mining containers featuring a patent-pending liquid immersion cooling system that reduces electricity expenditure by 75%.

Large Chinese Miners Want To Operate In US

Speaking to Cointelegraph, Adam Traidman, the head of Ripple SBI Asia, attesting to already seeing a “massive” shift from east to west in the mining sector.

Traidman predicted a “huge influx” of “wealthy Chinese miners [moving] into the United States” over the next three years, highlighting that Texas offers electricity prices often significantly lower than the $0.03 to $0.05 per kilowatt-hour that miners pay in China.

However, Traidman noted that President Trump’s tariffs against China are “really hurting things,” adding: “As soon as those are lifted, it’ll be a huge acceleration.”

Updated: 5-23-2020

Bitcoin Miners Will Use Derivatives Like Traditional Commodity Producers

Miners need traditional financial products in order to hedge against the risk of increasing hash rate and difficulty.

Bitcoin (BTC) mining has become a multibillion-dollar industry. Pools, manufacturers and farms contribute to the growth and professionalization of the space. Financial service companies bring institutional-grade products and capital that increases liquidity for the biggest operators.

There’s a fundamental shortage of United States dollars available relative to the overall demand when the sector encounters certain market conditions. The dollar shortage is one of the contributing factors to volatility in the markets.

Just like traditional commodity producers, Bitcoin miners will likely become large users of derivatives — whether it’s with futures to lock in prices or options to hedge against losses. Everybody with a business that has relatively predictable cash flow is going to have an appetite for access to debt in order to reduce the capital requirements necessary to fund their growth.

For Bitcoin miners, it’s no different.

At their core, the Bitcoin lending markets have been supported by the proliferation of crypto derivatives — through BTC/USD swaps and futures — that people are now able to trade with. Derivative trading generates an implied interest rate on BTC, with which miners and other parties can use to borrow BTC against USD, or vice versa.

Finding scalable sources of low-cost capital and educating more institutional players about mining will lead to increased funding opportunities. Expanding access to capital is going to play a role in securing the Bitcoin network. Everything is becoming more sophisticated, and you don’t have to look far to find analogies for what we can expect will happen to this space over time.

The Current State Of Play

The trend of miners opting to borrow fiat to pay expenses without selling their coins has been growing.

Financiers from Genesis Trading and Three Arrows Capital suggested that terms are getting tighter, but demand is increasing.

Su Zhu, The CEO of Three Arrows Capital, Said:

“If firms can get a better understanding of where their yields come from, who and why is borrowing, and how people will pay for it, that will be a good step forward for this industry.”

For firms doing the arbitrage trade, we need a pledge for quality especially when we reflect on the consequences of the most recent price crash, in March 2020.

Recently, many counterparties, particularly in China, were completely wiped out through liquidations. There was a concept of false diversification where the thoughts were: Lending to many different firms doing the same thing is safer than lending to a few larger firms.

Six or seven years ago, on sites like BTCjam, people were simply lending money and hoping that they would get paid back. Fast-forward to today: People are now able to do things like look for different Loan-to-Values, or LTVs, as an arbitrage against the underlying market.

Zhu noted that firms sat back when the market crash occurred, even though it was a very profitable time to lend BTC.

When the market became safe again, they wanted to lend again even though the LTVs became more burdensome and terms got tighter.

Counterparty Risk

Leon Marshall, The Head Of Institutional Sales At Genesis Trading, Said:

“The explosion of derivative markets and basis trading has been a key part of the recent growth in Bitcoin lending. Miners and institutions make up a fair amount of the dollar-borrowing demand at our firm.”

What miners think about the most is interest rates and collateral requirements. One thing that should be more on their radar is to also find trusted and reliable counterparties. Some financial services providers protect themselves by only providing lending to the best clients and highly rated counterparts. This makes it harder to get loans but safer in the long run.

Reputable firms understand the wishes for low rates and low collateral and try to balance that with the need to reduce risk. Every party needs to protect themselves, and the best firms will try to ensure that miners are still alive when prices move lower.

The regulatory requirements and stringent collateral requirements for licensed financial services are a consequence of the fact that those firms deal with the capital of other parties when sending loans to miners and mining pools.

People have started to step back and ask: Okay, what do we actually know about these operators, and what funds do we think they would have available to meet a margin call? It comes down to how the counterparties think about risks and black swan events.

Increased Liquidity

The other factor that will affect liquidity is that banks around the world, and in Europe in particular, have started to become comfortable working with crypto companies. JPMorgan recently announced it will bank Coinbase and Gemini. When banks start accepting Bitcoin as collateral, we will see new sources of capital entering the industry that will have a profound impact on lending rates.

One source of liquidity for the markets, up until now, has been Tether (USDT). The recent growth in the market cap of stablecoins is an indication of the increasing demand for liquidity for crypto assets. The demand for USDT trading is particularly strong in Asia where it makes up 70% of Bitcoin trades. The collapse of Tether would likely lead to a crash in crypto markets.

Yama Zhang, the host of the Crypto Tonight YouTube channel — where several of the leaders from the finance and mining world met in a livestream — reported that there is a big community of USDT users in Asia but that the people who have been in the space for a longer period of time are actually quite concerned about Tether. There is a feeling in the established Bitcoin community that it is a real threat.

Hash Rate Futures

As players get more comfortable with mining futures, more products come onto the market. Earlier this month, FTX announced the launch of its hash rate futures. Its futures are priced by the average difficulty per quarter, meaning that as of May 2020, where the difficulty is roughly 16 trillion, the index is at 16.

Hash rate futures should allow miners to hedge their exposure to difficulty adjustments, letting them reduce their risk while maintaining operations.

Sam Bankman-Fried, The CEO of FTX, Said:

“You could potentially buy hash rate futures to protect against difficulty changes and then sell BTC futures to hedge against market moves.”

Professionalization For Miners

The current trend is for mining operations to scale up and become more professional. For mining pool operators without a deep financial background, it’s unclear for them how to assess the risk of certain financial products, or to even know who would be willing to take the other side of these trades. If the finance industry continues to work with trusted leaders from the mining industry, we will see liquidity increase and risks minimized.

Updated: 6-1-2020

Miners Have Been Selling More Bitcoin Than They Generate, Recent Data Suggests

Last week, Bitcoin miners reportedly sold 11 per cent more coins than they generated over the same period.

Last week, Bitcoin (BTC) miners sold 11 per cent more coins than they generated over the same period, June 1 data from on-chain analysis portal ByteTree suggests.

According to the portal’s metric that tracks Bitcoin wallet addresses associated with miners, around 5,800 BTC was generated over the past seven days, compared to over 6,500 ‘first spend’ transactions.

The ‘first spend’ that is used for the calculation is “the first time that a Bitcoin leaves the wallet it was generated in,” a ByteTree spokesperson explained to Cointelegraph, elaborating on how their metric works in greater detail:

“The miner wallet can be owned by an individual, a company or a mining pool. When the coins get generated by the miners and appear in the miner wallet, they are counted as ‘generation’. Those coins can then sit in their respective miner wallets for days, months, years or forever. It is up to the controller of that miner wallet to decide when they want to move the coins. If these coins are generated by a mining pool, the coins will either be distributed to the pool subscribers (ie. paid in btc) or sent to an exchange at some point in order to cover the fiat costs of operation.”

It Might Be Premature To Call ‘Capitulation’ Even Among Currently Inefficient Miners

Crypto Twitter commentator Conner Brown has used this data to argue that inefficient miners are capitulating, but some experts warn that the term ‘capitulation’ might entail different meanings.

Thomas Heller, global business director at F2Pool, told Cointelegraph that even when it becomes unprofitable to mine with certain equipment due to the increased difficulty, the owners normally sell their machines to places where electricity is cheaper instead of quitting the game.

“As these older machines are no longer profitable to mine at the electricity price in China, Canada, USA, or Europe, they eventually end up in other locations, such as Kazakhstan, Russia, the Middle East and South America,” Heller said, concluding:

“So far in 2020, there have been very few cases of mining farms going out of business”.

Post-Halving Realities

As previously reported by Cointelegraph, the Bitcoin halving has affected the network in numerous ways, as the hash rate, block time, fees, and miner revenue have changed considerably as a result of the event.

In order to mitigate the increased difficulty and provide pre-halving levels of mining efficiency, a new generation of mining hardware is being released by industry leaders like Bitmain and MicroBT. Earlier today, Bitmain unveiled its new Antminer T19 Bitcoin Mining ASIC, which will reportedly start getting shipped out in late June.

Updated: 6-1-2020

Bitmain Debuts New T19 Bitcoin Miner After S17’s Troubled Launch

World-leading mining hardware producer Bitmain launched its new Antminer T19 Bitcoin Mining application-specific integrated circuit (ASIC).

According to a June 1 announcement, Bitmain’s new Antminer T19 features a SHA256 hash rate of 84 terahash/second with a 3% error margin and a power efficiency of 37.5 joules/terahash with a 5% error margin.

The new ASIC model will be sold on the producer’s official website starting today and shipments will start between June 21 and 30.

The chips used in the new device are the same as those featured in the Antminer S19 and S19 Pro, but it also uses the new APW12 power supply and an upgraded firmware. Those changes reportedly allow for faster start-up speeds for an optimized mining experience.

Riccardo Mori, the manager of a small scale mining operation in Venezuela, told Cointelegraph that the T19 is a major improvement over the T17 and its introduction will probably increase Bitcoin’s hashrate. He also believes the introduction the new hardware will help Bitcoin’s network gain hashrate once again:

“With the introduction of the T19 we can expect the network hashrate to substantially rise and consequently the mining difficulty to rise as well. This will lower the profitability and extend the expected ROI time once again.”

Bitmain’s Production Pain Points Recently Manifested

The T19 announcement follows recent community reports that Bitmain’s recently-launched Antminer S17+ mining ASICs were defective. Co-founder of United States-based cryptocurrency consulting and mining firm Wattum Arseniy Grusha said:

“I have never seen such defective production before.”

Shortly after the early-May critiques, Bitmain confirmed that many ASIC units of the series had major problems. A spokesperson told Cointelegraph that the company was already in talks with customers who encountered the issues.

Updated: 6-1-2020

Antonopoulos: Drop In Oil Prices Give US Miners A Competitive Edge

Crypto miners based in the United States will greatly benefit from the falling electricity prices worldwide, says Andreas Antonopoulos.

Bitcoin educator Andreas Antonopoulos sees the recent downturn in oil prices as a net positive for crypto miners worldwide, particularly those at the Bitmain mining facility in Texas.

In a video he posted to his YouTube channel on May 27 titled “Down the Rabbit Hole”, Antonopoulos said the falling oil prices will benefit crypto miners by providing cheaper electricity worldwide, but “not equally worldwide.”

Miners based in the United States — which gets 36% of its energy from petroleum — and Texas in particular will reap the rewards of these cheaper costs.

One of the biggest new mining operations opened in the United States in the state of Texas and I can’t imagine that that is a coincidence… it probably had a lot to do with the fact that the U.S. had 12,000 barrels per day. It is the largest oil producer in the world because of fracking. Therefore, there may be really good opportunities for cheap power, which would suddenly make U.S.-based miners much, much more competitive and profitable.

Chinese Miners Also Benefit

China remains a major player in the cryptocurrency mining industry. Cointelegraph has reported Chinese Bitcoin miners were responsible for as much as 66% of the global hash rate in 2019.

Antonopoulos acknowledged that most Chinese crypto mining is completed with rigs primarily powered by coal plants — though some companies are pushing for renewable power.

However, he said that falling oil prices would still result in financial benefits for Chinese miners. According to the Bitcoin educator, energy producers not reliant on petroleum might attempt to stay competitive by operating at a loss, resulting in cheaper electricity for miners while the price of oil is down.

Because energy and electricity is a fungible commodity, if you are connected to a coal-fired power plant and somewhere else, a gas-fired or oil-fired power plant has half the cost of energy because its oil is much cheaper, it’s going to cost less to get electricity from your coal plant…

The real competition between buyers, said Antonopoulos, is no longer determined by having the most modern mining rigs, which he says are generally fine to use for 18-24 months. Rather, it is based on “the unit cost of electricity, which is dominated in some places by the cost of oil.”

Updated: 6-3-2020

US Firm Announces Installation of 700 Mining ASICs With More On The Way

United States firm, Marathon Patent Group, announced that it installed 700 units of Bitcoin (BTC) mining application-specific integrated circuit, or ASIC, units.

According to a June 3 announcement, Marathon Patent Group installed 700 Whatsminer M30S+ ASICs produced by MicroBT. The company is also reportedly waiting for a delivery of 1,160 AntminerS19 Pro units produced by leading mining ASIC producer, BitMain.

In late March, Bitmain announced that it sold the first batch of Antminer S19s and S19 Pros within 24 hours after starting to accept orders. On June 1, the firm also announced the launch of its newest Antminer T19 features a SHA256 hash rate of 84 TH/second.

A Company Rich In Hashrate

The Antminer S19 Pro boasts a hash rate of 110 TH/s and an energy efficiency of 29.5±% 5 J/TH. That means Marathon Patent Group is waiting to add 127.600 PH/s to the hashrate under its control. Summed with the 70,000 TH/s coming from its 700 Whatsminer M30S+ ASICS (100 TH/s each), this will result in the company having a total hashrate of 197.600 PH/s.

The announcement comes shortly after Ripple SBI Asia CEO Adam Traidman predicted that the mining industry will continue to see hashrate migrate from east to west. He also stated that he is already witnessing the transition begin.

Updated: 6-5-2020

Antminer T19 May Not Affect Bitcoin Hash Rate But Keeps Bitmain Ahead

The Antminer T19 by Bitmain may not have a big impact on the Bitcoin network, and it comes out amid the firm’s internal and post-halving uncertainty.

Earlier this week, Chinese mining-hardware juggernaut Bitmain unveiled its new product, an application-specific integrated circuit called Antminer T19. The Bitcoin (BTC) mining unit is the latest to join the new generation of ASICs — state-of-the-art devices designed to mitigate increased mining difficulty by maximizing the terahashes-per-second output.

The Antminer T19 announcement comes amid the post-halving uncertainty and follows the company’s recent problems with its S17 units. So, can this new machine help Bitmain to reinforce its somewhat hobbled position in the mining sector?

T19: The Cheaper S19

According to the official announcement, the Antminer T19 features a mining speed of 84 TH/s and a power efficiency of 37.5 joules per TH. The chips used in the new device are the same as those equipped in the Antminer S19 and S19 Pro, though it uses the new APW12 version of the power supply system that allows the device to start up faster.

Bitmain usually markets its Antminer T devices as the most cost-effective ones, while the S-series models are presented as the top of the line in terms of productivity for their respective generation, Johnson Xu — the head of research and analytics at Tokensight — explained to Cointelegraph. According to data from F2Pool, one of the largest Bitcoin mining pools, Antminer T19s can generate $3.97 of profit each day, while Antminer S19s and Antminer S19 Pros can earn $4.86 and $6.24, respectively, based on an average electricity cost of $0.05 per kilowatt-hour.

Antminer T19s, which consume 3,150 watts, are being sold for $1,749 per unit. Antminer S19 machines, on the other hand, cost $1,785 and consume 3,250 watts.

Antminer S19 Pro devices, the most efficient of three, are considerably more expensive and go for $2,407. The reason Bitmain is producing another model for the 19 series is due to what is known as “binning” chips, Marc Fresa — the founder of mining firmware company Asic.to — explained to Cointelegraph:

“When chips are designed they are meant to achieve specific performance levels. Chips that fail to hit their target numbers, such as not achieving the power standards or their thermal output, are often ‘Binned.’ Instead of throwing these chips in the garbage bin, these chips are resold into another unit with a lower performance level. In the case of Bitmain S19 chips that don’t make the cutoff are then sold in the T19 for cheaper since they do not perform as well as the counterpart.”

The rollout of a new model “has nothing to do with the fact that machines are not selling well,” Fresa went on to argue, citing the post-halving uncertainty: “The biggest reason machines probably are not selling as well as manufacturers would like is because we are on a bit of a tipping point; The halving just happened, the price can go anyway and the difficulty is continuing to drop.” Product diversification is a common strategy for mining hardware producers, given that customers tend to aim for different specifications, Kristy-Leigh Minehan, a consultant and the former chief technology officer of Genesis Mining, told Cointelegraph:

“ASICs don’t really allow for one model as consumers expect a certain performance level from a machine, and unfortunately silicon is not a perfect process — many times you’ll get a batch that performs better or worse than projected due to the nature of the materials. Thus, you end up with 5–10 different model numbers.”

It is not yet clear how efficient the 19-series devices are because they have not shipped at scale, as Leo Zhang, the founder of Anicca Research, summed up in a conversation with Cointelegraph. The first batch of S19 units reportedly shipped out around May 12, while the T19 shipments will start between June 21 and June 30. It is also worth noting that, at this time, Bitmain only sells up to two T19 miners per user “to prevent hoarding.”

Hardware Problems And Competitors

The latest generation of Bitmain ASICs follows the release of the S17 units, which have received mostly mixed-to-negative reviews in the community. In early May, Arseniy Grusha, the co-founder of crypto consulting and mining firm Wattum, created a Telegram group for consumers unsatisfied with the S17 units they purchased from Bitmain. As Grusha explained to Cointelegraph at the time, out of the 420 Antminer S17+ devices his company bought, roughly 30%, or around 130 machines, turned out to be bad units.

Similarly, Samson Mow, the chief strategy officer of blockchain infrastructure firm Blockstream, tweeted earlier in April that Bitmain customers have a 20%–30% failure rate with Antminer S17 and T17 units. “The Antminer 17 series is generally considered not great,” added Zhang. He additionally noted that Chinese hardware company and competitor Micro BT has been stepping on Bitmain’s toes lately with the release of its highly productive M30 series, which prompted Bitmain to step up its efforts:

“Whatsminer gained significant market share in the past two years. According to their COO, in 2019 MicroBT sold ~35% of the network hashrate. Needless to say Bitmain is under a lot of pressure both from competitors and internal politics. They have been working on the 19 series for a while. The specs and price look very attractive.”

Minehan confirmed that MicroBT has been gaining traction on the market, but refrained from saying that Bitmain is losing market share as a result: “I think MicroBT is offering option and bringing in new participants, and giving farms a choice. Most farms will have both Bitmain and MicroBT side by side, rather than exclusively host one manufacturer.”

“I would say that MicroBT has taken up the existing market share that Canaan has left,” she added, referring to another China-based mining player that recently reported a net loss of $5.6 million in the first quarter of 2020 and cut the price of its mining hardware by up to 50%.

Indeed, some large-scale operations seem to be diversifying their equipment with MicroBT units. Earlier this week, United States mining firm Marathon Patent Group announced that it had installed 700 Whatsminer M30S+ ASICs produced by MicroBT. However, it is also reportedly waiting for a delivery of 1,160 Antminer S19 Pro units produced by Bitmain, meaning that it also remains loyal to the current market leader.

Will The Hash Rate Be Affected?

Bitcoin’s hash rate plummeted 30% soon after the halving occurred as much of the older generation equipment became unprofitable due to the increased mining difficulty. That spurred miners to reshuffle, upgrading their current rigs and selling older machines to places where electricity is cheaper — meaning that some of them had to temporarily unplug.

The situation has stabilized since, with the hash rate fluctuating around 100 TH/s for the past few days. Some experts attribute that to the start of the wet season in Sichuan, a southwest Chinese province where miners take advantage of low hydroelectricity prices between May and October.

The arrival of the new generation of ASICs is expected to drive the hash rate even higher, at least once upgraded units become widely available. So, will the newly revealed T19 model make any impact on the state of the network?

Experts agree that it won’t affect the hash rate to a major degree, as it’s a lower output model compared with the S19 series and MicroBT’s M30 series. Minehan said she doesn’t expect the T19 model “to have a huge impact that’s an immediate cause of concern,” as “most likely this is a run of <3500 units of a particular bin quality.” Similarly, Mark D’Aria, the CEO of crypto consulting firm Bitpro, told Cointelegraph:

“There isn’t a strong reason to expect the new model to significantly affect the hashrate. It might be a slightly more compelling option to a miner with extraordinarily inexpensive electricity, but otherwise they likely would have just purchased an S19 instead.”

Bitmain Continues To Hold Leadership Despite Internal Struggle

At the end of the day, manufacturers are always in an arms race, and mining machines are simply commodity products, Zhang argued in a conversation with Cointelegraph:

“Besides price, performance, and failure rate, there are not many factors that can help a manufacturer differentiate from the others. The relentless competition led to where we are today.”

According to Zhang, as the iteration rate naturally slows down in the future, there will be more facilities using “creative thermal design such as immersion cooling,” hoping to maximize the mining efficiency beyond just using most powerful machines.

As for now, Bitmain remains the leader of the mining race, despite having to deal with the largely defunct 17 series and an intensifying power struggle between its two co-founders, Jihan Wu and Micree Zhan, which recently resulted in reports of a street brawl.

“Due to its recent internal issues, Bitmain is facing challenges to keep its strong position in the future thus they started to look at other things to expand its industry influences,” Xu told Cointelegraph. He added that Bitmain “will still dominate the industry position in the near future due to its network effect,” although its current problems might allow competitors such as MicroBT to catch up.

Earlier this week, the power struggle inside Bitmain intensified even further as Micree Zhan, an ousted executive of the mining titan, reportedly led a group of private guards to overtake the company’s office in Beijing.

Meanwhile, Bitmain continues to expand its operations. Last week, the mining company revealed it was extending its “Ant Training Academy” certification program to North America, with the first courses set to launch in the fall. As such, Bitmain seems to be doubling down on the U.S.-based mining sector, which has been growing recently. The Beijing-based company already operates what it classifies as “the world’s largest” mining facility in Rockdale, Texas, which has a planned capacity of 50 megawatts that can later be expanded to 300 megawatts.

Updated: 6-6-2020

‘Bullish’ — Struggling Miners Done Selling Their Bitcoin, Says Analyst

Bitcoin’s Miner Outflow Multiple shows that buoyant miners are keeping their coins and weaker players have none left to sell, argues Tuur Demeester.

Bitcoin (BTC) miners are setting up a bullish trend despite large sell-offs around the halving, a new data metric suggests.

According to Glassnode’s Miner Outflow Multiple (MOM), outflows from mining pools compared to their one-year moving average are nearing all-time lows.

Demeester “Bullish” On BTC Miner Data

MOM calculates coins leaving mining pools and compares them to the yearly moving average as a ratio.

As of June 3, that ratio was 0.534 — less than half its value one day before the halving on May 10.

By comparison, December 2018 saw mass upheaval due to BTC/USD hitting $3,100. This produced a ratio of around 0.28.

Reacting to the latest reading, Adamant Capital founder Tuur Demeester argued that Bitcoin investors have every reason to be optimistic.

He Tweeted On Friday:

“Healthy bitcoin miners are hodling, and struggling miners have little BTC left to sell. Bullish.”

Bitcoin Channels 2018 Bear Market Bottom

As Cointelegraph reported this week, miner outflows have markedly decreased in the past two weeks. After the halving, there was a brief period in which sales totaled more than miners’ incomes.

Bitcoin’s mining difficulty, which automatically regulates the incentive to participate in the Bitcoin network, is currently on course to repeat another trait from December 2018 — three back-to-back downward adjustments in a row.

Such a phenomenon has only happened twice before, the other occasion being a record eight consecutive drops in 2011.

Updated: 6-16-2020

Bitcoin Mining Difficulty Makes Biggest Jump In 29 Months

Bitcoin has just posted its biggest mining difficulty increase in nearly 2.5 years.

At around 17:00 UTC on Tuesday, the network adjusted its difficulty level – a measure of how hard it is for miners to compete for block rewards on the blockchain – to 15.78 trillion.

The 14.95% rise is the biggest difficulty jump since January 2018, which saw a larger spike on the back of the 2017 crypto market bull run, data compiled by BTC.com shows.

As a result, miners contributing hashing power to the network are now facing the fourth-most difficult two-week mining period in Bitcoin’s history.

The latest increase comes after two consecutive declines in difficulty following the network’s quadrennial halving event on May 11, 2020, which reduced block rewards from 12.5 bitcoin per block to the current 6.25 bitcoin.

The reduction in block rewards initially forced some miners with inefficient hardware and/or more costly electricity resources to halt operations. That led to a decline in Bitcoin’s total hashrate and difficulty until earlier this month.

The difficulty drops on May 20 and June 4, and the sudden reduction in competition, meant that those miners able to continue operating could receive a bigger slice of the pie.

However, the lower difficulty also meant that some who had shut down older mining equipment immediately after the halving could once more turn a profit in the past two weeks. Meanwhile, major miner manufacturers in China have been delivering new, top-of-the-line equipment since May.

These factors have pushed up the average 14-day hash rate on Bitcoin from 98 million terahashes per second (TH/s) earlier this month to now around 113 EH/s.

Out With The Old?

All that said, the fact that Bitcoin’s mining difficulty has quickly bounced back to the pre-halving levels may bring pain for some existing players.

Bitcoin adjusts its mining difficulty every 2,016 blocks, roughly every 14 days, to ensure an average block interval of 10 minutes. When more people choose to plug in during a two-week cycle, the network will see a hash rate increase that will shorten the block interval and will subsequently increase the difficulty for the next cycle.

The current difficulty level of 15.78 trillion follows closely behind the highest three figures ever of 16.55, 16.1 and 15.95 trillion, respectively – all recorded in the two months prior the halving. In other words, miners are facing competitiveness close to that seen prior to the halving, but the daily block subsidies are now down from 1,800 bitcoin to 900.

As a result, each TH/s of computing power is now generating around 0.000008 bitcoin in 24 hours, worth around $0.08 at bitcoin’s current price.

“With the value of hashrate set to decrease to $0.075 cents per TH/s, not many of the existing, old-gen equipment will turn back on,” said Ethan Vera, co-founder and CFO of the Luxor mining pool. “New hashrate coming onto the market will likely be driven by new-gen and high-efficiency machines.”

Kevin Zhang, director of blockchain strategies at New York-based bitcoin mining-power plant hybrid Greenidge Generation, offered a similar view, saying the firm’s strategy is to stay competitive by procuring and running the latest-generation equipment.

“Despite limited price action, we expect the hash rate to continue rising in the near term as more older generation miners go offline and newer generation ones come online,” he said.

As a comparison, the most recent mining devices, like Bitmain’s AntMiner S19, can deliver computing power that’s nearly 10 times that of an older model like the AntMiner S9, but only consumes two times more power.

An on-going power struggle at Bitmain, the world’s largest bitcoin miner maker, will most likely cause delays to delivery of new mining equipment, said Vera, though he thinks the network’s hashrate could still reach 140 million TH/s by the year’s end.

Updated: 6-18-2020

Experts Say Bitcoin Difficulty Adjustment Might Prompt Miners To Switch Off Again

As the network gets readjusted and Bitcoin mining difficulty increases, older generations of mining machines might be out again.

Some Bitcoin (BTC) miners might become unprofitable again as a result of the latest difficulty adjustment.

Earlier this week, the network mining difficulty adjustment saw a 14.95% spike, its largest increase since January 2018. The regular update, which occurs every 2016 blocks, has been pre-coded into the blockchain to keep mining speed at approximately 10 minutes for a block.

The latest adjustment might thwart an emerging trend in the mining sector: older generation machines coming back online after the halving. In May, the Bitcoin block reward was halved, causing a substantial number of miners to pull the plug on older machines, looking to sell their equipment or relocate to places with cheaper electricity.

As Karim Helmy, a data analyst at Coinmetrics, told Cointelegraph, Antminer S9s — a cheaper and once extremely popular mining device produced by Bitmain — started to come back online as a result of two negative adjustments of 9.29% and 6% that preceded the latest upgrade earlier in June.

“So the S9s actually came back after the last difficulty adjustment, which was a large downward move, not this one. Their coming back online was the source of the increase in hashrate that caused this large upward adjustment.”

Thomas Heller, the global business director at leading Bitcoin mining pool F2Pool, confirmed that older generation units saw a comeback after becoming “borderline profitable again.” However, he added that the increased hash rate was also caused by a new generation of ASICs — such as MicroBt M30s and Bitmain Antminer S19s — being turned on for the first time after finally getting shipped to their owners:

“Prior to the difficulty adjustment, the recent hashrate increase is mostly from old-gen machines turning back on, and some M30, S19 and A11 machines turning on for the first time.”

Now that it has essentially become harder to mine Bitcoin, some units might be switching off or migrating to other coins supporting the SHA256 algorithm again, Heller noted:

“A leading indicator is daily mining revenue per TH/s, and right now 1 TH/s will earn you approximately $0.078 per day for BTC mining. It is likely some miners will switch to mine BCH and BSV, and some will turn off machines to wait it out.”

Helmy agreed that older generation miners are likely to come offline again, but noted that conditions on the ground should be “identical to what they were immediately after the halving” for that to happen:

“There are a lot of other factors at play here, including the Chinese rainy season and the price of Bitcoin.”

From the recent adjustment alone, there “won’t be any huge changes to the mining landscape,” Heller argued, concluding:

“The dance between price, hashrate and difficulty will continue, while miners will continue to optimize and try to reduce their OPEX costs.”

Hash Rate Might Experience A Slight Decrease

As observed by Cointelegraph, the BTC hash rate has been fluctuating above 100 EH/s, while a Blockfolio analyst argued that “more hashrate has joined the network than ANY TIME since the historic 2017/18 market bull run.”

Both Heller and Helmy agreed that the hash rate might decrease slightly as a result of a major spike in difficulty, but that would largely depend on other factors, such as electricity price and Bitcoin’s price.

The Coinmetrics specialist also observed that the intensifying power struggle at Bitmain might result in less state-of-the-art miners getting shipped out, which, in turn, could leave the network without extra hash power.

Updated: 6-22-2020

Chinese Mining Company Ebang To Reportedly List On Nasdaq This Week

Ebang will reportedly get listed on Nasdaq on June 26, hoping to raise $125 million in an initial public offering.

Chinese Bitcoin (BTC) miner manufacturer Ebang will reportedly be listed on Nasdaq Global Market under the ticker EBON later this week, becoming the second crypto mining company to go public in the United States.

According to a report from Chinese crypto news outlet Blockbeats, Ebang will be officially listed on Friday, June 26.

Additionally, Blockstream chief strategy officer Samson Mow tweeted a screenshot of an invitation to a Ebang event held at a hotel in Hangzhou, where the company is headquartered, which also starts on Friday.

Ebang Aims To Raise $125 Million, Extending The Original Goal

Ebang filed for a $100 million initial public offering (IPO) with the United States Securities and Exchange Commission in April this year. The firm decided to enter the U.S. stock market after an unsuccessful attempt to conduct a $1 billion IPO in Hong Kong in 2018.

On June 17, the company submitted its latest filing to the SEC, choosing the Nasdaq as its listing exchange.

The Chinese mining player aims to raise $106 million by putting 19.3 million shares on sale at a price range of $4.50 to $6.50, meaning that it now intends to raise up to $125 million, while the initial proposal was hard capped at $100 million. If the IPO is successful, Ebang’s market value could come close to $800 million.

Notably, Ebang’s sales have been decreasing since 2018. In 2019, Ebang’s annual revenue was $109 million, which constituted a 66% drop in growth from $319 million in 2018.

As per the latest filings, 2020 might not necessarily be the comeback year for Ebang despite the overall better market conditions. The company reported a net loss of $2.5 million for the first quarter of the year, blaming the “significant decrease in certain non-recurring local government’s tax rebates,” although it noted that its sales volume has increased since 2019.

“This is great for the Bitcoin mining industry because as more ASIC manufacturers go public we have more transparency and accountability,” Mow told Cointelegraph, stressing that Ebang is “one of the more reliable manufacturers in this space” in his experience.

Other Bitcoin Mining Companies’ IPOs

In November 2019, Canaan became the first Bitcoin mining juggernaut to be listed on a U.S. stock exchange, raising $90 million by selling 10,000,000 shares for $9 each in its IPO, over 75% less than the figure expected originally. Moreover, its stock has plunged since, as it currently trades below $2.

Another Chinese mining giant, Bitmain, quietly filed a Deutsche Bank-backed application for an IPO with the SEC toward the end of 2019, although no details have surfaced since.

Binance Adds Profit Maximization Service To Its Mining Pool

Binance has a new system for helping miners automatically mine the most profitable coins.

Shortly after the launch of its own cryptocurrency mining pool, Binance is adding specialized features to it to help miners make more money.

Earlier this month, Binance Pool launched a new feature called “Smart Pool.” It lets miners automatically switch hash rates to mine the most profitable of three supported coins based on the SHA- 256 algorithm — either Bitcoin (BTC), Bitcoin Cash (BCH) or Bitcoin SV (BSV).

Lisa He, head of Binance Pool, explained that Smart Pool detects the difficulty in different chains using the same algorithm, and it “helps users transfer their computing power to chains with less difficulty and higher rewards.”

Binance pays out the final settlement to miners in BTC regardless of which crypto they actually mine. Lisa suggested that this new feature can increase earnings for those who use it by 1% on average.

In line with the promise to secure maximum returns for miners, the Smart Pool uses real-time hedging to ensure that revenues generated by the service will not be lower than those generated via its standard option, called FPPS (Full Pay Per Share).

In cases where the revenue is lower than what would have been earned via FPPS, the exchange has pledged to pay back the difference to users.

Smart Pool service can be activated with a single click within the mining pool’s regular interface. Miners don’t have to change user ID or their mining stratum URL.

Mining Pool Competition

Although there were concerns about potential centralization effects following the launch of Binance’s pool, it does not appear to currently be commanding a significant share of the Bitcoin network.

Last week, Binance Pool was, however briefly, producing more BSV blocks than any other pool in the market — despite the fact that the coin itself has been delisted from the exchange itself.

As of press time, Huobi is now the single-largest mining pool on the BSV network, commanding a 21.53% share as against Binance’s 11.11%.

Updated: 6-27-2020

US Blockchain Firm Buys 17K Bitcoin Mining Rigs From Bitmain

Core Scientific signs deal to buy Bitcoin mining machines from mining hardware producer Bitmain, company says, as American mining interest goes up.

American blockchain hosting provider Core Scientific signed a deal to buy next-generation Bitcoin (BTC) mining machines from major Chinese mining hardware producer Bitmain.

Core Scientific will purchase more than 17,000 S19 Antminers from Bitmain on behalf of its clients and for its own use. It will be the largest number of S19 machines purchased by a single blockchain hosting company, according to Core Scientific.

Kevin Turner, president and CEO of Core Scientific and the former COO of Microsoft said, “Core Scientific has received and begun testing the first of Bitmain’s newest ASIC miners, and has seen material success in increasing existing hash rate to achieve a 110 TH/s ± 3%.”

The deal comes as Texas has started attracting a number of mining facilities.

Last October, Bitmain opened “the world’s largest” facility for Bitcoin mining in Rockdale, Texas. In January, it was reported that SBI and GMO, two Japanese blockchain-related companies, penned an agreement with Northern Bitcoin AG subsidiary Whinstone to process cryptocurrency transactions at their facility in Rockdale.

Increased Interest In North America

Speaking to Cointelegraph, Russell Cann, Chief Customer Service Officer of Core Scientific, acknowledged the increased interest in growing hash rate via North American mining operations and explained the reason:

“Our view is that this rise in interest and increase in capital allocation and investment can be attributed to the growing acceptance of crypto and/or digital assets as an investment asset class as well as the favorable investing characteristics of North America; specifically, the stable geopolitical and regulatory environment, suitable climatic conditions and multiple energy sources present.”

According to Cann, historically the regulations around mining in other jurisdictions have been “flip-flopped”, creating uncertainty for mining investors. In contrast, hosting mining facilities in North America is beneficial because of “the stability of the power system as well as the regulatory environment around land ownership.”

Moreover, he said the recent collapse of energy pricing makes the North America region more attractive:

“Importantly, with the collapse of energy pricing, the lower cost power areas in the US and Canada, are creating some unique project opportunities for larger-scale miners, like Core Scientific, to consider.”

Yet, it does not mean investors are abandoning other mining operations in such countries as China. Cann suggested that investors are looking to diversify their investments globally.

Updated: 7-3-2020

Stock In Crypto Mining Firms Riot And Hive Massively Outperforms Bitcoin

While shares in Riot Blockchain and Hive Blockchain eclipse Bitcoin’s YTD gains, other mining firms have not fared so well — with Canaan crashing nearly 70%.

The share price of Bitcoin (BTC) mining firms Riot Blockchain and Hive Blockchain has produced enormous year-to-date gains, with stock in Riot nearly doubling while Hive’s has tripled over 2020 so far.

However, not all mining firms have fared well throughout the COVID-19 pandemic, with Canaan’s stock falling nearly 70% since early January, and both Hut 8 and DMG Blockchain seeing scant YTD gains despite experiencing significant volatility this year.

Mining Firms Outperform Bitcoin

While Bitcoin is up more than 26% from roughly $7,200 to $9,100 since the start of the year, the leading cryptocurrency’s gains have been dramatically overshadowed by a handful of firms mining it.

Hive Blockchain has seen a dramatic performance this year, rallying more than 420% from the start of 2020 until mid-February, from $0.066 to $0.345.

The firm’s shares crashed back to $0.118 over the next month as immediate economic fallout from the coronavirus took effect. However, an expansion that led to Hive doubling its mining capacity saw its stock rebound to test the $0.033 area by mid-May.

The firm’s shares have since fallen back to $0.228.

After starting the year trading for $1.22, Riot Blockchain shares rallied to $1.60 by mid-February before crashing to $0.65 in roughly one month. However, Riot produced a strong recovery, gaining over 375% to trade for $3.10 on June 10.

The firm’s shares have since retraced to $2.29.

Riot’s recovery may have been boosted by announcements in May that its mining revenues had grown 70% in the first quarter year-on-year, its plans to roughly double its hash rate after Bitcoin’s block reward halving, and the dismissal of pump-and-dump complaints against the firm.

Riot also expanded its total hash rate capability after establishing a hosting arrangement for its Antminer S17s with fellow mining firm Coinmint in April after facing disruptions resulting from COVID-19.

Canaan’s Shares Plummet In 2020

However, the gains enjoyed by Riot and Hive are certainly not indicative of all miners, with Canaan suffering huge losses over 2020 so far.

After starting the year at $6.02, Canaan shed over a quarter of its value by mid-Feb — when a sudden spike pushed prices up to $8.04 in a single day. Canaan’s stock then plummeted to $2.81 in mid-March, before embarking on a steady recovery to retest $6 two months later.

Since May 14, Canaan’s price has crashed by more than two-thirds to currently trade for $1.82.

While the YTD performance for Hut 8 and DMG Blockchain are currently sitting at an approximate break-even, both firms have seen extreme volatility during 2020.

Both Riot and DMG produced sudden spikes of over 60% in February followed by crashes of at least 60% by mid-March and a recovery back to trade at early-January levels.

Updated: 7-8-2020

Venezuelan Authorities Seize Over 300 Bitcoin Mining Machines

Venezuelan authorities confiscated 315 Bitcoin mining systems.

The Bolivarian National Guard of Puerto Ordaz, Venezuela, seized 315 Bitcoin (BTC) mining machines manufactured by Bitmain. The owners of the mining rigs were told that they did not possess the necessary permits to own and operate the machines. They also were not authorized to be transporting the machines during the COVID-19 quarantine.

According to current legislation, Venezuelan citizens who are interested in conducting crypto-related mining activities must obtain the appropriate permits from a government office called the National Superintendence of Cryptoactives. Owners who fail to obtain these permits risk being fined, and having their equipment confiscated.

Updated: 7-10-2020

Kazakhstan Sets Eyes on Top-3 Spot For Global Bitcoin Mining

The post-Soviet country’s cheap electricity has been attracting Bitcoin miners, but will it manage to elbow out Russia and the United States?

Kazakhstan is becoming an important destination for Bitcoin (BTC) miners seeking cheap electricity in the post-halving market driven by thinner margins.

According to recent reports, the oil-rich Central Asian country expects the total amount of money invested in local crypto mining operations to double by the end of 2020 and attract $738 million over the next three years.

Unlike other countries in Central Asia, the Kazakh government has de facto legalized crypto mining, which makes the market more attractive for both local and foreign players. So, could this vast semidesert land become the new go-to spot for BTC miners?

From Blanket Crypto Ban To Legalization

The Kazakh government has adopted an overall friendly approach to crypto recently, although there is still little regulatory clarity on the subject. However, positive developments were preceded by regulatory turbulence, and at some point, its central bank went as far as to suggest a blanket ban on cryptocurrencies.

In early 2018, the chairman of the National Bank of Kazakhstan, Daniyar Akishev, declared that his agency was considering outlawing all cryptocurrencies.

Just a few months later, Kazakhstan’s president, Nursultan Nazarbayev, called for global cooperation in crypto regulation but did not mention whether this regulation should encourage the sector’s growth or its containment.

Previously in 2017, Kazakhstan’s government-supported Astana International Finance Center signed a deal with Malta-based firm Exante to develop the Kazakh digital asset market, while the central bank announced it was considering using blockchain to sell short-term debt notes to investors.

Things started to look more concrete and positive for local crypto miners in 2019. In December of last year, local media reported that Kazakhstan’s lawmakers wouldn’t be taxing cryptocurrency mining until the mined assets are exchanged for fiat money, as crypto mining would not be treated as an entrepreneurial activity but rather a “purely technological process.”

A recent bill, which was approved by the Kazakh Senate and signed into law by Nazarbayev earlier in June, essentially legalizes mining, saying that people involved in digital mining are obliged to inform the authorities about their activities. It also stresses that miners are the legal owners of the digital assets they produce.

Didar Bekbauov, founder of crypto mining marketplace Xive — a local company providing hosting services for large-scale international miners — and who previously worked at Hive Mining, told Cointelegraph that the current regulation is not strict, but stressed that the framework hasn’t been finalized yet: “The bill says miners need to report to [the] government about their activities. But nobody still knows how it will be in practice. Other than that no regulations.”

Cheap Electricity Attracts Foreign Players

According to Bekbauov, the main mining players in Kazakhstan are foreign companies from China, Japan and “other Asian countries.” There is also Genesis Mining, an international cloud mining company with farms located across several countries, and Bitfury, another non-Chinese mining powerhouse headquartered in Amsterdam.

“They are miners with experience, some private funds, private investors,” Bekbauov said of the companies mining away in Kazakhstan. The Xive founder added that around 90% of their mining activities are performed on the Bitcoin blockchain, and he said that the arrival of foreign companies doesn’t make it harder for local mom-and-pop mining operations, as Kazakhstan “still has excess electricity generation.”

Therefore, the main attraction for miners is not the regulatory framework, which still remains ambiguous despite some positive developments, but rather the abnormally cheap electricity rates. As of December 2019, the price of electricity in Kazakhstan was $0.041 per kilowatt-hour for households and $0.049 for businesses. For comparison, the average electricity price in the United States is $0.14, although some states such as Texas seem to be offering competitive prices under certain conditions.

The price of electricity has always been one of the main factors when it comes to cryptocurrency mining, but it has become even more important after the Bitcoin halving took place back in May. The halved reward prompted miners to either sell their equipment or relocate to regions with cheaper electricity such as Kazakhstan, Russia, the Middle East and South America.

Along with the abundance of cheap electricity, Kazakhstan’s geographical position also makes it “a fast-growing hotbed for Bitcoin mining action,” according to Thomas Heller, global business director of F2Pool, who also told Cointelegraph:

“Kazakhstan is located in an optimal location for mining. The climate is cool, and is in close proximity to China. It’s becoming a popular location for Chinese miners to move old-gen machines from China to Kazakhstan to take advantage of cheaper electricity prices outside of the Sichuan Hydro Season.”

Bekbauov said that most local mining operations are located in regions with high electricity generation — such as Ekibastuz, Karagandy, Pavlodar and Taraz — while the country has an overall good climate for crypto mining throughout most of the year. Dmitrii Ushakov, chief commercial officer of BitRiver — a major co-location services provider for Bitcoin mining in the Commonwealth of Independent States region — confirmed that the cheap electricity prices in Kazakhstan are luring investors in, telling Cointelegraph: “Miners can currently find very attractive electricity prices for mining in Kazakhstan and some other former Soviet countries. This is the main reason for the current interest in mining in Kazakhstan.”

However, Ushakov added that there are “no natural prerequisites for cheap electricity in the country,” as it is mainly produced by coal-fired power plants.

He elaborated, expanding on some other drawbacks of Kazakhstan-based mining, namely an overall unstable situation in the region and inadequate safety of local mining farms:

“This is risky because the markets and other factors affecting the price of such electricity within a nation can change quickly. Another aspect that should be considered here is the safety of these mining sites, which are often set up in a very short time by using pre-existing infrastructure that is old and unreliable.”

Will Kazakhstan Become A Top-Three Mining Destination?

Last month, Kazakhstan’s minister of digital development, innovation and aerospace industry, Askar Zhumagaliyev, announced that the department is planning to attract 300 billion tenge, or $738 million, worth of investments by 2023 for activities related to cryptocurrency mining.

Kazakhstan’s ambitious mining plans might seem staggering at first, but the country has some statistics to back them up. According to Zhumagaliyev, there are currently 14 cryptocurrency mining farms that have already brought in approximately $201.7 million of investments combined.

Further, the Bitcoin Mining Map designed by the Cambridge Center for Alternative Finance at the Judge Business School of the University of Cambridge shows that the countries in the CIS region combined comprise the fourth largest region for crypto mining globally.

In the second quarter of 2020, mining in Kazakhstan has reportedly made up about 6.17% of the average monthly Bitcoin hash rate, which is only slightly behind Russia (6.9%) and the United States (7.24%), while China remains the undisputed king (over 65%). Alejandro De La Torre, vice president of mining pool Poolin, agreed that under certain conditions, Kazakhstan could become third in the near future:

“With the abundance of cheap electrical prices, mild temperatures and the governments ’hands-off’ approach to mining, I do indeed foresee Kazakhstan becoming a top-3 crypto mining destination.”

Other experts are more skeptical. BitRiver’s Ushakov argued that although low electricity prices are a solid advantage for Kazakhstan in the mining race, the region itself isn’t stable enough to witness significant growth:

“Although low electricity prices make Kazakhstan a hot destination to mine, we believe that China, Russia and the USA will continue to be the top-3 mining destinations in the world because of increasing investments in mining, predictable energy policies and a more stable political as well as economic environment for mining.”

Kristy-Leigh Minehan, a mining consultant and former chief technology officer of Core Scientific, told Cointelegraph that she does not expect Kazakhstan to become a top-three destination anytime soon due to an apparent lack of interest from institutional players: “Bitcoin mining is becoming the destination of institutional investment that seeks an alternate asset base; many are still very shy with regards to Kazakhstan’s politics.”

Updated: 7-10-2020

Switching Bitcoin to 100% ASIC Mining Could Increase Security 2,000X

ASIC miners are the best option for Bitcoin network security well into the future, new research has found.

The wholesale embrace of Application-Specific Integrated Circuits (ASIC) mining for Bitcoin (BTC) could increase the cost of a 51% attack by a factor of up to 2,000.

Rod Garratt University of California Santa Barbara presented the research he co-authored with Maarten van Oordt from the Bank of Canada at the Unitize conference on July 10.

It examined the varying costs of a 51% attack on the Bitcoin network based on the type of equipment used to secure the network. The research suggests by simply switching the network 100% ASIC miners ongoing security can be enhanced greatly.

The main reason is because ASIC miners have little use, and little value, outside of Bitcoin mining and an attacker would not be able to obtain much of a return from the sale of equipment used in an attack. Consequently, in order to perform a profitable attack, they would need to double spend a much higher volume of coins, which is more costly and difficult to do.

The research estimated that for an attack occurring after the next halving to be profitable, it would require between 157,000 – 530,000 Bitcoin if 100% ASIC mining was in place.

What Is A 51% Attack?

A 51% attack is when a malicious participant seeks to manipulate a blockchain network by controlling 51% of the mining power (this is the minimum needed to accept new blocks). The attacker then creates an alternate chain of blocks to the ‘real’ chain, and transitions the rest of the network to accept the new, manipulated chain as the correct one.

The most common use-case for this style of attack is to spend the same coins twice, commonly referred to as a double spend.

Concerns Over Bitcoin’s Security

Some in the Bitcoin community are adverse to ASIC miners, which caused a hard fork in 2017 that resulted in ASIC-resistant Bitcoin Gold being created. Garratt said this was why Bitcoin Gold had a number of successful 51% attacks resulting in the double-spend of $18 million in coins, while Bitcoin is yet to receive its first successful attack. However, it is vastly more expensive to attack Bitcoin, which is also a big factor.

Some Bitcoin network participants are concerned over the long term security of the blockchain network as block rewards are replaced with transaction fees, he explained, which leaves miners relying on transaction fees as their rewards.

The potential danger is that once miners are relying on transaction fees, they will react to large price fluctuations by turning off their miners, making it more cost effective to perform an attack on the network.

Garratt mentions another security benefit from using ASIC machines is that miners are much less likely to switch off their equipment as a result of price fluctuations, increasing the strength of the network against price fluctuations.

Updated: 7-13-2020

Bitcoin Mining Difficulty Hits Record High of 17.3 Trillion

Just two months after May’s Bitcoin halving event, both hash rate and difficulty have shrugged off post halving dips to hit new all-time highs.

Following last week’s record-high Bitcoin hash rate, the latest difficulty adjustment saw a change of +9.89%, bringing the level to a new all-time high of over 17.3 trillion on July 13.

Despite a lack of recent significant Bitcoin (BTC) price action, the fundamentals securing the network are as healthy as they’ve ever been. This is more positive news for investors concerned about a previous drop in hash rate and difficulty after May’s third reward halving event.

Concerns Over Halving Unsubstantiated

Some analysts predicted that the reward halving earlier this year would lead to mass capitulation from unprofitable miners.

There was a significant drop in hash rate immediately after the halving, followed by two reductions in the mining difficulty. But an upwards difficulty adjustment of 14.95% last month almost reversed the previous two falls on its own.

With both hash rate and difficulty now at historic highs, any concerns around the impact of the halving now seem to have been proven unfounded.

Keeping Bitcoin Ticking Along At 1 Block Per 10 Minutes

The mining difficulty gets automatically adjusted every 2016 blocks (or approximately 14 days), in order to ensure that new blocks are produced every 10 minutes on average.

It generally fluctuates with the hash rate (increasing hash power means quicker blocks so difficulty must also be increased), although the overarching trend tends to be upwards.

Higher difficulty can also have an impact on mining profitability, which causes some miners to sell up. When this happens, it can potentially force the hash rate back down again.

Updated: 7-13-2020

Fidelity International Doubles Stake in Bitcoin Mining Firm Hut 8

Updated: 7-24-2020

10,000 Antminers Go ‘Missing’ In Latest Chapter Of Bitmain Power Saga

Former Bitmain staff have been accused of “illegally” moving 10,000 Antiminers from a company-owned mining facility in Mongolia.

In the ongoing power struggle at cryptocurrency mining giant Bitmain, not only have accusations of “illegal power seizures” made headlines, but now the physical theft of mining hardware as well.

A new post on Bitmain-owned Antminer’s WeChat channel alleges that former Bitmain staff have “illegally moved” 10,000 Antiminer Bitcoin (BTC) mining rigs from a company-owned facility in Mongolia.

The machines — among them models from the S17 and T17 series and flagship S9 miners — were reportedly removed in mid-July, causing “serious economic losses to the company and customers.” The incident has been reported to the police and public security authorities.

At stake is not only Bitmain’s own hardware, but also that belonging to clients who choose to have their mining hardware operated and hosted at the manufacturer’s mining farms.

In a post to Bitmain’s Weibo account, co-founder Micree Ketuan Zhan — one half of the duo at loggerheads over power at Bitmain — accused his co-founder Jihan Wu of being responsible for the “illegal transfer” of the machines.

Power, Property And Office Brawls

The backdrop to this week’s moved miner saga is a conflict raging over which of the two co-founders has the position of legal representative at Bitmain.

Since October 2019 — when Wu reportedly ousted Zhan in what the latter referred to as an “illegal power seizure” — the pair have been embroiled in an extremely public battle over control of the firm.

Bitmain’s chief financial officer was arrested in May after allegedly participating in a purported “mob attack” on Zhan, in response to the latter’s controversial attempt to wrest back the role of legal representative at Bitmain’s Chinese subsidiary.

In June, reports on the intensifying struggle alleged that Zhan had hired guards to forcibly seize control of Bitmain’s Beijing office. Zhan has also pursued legal action in his bid to regain control.

At present, Wu retains formal authority over Bitmain’s Hong Kong-based operations, and the firm reaffirmed Zhan’s October ousting again this spring. Zhan continues — by various means — in his attempts to regain control of operations in the mainland.

Updated: 7-27-2020

Ethereum Miners’ Income Soars By 60% In A Month And Outruns Ether’s Price Jump

The daily income earned by Ethereum miners has soared by over 60% in a month, according to data tracked by Ethereum mining pool Sparkpool.

The surge in daily profit from Ethereum mining surge has also outpaced ether‘s (ETH) price jump of 40% over the same period.

The profitability rise comes thanks to soaring transaction fees on the network, as well as relatively slow growth in competition from other miners.

Sparkpool’s data shows Ethereum miners’ daily income was around $1.85 per 100 megahashes second (MH/s) on the network on June 27. Over the past month, and the last two weeks in particular, this has jumped by 60% and reached as high as $3.27 on July 25. The metric has since dropped back to around $3.

During the same period, ether’s price has gone up by nearly 40%, from $229 on June 27 to $327 at time of writing, the highest price point for over a year.

Transaction fees on the network, which form part of a miner’s daily revenue, have reached a two-year high as the hype around decentralized finance (DeFi) brought a spike in network activities.

However, the total computing power competing on the world’s second largest blockchain network by market capitalization has remained steady around 190 petahashes per second, blockchain explorer Etherscan shows.

In fact, data from Bitinfocharts indicates daily mining revenue on Ethereum had remained below $2 per 100 MH/s during the first quarter of the year and dropped to $1 per 100 MH/s following the crypto market crash on March 12. But in the four months since, daily mining revenue has tripled.

Currently, some state-of-art Ethereum mining equipment, such as InnoSilicon’s A10 Pro with a computing power of 485 megahashes per second (MH/s), can generate $12.92 in daily revenue at Ethereum’s current price and mining difficulty.

With an electricity of cost of $0.03 per kilowatt-hour (kWh), one A10 Pro machine is able to bring home a daily net profit of nearly $12, according to mining pool F2Pool’s miner profitability tracker.

Profit at that level exceeds some top-of-the-line Bitcoin miners by almost 100%, although bitcoin’s price has jumped above $10,000 over the weekend for the first time since early June. The sudden increase came after weeks of low price volatility that kept the cryptocurrency stuck between $9,000 and $9,500.

However, Bitcoin’s mining difficulty is still around its all-time-high. As such, even the most efficient Bitcoin miners, like MicroBT’s WhatsMiner M30S++ and Bitmain’s AntMiner S19 Pro, are generating a daily revenue of $9 per unit.

At an electricity cost of $0.03 per kWh, that would provide a daily profit of around $6.50 at bitcoin’s current price and difficulty, data from mining pool PoolIn shows. In general, industrial electricity cost for crypto mining can range between $0.03 to $0.06 per kWh.

Updated: 7-29-2020

Marathon Boosting Bitcoin Mining Game With 1,360 More Rigs Arriving In August

Publicly traded cryptocurrency mining firm Marathon Patent Group is planning to receive 1,360 additional bitcoin mining rigs in August in a rollout that will rocket its Quebec facility’s hashpower up 320% to 184 peta hashes.

* The company said in a press release it expects 700 newly bought M31S+ ASIC Miners from MicroBT and 660 previously ordered Bitmain S-19 Pro Miners to arrive in mid-August.

* Marathon has purchased 3,020 total rigs from the fiercely competitive mining rivals in the past few months. It already has 700 active MicroBT miners, and, in addition to the August arrivals, is waiting on 1,000 more from Bitmain coming in Q4.

* “Based on current bitcoin prices, the company would expect to become cash flow positive” once it installs the August rigs, CEO Merrick Okamoto said in a press statement.

Updated: 7-30-2020

Iranian Authorities Greenlight Power Plants Mining Bitcoin

According to Iranian authorities, power plants can mine cryptocurrencies like Bitcoin, but will not be able to take advantage of subsidies.

Iran has announced that it will now allow industrial-scale power plants in the country to operate as Bitcoin miners —- provided they don’t use subsidized fuel.

In a statement to the Islamic Republic News Agency (IRNA) on July 27, Mostafa Rajabi Mashhadi, a Deputy Managing Director at Tavanir, Iran’s Power Generation, Transmission and Distribution Management Company, said power plants in the country could operate as Bitcoin mines “if they comply with approved tariffs” and have the necessary licenses.

Mashhadi said that any power plant considering such a venture could not use subsidized fuel for crypto mining.

“Now we’re in a situation where the supply of electricity is of great importance to the public,” the energy spokesman said. “We will not allow anyone to misuse tariffs provided for the agricultural and industrial sectors to produce Bitcoin while it’s worth more than $9,000.”

All About Power

Cointelegraph reported in January that Iran’s Ministry of Industries, Mining and Trade had issued 1,000 licenses for crypto mining since the government authorized it as an approved industrial activity in July 2019.

According to the IRNA, a spokesman for the electricity industry said 14 crypto miners in Iran had requested more than 300 megawatt (MW) of power — equivalent to the usage across three provinces in the country.

The tariff scheme for crypto miners in Iran is dependent on market factors such as fuel prices in the Middle East. Mining requires a lot of power, but the country’s electricity is very cheap compared to the rest of the world. Mashhadi estimated in 2019 that the production of a single Bitcoin would use only about $1,400 in state subsidies.

People who expose illegally operating cryptocurrency mining companies in Iran also receive a bounty of up to 100 million Rials, or $2,375.

3 Reasons Not To Panic As Bitcoin Miners To Exchange Flow Spikes 46%

On-chain data shows miners have sold more than they mined in the past week, but this might not necessarily impact BTC price for three reasons.

The latest on-chain data from July 30 suggests miners are preparing to sell Bitcoin (BTC). According to data analytics resource Glassnode, miners’ outflows to exchanges increased significantly in the last 24 hours.

There are three possible reasons the miner to exchange flow might not largely affect Bitcoin’s price. First, the potential sell-off from miners coincides with the rejection of Bitcoin at $11,400.

Second, while a 46.5% increase seems significant, this is only $94,000 at current BTC prices. Given that the Bitcoin exchange market reportedly processes $24 billion per day, it is not a relatively significant amount of BTC. Third, some market commentators say the short-term market structure of BTC alongside strengthening fundamentals paint an optimistic picture.

Bitcoin Already Rejected From $11,400

On July 28, the price of Bitcoin peaked at $11,400 across many exchanges. Since then, BTC dropped to as low as $10,800, marking a 5% drop.

According to data from ByteTree, miners sold around 510 BTC more than what they mined in the last seven days. In one week, miners produced 6,556 BTC and sold 7,060, recording a minor negative net inventory.

Given that the price of Bitcoin already fell by 5% in the past 48 hours, there is a high probability that the market likely priced in the miner sell-off. If that is the case, this extra supply is unlikely to affect BTC/USD in the near-term.

Not A Big Net Spend

Additionally, the 500 BTC net spend is not high relative to the usual net spend of miners in most weeks. Miners likely sold slightly more BTC to cover expenses, but that could mean lower net spend in the upcoming weeks.

Historical data shows miners often sell most of the Bitcoin they mine regularly. For example, a 500 BTC sell order in the exchange market, which equates to $5 million, is not relatively high or uncommon.

Compelling Short-Term Market Structure

Meanwhile, traders see a positive near-term trend for Bitcoin due to its recovery from the recent dip. After BTC declined to $10,800, it rebounded quickly back above $11,000.

Initially, BTC saw a breakdown from the $11,200 to $11,400 resistance range. The recovery to $11,000 and a strong hourly candle could sway the momentum, according to recent technical analysis.

Jonny Moe, A Bitcoin Trader, Noted:

“If you caught shorts on the wedge breakdown, this is the kind of hourly candle that should make you consider covering.”

The market bias around Bitcoin is seemingly swaying bullish. Data from Binance Futures suggests 58% of “top traders” on the platform are holding long positions on BTC.

While the market remains majority long, the price action has cooled down since earlier this week. Funding rates of perpetual futures contracts, across the board, have declined. That suggests the market is less overheated, and traders see a favorable market structure in the short-term.

Moreover, despite the miner to exchange flow uptick, the amount of BTC held on exchanges has dropped to the lowest levels since right before the summer 2019 bull run. Thus, the confluence of a decent-size pullback, a neutral futures market, and a relatively small miner sell-off could sustain Bitcoin’s momentum.

Updated: 8-6-2020

Bitmain Delays Bitcoin Miner Shipments By Three Months As Co-Founders Battle On

The escalating internal power struggle at Bitmain is starting to have a more serious impact on its business and customers.

* The Beijing-based bitcoin miner maker said via the official WeChat account of its AntMiner brand Thursday that customers whose equipment were due in June and July will have to wait until September and October.

* The delay is caused by “external interference over the company’s management,” the official account said.

* It’s important to note that bitcoin miners are typically sold via pre-orders, which must be made two to three months in advance.

* That means customers who ordered the June and July batches could have placed their orders as early as March and April.

* The delay comes amid the escalating fight for control of Bitmain between its two co-founders, Wu Jihan and Micree Zhan Ketuan, which has essentially “hard-forked” the firm’s bitcoin miner production.

* Currently, the official WeChat account of the AntMiner brand is controlled by Wu’s faction within the firm.

* Zhan was ousted by Wu in October, but returned to power in June and has controlled Bitmain’s Shenzhen-based factory since then.

* The situation threatens to become a kind of stalemate: Zhan’s side will likely not have an easier time with shipments either, as Wu also controls the miner chip supply chain via Beijing Bitmain’s parent entity in Hong Kong.

* Bitmain is now offering two mutually exclusive options for customers whose orders are delayed.

* The first option is to send Bitmain a written request to speed up the delivery. If they still don’t receive their machines 60 days after the notice, they can request a refund.

* The second is to wait patiently until the actual delivery, with Bitmain saying it will compensate customers with their theoretical mining revenue between now and delivery in the form of cash coupons to be used in future purchases.

Updated: 8-10-2020

How Miners Can Hedge Their Inventory To Increase Return On Investment

Strategies from the world of traditional finance could offer promise for miners who want to lower the risk associated with holding inventory.

To a newcomer, crypto mining may sound deceptively easy — essentially, a way to switch on a machine, walk away and watch the lucrative crypto rewards roll in. But the reality is a little more complicated.

The oldest and most powerful crypto out there, Bitcoin (BTC), uses a proof-of-work algorithm to ensure it’s blockchain’s security, and plenty of other influential cryptos have followed suit.

Miners in PoW protocols receive a crypto reward whenever they’re the first to submit a correct answer to the cryptographic math problem that seals each new block of data on the blockchain. The more miners there are operating on one blockchain network, the stiffer the competition becomes to solve this problem and win a crypto reward.

To improve their chances, miners generally use hardware rigs that demand more and more hardware components and electricity to become more powerful.

Crypto miners need to make significant rig investments and pay high monthly electricity bills if they want any chance of earning a mining reward more than once or twice in a blue moon.

Regions with cheaper electricity tend to attract more miners, but even among these operations, profit margins tend to be tight.

As a result, miners generally sell off their mined crypto as soon as they can. Selling their earnings for fiat not only helps them keep their rigs turned on but also lowers the risk of wiping out their profits or even having their capital sunk into mining equipment if market prices drop.

That cautious business model also makes it harder for miners to earn a high return on investment, which is enjoyed by more institutional crypto traders — especially when they have access to sophisticated strategies borrowed from the world of derivatives and traditional finance.

But as crypto markets continue to mature, more and more asset classes become available to miners and can help them earn a higher ROI on their mining investment — without risking huge losses in a volatile crypto market.

Interest-bearing Accounts

High-interest accounts are an ideal low-risk solution for any crypto owners who feel bullish about their assets and prefer to hold. Miners can deposit their inventory with account providers, who use those held assets to provide loans to vetted crypto users looking for extra capital.

The borrowers repay their loans to the account providers over time with interest, and the account provider shares that interest with the account holder. These accounts tend to generate more interest the longer account owners agree to lock up their funds. Typical accounts with popular services such as Compound, BlockFi, Celsius and DeFiner offer 5%–10% annualized returns.

Futures Contracts

Crypto experiences market volatility like any other commodity — and futures contracts can help miners turn that volatility into a revenue generator. Futures contracts are securitized agreements to sell and buy an asset at a price and time agreed upon when the future is created.

Crypto miners can lock up some of their crypto inventory in a futures contract and sell that contract for more than the crypto’s current marketplace value.

During periods of a market condition called contango, futures contracts are priced higher than their current “spot price” — the market price traders pay to immediately acquire the asset.

The difference between futures prices and spot prices is also referred to as the premium to spot pricing. Instead of selling their newly mined crypto for the current spot prices, miners can sell a dated futures contract to lock in that premium.

While exploring futures contracts, miners should be aware that they’re often cash-settled, meaning upon expiration, the futures seller will transfer the cash equivalent of the buyer’s promised position in the underlying asset’s market rather than the asset itself.

Cash settlement is of limited use to crypto miners who actually own and eventually want to transfer their tokens, so miners should focus on physically settled futures contracts to ensure that their inventory actually changes owners.

Options Contracts

Someone selling an option isn’t selling an asset itself — rather, they’re selling the right, but not the obligation, to buy that asset at a set price (called a strike price) at a later, agreed-upon time. Miners can sell options on their existing inventory and future inventory.

After selling options on future inventory, they can use revenue from the sale to increase their mining operation’s output per day, setting them on the right track to meet future obligations created by the options. Traders can also sell options that are “in the money,” which means that their eventual strike price is lower than the crypto asset’s current price.

If the market price is still above the strike price when the contract expires, the option holder is likely to exercise it, and the miner sells their inventory at the agreed-upon strike price as indicated in the options contract.

If the market price is below the strike price, then the holder won’t exercise it because they could get the same amount of crypto for cheaper going directly through the market. With the option expired and unused, the crypto miner gets to keep both the original crypto inventory and the premium they made selling the option in the first place.

Contracts are key to implementing a “Collar,” one of the most common hedging strategies for crypto inventory. To use a Collar, miners buy two kinds of options simultaneously. They would buy a put option below the market price of the asset, which is the right to sell the token at a set time and price. However, they would sell a call option above the market price of the asset, which is the right to buy the token at a set time and price.

Sale of the call option generates the revenue needed to cover purchasing the put and only cuts into the trader’s profit if the token’s spot price eventually increases above the price delineated in the call option.

If the token’s market price drops below a certain benchmark, miners can exercise their put option at its expiration and sell off their inventory at the put’s price rather than actual, lower market prices. The Collar thus keeps the miner from experiencing huge losses or huge gains even in a volatile market.

Collar Options Strategy Setup Example

In this example, the miner has asset protection in the event the price drops below $220, however, the profit is limited if the asset price rises past $260 due to the sale of the call option.

The net cost of protection is a profit here due to the difference between the sale and purchase of the call and put, respectively. The maximum profit is limited to $23 and the maximum loss at $17, given the current ETH/USD price of $239.

Over-The-Counter Negotiations

Over-the-counter negotiations go through avenues outside of exchanges and other public venues, happening instead mostly through brokerages and private transactions. Most crypto miners who use OTC services sell forward contracts. Forward contracts, much like futures contracts, consist of agreements to sell an asset at an agreed-upon time and price.

But while futures contracts are standardized to be bought and sold in trading venues, forward contracts tend to be customized to meet the needs of each buyer and seller.

Some customizable aspects include the amount of the asset and the agreed-upon date but can generally include any terms, given all parties involved agree to them.

Miners can sell forward contracts on inventory they don’t even own yet through OTC negotiations and use the sale revenue to expand their mining operation, which makes it more likely they’ll end the contract both meeting its inventory terms and possessing a more powerful mining rig.

Conclusion

The aforementioned strategies are from the world of traditional finance, and they can offer some promise for miners who want to increase their ROI without increasing the risk associated with holding inventory.

In addition to immediate ROI increases and higher inventory retention, these strategies could also make overall market conditions better for market participants as a whole. Without the constant supply pressure of miners trying to offload their mining rewards immediately, crypto prices are likely to go up, making rewards more valuable and mining more profitable.

In practice, sophisticated miners will likely use a combination of these strategies. For example, miners may opt to hold the majority of their inventory in interest-bearing accounts and a smaller portion on a derivatives trading venue where traders buy and sell options and contracts to hedge their overall position.

Derivative platforms typically provide leverage on the collateral posted at the venue, and miners will benefit from the time duration associated with the derivative contracts. Executing this strategy will undoubtedly both increase the return on the investment for the mine operators and improve market pricing as a whole.

Updated: 8-13-2020

Why Chinese Miners Won’t Stage A 51% Attack On Bitcoin

Jameson Lopp explains why attacks on Bitcoin won’t work and that he expects China’s mining dominance won’t last.

China accounts for more than half of the world’s Bitcoin mining capacity but Jameson Lopp, the co-founder and CTO of Casa, has hosed down fears that Chinese miners are a threat to Bitcoin in a blog post on Aug. 9.

Although many people have raised concerns over the concentration of such much hashpower being located in China, Loop pointed out that even in the event of a 51% attack on Bitcoin, attackers are limited in what they can actually do.

He explained that attackers can’t steal people’s Bitcoin arbitrarily, nor change the consensus rules. They can’t reverse valid transactions. The only thing they can do is double spend their own Bitcoin.

The best way for a 51% attacker to seek maximum profit is to cash out via crypto exchanges into “censorship resistant cryptocurrency or stablecoin”. However, this presents big problems in terms of withdrawal limits and Know Your Customer requirements among exchanges. It also doesn’t make much economical sense for attackers to dump a big chunk of Bitcoin at once:

“The value of the Bitcoin you still hold after the attack will likely have decreased substantially, thus a successful large attack could actually result in shooting yourself in the foot. You’d better not slip up while you’re accessing the exchange you target. For example, one hacker returned $25M in stolen funds after leaking their IP address.”

Bitcoiners To The Rescue

Loop thinks it would be nearly impossible for a nation state to get in total control of mining facilities and that Bitcoin stakeholders would take immediate emergency actions against such an act.

Even if the attack shifts from targeting individual mining facilities to an easier attack of mining — 70% of hashpower in China is coordinated via fewer than 10 mining pools — switching mining pools is incredibly easy for miners. It’s also difficult to pull off covertly as there are plenty of independent companies putting out social media alerts against malicious actors.

“It’s hard to imagine a scenario in which a state actor would be able to quickly and covertly seize enough hashpower to perform an ongoing attack that lasts more than a few hours.”

According to Lopp, the reason hashpower has been concentrated in China ever since 2015 is due to the fact most of the mining chips are produced in Asia. Most importantly China also has “an abundance of cheap energy” and has the political and economical stability to facilitate the mining infrastructures.

Loop concluded any large-scale mining attack is going to be “limited in its effectiveness”. As Cointelegraph reported before, in the long run, competition in semiconductor production and cheaper power sources will continue to rise globally and China’s mining dominance will not last.

Updated: 8-13-2020

Mining Firm Hut 8 Reports 28% Drop In Q2 Revenue Following Bitcoin Halving

Canadian bitcoin miner Hut 8 announced its Q2 2020 earnings Thursday, reporting a sharp drop in revenue. However, the rising value of the firm’s bitcoin holdings helped Hut 8 finish the quarter in the black.

The publicly traded company mined 795 bitcoin (BTC) last quarter, a 29% decrease from the 1,116 BTC mined during the prior quarter. As a result, revenue declined 28% to C$9.2 million (US$7 million).

Management mainly attributed this to the bitcoin halving that took place on May 11, writing:

“The network difficulty decreased subsequent to the halving by 15%, but quickly returned back to levels prior to the halving. This posed a difficult challenge to many bitcoin miners as they saw the bitcoin block reward drop by 50% with similar network difficulty rates meaning that revenue dropped by nearly 50% for all bitcoin miners, including Hut 8.”

Despite a C$6.4 million gross loss for Q2, Hut 8 reported C$2.8 million in net income – thanks to a C$9.4 million gain on the re-measurement of its bitcoin holdings. Hut 8 has 2,954 BTC on its balance sheet as of the end of Q2 2020.

The company also noted it had successfully raised C$8.3 million in gross proceeds from its public offering, which closed near the end of the quarter. According to management, the additional capital has already been committed to upgrading its existing mining equipment.

“This upgrade is a big step towards modernizing Hut 8’s equipment and increasing the overall efficiency of its bitcoin mining fleet,” the company said in a statement.

As of press time, Hut 8 shares have declined 2% following the earnings release.

Updated: 8-17-2020

Bitcoin Mining Firm Layer1 Accused of Copyright Infringement

Layer1 — a Bitcoin mining firm backed by PayPal co-founder Peter Thiel — was accused of copyright infringement.

United States-based cloud computing company Lancium LLC has filed a lawsuit against Bitcoin (BTC) mining firm Layer1 for patent infringement in the Western District Court of Texas.

According to a complaint filed on Aug. 14, the power usage model employed by Layer1 for Bitcoin mining violates Lancium LLC’s patent filed in March 2020.

The founder of Lancium LLC, Michael McNamara and Raymond Cline, had reportedly filed the patent after formulating a method to help data centers shut down or start operations depending on the cost of electricity in near real time.

The company claims that its data center power management system allows data centers to be more flexible with their energy consumption and more efficiently handle computing workloads including Bitcoin mining.

Layer1 had purportedly been using the exact same method to operate its Bitcoin mining operations while calling it “its proprietary demand-response software.”

Lancium alleges that Layer1 has violated U.S. patent laws by infringing on multiple parts of Lancium LLC’s patent “by manufacturing, using, offering to sell, selling, and/or importing infringing systems and methods for adjusting power consumption utilized in or by at least Layer1’s Bitcoin mining facilities.”

The firm argued in its statement that Layer1’s alleged transgression had caused “irreplaceable harm” to Lancium LLC. While the value of damages will be determined during trial, the company said the amount “cannot be less than a reasonable royalty” and requested compensation for the same.

Lancium has also requested the court to publish a permanent injunction that could prevent Layer1 or its employees from further violating the company patent.

Layer1 did not immediately respond to Cointelegraph’s request for comment.

Updated: 8-18-2020

Top Bitcoin Mining Pools See 15% Hashrate Drop Amid Continuous Rainstorms In China

Major Chinese bitcoin mining pools are each seeing daily hashrate drops of between 10% and 20% following continuous rainstorms in Sichuan.

China’s southwestern Sichuan province, a mountainous region that is estimated to have over 50% of the Bitcoin network’s total computing power, has been hit by heavy rainstorms since last week, which peaked over the last two days.

The heavy rainstorms have caused electricity outages in parts of the region as hydro-plants stop generating power to help discharge the floods. Some counties are also experiencing telecommunication and internet breakdowns, said Kevin Pan, CEO and co-founder of PoolIn.

As result, impacted bitcoin mining farms in the region are forced to unplug from the network for the time being. It’s not clear when the situation will prove as the rainstorms are still ongoing.

Data from BTC.com shows the world’s top four bitcoin mining pools – PoolIn, F2Pool, BTC.com and Antpool, all based in China – have each seen their hashrates drop between 10% and 20% over the last 24 hours. The computing power connected to these four pools accounts for around 50% of the Bitcoin network’s total.

Pan said in a Weibo post Tuesday China time that in addition to mining farms being forced to unplug due to electricity and internet disruptions, some have also proactively paused operations ahead of time and evacuated their on-site staff for safety precautions.

According to the Xinhua News Agency, the accumulated rain volume in a dozen most-impacted cities in Sichuan between Aug. 10-15 alone has already surpassed the average August monthly volume in any year’s record.

Further, one major highway that leads to Sichuan’s mountain area, where most of the mining farms are located, is shut down due to severe floods and mudslides.

Meanwhile, bitcoin’s last three-day and one-day average hashrate has dropped to around 123 and 110 exahashes per second (EH/s), respectively. These numbers are down over 3% and 10%, respectively, from the seven-day rolling average around 127 EH/s, which is still at an all-time high.

The monsoon season in China every year brings abundant rain and thus excessive hydropower resources especially in the country’s southwestern regions, including Sichuan and Yunan. Such energy excess leads to cheap electricity prices that have been attractive to bitcoin miners.

But over the years, the unpredictable weather also caused floods and mudslides, which resulted in bitcoin mining farms halting operations temporarily or even being completely destroyed.

Updated: 8-24-2020

Marathon Brings New Bitcoin Mining Rigs Online, Sees Itself Becoming Cash-Flow Positive

Nasdaq-listed cryptocurrency mining company Marathon Patent Group received and deployed two shipments of new mining machines, which increased the company’s hashrate by 130 petahash per second to 186 petahash per second.

* According to an announcement Monday, the company received 700 WhatsMiner M31S+ Miners from MicroBT and 600 S19 Pro Antminers from Bitmain.

* 1,000 additional S19 Pro Antminers are expected to arrive between September and December this year leading to an expected additional hashrate increase of 153.4 petahash per second.

* “We believe that the increased hashrate production will mean the company will become cash-flow positive on a go forward basis for the first time since we embarked on this pivot to become a bitcoin mining company,” said CEO Merrick Okamoto.

* Marathon shares, which were already down about 50% from their yearly high set earlier in August, are down 10% from their Monday open, trading around $2.52 at last check.

Updated: 9-3-2020

Nvidia Teases A Massively Improved RTX 3080, But Will It Be Good For Mining?

The performance gains probably won’t be enough to overcome Nvidia’s mining disadvantage.

Nvidia is set to release the next generation of its popular RTX series of graphics cards on Sep. 17. One of these will be the RTX 3080, which comes as the mid-range card among its peers the 3090 and 3070.

However, the performance of the card is set to eclipse the performance of the previous generation’s equivalent, the RTX 2080 Ti. According to Tom’s Hardware, the GPU is promised to be “twice as fast” as the last generation by Nvidia and its raw specifications suggest that the gains could even be higher.

All of this while the price is set to remain the same at $700. The RTX 3090 appears to be a less efficient model in terms of performance to cost ratio, with twice the price but only a 20% performance gain.

But all of these figures apply to gaming, not necessarily mining. AMD has traditionally been dominant in this sector as its cards generally achieve higher hashrates per Watt or unit cost.

The RTX 2080 Ti generally benchmarks lower even compared to its predecessor, the 1080 Ti. Part of this is due to the specific nature of these cards. The RTX series focuses on providing innate ray tracing capabilities, which is very useful for high-end gaming but does nothing for miners.

Philip Salter, head of operations at Genesis Mining, told Cointelegraph what the RTX 3080 could mean for the mining industry:

“What hashrate the 3080 can do remains to be seen. In theory, Ethereum hashrate might be 60%-70% faster, if you look only at memory bandwidth. The advertised 1 TB/s of bandwidth has already been delivered by AMD with the Vega VII, and you can reach 100 MH with that card.”

But he explained that reaching such hashrates requires optimizing the memory timings for Ethereum mining. That can only be done by changing settings in the GPU’s VBIOS, an internal firmware. “Nvidia does not allow you to use custom VBIOS mods however, so you will be stuck with the memory timings that are set by the manufacturer,” Salter added.

Nvidia could release an official VBIOS mod to enhance Ethereum mining, but so far this hasn’t happened.

In addition to the performance issues, the pricing is also likely to be a problem. Nvidia has a “strong position in the gaming market” and the price of its cards generally reflects that, Salter said. The premium for the ray tracing cores also contributes to souring the deal for miners.

“In the end, the 3080 will probably not be able to beat AMDs offering of affordable, tunable GPUs for mining,“ he concluded. However, should the current Ether (ETH) price rally continue, demand for GPUs may become so large that Nvidia cards could suddenly become attractive, similar to how it happened during the 2017 bull market.

Updated: 9-7-2020

‘Exclusive Mining’ Could Have Negative Implications For The Blockchain Industry, Say Experts

A new mining concept is facing criticism in the blockchain sphere.

Dr. Elias Strehle of the Blockchain Research Lab and Lennar Ante of the University of Hamburg recently warned that blockchain nodes engaging in exclusive mining “have no incentive to forward new transactions to their peers.”

They speculated that crypto miners may instead be incentivized to keep transactions confidential “in the hope of being the only one who can earn the associated transaction fees.”

Exclusive mining, which is a type of collusion between a transaction initiator and a single miner or pool, uses private channels to confirm transactions rather than broadcasting them on the public blockchain. It is only after they are recorded in a block that public blockchain that users become aware of such transactions.

The authors alleged that, since transaction costs represent regular income for miners, “significantly increased transaction costs could be used to launder money” by colluding with a miner.

As a result, criminals may see smaller blockchain networks “as more suitable vehicles for money laundering or tax evasion via exclusive mining”, the researchers noted.

Dr. Strehle and Ante identified two other possible motivations for engaging in exclusive mining: reducing transaction cost volatility and hiding unconfirmed transactions from the network to prevent frontrunning.

In June, Cointelegraph reported on a number of mysterious transactions that have stumped the wider community. Some suggest they could be examples of money laundering, or revenge from a disgruntled exchange employee.

Updated: 9-10-2020

DCG’s Foundry To Finance Bitmain Customers In North America

The new partnership targets Bitmain’s end customers.

China’s crypto mining giant Bitmain has entered a new partnership to streamline its operations in North America.

As Bitmain officially announced on Sept. 10, the company has officially partnered with Foundry, a wholly-owned crypto mining subsidiary of major cryptocurrency firm, Digital Currency Group, or DCG. Within the partnership, Foundry will provide financing to Bitmain’s end customers in North America.

According to Bitmain, obtaining financing is more difficult for crypto miners than for firms in other industries. Foundry, in its turn, will help “ship a significant number of machines into North America this year,” according to Su Ke, the global sales and marketing director of Antminer at Bitmain.

The announcement comes shortly after DCG officially introduced Foundry in late August 2020. Formed in 2019, Foundry offers institutional expertise, capital and market intelligence to crypto miners and manufacturers. According to Bitmain, Foundry has emerged as “one of the largest Bitcoin miners in North America” and helped to procure “almost half of the Bitcoin mining” in the region in 2020.

Bitmain has been collaborating with the company “for some time,” a Bitmain representative said. According to the firm, Foundry’s efforts not only “breaks down barriers to entry and growth for mining businesses,” but also “strengthens the overall mining ecosystem.”

Updated: 9-17-2020

This Crypto Mining Operator Was Named Bitmain’s Sole North American Cooperative Repair Center

North America now has its own Bitmain repair center.

Crypto mining operator Core Scientific is set to become the first North American cooperative repair center for major crypto mining hardware manufacturer, Bitmain.

According to an announcement shared with Cointelegraph, the company will offer repair services for Bitmain’s machines. The company says that this will reduce costs associated with shipping hardware to Asia, and curtail the time it takes to fix Bitmain’s proprietary hardware.

Core Scientific will also be able to perform repairs on out-of-warranty machines, with engineers certified by the Bitmain’s Ant Training Academy.

Speaking with Cointelegraph, Taras Kulyk, Core Scientific’s Senior VP of Blockchain Development, highlighted China as the dominant jurisdiction within the digital mining sector. He also noted that the country is currently the global leader in terms of Bitcoin’s (BTC) hashrate.

He acknowledged, however, that global hashrate diversification has increased in recent months as other countries (the U.S. in particular) vie for their place in the digital mining industry:

“This growth in demand has massively increased the strain on the repair services needed to maintain the fleet within the US and Canada. Importantly, being selected as the cooperative repair center for Bitmain will allow our customers, as well as other Bitmain product users, within North America to materially reduce downtime and the costs involved in repairing their bitmain hardware.”

Russell Cann, Core Scientific’s Chief Customer Success Officer, spoke with Cointelegraph on the benefits of a North American repair center:

“At a minimum, the Core Scientific warranty repair center will save customers the international shipping cost of units going to Hong Kong. More importantly, the customer downtime of a unit in-warranty repair will be significantly shortened by having a large US operator handle warranty repair. Current shipping savings is estimated to be as much as US$100/unit and having a repair center within North America should cut the repair time by as much as two weeks.”

Over the past year, the crypto mining industry in the United States has witnessed an uptick in activity, with Bitcoin’s hash rate increasing by 78% between September 2019 and April 2020.

Updated: 9-21-2020

Profit Taking Bitcoin Miners Won’t Stop The Next Bull Run: On-Chain Analyst

Bitcoin miners sold substantial amounts of BTC throughout the past two months, but on-chain analysts believe it won’t stop the next bull run.

Historical data shows that some miners began to sell Bitcoin (BTC) at the end of July, leading to increased selling pressure in the cryptocurrency market.

Eventually, the dominant cryptocurrency fell steeply from mid-August, recording a 13% fall and since then BTC has struggled to retake the $12K mark.

According to CryptoQuant CEO Ki Young Ju, continued selling by miners might not be enough to prevent a bull run. On-chain data analysis firms closely observe the movements of miners and whales because they hold significant amounts of BTC.

Willy Woo, an on-chain analyst, explained that miners represent one of the two external sources of selling pressure for Bitcoin. He previously said:

“There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.”

When miners start selling their Bitcoin holdings, typically to cover expenses, it could trigger a correction in the cryptocurrency market.

For instance, From Aug. 17 to Sept. 5, the price of Bitcoin dropped from $12,486 to $9,813. During that time, several whales sold Bitcoin right at $12,000 and the same behaviour was observed amongst miners.

The selling pressure coming from miners and whales noticeably has been attributed to the current crypto market slump but in the longer term, Ki explained it is not enough to stop a prolonged bull run.

If miners abruptly sell a significant amount of BTC, it could cause a severe correction as a small price movement could trigger liquidations from heavily-leveraged traders. Hence, even a relatively small sell-off by miners could theoretically cause massive price swings.

Ki says the intensity of the sell-off from miners was not strong enough to halt future bull runs. He said:

“Miner Update: Some miners began selling at the end of July, but I think in the long-run, miners didn’t sell BTC large enough to stop the next bull-run.”

According to ByteTree, the net inventory of Bitcoin miners declined by 125 BTC per week in the last 12 weeks. The data indicates that miners sold approximately $1.362 million BTC per week week atop the BTC that they mined and sold.

As Ki emphasized, the data shows that miners sold substantial amounts of BTC, but not in amounts that were irregular to normal behaviour.

Post-Halving Bull Cycle Remains A Possibility

Bitcoin is still hovering above the critical $10,000 technical support level despite multiple attempts by bears to drop the price below the key level.

The resilience of Bitcoin amidst a heightened level of selling pressure suggests a cautiously bullish trend in the long term.

Several on-chain metrics also indicate that now is a healthy accumulation phase for Bitcoin. Rafael Schultze-Kraft, the CTO at Glassnode, said:

“Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) with a #bullish signal here imo. That bounce of the 0-line was important, is very characteristic for previous bull markets, and historically a good buying opportunity.”

Updated: 9-23-2020

Crypto Mining Activities Are Now Regulated By The Venezuelan Gov

But there is always a catch when it comes to Maduro’s government.

Venezuela’s National Superintendency of Crypto Assets and Related Activities, or SUNACRIP, has issued the first decree to officially regulate all crypto mining activities. In order to qualify, miners will need to meet specific requirements.

An official announcement was first published in the Gaceta Oficial and signed by the head of the SUNACRIP, Joselit Ramirez. It stated that residents in Venezuela who are interested in mining Bitcoin (BTC) and other cryptocurrencies must request a license and join the so-called “national pool.”

The legal framework asks people to disclose what kind of activities they would like to do in crypto mining, such as trading, importing, or using mining equipment. The government will also issue a special license for those who want to manufacture ASIC mining hardware or build mining farms.

About The “National Pool,” The SUNACRIP Defined It As Follows:

“A group of pooled miners agreeing to share block earnings in proportion to the contributed mining hash power. They share a similar operation to cooperatives, and it would be in charge of the National Superintendency of Crypto Assets and Related Activities (SUNACRIP).”

The decree also states that the SUNACRIP “may” offer benefits, incentives, and even “tax exemptions to encourage miners to join the national pool.” However, if Venezuelan crypto miners don’t join the national pool, they’ll be subject to the Comprehensive Crypto Assets System’s sanctions.

The new regulation doesn’t clarify if the government has the legal authority to freeze crypto mined within the national pool, or what type of sanctions will be imposed on people who mine outside such a public pool.

Crypto miners should apply for the licenses through the Comprehensive Registry of Services in Cryptoassets, or RISEC, a system run by the SUNACRIP.

Although Venezuela is known for having a highly active crypto mining population, the government has not always favored such activities.

Venezuelan Minister of Habitat and Housing, Ildemaro Villarroel, recently announced that crypto mining operations would not be allowed in any state-owned housing or neighborhoods that are part of the “Gran Misión Vivienda” project (Great Home Mission).

Updated: 9-25-2020

Preliminary Tests Suggest Nvidia RTX 3000 Series May Take AMD’s Mining Crown

The RTX 3080 is apparently twice as fast as the previous generation.

The newly released generation of Nvidia graphics cards, the RTX 3000 series, is generating some buzz among miners as it is expected to be a vast improvement over the previous generations.

While the cards were initially speculated to be only a minor upgrade, new information seems to confirm that they could reach hash rates of around 100 Megahashes per second for Ethereum and Ethash mining.

This would be more than a two-fold improvement over many of the top-of-the-line cards offered on the market today by both Nvidia and AMD. According to mining calculator Whattomine, the AMD RX Vega series, 5700 series and Nvidia’s previous RTX 2000 series all range between 40 and 50 MH/s with light optimizations.

Preliminary tests circulating in the community firmly place the RTX 3080 and 3090 — the mid to high range cards — between 90 MH/s and 115 MH/s depending on the GPU and the optimizations.

Kristy-Leigh Minehan, former chief technology officer of Core Scientific and Genesis Mining, said that these results are to be expected given the cards’ memory bandwidth. According to her, the “rule of thumb” is that the Ethereum hash rate is 10% of the memory bandwidth in Gigabytes per second. Leaked specifications suggest that the RTX 3080 ranges between 700 GB/s and 900 GB/s, while the RTX 3090 can reach more than 1000 GB/s.

Minehan also highlighted that while flashing the bios is impossible on Nvidia, optimizing the memory timings for Ethereum can be done on-the-fly with software, eliminating AMD’s purported competitive advantage. In a conversation with Cointelegraph, she claimed that the RTX 3000 series will be “beyond better than AMD.”

It is worth making a direct comparison between the RTX 3080 and its closest competitor from AMD, the Radeon 5700 XT. The 3080 can be obtained for around $600 to $700, while the 5700 XT sells for about $400. The AMD hashes at around 51 MH/s, while the Nvidia card is expected to reach at least 90 MH/s.

However, the Nvidia is hungrier than the AMD, having a thermal design power — an industry measure for maximum energy consumption — of 320 Watts. The card from AMD clocks in at 225 Watts. Nevertheless, the higher hashing rate more than makes up for this difference in energy efficiency. It is also worth noting that these figures are unlikely to be entirely accurate for actual mining usage.

While many miners located in regions with expensive electricity will often look only at energy efficiency, professional miners will also heavily focus on the unit price. “All three are important,” Minehan said referring to hash rate, price and energy usage.

From that point of view, the 5700 XT’s price-to-hash rate ratio is almost equal to that of the Nvidia. This measure would also immediately disqualify the beefier RTX 3090, which comes at a $1,500 price tag for a modest 10-15% hashing improvement over its smaller brother.

In summary, Nvidia’s new RTX 3000 series appears to be quite competitive with AMD in the field of Ethereum mining, in contrast to previous generations. The RTX 2000 series and, to a lesser extent, the GTX 1000 series were generally more expensive than AMD while featuring equal or lower hash rates.

Updated: 9-27-2020

The Top Crypto-Mining Graphics Cards To Get A Big Bang For Your Buck

Cryptocurrency miners are back in business, but which graphics card should you choose to not be left with an empty wallet?

Now that we are at the tail end of 2020, the big hardware manufacturers are starting to announce their latest, fastest offerings set to be released ahead of the holiday season. Meanwhile, the cryptocurrency mining market continues to expand rapidly against all odds. Here’s an overview of which producers offer the best graphics cards in the market and which cards suit specific types of mining.

Bitcoin or Ether?

In terms of choosing a cryptocurrency to mine in 2020, there have been no significant changes. This year, most video cards continue to be able to mine Ether (ETH) or its forks. As for Bitcoin (BTC), mining of the world’s first cryptocurrency stopped being available to ordinary people a few years ago, as it requires serious investments, special equipment and access to large amounts of cheap electricity.

This is even more so the case now, as BTC mining is bringing in half the income after the reward halving took place in May. The difficulty of mining continues to increase, and in September, it updated to an all-time high of 19.31 trillion at block 649,152.

As a result, many popular devices such as the Antminer S9 have become obsolete. After the halving, the most profitable miners became the Whatsminer M30S ++ from the Chinese company MicroBT, which can deliver a hash rate of up to 112 terahashes per second and bring in just over $8.50 per day in profit, and Bitmain’s Antminer S19 Pro, which can reach a hash rate of 110 TH/s and see a daily profit of just under $8.50. But the prices of these miners are rather steep: A Whatsminer M30S++ costs $1,800, and the Antminer S19 Pro comes in at $2,407.

When it comes to Ether and its forks, graphics-card mining is once again becoming popular for several reasons. First, over the past two years, Ethereum’s hash rate has decreased by 15% (when compared with August 2018), now sitting at 256.221 TH/s. This means that Ether is now easier to mine.

Second, both modern and old models of cards can still be used for mining. For example, the Nvidia 1050 Ti, released in October 2016, and the Radeon RX 580, released in April 2017, are still very popular. Prices for such old cards are constantly decreasing as newer cards come out, which is encouraging miners to return to the market. But most importantly, the price of ETH tripled from the start of 2020 to the beginning of September, making Ether still very profitable to mine.

There is another factor that attracts the interest of miners: the upcoming transition to Ethereum 2.0 and a proof-of-stake algorithm, which is expected to commence before the end of the year. A spokesperson from WhatToMine, a popular web-based calculator for evaluating the profitability of mining cryptocurrencies, told Cointelegraph that Ether will continue to be in demand, not only this year but also in 2021:

“This cycle we can expect further expansion of DeFi projects, which will in turn make ETH network more and more popular. As a result block reward for ETH (the fee part) should increase in cycles with general uptrend, making ETH mining the most profitable for GPU miners.”

What To Buy?

At the beginning of the year, Cointelegraph reviewed the graphics cards of the two largest manufacturers, Nvidia and AMD, and Nvidia cards seemed to have an upper hand in mining. However, taking into account the fact that Ether mining has gained a second life, AMD cards should not be written off, as the company’s Vega and RX generations are still very suitable for Ethash algorithms.

Regardless of the manufacturer, the most important factor is return on investment, as any miner must first invest a decent amount of money before turning any profit. A standard rig requires six graphics cards, and as a result, a miner can spend over $9,000 if buying the popular Nvidia RTX 2080 Ti with 8 GB or 11 GB of RAM memory. But what about those who can’t afford the top shelf but still want to make a profit? Here are the most popular graphics cards right now for Ether mining that cost under $400.

Nvidia GTX 1660 Super

This card was released in October 2019, meaning the tech is still fresh. The graphics card has 6 GB of memory and Turing architecture, which executes more clock frequency, uses less power and has 20% better performance than the GTX 1660. The price of this model ranges from $240 to $250.

AMD Radeon RX 5700 and RX 5700 XT

In summer 2019, AMD introduced a new line of RX 5700-series graphics cards to the market. These cards use fin field-effect transistor, or FinFET, technology, which results in better energy efficiency when mining due to the reduced size of electronic components and lower current consumption.

The specifications of the RX 5700 include 8 GB of GDDR6 memory and a power consumption of 180 watts. The RX 5700 XT ​​has a power consumption of 225 W, but the base frequency is also 10% higher than in the RX 5700 model. These cards are slightly more expensive, costing around $430, but can be snatched up with a discount at around $400.

Nvidia RTX 2060 Super

The RTX 2060 Super card may not be an obvious choice, as apart from having 8 GB of memory, it is no different from the RTX 2060. But at the same time, it uses five different algorithms — GrinCuckarooD29, GrinCuckatoo31, DaggerHashimoto, X16Rv2 and BeamV2 — which makes it more stable, safe and suitable for mining.

In fact, this is an intermediate option between the RTX 2060 and the RTX 2070, but it can be found online for just $399, while the RTX 2070 will cost you around $530 — and a $130 difference is a lot of money in this business.

AMD Radeon RX 580

AMD’s RX 580 was released back in 2017 and is still one of the best low-budget GPUs for mining, with a price ranging between around $180 and $230. The card is used mainly for mining Ether and has 8 GB of memory, but it consumes little power at just 150 W. The only potential competitor might be the RX 570, but those card with only 4 GB of memory will no longer be able to mine Ether in 2021.

Nvidia P106-100

Nvidia has a dedicated series of graphics cards for crypto mining. The Nvidia P106-100 “mining edition” is based on the Nvidia GP106 GPU (Geforce GTX 1060), which is almost the same as a regular Geforce GTX 1060 but with some slight modifications. The P106-100 has no video outputs and no rear panel, and the card is equipped with 6 GB of memory.

The “mining edition” in the name does not mean that the new product is better at mining than the usual version but rather that it’s designed specifically for miners, as everything considered nonessential has been removed, allowing it to be sold for around $320, a whole $170 cheaper than a GTX 1060 unit.

So, Which One Is Best To Buy?

How long will it take for these budget cards to recoup their initial price? For comparison, one of the most popular cards for mining today, the Nvidia RTX 2080 Ti, brings in around $1.66 per day when mining Ether. If purchased for an average price of around $1,400, this graphics card will take about 28 months to pay for itself, without taking into account the cost of electricity.

So, here is what the calculations say: The Nvidia GTX 1660 Super, which can be bought for $240, would bring $0.65 per day and take 12 months to pay for itself. The AMD Radeon RX 5700 XT costs $400 and would have an 8.5-month payback time while bringing in $1.56 per day.

The Nvidia RTX 2060 Super can be bought for $399 and will bring $0.92 per day when mining Ether. This card will pay off in 14 months. The Radeon RX 580 is a very popular card due to its rather low price of around $200, and this card will recoup in just seven months, bringing in almost a dollar ($0.96) per day. Created specifically for mining, the Nvidia P106-100 will bring $0.85 per day and, at a cost of $320, will pay off in just over 12 months.

However, this is not an exact science, and every miner should keep in mind that the algorithms of any crypto are constantly becoming more complex, which makes it harder to mine and longer to recoup their investment into their mining equipment.

New Cards Right Now?

Given the excitement around decentralized finance, a crypto boom looms on the horizon once again, and the upcoming new products may take it further. In September, Nvidia released its new generation of GeForce RTX 3000 graphics cards, with some people already saying that it can produce 81–89 MH/s during Ether mining. And the upper-class model, the GeForce RTX 3090, is expected to demonstrate 120–122 Mh/s. If so, then Nvidia may face a shortage of cards, as miners will buy everything, leaving gamers with nothing.

But AMD is not lagging behind and will present its Radeon RDNA 2 line at the end of October, which will directly compete with the 3000 series from Nvidia. The emergence of new cards will be of great interest to the crypto mining community. Andrej Škraba, head of marketing at NiceHash — a crypto mining and trading platform — is confident that the technological innovations of AMD and Nvidia will bring higher productivity:

“Nvidia just launched 3000 series, but current availability is super low. New RTX cards will bring higher hash-rates and miners will be upgrading their used 1060s and old AMD cards (480s/580s). We still have to wait for the AMD announcement to see what they will bring to the market.”

Updated: 10-5-2020

Fidelity, Vanguard, Schwab Funds Have Been Loading Up on Crypto Mining Stocks

Updated: 10-12-2020

The First-Ever Mining Hardware Marketplace Just Launched

This company presents an alternative to “sketchy” Telegram channels for second-hand mining equipment.

Asic Jungle has launched a beta version of what it calls “the first-ever mining hardware marketplace” for cryptocurrency mining hardware. The company’s CEO Artem Bespaloff told Cointelegraph that he has created a trusted platform for second-hand mining equipment that operates without any middlemen:

“[It’s] the first and only online marketplace where buyers can interact directly with sellers through the platform and not have to use any brokerage services or Telegram channels (I call them ‘sketchy’ Telegram channels) because all sorts of things go on there. And we decided to create this ecosystem where buyers and sellers deal together between themselves.”

The company’s solution to these problems is a two-sided marketplace that connects ASIC buyers and sellers in a secure and transparent environment. According to Bespaloff, ASIC brokers currently charge high premiums that are taking advantage of the market’s lack of price discovery mechanisms. He believes that these brokers create information asymmetry by withholding pertinent information.

Bespaloff said that Asic Jungle upholds a number of security features to ensure that transactions happen in a trusted environment, including an emphasis on AML compliance. As the Canada-based company will be serving customers from all over the world, they intend to comply with both local laws and regulations and the compliance laws of the United States.

Although mining equipment becomes progressively less efficient with the passage of time, Bespaloff assured that there is plenty of demand for second-hand equipment in places with very cheap or free energy sources, like some areas in Canada and Venezuela — though the residents of the latter may be excluded from participation in an effort to comply with U.S. sanctions.

Both Bitcoin and Ethereum (ETH) have recently experienced record-setting hashrate increases, indicating there will be no lack of interest in mining equipment in the near future.

Updated: 10-18-2020

This New Service Plays Matchmaker Between Solo Miners, Big Mining Farms

Updated: 11-30-2020

This Bitcoin Mining Company’s Stock Is In Free Fall Following Q3 Loss

Q3 was a tough quarter for mining rig manufacturers as the impact of COVID-19 continued to weigh.

The stock of one of China’s “big 3” mining firms is in free fall Monday after reporting another quarterly loss, underscoring the operating challenges imposed by COVID-19.

Canaan Creative, which manufactures mining rigs, released its third-quarter financial results Monday. The company posted a net loss of $12.7 million, or 54 cents per share, on revenues of $24 million. Although quarterly revenues grew 5%, the company’s net losses more than quadrupled.

Quanfu Hong, Canaan’s chief financial officer, poured cold water on the negative earnings release by claiming that demand for mining equipment rebounded during the quarter — a trend expected to continue in the final stretch of 2020. He said:

“(…) we have received a large number of pre-sale orders which are scheduled for delivery starting in the fourth quarter of 2020.”

Canaan’s share price, a consistent underperformer since debuting in Nov 19, plunged more than 10% Monday. The stock was last seen nursing losses of around 9.5%.

Canaan crashed in lockstep with the broader financial markets in February. After a brief recovery, the stock resumed its plunge through the spring. It would eventually stabilize below $3.00 before catching a strong bid in early November, possibly due to a correlation with Bitcoin (BTC).

Along with Bitmain, Ebang, and Microbt, Canaan dominates the global market for SHA256 miners. Due to broad industry consolidation, it’s possible that only “2 or 3 players will survive into the longer term,” according to research from crypto derivative exchange Bitmex.

The Chinese mining industry may have suffered the most due to COVID-related supply challenges, according to crypto analytics company Tokeninsight. Beyond the immediate impact of the pandemic, the segment appears to be in growth mode, especially in the manufacturing sector, where “new players are eager to enter the field.”

Updated: 11-30-2020

Bitcoin Mining Difficulty Approaches ATH As Price Stabilizes Above $18K

Mining difficulty on the network rose by 8.9% today while the hash rate is more than 130 EH/s.

The price of Bitcoin has reached a two-year high of more than $19,000 and fallen below $17,000 more than once in the span of a week as mining difficulty continues to rise.

According to on-chain analytics provider Glassnode, Bitcoin (BTC) mining difficulty increased by 8.9% today, putting the metric within 5% of its all-time high value set last month.

#Bitcoin mining difficulty increased by 8.9% today.

It is now only 4.4% below its ATH.

Chart: https://t.co/qtmuDmTfGS pic.twitter.com/1eX63yBAgc

— glassnode (@glassnode) November 29, 2020

A rise in mining difficulty marked the start of bull cycles in 2013 and 2016, though it remains to be seen whether the coin’s recent rally to within 3% of its ATH price is long-term bullish. The price of Bitcoin fell by 11% last week as many whales moved some of their holdings to exchanges and is $18,122 at the time of publication.

Greater mining difficulty can mean an increase fees for users and the time required to generate a block in addition to increasing the number of unmined transactions in Bitcoin’s mempool. According to estimates from Earn.com, the optimal BTC transaction fee is currently 14,272 satoshis, or roughly $2.60.

The Ethereum (ETH) blockchain has also seen record highs recently. Glassnode reported mining difficulty for the network was at a two-year high on Friday following the price of the token falling from more than $600 on Nov. 23 to $513 in three days.

Updated: 12-06-2020

Bitcoin Miners Saw 48% Revenue Increase In November

Bitcoin miners generated an estimated $522 million in revenue in November, up 48% from October, according to on-chain data from Coin Metrics analyzed by CoinDesk.

The sharp revenue increase came as bitcoin soared through November, setting a new all-time high by month’s end after gaining over 40 percent. Monthly aggregate revenue in November hit the highest level since September 2019.

Revenue estimates assume miners sell their BTC immediately.

Measured by revenue per terahash (TH), the unit measurement for the speed of cryptocurrency mining hardware, miner revenue hit six-month highs as it climbed above $0.15 multiple times in November, the highest level since early May, according to data aggregated by mining software company Luxor Technologies.

Despite significant intra-year volatility, mining revenue measured by terahash per second (TH/s) is roughly flat year to date from roughly $0.138 per TH/s on Jan 1 to $0.135 per TH/s at last check.

Network fees brought in $54.9 million in November, or nearly 11% total revenue, a slight percentage decrease from the 12.2% of revenue represented by fees in October.

Fees steadily declined through November, coming down from the roughly two-year highs in late October, dropping from a $13 average transaction fee at the start of November to below $3 near month’s end, per Coin Metrics.

Notably, fees as a percentage of total revenue continues a strong upward trend since April, prior to the network’s third-ever block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.

Taking advantage of the revenue increase, miners are bringing more and more machines online after early November’s record difficulty drop, with the past two adjustments resulting in difficulty increases and a third consecutive increase projected for mid December, meaning an increase in resources required to mine than at a lower difficulty level.

As analysts predict bitcoin’s current rally is sustainable with the strong possibility of continued upward price movement, miners eye continued revenue growth through the end of 2020.

Updated: 12-15-2020

Riot To Test Immersion Cooling Bitcoin Mining Technology In Texas

Nasdaq-listed bitcoin mining company Riot Blockchain (RIOT) is piloting new liquid cooling technology for mining hardware in Texas to test solutions for effective mining in difficult temperature environments.

Riot is launching an 8-megawatt immersion technology testing initiative to “assess the potential for higher productivity and lower cost mining opportunities in Texas,” per a press release. Testing is scheduled to start in Q1 2021.

If successful, CEO Jeff McGonegal told CoinDesk the company envisions “deploying immersion at a larger scale over time, particularly in warmer climates where cooling is a chief concern.”

In high heat and humidity environments, cooling mining machines with liquid immersion instead of air cooling offer significant advantages for miners with razor-thin profit margins.

Not only does liquid cooling offer significant noise reduction compared with fan cooling. Immersion cooling can also increase usable hashrate per machine by up to 50% in some cases, prolong the lifespan of some machines and allow miners to install more machines per square foot than if the same facility used fan cooling. But maintenance can be difficult.

The mining industry is still standardized around air-cooled designs, which means air-cooled facilities are still the first choice for miners,” said Ethan Vera, co-founder of Seattle-based mining company Luxor Technology, in a direct message with CoinDesk.

“But in areas of high temperature and low humidity, miners use evaporative cooling as a cost-effective strategy to mitigate the heat.”

In hot, humid regions like Texas, Vera said, liquid immersion is “the cooling method of choice as it eliminates heat, dust and humidity issues.”

In planning this pilot project, the Castle Rock, Colo.-based mining firm is “looking to observe improvements operating in difficult mining temperature environments, combined with the additional performance that can be achieved as a result,” McGonegal told CoinDesk.

Participating in Riot’s pilot program are two bitcoin (BTC, +1.71%) mining hardware and energy software companies, Enigma and Lancium, that are providing the technology Riot plans to test.

In 2020, Riot shares have outperformed bitcoin year to date in 2020, gaining 660% since January and trading near $9.37 at last check. Over the same period, bitcoin gained 170%. The mining firm is now worth over $666 million.

Updated: 12-17-2020

US Bitcoin Mining Firm Core Scientific To Triple Capacity With Massive 59,000-Machine Order

U.S. blockchain and AI infrastructure provider Core Scientific has expanded its fleet of state-of-the-art crypto miners to over 77,000, comprising the largest-ever grouping of Bitmain Antminer S19 rigs outside of China.

Core Scientific, which offers a mix of hosted crypto-mining and data-science computation, ordered the miners earlier this year. The company announced Thursday it has now procured an additional 59,000 S19 and S19 Pro Antminers.

The new order will bring the total computational power hosted with Core Scientific to 7.26 exahash per second (EH/s) while using approximately 250mW of electricity, said Taras Kulyk, the firm’s senior VP of blockchain development.

“We are truly a global player with this order, which is a magnitude of scale larger than anything that’s been done in North America today” said Kulyk.

One of Core Scientific’s closest U.S. rivals, Nasdaq-listed Marathon Patent Group (MARA), recently announced it was buying some 10,000 Antminers, which will bring the firm’s total hashrate to 2.56 EH/s.

The new units will be spread across Core Scientific’s existing facilities in North Carolina, Georgia and Kentucky, Kulyk said. A large chunk of the energy consumed by the miners will be renewable power. Core Scientific’s facilities cover over 100 acres and the firm is now looking for more space to house the new rigs.

Core Scientific’s bullish news comes as the price of bitcoin hits all-time highs and the stocks of listed crypto mining companies surge upward. (Core Scientific remains privately held.)

While the U.S. hashrate is certainly on the increase, China far and away dominates crypto mining with around 65% of global hashpower. According to Cambridge Centre for Alternative Finance, U.S. and Canada combined account for just 8.5% of the pie. But North America has more publicly traded mining companies than anywhere else and a muscular reach towards institutional investors.

Recently, Core Scientific announced a deal with Digital Currency Group mining subsidiary Foundry to receive some $23 million in financing to build out mining equipment for Core and its clients. (Digital Currency Group is also the owner of CoinDesk.)

A further coup for Core Scientific happened back in September when it became Bitmain’s “cooperative repair center” for mining equipment in North America. That’s a big deal because it saves having to box up tons of computers and ship them to China.

“When you have 77,000 units, to have to unpack and ship them somewhere else for repair is a direct impact to your bottom line,” said Kulyk.

Bitmain is experiencing a spike in demand for the latest Antminers, which are sold out until July 2021.

“There’s absolutely a massive supply crunch right now,“ Kulyk said. “We are oversubscribed, even with this order.”

Updated: 12-18-2020

Beyond ASICs: 3 Trends Driving Bitcoin Mining Innovation

From the Bitcoin halving in May to the ongoing price rally today, bitcoin has certainly seen its fair share of ups and downs in 2020. Even as the price of bitcoin sets new highs above those of 2017, observers have remained cautious, fearing that this may very well be a bitcoin bubble 2.0.

However, pointing to a maturing market where interest in digital assets is rising among institutional investors, Bitcoin advocates have argued that this rally is not just another speculative frenzy. With such renewed optimism, one can only hope that this time, history doesn’t repeat itself.

At the same time, with miner revenues hitting pre-halving levels for the first time this November, much has changed since the genesis block came into being. No longer limited to a network of independent miners, we now see staggering operations at scale, in diverse jurisdictions stretching from lesser-known provinces in China to Kazakhstan and even Malaysia.

Despite this growth, the burgeoning mining industry faces existential risks. And not only the ones related to the long-term sustainability of bitcoin (BTC, -2.94%) mining after the last block is mined in 2140.

New Year, New Markets

With its inexpensive electricity, low production costs and readily available labor, China has long dominated the bitcoin mining sector. Yet, the center of gravity has started to shift in recent years, largely due to the emergence of mining pools in other parts of the world. Despite China still holding more than two-thirds of the global hashrate distribution countries such as the U.S., Russia and Kazakhstan are starting to catch up.

In order to carve out space and thrive in the bitcoin mining space, these new contenders need to consider a multitude of factors, namely: competitive energy prices or alternative energy sources, attractive real estate prices and a government supportive of digital assets.

Mining-friendly Kazakhstan, for instance, has seen significant growth in bitcoin mining activities, holding over 6.17% of the total bitcoin mining hashrate. This is in large part attributed to a tax-friendly government where crypto mining will not be taxed until the mined assets are exchanged for fiat money.

Then there is the legalization of mining, which saw a recent bill approved by the Kazakh Senate and signed into law earlier in June. The low electricity costs only serve as icing on top.

This approach has certainly paid off, with investments in local crypto mining operations expected to double by the end of 2020 and an additional $738 million expected to pour in over the next three years.

“China’s bitcoin mining crown will not be so easily displaced”

As we look towards 2021, bitcoin mining will continue to move in a positive direction and see continued momentum. For two years now, markets across the Commonwealth of Independent States (CIS), Europe and North America have grown. This trend is only going to be more prominent as miners look to new jurisdictions to avoid regulatory crackdowns while searching for lower-cost electricity.

In Europe and North America, plans for opening mining facilities may have been delayed as a result of the COVID-19 pandemic. But with the gradual recovery of the bitcoin market and the likelihood of a coronavirus vaccine in 2021, we may see a rebound in the demand for mining.

The implications of a new Biden administration on the treatment of cryptocurrencies, on the other hand, still remain unclear.

Despite new markets looming on the horizon, China’s bitcoin mining crown will not be so easily displaced. The Chinese government has called to accelerate the development of blockchain technology and financial incentives to advance in renewable energy-powered crypto mining.

Technological Innovation

Bitcoin mining has certainly come a long way since the early CPU days of Nakamoto’s genesis block. From initial innovations like GPUs and FPGAs to the birth of today’s ASICs, miners continue to seek out the fastest, most powerful and cost-efficient machines.

The current competitive state of bitcoin mining means that technological innovation needs to constantly keep up with the industry’s fast-growing demands.

If not, miners will no longer be able to compete based on equipment, but instead, look elsewhere – whether it’s in alternative sources of energy or other forms of consensus protocols – to further establish a competitive edge and earn maximum profits.

Since the ASICs revolution, much of the technological progress in bitcoin mining has come from the reduction of chip sizes and higher hashrates to provide miners with greater efficiency gains. However, these improvements have been plateauing with each new iteration.

And despite bitcoin mining being the ultimate manifestation of proof-of-work (PoW), questions over PoW’s long-term viability have been raised. Ethereum 2.0’s proof-of-stake (PoS) consensus is arguably a more sustainable and environmentally-friendly model.

When it comes to the next technological innovation, much has been said about the use of quantum computing. Touted as the next computing frontier, quantum tech may potentially crack Bitcoin’s security and effectively rendering Bitcoin’s cryptographic keys insecure. When this happens, a soft fork would be likely to occur, enabling the Bitcoin protocol to run on quantum-resistant algorithms and potentially even be operated by nodes that run on quantum computers.

However, it’s early days for quantum computing, and going into 2021 ASICs will still be the cornerstone of bitcoin mining. I believe bitcoin miners will be waiting another few years before the arrival of the next groundbreaking technology.

Sustainability Not For Sustainability’s Sake

As mining machines get increasingly powerful, so, too, will energy consumption increase.

Regions like China’s Xinjiang and Inner Mongolia have historically been reliant on coal energy to provide crypto mining companies with lower energy prices. China is seeking to address pollution on a broader level, recently stating its ambitions for a “green revolution” to become carbon-neutral by 2060. This means that mining with non-renewable sources of energy such as coal will become increasingly cost-inefficient for China-based miners.

To further compound matters, bitcoin miners have traditionally relied on the cheap electricity powered by hydroelectric plants in the Sichuan province as their source of renewable energy. But when you consider that hydropower is only available during the wet season in China, six months of the year, it’s no surprise that bitcoin miners have cast their eyes to more innovative and sustainable sources of energy across novel jurisdictions for renewable or surplus energy.

As 2020 comes to a close, the future of bitcoin mining looks bright. Just as we recovered from the last bitcoin bubble popping, 2021 will see a brighter outlook as the fourth industrial revolution plays out.

In reimagining a mining ecosystem that is both sustainable and viable, we will do well to plan strategically for the long-term and not only consider short-term wins – whether it’s in tech or profitability – focusing instead on the complete integration of commercial, sustainability and environmental goals.

Updated: 12-21-2020

Linzhi Begins Rollout of Long-Awaited Ethereum Miner ‘Phoenix’

Ethereum’s mining competition just got a bit hotter, even as the second-largest blockchain by market cap has begun the formal process of getting rid of its dependency on the industry all together.

Shenzhen, China-based mining firm Linzhi Inc. has begun rolling out a new Ethereum ASIC miner dubbed the Phoenix, reportedly three times more powerful than top options available today. As reported by CoinDesk, the journey to produce a more powerful and efficient Ethash ASIC miner was begun some two years ago by Chen Min, former CTO of mining giant Canaan.

Mining pool F2 Pool released a demo of the new machine on YouTube Saturday. The Phoenix outpaces the next best A10+ Pro at 2,600 megahashes per second MH/s to around 500 MH/s. Linzhi’s new machine is also more energy efficient clocking in at 3,000 watts per hour to the A10+ Pro’s 1,300 W, F2 Pool says.

“If you look back on CoinDesk reporting about Linzhi dating back to the first article in September, 2018, it’s clear we had delays,” Linzhi Director of Operations Wolfgang Spraul told CoinDesk in an email. “Some due to underestimating the technology, then some due” to the coronavirus pandemic.

Spraul said the firm is rolling out pre-orders and limited quantities to “developers, community, pool operators, etc.” Innosilicon carries the A10+ Pro for about $4,440 per unit while Linzhi has yet to release a public price figure.

Scrapping Ethereum Mining

The new product comes as the Ethereum network has begun a technical transition from a proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS). That process began Dec. 1 with the launch of the Beacon Chain. That chain acts as a central conductor for the new blockchain network which uses coin deposits as a means of securing the network, called “staking,” over mining.

Still, miners have at least a two-year runway with PoW on Ethereum. The current network, Eth 1.x, won’t be moved over to the new PoS blockchain until phase 1.5 of Eth 2.0.

The current Linzhi Phoenix demoed by F2 Pool will need at least one upgrade to stay useful before that transition, however.

The Ethereum network’s directed acyclic graph (DAG) – a component of Ethereum’s PoW algorithm called Ethash – stands at just under 4 gb, while each Linzhi Phoenix only has a 4.4 GB memory. The incumbent A10, on the other hand, can house between 6 and 8 gigabytes, F2 Pool says.

The Phoenix will need a bump in memory size or aftermarket components if it is not to become obsolete before phase 1.5. Spraul told CoinDesk in an email that the Phoenix miners currently rolling out are limited to quantities of pre-orders. The firm is “working on a successor with an increase in DAG memory – no specs yet,” he said.

Of course, other Ethash-based cryptocurrencies such as Ethereum Classic will still be using proof-of-work, meaning a market will still exist for the Phoenix even after Eth 2.0 phase 1.5.

Updated: 12-22-2020

Bitmain’s ‘Hard Fork’ To End In $600M Settlement In Favor Of Micree Zhan

The year-long dispute between Bitmain co-founders appears to be at an end with a $600 million compensation on the table.

After months of wrestling for control of the company, Bitmain co-founders Jihan Wu and Micree Zhan have reportedly reached a settlement. According to Chinese crypto expert Colin Wu, and reported by multiple local publications, both parties have agreed to a $600 million compensation for Jihan Wu with Zhan taking control of the crypto miner maker operations.

As part of the settlement, Wu will exit the company taking the BTC.com mining pool as well as Bitmain’s overseas mining centers. Thus, Zhan will be left with the Antpool mining pool and Bitmain’s China-based mining farms.

The deal also sees Zhan left in charge of the artificial intelligence (AI) division and the mining rig hardware manufacturing enterprise. Zhan will temporarily mortgage his shares to raise the $600 million required to buy out Wu’s stake in the company.

Sequoia Capital will act as the middle regulator in the negotiations with the deal expected to be ratified at the upcoming shareholders meeting slated for Dec. 28. However, reports indicate that the current terms of the agreement could change in the interim.

While the move represents a settlement of the current dispute, the splitting of Bitmain’s assets does pit both co-founders as competitors going forward. As part of the agreement, Zhan will reportedly complete an initial public offering in the U.S. before the end of 2022.

The company’s first IPO attempt elapsed back in March 2019 and likely sparked off tensions between both co-founders. Both figureheads stepped down from running the company but Wu returned in October and ousted Zhan in a shock move.

A month later, Zhan declared his removal from the company as illegal and threatened legal action. Zhan later regained control of Bitmain’s office in Beijing, storming the building with security personnel in early June 2020

Updated: 12-22-2020

Riot Blockchain Buys 15K Bitmain Antminers, Expects 65% Hash Rate Increase

Nasdaq-listed crypto firm Riot Blockchain purchases additional 15,000 Antminers from Bitmain for $35 million.

Riot Blockchain, a Nasdaq-listed cryptocurrency mining company, has inked another deal with Chinese mining giant Bitmain to buy 15,000 Antminers. According to a Dec. 21 announcement, the Colorado-based firm expects the new purchase will contribute a 65% increase to its total Bitcoin (BTC) mining hash rate.

The purchase cost Riot $35 million, comprising of 3,000 S19 Pro Antminers and 12,000 S19j Pro Antminers. The company expects to receive and deploy the new miners starting from May 2021 up to October 2021.

With the latest purchase, Riot further expands its total mining equipment from Bitmain, as the company has been regularly receiving and deploying new miners in 2020. At full deployments of more than 37,000 miners, Riot estimates its total operational hash rate to surge from 2.3 EH/s to 3.8 EH/s, consuming about 120 megawatts of energy.

Riot CEO Jeff McGonegal said that continued growth in deployed miners is “paramount to a miner’s success,” adding further: “Expanding the Company’s bitcoin mining hash rate and operating on a cost-effective basis is very important, particularly during periods when the bitcoin spot price has appreciably increased.”

As part of its partnership with Riot, Bitmain has been consistently delivering its latest Antminers to the United States-based firm. In October 2020, the companies announced a deal for 2,500 Antminer S19 Pro on top of the previous batch of 5,100 Antminers deal and another one for 8,000 Antminers in September.

Bitmain, one of the world’s largest crypto hardware suppliers, have been actively tapping the North America market. In September 2020, Bitmain announced that mining operator Core Scientific will become its first North American cooperative repair center.

Previously, Bitmain partnered with Foundry, a wholly-owned crypto mining subsidiary of Digital Currency Group. As part of the partnership, Foundry was set to provide financing to Bitmain’s end customers in the market.

Updated: 12-22-2020

Mining Firm Bitfarms Set To Reach 1.2 EH/s Hashrate, Deploy 3,000 New Machines

Publicly traded bitcoin mining company Bitfarms (BITF) announced its deployment of 1,000 Whatsminer M31S mining machines with another 3,000 set to be deployed in Q1 2021.

* The mining capacity expansion is set to push Bitfarm’s hashrate above 1.2 exahashes per second (EH/s), per an announcement shared with CoinDesk, just over one third of its target 3 EH/s hashrate.

* To date in 2020, the Toronto-based firm has acquired or deployed nearly 6,000 new machines, according to prior press releases.

* Other mining companies, including Colorado-based Riot Blockchain (RIOT), are on shopping sprees for new mining machines as leading manufacturers like Bitmain have sold out until Q3 2021. Strong demand has pushed miners to secondary markets as they scrounge for any available machines, per CoinDesk’s prior reporting.

* Shares of Bitfarms are trading hands around $2.62 at last check, a more than 230% gain to date this month.

* Bitcoin gained roughly 20% over the same period.

Updated: 12-25-2020

Top Crypto Mining Hardware To Expect In 2021

With crypto mining gaining momentum, here’s the newest products coming out in 2021 and what Bitcoin miners should look to buy.

At the beginning of this unusual and sometimes difficult year, the cryptocurrency world reminisced about the crypto mining boom and whether it was now over. But soon, the fears were washed away as large companies registered on Nasdaq expressed clear interest in mining Bitcoin (BTC) for additional earnings.

It has been said more than once that this year’s sharp rise in mining is directly related to the significant increase in cryptocurrency prices. During the summer, Bitcoin could be bought at just above $10,000; now, it’s priced at well over double the amount.

Altcoins are not lagging behind, either. Ether (ETH) reached the $650 mark this month and Litecoin (LTC) was above $117 recently, although six months ago, the latter could be bought for just $41.

As price analysts expect the bullish market trend to continue into 2021, the most up-to-date hardware offerings are likely to be in high demand. So, here are some of the most interesting products on the hardware market that miners should expect to see on the shelves in 2021.

On Solid Ground

When it comes to Bitcoin mining, ASIC miners are the main choice for hardware. An ASIC, or application-specific integrated circuit, is a ready-made device that is easy to set up and program.

When mining Ether and Ethereum-based tokens, things start to get more interesting, since they require putting together a rig that consists of a motherboard, GPU cards and several other components.

So, what was in use this year and what did the world’s miners spend the most money on? Most recently, Riot Blockchain purchased 15,000 variations of the Antminer 19 series, to be delivered in 2021. Nathaniel Justin Yu, manager from International Marketing team at Bitmain, confirmed to Cointelegraph that the Antminer 19 Series models released in May 2020 were in high demand among Bitcoin miners:

“We have been seeing a growing demand for mining hardware, especially for our Antminer 19 Series models (Antminer S19 Pro, S19, and T19). 19 Series delivered a industry-leading market performance this year as it is equipped with a new generation custom-built chip, achieving a power efficiency as low as 23 J/TH. Our Antminer products have been purchased until July of 2021.”

For those who decided to put together mining rigs by themselves, the list of the most in-demand equipment for mining this year naturally starts with the GPU cards. Two long-time rivals presented their newest lines this year: Nvidia with its top-end GeForce RTX 3000 Series GPU cards in September, followed by AMD’s Radeon RX 6800.

Miners are still divided over which of these cards is better, but the main question is when will these cards be available to everyone, as demand significantly exceeds supply. While Nvidia GeForce RTX 2080 Ti and AMD Radeon RX580 are still top-end cards, the interest around the new offerings will likely spill into 2021.

New ASICs

Next year, Bitmain will continue to delight users with series 19 ASIC miners. According to the manufacturer, new solutions will be implemented that help increase the efficiency of mining.

Another Chinese manufacturer, Canaan Creative, introduced a new model of the miner AvalonMiner 1246 in September, which claims to have 30% better efficiency than the previous model. According to the producer, AvalonMiner 1246 could reach 90 terahashes per second, while A11 series process at an average of 60–68 Th/s.

The miner will be available starting in January. Although this model is inferior in performance to Antminer 19, it’s cost is slightly cheaper. At around $3,000 it’s still worth a second look for those wishing to mine Bitcoin.

New GPU Cards

While Nvidia was having difficulties with the release of its flagship GeForce RTX 3060 Ti, AMD is already working on the next one, having just presented its 6000 series. The company announced the release of the next series with a new RDNA 3 architecture in late 2021.

According to the manufacturer, the GPU should surpass the previous one in performance by 50% and will require less power and cooling to run.

But Nvidia should not be written off just yet. Despite some delays in launching its GeForce RTX 3000 cards, the company may be preparing to present new products during the event scheduled for Jan. 12, 2021.

Presumably, the manufacturer will unveil Ti and Super modifications, which should please miners. In any case, the line will expand with cards of different price categories, and this will allow users to have more options when putting together mining rigs.

New Motherboard

If GPUs are the preferred method for mining, a good motherboard is an absolute must. The main feature in this case is the number of slots GPU cards can be installed into.

Given what’s already available in the mining motherboard market, with the likes of MSI H310-F PRO, which has 13 GPU card slots, or the Asus B250 Mining Expert with 19 slots, miners should not expect to receive any special presents from manufacturers in 2021.

However, new goods are on the way. Biostar, one of the biggest hardware producers, recently introduced a new TB360-BTC D+ motherboard designed for cryptocurrency mining. The motherboard has eight PCIe x16 slots, which is sufficient for a standard rig. However, the price and the sales start date are not yet clear.

Hardware That Shouldn’t Be Overlooked

For efficient mining, the choice of each component is crucial. Apart from the correct GPU card and motherboard, uninterrupted internet and electricity is a must.

Additionally, equipment for mining cryptocurrencies is very noisy and can get hot, so miners need to follow safety precautions. When mining at home, running the rig in an air-conditioned room is the best option for when it’s warm and a balcony when it’s not.

On top of that, it’s worth choosing a powerful power supply with sufficient power and, most importantly, with protection against power surges and other electrical problems. One such option that will be shipped at the start of 2021 is the EVGA SuperNOVA 1000, which costs almost $200.

Choosing a frame is not the last task, because it affects the level of noise generated by the rig. Guntis Vitolins from Mineshop company, which offers both ready-made rigs and equipment separately, noted to Cointelegraph that miners’ tastes in frames have changed this year:

“GPU mining industry has changed since 2017, most of the miners prefer the server type riser less GPU cases over open air frames with risers. As the cooling is better in closed case and also installation is much faster. Only downside on these cases is they could be a bit noisy at 50–60db.”

For those who do not want to figure out the complex topic of designing a mining rig, GPU card selection and so on, there are companies that offer turnkey solutions. This year, experts have been discussing the growth in sales of these ready-made rigs, dubbed “mining 2.0.”

Vitolins further stated that “sales have increased dramatically since March 2020,” adding that GPU miners built with AMD graphic cards (the best cards for mining Ether) have been a particular hit.

Is 2021 Good For Mining?

Looking at the growing cryptocurrency prices and the excitement around mining equipment gives hope that 2021 will start off no worse than the previous year for the industry. However, it is impossible to predict whether crypto mining will stay in fashion due to economic uncertainty amid the devastating COVID-19 pandemic.

But, it is safe to say that miners in 2020 have become more experienced and battle-tested following Bitcoin’s mining reward halving and the not-so-smooth rainy season in China. Today, miners are no longer babies seeing the world around them for the first time, but ready for market shocks and able to adapt to any conditions. Furthermore, as large, public companies are starting to enter crypto mining, 2021 should further solidify the adoption and acceptance trend.

Updated: 12-28-2020

Marathon Patent Agrees To Buy 70K ASIC Miners From Bitmain For $170M

Nasdaq-listed Marathon Patent Group (MARA), one of the largest enterprise bitcoin mining companies in North America, announced its pre-order purchase of 70,000 Antminer S-19 ASIC miners from Bitmain for $170 million, more than tripling the size of Marathon’s fleet.

* “This purchase is the largest order in dollar terms as well as the single largest order for S-19 ASIC miners that Bitmain has ever received,” said Marathon Chairman and CEO Merrick Okamoto.

* Marathon said it sees receiving an initial batch of 7,000 S-19 miners in July 2021 and the final shipment in December 2021.

* Marathon said its mining fleet will include more than 103,000 machines after this latest order has been received and deployed with a total mining capacity of 10.36 exahashes per second (EH/s).

* Shares of Marathon opened Monday trading nearly 30% higher than their Friday close, trading hands just below $14. But some gains were given back as the share price dipped roughly 5% around 15:30 UTC.

* The monster order comes after a holiday weekend in which the price of bitcoin (BTC, +1.05%) hit a succession of new all-time highs.

Bitcoin Mining Company Riot Blockchain Passes $1B In Market Cap

Nasdaq-listed bitcoin mining company Riot Blockchain (RIOT) reached a $1.08 billion market capitalization Monday after surging nearly 13% in early trading hours.

* Shares of the Castle Rock, Colo.-based firm have gained over 1,250% in 2020, currently trading hands above $16.

* Over the same period, bitcoin (BTC, +1%) gained nearly 280%.

* Riot has issued nearly 17 million shares since November, with a total of 67.5 million shares outstanding, according to data collected by ycharts.com.

* Riot has aggressively expanded the size and sophistication of its mining operations in 2020, including a planned pilot project in Texas to test water immersion cooling technology in addition to purchasing over 31,000 new ASIC mining machines this year, per CoinDesk’s prior reporting.

* Riot shares opened Monday nearly 18% higher than the Thursday close on Christmas Eve.

* Riot pivoted its business model from biotech to bitcoin mining in October 2017 when the company’s value was less than $50 million.

* Riot did not immediately respond to a comment request from CoinDesk.

Updated: 12-31-2020

Bitcoin Mining Machine Maker Ebang To Launch Crypto Exchange In 2021; Shares Rise

Bitcoin mining equipment maker Ebang (EBON) announced Thursday it is preparing to officially launch a cryptocurrency exchange in the first quarter of 2021.

* Shares of the Nasdaq-listed mining equipment manufacturer rose on the news, jumping to as high as $6.18 a share before settling down to $5.71 at the time of this writing, up 16%.

* Ebang said it has started publicly testing its cryptocurrency exchange and will officially launch in the first quarter of 2021.

* Very little has been revealed about the proposed exchange, except that Ebang has said it will be a regulatory-compliant cryptocurrency exchange that would strictly operate outside of China, where the government has cracked down on trading platforms.

* Recently Ebang set up a wholly owned subsidiary in Australia as part of its strategy to create a digital asset trading platform.

* In a statement, Ebang Chairman and CEO Dong Hu said the completion of the internal testing of the cryptocurrency exchange is a step forward in expanding its blockchain financial services business.

* “We will also explore other business opportunities in the blockchain and cryptocurrency industry such as establishing mining farms and cryptocurrency mining to optimize the structure of our offerings in the blockchain industry value chain,” said Hu.

Updated: 1-4-2021

Bitcoin Mining Machine Shortage Worsens As Bitmain Sells Out Through August

Even though leading bitcoin mining manufacturer Bitmain doubled prices to capitalize on overwhelming demand resulting from the surge in the price of bitcoin, it still pre-sold three months of inventory in a few weeks.

In early December, Bitmain was pre-selling bitcoin ASIC miners with an expected shipping date of May 2021, per CoinDesk’s prior reporting. Less than a month later, Bitmain has sold out through August 2021 and has raised its prices significantly.

In late November, Bitmain’s Antminer S19 was priced at $1,897. Now, the same machine sells for $3,769 a 98% markup.

Bitmain’s prices have gone up, said Kevin Zhang, vice president of business development for New York-based mining company Foundry, noting that demand for new ASICs shows no sign of abating soon. “But there also has been very limited extra allocation for May though July next year for S19s and S19 Pro models.”

With miners eager to buy any available machines, secondary mining markets continue to benefit from primary manufacturers’ low inventory with activity surging to its highest levels since 2017. Prices for more efficient, second-hand models have climbed to 12-month highs, per Luxor Technologies market data.

“Secondary markets are also booming”, said Amanda Fabiano, head of mining at Galaxy Digital. “S9s that were being sold in May 2019 for $20 are now being sold at $130 on some channels,” she told CoinDesk in an email.

The surge in mining activity comes as bitcoin ended 2020 with a more than 300% gain, currently trading just below $31,000. Miner revenue has also soared with the dollar amount earned per terahash per second (TH/s) reaching $0.25 Sunday, its highest level since August 2019, per data from Luxor.

To meet growing market demand, Bitmain has “been enhancing the efficiency and capabilities of our manufacturing facilities,” said International Marketing Director Nathaniel Yu.

But Yu doesn’t expect demand for mining machines to subside anytime soon as “more institutional investors take interest in cryptocurrencies and blockchain technology.”

Fabiano described the current mining machine market conditions as a “perfect storm” for supply constraints: limited capacity at the foundries, larger facilities buying up supply, and companies with strong balance sheets entering the market with the ability to place massive orders.

Those massive orders are coming from mining firms like Riot Blockchain (RIOT), who bought over 31,000 new machines this year, Core Scientific, who bought 59,000 machines from Bitmain in one order, and Marathon Patent Group (MARA) who expanded their mining fleet to over 100,000 machines.

“At this rate, hardware procurement will continue to be an obstacle throughout 2021,” Fabiano said.

Updated: 1-5-2021

Canaan Releases Liquid-Cooled A1066I Bitcoin Miner

Canaan’s new miner is natively cooled by immersion in liquid, promising better performance.

Canaan, one of the earliest manufacturers of Bitcoin (BTC) ASIC miners, has released the Avalon Immersion Cooling Miner A1066I, a device designed to be liquid-cooled.

Unlike traditional air-cooled devices and common types of liquid cooling for enthusiast PCs, the A1066I’s electrical components are submerged in a special dielectric fluid that carries heat away directly from the boards.

Dielectric fluids are specially engineered to insulate the components and avoid the corrosion damage and short circuiting that would occur with standard water or other types of fluids. This is also different from liquid cooling based on water blocks, where a special heat exchanger isolates the water from the components.

The A1066I is a large container device that can hold up to 90 immersion-cooled units. Canaan claims that each unit produces 50 Terahashes per second for a power consumption of 3400 watts, while each tank reaches up to 7200 TH/s and 306 kilowatts of energy usage when fully stacked.

While Canaan claims the A1066I has better performance than its air-cooled top-of-the-line A1246, the latter packs 90 TH/s of hashrate for the same energy consumption, making it more efficient on paper.

Cointelegraph asked for clarification on the figures but did not immediately receive a response.

Nonetheless, the native liquid cooling feature can make the device more attractive to certain categories of miners, especially those in warmer regions. The more effective cooling method also allows for more aggressive overclocking, potentially allowing for higher hashing performance — though electricity consumption remains an important constraint when trying to boost the hash rate. The cooling method also benefits from protection against dust and overheating.

Canaan is one of the original ASIC manufacturers and the first to launch a successful initial public offering on NASDAQ. Its performance has been lackluster since then as lawsuits and claims that the company misled investors surfaced. Quarterly operating losses weighed heavily on the stock price too.

Canaan’s chief competitors are Bitmain, which is having its share of troubles as well, and MicroBT, an up-and-coming manufacturer that has steadily gained market share in the past months.

Updated: 1-6-2021

Cryptocurrency Mining Firm Marathon’s Market Cap Passes $1B

Nasdaq-listed cryptocurrency mining firm Marathon Patent Group (MARA) reached a total market value of $1 billion as its shares surged Wednesday to the highest in more than three years, over $17.

* Shares of the Las Vegas-based company have soared over 1,700% in the past 12 months. Bitcoin gained roughly 330% over the same period.

* Marathon has been mining some cryptocurrency since at least 2016, but considerably increased its focus on mining operations in the past few years. At the cryptocurrency market’s prior peak in late 2017, Marathon barely had a $50 million market capitalization. Coinciding with its recent nearly parabolic increase in share price, Marathon has aggressively expanded its mining capacity, with a total of 90,000 new machines purchased in October and December.

* In an email to CoinDesk, CEO Merrick Okamoto said the milestone is “a very special moment for our company.”

* “Many of our shareholders stuck with us through the difficult times in our industry,” Okamoto said. “We feel honored that those who stayed on this journey are now reaping this financial reward for their patience and confidence in our company.”

* The company also completed a $200 million capital raise Monday and announced a “clean block” mining pool with DMG Blockchain Solutions “that adheres to the Office of Foreign Asset Control’s (OFAC) compliance standards and reduces the risk of mining blocks that include transactions linked to nefarious activities,” per a release.

* Marathon reached the billion-dollar market value club a week after publicly traded bitcoin (BTC, +7.53%) miner Riot Blockchain also reached $1 billion in market value.

* Bitcoin’s sustained rally over the past year has benefited publicly traded mining companies across the board, with the gains of nearly all of their shares outperforming the leading cryptocurrency, per CoinDesk’s prior reporting.

Updated: 1-7-2021

Bitcoin Miners See Revenue Per TH/s Nearly Triple In 3 Months

Bitcoin mining revenue has nearly tripled in the past three months measured by dollars per terahashes per second (TH/s).

* In early October, miners were earning roughly $0.078 per TH/s.

* Following bitcoin (BTC, +9.16%)’s parabolic price rally, that revenue has soared by 265%, reaching $0.284 Thursday.

* Not since early August 2019 has miner revenue reached these levels, according to data from Luxor Technologies.

* Bitcoin cut through the $40,000 mark Thursday afternoon, extending its early year gains to well over 30%, extending on its more than 300% gains in 2020.

* With market conditions prompting existing miners to expand their operations and new participants to join the sector, mining equipment manufacturers are struggling to keep pace with demand. Bitmain, for example, has sold out until August and nearly doubled the price of its S19 model, per CoinDesk’s prior reporting.

* Amid the mining machine shortage, miners are scouring secondary markets for any available and efficient machines they can find as mining revenue continues to increase along bitcoin’s price.

Updated: 1-8-2021

Cryptocurrency Miner Hive Blockchain Passes $1B Market Value

Publicly traded cryptocurrency mining company Hive Blockchain (HIVE) has passed $1 billion in market value as its shares continue to surge amid bitcoin’s parabolic rally.

* The Vancouver-based company has a current market value of $1.17 billion at last check with 345.7 million shares outstanding.

* Hive first crossed the 10-digit mark in early November 2017 shortly before the cryptocurrency market peaked a month later. For most of the past three years, Hive’s market value has stayed below $200 million.

* Hive shares rallied over 2,500% in 2020 and have added an additional nearly 40% gain so far in January, currently trading around $3.32. In 2017, shares peaked just above $6.75.

* To date in 2021, bitcoin (BTC, +1.18%) has gained over 40% after reaching nearly $42,000 Friday morning.

* Coinciding with its soaring market value, Hive has focused expanded its mining operations with the purchase of over 3,000 new mining machines in 2020, with nearly half of that number purchased and deployed in November 2020 alone.

* Hive competitors Riot Blockchain (RIOT) and Marathon Patent Group (MARA) both also recently hit the $1 billion market value in late December and early January respectively, per CoinDesk’s prior reporting.

Updated: 1-8-2021

Square Crypto Funds Bitcoin Developer To Improve Mining Pool Software

Square Crypto’s latest grant will fund a Bitcoin developer’s work on software that could improve how mining collectives pool hash power.

Pseudonymous developer Fi3 (@piccioneLibero2 on Twitter, or “free pigeon”) will receive an undisclosed sum to work on an implementation of Stratum V2, the next iteration of a Bitcoin mining protocol software developed by Braiins.

“Square Crypto is excited to support the development of a high quality open-source implementation of Stratum v2,” Square Crypto lead Steve Lee said to CoinDesk. “This software benefits miners by maximizing their revenue and providing more freedom and security.”
‘Personal freedom’ to pursue Bitcoin development

“I wanted to work on something related to Bitcoin,” Fi3 told CoinDesk. The Bitcoin developer has previous experience working with Bitcoin’s mining industry via a collaboration with Italian mining company Bitminer Factory. Fi3 is proficient in the Rust programming language, which will be used to code the upgrade, so once they saw the opportunity they “caught it.”

“I also like the personal freedom that this kind of grant gives you,” Fi3 continued.
Read more: Square Crypto’s 20th Grant Will Support Bitcoin Design, User Experience

The co-author of the proposal, Jan Kvapil, will begin work on the implementation in February, Fi3 said.
Stratum V2: Giving Bitcoin mining a boost

A mining pool is a collective of miners – from big industrial players to hobbyists farming in their basements – who combine their hash power to increase their collective chance of mining a block.

The Stratum software coordinates this pooled mining. The new edition, V2, will patch a handful of security flaws present in its 2012 predecessor, while improving connection speeds between miners in the pool. It will also give individual Bitcoin miners a say in which transactions they want to include in the blocks that the pools mine, allowing individual miners a bit more freedom in the process.

Fi3’s goal is to develop and create a Bitcoin Improvement Proposal (or BIP, code that alters some aspect of the Bitcoin network or protocol) that paves a clear path to activating the upgrade. Stratum V2 has been in the works for some time, but the grant will fund the changes that should finally push the project to fruition.

Toward this end they will consult with Braiins co-founder Jan Čapek and former Bitcoin Core developer Matt Corallo, who now works full-time for Square Crypto as a developer on open-source projects.

Fi3 said a Bitcoin Core pull request for implementing Stratum V2 could be ready in 6 months; this would include a BIP that outlines activation. After this point, “a well-tested implementation [of Stratum V2] should be ready” in a year, Fi3 said.

Updated: 1-9-2021

Are Bitcoin Miners Bullish? BTC Mining Difficulty Sees Biggest Bump In 3 Months

The average amount of Bitcoin miners are selling continues to gradually decrease.

Bitcoin (BTC) mining difficulty is increasing by roughly 11% on Jan. 9, according to data from BTC.com. This marks the biggest increase in nearly four months that will put the metric over 20 trillion for the first time ever.

“Hashrate is on a tear!” commented popular pseudonymous Bitcoin trader hodlonaut three days ago. “When difficulty readjusts in 3 days, it will crush through 20T for the first time in Bitcoin history.”

Bitcoin Network Difficulty Reaches 20 Trillion

The network difficulty is a relative measure of how hard it is to mine a new block for the Bitcoin blockchain.

With the hash rate currently at record levels of around 148 EH/s, the difficulty adjustment, which occurs every 2016 blocks, makes sure that the time between blocks mined remains 10 minutes on average.

Miners Remain Bullish

Meanwhile, simultaneous rising hash rate and mining difficulty suggest that miners are continuing to allocate a record number of resources to secure and invest in the network.

Since the halving in May, the total outflows of BTC from miners have been gradually decreasing on average — the opposite of BTC/USD. Hence, miners are still showing no signs of major selling despite the price of Bitcoin skyrocketing to over $41,000 in the past week.

What’s more, the Miners Position Index (MPI), which calculates the ratio of BTC leaving all miners wallets to its 1-year moving average, is currently at 4.5. Values above 2 indicate most miners should be selling.

This suggests that miners aren’t eager to part with their freshly-minted BTC at the moment, particularly as exchange BTC reserves plummet and the price is in a strong, accelerating uptrend.

Thus, it may make sense for some miners to hold their inventory and benefit from the accelerating bull market that may last into December 2021, according to some predictions.

Meanwhile, concerns of a “mining death spiral” continue to be disproven with every new network record as Bitcoin network fundamentals appear stronger than ever. Overall, Bitcoin miners seem to be in a financially secure position from a rising BTC price, remaining financially secure even though it has never been harder to mine BTC.

Currently, each BTC block mined is worth roughly $253,600 with around 9.44% coming from network transaction fees, according to the latest data from Clarkmoody.

Max Keiser Predicts Bitcoin Price Rise As Hashrate Hits New All-Time High

The hashrate for bitcoin broke its all-time high record which has led Max Keiser to predict that a price increase will follow.

Bitcoin Hash Rate

For blockchain-based projects like bitcoin, a higher hashrate means that the network is more secure, further driving investor confidence in the product. It also gives a snapshot of the amount of ‘labor’ being contributed to bitcoin, which creates more competition for miners and shows they’re betting on the cryptocurrency, as mining is resource intensive and has singiifcant energy costs.

Earlier in the month, crypto analyst and bitcoin bull Max Keiser posted a tweet that bitcoin price “follows hashrate,” and that hashing has been on a bullish trend for nine years.

Price follows hashrate and hashrate chart continues its 9 yr bull market. #Bitcoin pic.twitter.com/Rh49V9gaJw

— Max Keiser (@maxkeiser) August 8, 2018

Increased hashing power can indicate market confidence, but it also creates higher operating costs for miners obtaining block rewards. The prevailing theory has been that increased competition for BTC drives up value inherently, as miners are forced to sell at a higher price to cover costs.

Not everyone agrees that the “Labor Theory of Value,” applies to bitcoin, but Keiser is adamant that hashing is a bullish indicator.

Kentucky Bill Seeks To Lure Crypto Miners With Tax Breaks

Two Kentucky lawmakers have called upon the commonwealth to offer tax breaks to cryptocurrency miners seeking to tap into the energy rich region.

* General Assembly Representatives Steven Rudy and Chris Freeland’s bill introduced last week would exempt “commercial cryptocurrency miners” from paying 6% sales taxes or 6% excise taxes on their rigs’ electric bills and mining equipment.

* Kentucky “has an opportunity to become a national leader” in crypto mining because of its low energy rates and abundant supply, said the bill. Tax breaks would help the Commonwealth further compete.

* The Republican lawmakers submitted their 13-page bill to the General Assembly on Jan. 8, where it now sits in committee. Neither representative responded to a request for comment.

* The Block first reported the bills’ submission.

Updated: 1-13-2021

Riot Blockchain Adds Blockware CEO To Advisory Board

Mason Jappa is the latest addition to Riot’s changing boards of directors and advisors.

Nasdaq-listed bitcoin miner Riot Blockchain (RIOT) has added Mason Jappa, CEO of mining hardware and hosting company Blockware, to its advisory board.

* The two companies have had a close working relationship, Jappa told CoinDesk, including sharing industry insights and Blockware helping Riot sell machines.

* Per a statement, Jappa will assist the billion-dollar company with “optimizing operations” and its “evaluation of growth opportunities,” among other responsibilities.

* Jappa is the latest in a series of changes to the Castle Rock, Colo.-based firm’s board of directors and board of advisors over the past two years.

* In July 2019, the company named Yan Pritzker and Cory Klippsten of bitcoin exchange service Swan Bitcoin and Pierre Rochard of Kraken to its advisory board.

* In November 2020, former Ontario legislator Remo Mancini resigned from the board of directors after being appointed in 2018.

* Jappa brings strong knowledge of the mining industry to Riot’s board, with his company having placed over 45MW for hosted clients and sold over 200,000 ASIC miners since its founding in 2017.

Updated: 1-14-2021

Coinbase Invests In US-Based Mining Firm Amid Industry Diversification Efforts

Titan secured funding from Coinbase to offer a U.S.-developed software suite for miners.

Coinbase Ventures, the investment arm of the major crypto exchange, has invested an undisclosed amount into Titan, a developer of software and services targeted at industrial Bitcoin (BTC) mining.

According to Titan’s announcement, the investment will help continue development of the company’s products and improve efficiency and profitability of Bitcoin mining companies.

Ryan Condron, co-founder and CEO of Titan, said that “mining has advanced from hobby, to industry, to critical global computing infrastructure, and Titan is prepared to help world-class miners meet these challenges.”

Titan offers advanced pool and mining software targeted specifically for professional U.S.-based miners. Its network of nodes and mining dashboards allows miners to better compete on a global scale, according to the company.

Previously, Titan launched the Titan Pool in collaboration with CoinMint and CoreScientific, two major mining infrastructure providers in the U.S. Among the benefits offered by the pool, Titan cites better transparency and, crucially, solving some jurisdictional issues for U.S. miners.

China currently accounts for the vast majority of the Bitcoin hashrate. The relative dominance can be attributed to a combination of attractive electricity costs and a localized supply chain.

The Sichuan region is particularly attractive for miners due to its cheap hydroelectric power. Its importance is so pronounced that local seasons have a strong effect on Bitcoin’s hash rate. But cheap electricity is not unique to China, with some regions in the U.S., Canada and Europe being just as competitive.

The mining supply chain, on the other hand, sees a much stronger dominance of Chinese companies. Mining hardware manufacturers are almost exclusively based in China. This gives local miners a powerful home field advantage, as there may be difficulties in exporting and importing certain chips and devices. Though the U.S. is catching up in terms of mining hash rate, accounting for 14% of the total, local firms are still using Chinese-made devices.

This may be particularly problematic in today’s geopolitical environment, where the U.S. is actively banning Chinese-made products and services, and going as far as prohibiting investment in Chinese companies. The mining industry has already begun responding, with some operators repatriating hash rate.

Though the departure of President Trump may help ease tensions somewhat, some analysts believe that there may be no reset in sight for the U.S.-China relations.

Titan is primarily focusing on the software side of the mining supply chain, offering a national pool for miners to join. There have also been some developments in local maintenance infrastructure, with Bitmain offering technician certification courses in the U.S. in May 2020.

Interest in diversifying the mining industry away from China’s dominance appears to be high, but full independence is unlikely to be achieved until ASIC manufacturers from other countries step in.

Updated: 1-18-2021

Nvidia May Restart Production of Crypto Mining GPUs If Demand Sufficient

Selling dedicated crypto cards would alleviate pressure on Nvidia’s consumer models.

Chip-making giant Nvidia could potentially restart production of dedicated graphics processing units (GPUs) for cryptocurrency miners, according to its executive vice president and chief financial officer, Colette Kress.

* Speaking at an event on Jan. 12, Kress said if demand in the cryptocurrency market picks up to a “meaningful” level, the company could again start selling the specialized cards called CMPs, according to a SeekingAlpha transcription.

* CMPs are GPUs with the video outputs removed, allowing them to be made and sold more cheaply.

* Currently, Nvidia’s RTX 30-Series GPUs are popular with miners, though Kress said, “We don’t believe [mining demand is] a big part of our business today.”

* However, “gaming demand is very strong, and we think that’s larger than our current supply,” she said.

* With the RTX 30-Series supply to stay tight until at least the end of Q1 2021, relaunching CMPs could alleviate pressure on the consumer product line.

* While bitcoin miners use specialized and more costly processors called ASICs, other cryptocurrencies like Ethereum’s ether can be mined with GPUs.

1-19-2021

Why Pakistan And The Middle East Can Bet On Crypto Mining

By embracing crypto mining activities in the region, Pakistan and Iran may give other nations in the Middle East an example to follow.

It is especially important for countries to become more aware of cryptocurrencies, especially with components like decentralized finance rising in prominence. Now that the Middle East is becoming more mining-friendly, the future suddenly looks bright once again for this region.

Pakistani Administration Legalizes Crypto Mining

The Pakistani government appears to be moving quickly toward a pro-crypto stance. Following a commitment to integrate Bitcoin (BTC) into its financial system last December, the country is taking steps to legalize mining.

Sumera Shams, a member of the provincial assembly in Khyber Pakhtunkhwa, announced on Twitter that the body had voted to pass a law legalizing mining:

Khyber Pakhtunkhwa is one of the major provinces in Pakistan. It is located in the country’s northern region and is a driving force behind the country’s development. According to further confirmation from Zia Ullah Bangash, chief advisor on science and information technology to the region’s chief minister, the area voted to legalize mining.

Local news sources claimed that the assembly had passed a draft legislation showing a commitment to embrace what could possibly be the future of money. Legislators explained that they believed cryptocurrencies would replace fiat currencies eventually and that it is important for them to be at the forefront as this development comes.

By embracing mining, they hope to usher in the next financial revolution. The bill passed in a unanimous vote, showing that legislators were indeed looking forward to bolstering their digital and financial spaces.

Waqar Zaka, an influencer and pro-crypto activist, tweeted that this was “one province done, three more to go.” While this doesn’t mean that all of Pakistan has embraced mining, it is indeed a step in the right direction.

It is unclear how the northern region wants to move forward with its mining strategy. However, it should be able to develop a robust regulatory regime that will encompass the entire industry and allow for investment to flow.

Iran Doubles Down On Mining

Pakistan is not the only country in the Middle East that is moving quickly toward the legislation of mining. In fact, it currently trails Iran in that regard.

Iran’s embrace of crypto mining has been swift. The country initially outlawed the activity after noticing that citizens had begun operating mining outfits in mosques. Most mosques get electricity subsidies from the government, and these miners had set up their operations to ensure that they would profit from it.

The situation was particularly dire because crypto had started gaining traction in Iran at the time. Sadly, it turned sour when the government began to seize mining equipment found in mosques. A report on the issue claimed that Mostafa Rajabi Mashhadi, an official at the Iranian Ministry of Energy, pointed out a 7% jump in the consumption of electricity in June 2019.

Mashhadi reportedly added that crypto miners had been responsible for the rise in consumption levels. So, the government chose to take preventive steps to avert any issues with Iran’s power grid. He pointed out that the government will identify miners and immediately cut them off the power grid — until all parties reach a reasonable agreement over pricing policies for miners.

In November 2018, Iran was ranked on top of the global energy subsidy list, providing up to $45.1 billion annually. That figure represented a 10th of its annual gross domestic product that year. Considering that Iran had been dealing with stringent economic sanctions from the United States government and the international community over its nuclear program, it couldn’t afford to pay more in subsidies.

However, these same policies have forced the country to rethink its policies. In July, the Iranian government officially ruled to declare crypto mining an industrial activity in the country. A report from the Mehr News Agency stated that the government had held a cabinet meeting, chaired by President Hassan Rouhani.

The legalization essentially made mining an official industry. At the same time, individuals and businesses looking to engage in the activity would need to get licenses from the Ministry of Industry, Mine and Trade.

It was a perfect match. Electricity prices are pretty cheap in Iran. Statistics from Global Petrol Prices at the time showed that the country charged almost $0.005 per kilowatt-hour. Considering that this is much better than what other countries charge, it is no doubt that this will be lucrative.

So far, over a thousand individuals and entities have jumped into the Iranian mining space, taking advantage of the cheap electricity. In return, the country has enjoyed a boost in revenues and taxes. The economic sanctions from the United States and the international community have continued to grow, and this means that the country is strapped for cash. With a fledgling industry like cryptocurrency mining, it can offset some of these costs.

It is unclear whether any countries in the Middle East will join the fray anytime soon. Saudi Arabia is growing to be the blockchain hub, although most of its efforts have been aimed at using the technology to improve its government and private industries. With the prospect of crypto legislation rising there, there is no reason why mining can’t become more of a recognized activity as well.

Crypto Winter: Bitcoiners Use Mining Rigs As Heaters As Temperatures Drop

Bitcoiners have been using the excess heat produced by their mining rigs to stay warm this season.

Bitcoiners mining cryptocurrency at home this winter have been staving off freezing temperatures by putting them to good use as heaters.

According to the Wall Street Journal, crypto miners in France and the United States report their overall heating costs have dropped — even if the temperature in their homes often gets far above what they’d prefer.

Thomas Smith, a photographer based in California, has been using mining rigs to heat his home since at least 2019. He’s also been exploring some novel uses, including employing the miners to warm up his two chickens in an outdoor coop and to grow tomatoes in his greenhouse as temperatures started plunging at night.

It’s not the first time the idea has been implemented, with reports in 2018 that the co-founder of Czech cryptocurrency exchange NakamotoX had been growing ‘cryptomatoes’ in five-acre greenhouse using the excess heat from crypto mining.

“My greenhouse is 24 cubic feet, so putting in all the heat from the cryptocurrency-mining computer would increase its temperature by around 40 degrees,” said Smith in the WSJ. “Even in the dead of winter — with a nighttime temperature of 45 degrees — that would still push my tomatoes to their 85-degree limit. On warmer nights, it would risk roasting them on the vine.”

He Added:

“I’ve experimented with heating my home using cryptocurrency-mining waste heat on a small scale, with a good deal of success”

Before the pandemic, when many were allowed to live on university campuses in the United States, students reported mining with “free” electricity provided by the schools, which helped them cover utility bills. One dormitory resident advisor said at the time that instead of using a space heater in the winter, he would simply mine crypto.

But before you rush off to save on heating bills with a crypto mining rig, remember that it’s difficult to take advantage of mining many cryptocurrencies at home as the cost of electricity often makes using personal computers to generate blocks financially prohibitive, especially for ultra-competitive currencies like BTC.

Cryptocurrency Miners Find Their Souped-Up Machines Make Dandy Warmers For Rooms, Greenhouses, Chicken Coops

As winter approached, Dan van der Ster worried his annual utility bill would skyrocket since his family of five was homebound with the pandemic.

It hardly budged.

While the electric portion shot up in 2020, the gas-heat expense surprisingly declined. He thinks that’s largely thanks to the beefy new computer he uses to mine cryptocurrency and on which his teenage son plays videogames.

Mr. Van der Ster, a 40-year-old engineer who lives in France near the Switzerland border, now has a new concern: “It’s getting too warm.”

With the health crisis keeping people home, computer gamers and bitcoin miners are taking greater advantage of a cold-weather perk. The more they use their high-powered machines, the more heat the devices give off.

In the pandemic’s early days, photographer Thomas Smith funneled heat through a tube from a computer he uses mainly for mining bitcoin to maintain a small greenhouse in his garage. It yielded fresh basil and heirloom cherry tomatoes.

“It was like those heaters on a restaurant patio,” he said. “I made a caprese salad.”

Now Mr. Smith, who lives in Lafayette, Calif., is experimenting with using his computer to heat at night a coop he recently set up in his backyard for two chickens. “It’s chilly out there,” he said, though he is concerned about the birds’ safety. “I don’t want to overheat them.”

Rebecca Ratchford hasn’t had to raise the thermostat this winter in her three-bedroom Cary, N.C., home, where she has been working remotely as an administrative assistant since the pandemic began. Her custom-built computer gives off plenty of warm air, she said, especially during intense battles in “Destiny 2,” the science-fiction shooter game.

“When a raid is going on, my PC is struggling,” said Ms. Ratchford, 27, which means it will work harder—and pump out more heat—to keep up with the action.

In warmer months, the machine’s excess heat will usually prompt her to crack open a window, though she generally doesn’t mind the temperature changing. Her Snowshoe cat Yachi loves it and often naps alongside her computer, while her mixed-breed dog Dash has a seasonal affection for the heat, usually in the winter.

How warm a high-performance computer can get depends on the type of cooling and other components in it, and what it is used for and how long, said Matthew Justice, a software engineer and author of “How Computers Really Work.” It could make a large, spacious home just a little bit toastier, he said, or turn a small one with minimal ventilation into a sauna. The problem is acute for gamers and miners in warm climates, he said, as both tend to use their pricey machines year-round.

Coping with the heat is a hot topic on a forum dedicated to computer gaming on the social-media platform Reddit, though mostly in the summer, said Jesse Zmick, 30, one of its moderators. Aside from making under-the-hood upgrades to components that keep the machine from overheating, he often recommends simply investing in a good desk fan to improve airflow.

“Fans are your friend,” he said, adding that sometimes extra steps may be necessary. During the summer, “I’ll strip down to shorts and a T-shirt if I’m playing an extended session,” said Mr. Zmick, a help-desk assistant in Charlottesville, Va., adding that the air-conditioning system in his apartment is subpar. “But in the winter it’s quite nice.”

Fast-food company KFC recently co-developed a gaming computer with a chamber for keeping its chicken warm. “Never risk letting your chicken go cold again,” reads a promotional website from the Yum Brands Inc. unit, which made the machine in partnership with hardware manufacturer Cooler Master Co.

KFC hasn’t announced a price or release date for the “KFConsole,” but a representative said the device is “a real-life product.”

Some people rely on powerful computers for mining digital currency such as bitcoin, whose value has more than quadrupled from a year ago. Miners and gamers tend to butt heads trying to get hold of new graphics cards—essential computer parts that generate lots of heat—which are often in short supply.

In Portugal, the home in the fishing village where Jon Standen is staying lacks a built-in heating system. As a tester of graphic cards for a living, he said, he is fortunate because his high-end computer is doing a good job of filling the gap.

“It’s essentially a 350-watt heater,” said the 40-year-old, originally from London, adding that lately a cold snap has brought the temperature at night down to around 37 degrees Fahrenheit. The computer, he said, “puts a lovely warm draft of air across my desk and my keyboard so I can keep typing.”

Kyle Burger, 25, is leaning on his gaming rig to help warm his drafty one-bedroom Chicago apartment this winter. “It’s better than a space heater,” he said, “because you can’t play games on a space heater.”

A financial-product designer temporarily working from home, Mr. Burger thinks his computer runs hotter than most because it is about eight years old. It has to work hard to support even games that don’t have complex graphics, he said: “With every new game I get I feel like I’m flying closer to the sun.”

Austin Evans, a YouTube creator in Los Angeles, last year made a video in which he fried an egg atop a gaming computer he purposely assembled without the kind of cooling features most machines have for safety and performance. “It was a little runny on the top,” he said, “but the bottom was white and tasted good.”

Mr. Evans, 28, doesn’t recommend that people attempt the same at home, even with a properly built computer. “It’s not practical for any kind of long-term use, but it was an interesting experiment,” he said. “It technically does work.”

Updated: 1-21-2021

Genesis Mining Head Forecasts Importance Of Layer-Two Bitcoin Solutions

He feels Bitcoin might need such solutions, even with the coin in a store of value role.

Would Bitcoin and its blockchain be able to handle mainstream adoption as a store of value without requiring second-layer solutions? Genesis Mining’s head of mining operations, Philip Salter, holds a mixed view.

“I think Bitcoin is a good store of value regardless of transaction fees,” Salter told Cointelegraph. “The issue is — the higher the fees are the larger is also the minimum value that can be efficiently transferred.”

Bitcoin (BTC) has stood the test of time up to this point, with BTC maintaining its place as the crypto industry’s highest market cap asset for the past 12 years. Bitcoin is seen as more of a store of value than digital cash these days, however, and Salter thinks complications may still arise from this shift in perceptions:

“Some years ago it was possible to store and transmit $1 efficiently, since tx fees were effectively zero. Currently, sending a transaction can easily cost $15, so it is not sensible to transmit $1 any more. If this trend continues due to more use of BTC and higher BTC prices, it will become prohibitive to transfer value in common amounts and it will be only an effective store of value for very large amounts.”

“That’s why I think that 2nd Layer solutions are a necessity not only for the use of BTC as a currency but also for the long term feasibility of BTC as a store of value,” Salter added. Industry players have worked on layer-two scaling solutions, such as Lightning Network, in an effort to facilitate small transaction capabilities.

Salter himself uses Lightning Network solutions for his own Bitcoin endeavors. “I personally upgraded my personal phone wallet to a lightning-only wallet (Phoenix), so that I can even in these crazy times pay with coins quickly and cheaply,” he said. “To anyone who tried to use lightning two years ago and found it confusing, I strongly suggest that you give it another try now that it’s far more established and user friendly to use.”

Bitcoin’s scaling debate was a focal point of discussion in 2017 and 2018. In September 2020, MicroStrategy said it faced no major issues during one of its BTC accumulations. The firm bought 38,250 BTC using a combination of off-chain and on-chain avenues.

Updated: 1-22-2021

Bitcoin Miners Facing Chip Shortage Amid Skyrocketing Demand

Bitcoin miners are scrambling to acquire more mining rigs as the global semiconductor shortage worsens.

A chip shortage is significantly affecting the Bitcoin mining hardware distribution chain, according to Reuters on Friday.

Indeed, Bitmain — one of the major Bitcoin miner makers — has seen its inventory sold out until August 2021, according to information on its website. Apart from being out of stock, Bitmain’s mining rigs are now at a massive price premium.

For instance, back in November 2020, the Antminer S19 shipped for $1,897 per unit. As of the time of writing, the same miner is priced at $2,767 on the company’s website — a 45% markup.

Speaking to Reuters, Alex Ao, vice president of semiconductor manufacturer Innosilicon, said, “There are not enough chips to support the production of mining rigs.”

What little supply is available is reportedly being scooped by major mining establishments in North America. Back in 2020, United States-based mining giants like Riot Blockchain, Bitfarms and Marathon significantly upscaled their inventory with massive purchases from Bitmain and rival MicroBT.

These capacity expansions occurred even as Bitcoin went through its quadrennial halving that saw block reward subsidies cut in half. Thus, while China still dominates the global hash rate distribution, North American mining interests are reportedly “squeezing supply to China.”

Chinese miners have also suffered notable disruptions of late including a frozen-card tide back in 2020 that prevented some operations from being able to pay for electricity. As previously reported by Cointelegraph, authorities in China’s Yunnan province also shut off the power supply to miners in the region.

Smaller mining operations are also in danger of being priced out of the market. Premiums on hardware, even for second-hand rigs, on top of the reduced block rewards could significantly impact their bottom lines.

Already, other industries dependent on semiconductors are beginning to feel the effects of the continued shortage. Car manufacturers such as Ford have announced shutdowns of some of their plants.

Updated: 1-25-2021

More Institutional Adoption As Marathon Patent Group Purchases $150M In Bitcoin

CEO Merrick Okamoto said the crypto purchase would help make Marathon an appealing choice to investors seeking “exposure to this new asset class.”

Nevada-based crypto mining firm Marathon Patent Group has invested $150 million in Bitcoin as a reserve asset.

Marathon announced today that it has purchased more than 4,812 Bitcoin (BTC) for $150 million through the New York Digital Investment Group — an average price of $31,168 per coin. Chairman and CEO Merrick Okamoto said the move was “a better long-term strategy than holding US Dollars,” comparing the Bitcoin purchase to companies like MicroStrategy, the business intelligence firm that made an initial $425-million crypto investment last year and has since bought more coins.

Okamoto Said:

“By purchasing $150 million worth of Bitcoin, we have accelerated the process of building Marathon into what we believe to be the de facto investment choice for individuals and institutions who are seeking exposure to this new asset class.”

The company expanded its operations significantly in 2020 in an apparent effort to become North America’s largest Bitcoin miner, installing Whatsminer M30S+ ASICs in June 2020 and purchasing 10,000 Antminer S-19 rigs in October 2020. Okamoto said that Marathon was expecting to have more than 100,000 miners “delivered and fully deployed” by the end of the first quarter of 2022.

“If all miners were operational today, based on the Bitcoin network’s current difficulty rate, we would produce approximately 55-60 bitcoins per day,” the CEO said. “However, by leveraging our cash on hand to invest in Bitcoin now, we have transformed our potential to be a pure-play investment into a reality.“

The crypto mining firm bought the dip, as its Bitcoin purchase reportedly came just before the coin rose back above $34,000 after falling below $30,000 last week. At the time of publication, the price of Bitcoin is $34,461, having risen more than 7% in the last 24 hours.

Updated: 1-27-2021

Blockstream Buys $25M Worth of Bitcoin Mining Machines From MicroBT

The ASICs are set to be deployed in Blockstream facilities through the U.S. and Canada.

Bitcoin technology company Blockstream said it bought $25 million worth of mining machines from MicroBT to expand its mining operations.

* The machines are to be deployed through Blockstream’s facilities in Canada and the US. When the company expects to receive its ASICs was not specified.

* In 2019, Blockstream launched Blockstream Pool and announced that it had been previously mining for a select few high-profile clients like Fidelity.

* Blockstream has over 300 megawatts in mining capacity available, said CEO Adam Back in a statement. “We’ll continue to grow aggressively throughout the year,” he said.

Updated: 1-27-2021

Time For A Crypto GPU? Gamers And Miners Spar Over Scarce Top Hardware

New GPU cards for mining are on the way, but the demand is too great. So, what are manufacturers doing to solve the shortage?

The rise of cryptocurrencies over the past few months, especially with the onset of 2021, has certainly catapulted the crypto niche into the mainstream. While traders buy and sell and try to calculate how much this or that currency has grown by and as large investment funds predict that Bitcoin (BTC) will soon reach $100,000 per coin, big things are also happening in the crypto mining space.

Miners in the largest pool, F2Pool, reportedly contributed to the recent fall of BTC price and then to its subsequent recovery, while individual miners from the United States and France are even heating houses in winter with their machines.

This indeed suggests that Bitcoin is one of the lifelines of the industry, especially with 2021 promising to be a year filled with new crypto mining products, especially video cards.

AMD On The Scene

At the end of 2020, several new products were expected from the two largest GPU card manufacturers, Nvidia and AMD, and it didn’t take them long to deliver. During the annual CES technology conference at the beginning of January, the manufacturers did not present the final versions of their GPU cards but confirmed that they will arrive on shelves very soon.

Users will be interested in the AMD Radeon RX 6700 and RX 6700 XT cards, which are intended to replace the Radeon RX 5700 and RX 5700 XT cards. This new series is interesting because according to some experts, the RX 6700 will be able to outperform its competitor and undisputed leader among miners, the Nvidia GeForce RTX 3060 Ti.

The new card can support up to 12 GB of GDDR6 memory, a powerful cooling system — like the GeForce RTX 3070 has — a 192-bit memory bus and 96 MB of Infinity Cache memory. An important factor for the popularity of the card will be the price, and because it’s reportedly cheaper to produce than the GeForce RTX 3060 Ti, the retail price is expected to be lower.

Why then can the RX 6700 be a success? Before purchasing a GPU card, miners look at the profitability of the cards — but here, AMD has problems. Of the 10 most profitable cards, almost all positions are occupied by Nvidia products. Of course, there is the AMD Radeon VII, which is very good, but when talking about cards that occupy the middle price category of $400 to $500, AMD is not in a strong position. This is why the RX 6700 series can possibly become a contender for the top five video cards of 2021.

A Special Product From Nvidia

What about Nvidia? Unfortunately, the company has yet to unveil a launch plan for a new card, perhaps because the RTX 3000 series just came out and is breaking all demand records, leading to a shortage of cards. Even before the new year, the new RTX 3080, 3070, 3060 Ti and 3090 were hard to find, even at several times their retail prices. The company admitted that this problem will likely not be resolved until April or May.

The RTX 3000 series is so popular because they are the most profitable cards for mining. According to some estimates, one GeForce RTX 3080 card can bring in $6 to $9 per day when mining Ether (ETH), and investments can be recouped in just two to six months — not bad for today’s network complexity.

But the manufacturer can get out of the crisis in a fairly simple way: Make cards specifically for miners and thus reduce the demand for the RTX 3000 series and end the struggle between gamers and miners.

Recently, the chief financial officer of Nvidia said that if demand from miners continues to grow, then the manufacturer may resume the production of the crypto-mining processor series. At the moment, the decision regarding their production has not yet been announced, which is understandable, as the previous generation of such cards in 2017 to 2018 was not widespread and the manufacturer fears another failure.

But that time, Nvidia presented special equipment for mining rather late, when many were already mining on readily available cards. Additionally, the timing was bad, as the wave of interest in crypto began to subside and the market entered a prolonged bearish period. This time, if Nvidia does a quick job of it and manages to release the cards within the next six months, then these cards may still come out while there is an ongoing shortage for the RTX 3000 series.

While Nvidia is cautious regarding announcing its own new mining cards, other manufacturers are starting to produce mining video cards based on the Nvidia architecture. MSI recently registered several products with the Eurasian Economic Commission — the main regulatory body of the Eurasian Economic Union, which consists of Belarus, Russia, Kazakhstan, Armenia and Kyrgyzstan — including the MSI GeForce RTX 3060 Ti Miner 8G and 8G OC GPU cards, which are designed specifically for mining.

Of course, this registration does not necessarily mean that the company will release these products, and it does not reveal a possible launch date, but this step clearly means that some manufacturers are interested in catering to the needs of miners and are determined to release very specific solutions.

Gamers vs. Miners

The fact is that while there is no special, up-to-date equipment for mining, all users end up buying the same latest cards, which operate well in both scenarios. For gamers, the main indicator of the quality of a card is the frame rate per second it achieves when playing the newest game at the maximum video settings.

The leader among gamers right now is the new Nvidia RTX 3090, which achieves 152.7 fps. A more popular card is the Nvidia GeForce RTX 3080 with 142.1 fps, which costs about $700 and works on the improved Ampere architecture. The only problem is that this card is as hard to find as a Sony Playstation 5.

But gamers should not be discouraged because there are signs that manufacturers are generally moving toward dividing equipment into mining and gaming. Nvidia announced that in February, the GeForce RTX 3060 will be released for sale and come equipped with 12 GB of GDDR6 video memory.

These cards will only be issued by Nvidia partner companies. Hong Kong-based Zotac has already presented two versions of the cards. The main thing that should please gamers is that they will not be powerful enough for mining and will only be suitable for games.

There’s No Consensus

It seems that for the near future, unfortunately, miners should be looking out for any GPU available on the market and cease hoping to strike gold by buying the latest and greatest. Ilya Goldberg, managing partner of Ecos-M — which operates a cloud mining center — said that 2021 will likely go by without any major shocks for the mining industry:

“As far as we know the main global hardware vendors have not purchased many chips for this year. Most likely, the new equipment will be released in the spring–summer of 2022. Therefore, we expect that this year the network hash rate will not grow much, and the profitability for miners will be good.”

Anyways, there is no need to fall into despair, as hardware manufacturers are evidently taking steps to meet the demand of all consumers — miners and gamers — which means that slowly but surely they are recognizing the power and demand of mining and are looking to deliver products for the industry.

Updated: 2-2-2021

California Pension Fund ($441 Billion) Loaded Up On RIOT Shares During Bitcoin’s Q4 Rally

The largest public pension in the U.S. bought more RIOT shares for the first time since 2017.

California’s $441 billion public pension fund increased its stake in bitcoin miner Riot Blockchain (RIOT) nearly sevenfold in last year’s Q4 amid the meteoric run-up in the price of bitcoin.

* California Public Employees’ Retirement System (CalPERS) held 113,034 shares in RIOT worth over $1.9 million at the end of 2020, according to Tuesday filings. That’s up from Q3 2020, when CalPERS’ 16,907 RIOT shares were worth a comparatively minuscule $49,000.

* The largest public pension fund in the U.S. had been holding firm on its nearly 17 thousand RIOT shares since acquiring them during the bull run in late 2017. That position seldom varied until now.

* RIOT spiked 541% during Q4 2020. Meanwhile, bitcoin was up 174% for the quarter.

* CalPERS board members included blockchain technologies as a future-forward investment opportunity during a public forum in 2016.

Updated: 2-2-2021

Bitcoin Miners Saw Revenue Rise 62% In January From December

Miners earned over $1.1 billion in January.

Bitcoin miners generated an estimated $1.1 billion in revenue in January, up 62% from December, according to on-chain data from Coin Metrics analyzed by CoinDesk.

The surge in revenue came as bitcoin‘s price climbed from $29,000 to just below $42,000 in the first half of the month before levelling off through the last two weeks.

Revenue estimates assume miners sell their BTC immediately.

Measured by per terahash per second (TH/s), miner revenues bounced between $0.20 and $0.27 for most of the month after peaking near $0.32 early in the month, per data from Luxor Technologies.

Network fees brought in $116 million in January, or over 10% of total revenue, a slight percentage increase from the 9.8% of revenue represented by fees last month. Fee revenue hit its highest mark since January 2018, per Coin Metrics data.

Fees measured in dollars were quite volatile in January, with average transaction costs bouncing between $5 to above $16 throughout the month, per Coin Metrics.

Notably, fees as a percentage of total revenue continues a strong upward trend since April, prior to the network’s third-ever block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.

Despite calls by some investment professionals like Guggenheim’s CIO Scott Minerd that bitcoin’s price is currently too high, miners eye a continued phase of strong revenue. Around the world, bitcoin miners continue buying more mining machines and are beginning to receive and deploy ASICs pre-ordered last year as they act on plans for continued expansion.

Updated: 2-7-2021

The Institutionalization Of BTC: Mining May Be More Profitable Than Buying

Regardless of Bitcoin’s price or future economic scenarios, Bitcoin mining will be a profitable activity.

For years, institutional investors have been watching Bitcoin from afar with bewilderment and amusement, but with little to no participation. Although they were attracted by the high returns, they were scared away by Bitcoin’s infancy, lack of rules and the myriad headlines warning of hacks, bankruptcies and scams.

In its early years, Bitcoin (BTC) lacked the on- and off-ramps required for most institutional investors, making it virtually impossible to get approved by any corporate investing mechanism.

Pre-2017 Bitcoin Investing

But a strange thing happened in the rally of 2017. As institutions were saying it’s too risky at the corporate level, many of the insiders were buying Bitcoin personally in every way they could.

They purchased Bitcoin through exchanges, Bitcoin ATMs and participation in initial coin offerings. Many of these individuals become passionate, even obsessive, about Bitcoin, and with them, Bitcoin began digging its roots into the financial world.

Post-2017 Bear Market

During the bear market that followed the 2017 rally, a huge number of Bitcoin products were created and launched specifically for institutional investors. Publicly-traded Bitcoin mining companies started providing investors with exposure to the most fundamental part of the industry.

Bitcoin holdings were securitized so that investors on major exchanges could freely speculate on Bitcoin’s price without setting up and using Bitcoin wallets. Companies started taking on debt to buy and hold Bitcoin because speculating the long term appreciation on Bitcoin is worth more than the interest on the debt.

Bitcoin’s Response To COVID-19

When Bitcoin fell and bounced off its approximately $4,000 low in March of 2020, the global COVID-19 pandemic was just getting started. Governments around the world largely followed the same strategy — lock people down and print more money.

Lockdowns, quantitative easing and fiscal stimulus were normalized before markets could fully digest what was happening.

Markets became inefficient pricing mechanisms not because participants were acting in bad faith but because participants were acting only on faith — on faith that things couldn’t continue like this for much longer.

As cash came in daily, the market reacted almost daily without looking for valuable parking spots for their capital. The market was competing with itself on how much and how fast capital could be parked. What does a logical person invest in as nearly every economy and industry in the world shrinks and world equity prices are soaring to record highs?

Buying And Holding Bitcoin In 2020

This time, everything was already in place for investors when they began to pay attention again. There were securitized products, on/off ramps, precedence, experience and many passionate supporters inside major institutions. Most important of all were the on/off ramps.

For the first time in cryptocurrency’s history, investors were able to use their normal tools and exchanges to invest in Bitcoin safely, easily and without any special approval. With proper mechanisms in place, companies and investors did what most investors should do: buy and hold.

In the real world, the simplest solutions are usually the best. This makes intuitive sense as it seems to embrace other seemingly natural laws of life, such as the 80/20 rule or the inevitability of death and taxes.

This is true in Bitcoin as well. While there are many ways to make large amounts of money off Bitcoin, mining, day trading, speculating, etc., for most people around the world, regardless of who or where they are, the best investment strategy has simply been to buy and hold Bitcoin.

The Reason For This Is Clear: Anybody can buy and hold Bitcoin, but almost nobody can beat the market forever. The industry is simply growing at such a tremendous pace that no one can keep track of everything that is happening now, let alone forecast the future. You have to live and breathe crypto for a chance at beating the market odds. Even so, we have seen true legends in this space completely wiped out by thinking they can do better than just holding their Bitcoin.

Why BTC Mining Is More Profitable Than Just Holding

In the history of Bitcoin, mining has been the clear exception to the rule of “buy and hold.” If you can create a scenario with the optimal blend of cheap energy and efficient mining hardware, Bitcoin mining will be a profitable activity in almost any economic scenario and at any Bitcoin price point.

To prove this, we ran an opportunity-cost comparison with buying Bitcoin or buying a Bitcoin miner the day it was announced from Bitmain, operating it at $0.06 and selling enough Bitcoin to pay your electricity bills.

In every scenario, you end up with more Bitcoin from mining than holding.

This one simple economic incentive has in just seven years bootstrapped the Bitcoin mining industry into a $5-billion industry today; done right, mining is one of the most predictable and safe ways to turn your Bitcoin into more Bitcoin.

Of course, “done right” assumes one very important thing: that you will reliably and consistently operate this equipment. This is often a lot easier said than done. Bitcoin mining can be highly technical: the equipment is sparse and highly varied in its quality, performance and condition.

Also, like any piece of equipment, it needs the right operating environment and skilled operators and systems to run well and cost-efficiently.

From the network’s perspective, Bitcoin doesn’t care how well or cost-effectively you mine. One terahash coming from a desert is equally valuable and indistinguishable from one terahash coming from snowy Quebec. But you as the owner will surely notice the cost difference on your bottom line, one thing is for sure: No one is in the mining business because they want less Bitcoin.

It doesn’t take a genius to make money mining in a bull market, however, it does take a genius to plan for and survive a bear market. When we brought Bitfarms to the Toronto Stock Exchange in 2018, we were surrounded by a number of large peers, most of whom did not survive to this point.

Those of us who did survive the bear market have come out stronger, more experienced and better operators with operations and equipment ready to capitalize on the 2021 Bitcoin rally and survive whatever market that follows it.

Updated: 2-10-2021

Bitcoin Mining On Track To Consume All Of The World’s Energy By 2020, Says Newsweek

By Anthony Cuthbertson On 12/11/17

A network that underpins the virtual currency bitcoin is projected to require all of the world’s current energy production in order to support itself within three years, according to estimates.

The amount of power necessary to support bitcoin has increased significantly in recent months, as its price has surged to record levels. On Monday, one bitcoin was worth around $16,500—a twentyfold increase since the start of 2017.

Bitcoin mining—the process of generating new units of the currency by confirming bitcoin transactions on an online ledger called the blockchain—requires computing power, which is used to solve the complex mathematical puzzles used in the mining process. These problems are designed to become more complicated as more computers join the cryptocurrency’s network.

Analysis of how much energy it currently requires to mine bitcoin suggest that it is greater than the current energy consumption of 159 individual countries, including Ireland, Nigeria and Uruguay. The Bitcoin Energy Consumption Index by cryptocurrency platform Digiconomist puts the usage on a par with Denmark, consuming 33 terawatts of electricity annually.

“As mining can provide a solid stream of revenue, people are very willing to run power-hungry machines to get a piece of it.

Over the years, this has caused the total energy consumption of the bitcoin network to grow to epic proportions,” Digiconomist explains in a blog accompanying the index.

The bitcoin network’s energy consumption has increased by 25 percent in the last month alone, according to Digiconomist. If such growth were to continue, this would see the network consume as much energy as the U.S. by 2019, and as much energy as the entire world by the end of 2020.

Such a projection is purely hypothetical, and for it to be realized it would require bitcoin to continue its remarkable growth trajectory and for global energy production to remain stable. A similar estimate created by ZeroHedge in November put the date as early as February 2020, though this was when bitcoin’s growth was even steeper.

There has also been debate as to how accurate Digiconomist’s figures are. Cryptocurrency investor Marc Bevand suggests the index overestimates the electricity consumption of bitcoin miners by 1.5 to 3.6 times.

Going by Digiconomist’s estimates, bitcoin’s annual carbon footprint is close to 16,000 kilotons of carbon dioxide. This is largely as a result of the bitcoin network being mostly fueled by coal-fired power plants in China.

But while computer server farms in warehouses are most commonly used to mine the cryptocurrency, cyber criminals have recently turned to botnets in order to exploit the processing power of victims’ computers.

More than half a billion people may be inadvertently mining cryptocurrencies from their computers, smartphones and other devices, according to research conducted earlier this year by ad blocking firm AdGuard.

Hidden software was found embedded within 220 popular websites, which have an aggregated audience of over 500 million people. The mining tool hijacks a computer’s central processing unit (CPU) and uses it to run mining software in the background.

Websites including Showtime and the torrenting site The PirateBay have been found to include such software, while researchers say the trend is likely to continue as incentives increase with the price of bitcoin.

“How much money have these websites made? We estimate their joint profit at over $43,000,” the AdGuard researchers said in an October blogpost that detailed their discovery. At the time, one bitcoin was worth around $5,000.

“Right now it’s not millions, but this money has been made in three weeks at almost zero cost…this analysis well illustrates the whole web, so it’s safe to say that one of every 40 websites currently mines cryptocurrency.”

Updated: 2-12-2021

BTC Miners Pocket $4M In 60 Minutes, The Highest Hourly Revenue In Bitcoin’s History

Bitcoin mining fundamentals are growing stronger as miners are making a killing from higher BTC price.

According to data from Glassnode, Bitcoin (BTC) miners made over $4 million in just under an hour on Feb. 12, making it the biggest hourly revenue in history.

In May 2020, Bitcoin underwent the third block reward halving in its history, cutting the amount of new Bitcoin mined in half.

* After a block reward halving, the amount of BTC miners can mine using computing power decreases by half. Hence, miner revenues decrease by 50% overnight, which could cause strain on mining operations in the short term.

At the same time, the hash rate of the Bitcoin network is also at new all-time highs with the fourth consecutive upward difficulty adjustment by roughly 2.5% expected in seven days.

So Why Are Bitcoin Miner Revenues Surging?

A block reward halving occurs every four years to decrease the rate the remaining supply of Bitcoin is introduced to the market.

As Bitcoin nears its fixed supply at 21 million, the pace at which new BTC is mined is reduced through a halving. But the halving can put immense pressure on miners that depend on the BTC they mine to cover operational costs in the short term.

Theoretically, when a halving occurs, the price of Bitcoin is expected to rise because of the lower supply of new coins entering the market. Therefore, a higher BTC price can make up for the lower number of BTC miners are rewarded with for mining a block.

This week, Bitcoin miners generated the biggest hourly revenue in history, despite mining half the BTC they used to mine compared to last year.

This shows that Bitcoin is working as designed with its value increasing following the block reward halving, incentivizing miners to increase their hash rate and invest in the security of the network. Analysts at Glassnode said:

“#BTC miners just made over $4 million in a single hour – the highest hourly miner revenue in Bitcoin’s history so far.”

Another reason behind the rising miner revenue is the increasing number of transactions on the network and the accompanying fees paid to miners as a result. Miner revenue is comprised of the transaction fees plus the block rewards collected by miners, with the former comprising roughly 13.5% of the total revenue, according to data from Clarkmoody.

Will Miner Revenue Continue To Increase With BTC Price?

PlanB, a pseudonymous Bitcoin researcher behind the popular price model Stock-to-Flow (S2F), said Bitcoin is on track to reach $288,000.

The S2F model largely relies on BTC’s supply (the stock) and the new Bitcoins mined (the flow), predicting the price trend of BTC based on its scarcity. PlanB wrote:

“#bitcoin price track after 2020 halving is between 2012 and 2016 tracks. I added S2F ($100K) and S2FX ($288K) model targets. Targets are average prices, actual BTC price will oscillate around targets. If 2021 bull market follows 2017 then $100K it is, if we follow 2013 .. $288K.”

Currently, Bitcoin is consolidating after reaching a new all-time high above $48,500. If the price of BTC nears $60,000, it would cause the market capitalization of the cryptocurrency to surpass $1 trillion.

Moreover, at around $56,000, analysts say that there is a big options gamma squeeze awaiting for Bitcoin. Hence, the probability of BTC rising to around $53,000 to $56,000 remains high in the first half of 2021.

Lex Moskovski, a cryptocurency researcher and a quant trader, also emphasized that the market sentiment remains positive due to rising institutional interest. He said:

“Any institution, company, and individual that holds any of the ETF below or plain $TSLA, holds #Bitcoin as well. Tesla has pulled the ultimate trojan horse. Let’s welcome Warren Buffett and Swiss National Bank. Holding TSLA? You are long $BTC.”

Updated: 2-15-2021

Bitcoin Miners Posted $354M In Revenue Last Week, Breaking Record From 2017

Last week’s mining revenue eclipsed the previous record set in mid December 2017.

Bitcoin miners set a new record for weekly revenue after bringing in $354.4 million last week.

* Mining revenue growth was helped by the leading cryptocurrency’s performance last week following a string of positive developments, culminating in bitcoin hitting new record highs over the weekend just below $50,000.

* “Despite decreasing block reward, mining revenue on a USD basis has trended upwards,” said Ethan Vera, co-founder of Seattle-based mining company Luxor Technology, in a direct message with CoinDesk. “This is encouraging for the long term prospects of Bitcoin’s security and continued investments over the next few halving.”

* Weekly revenue eclipsed the previous record of $340 million set in mid-December 2017 near the peak of bitcoin’s prior bullish market cycle. CoinDesk revenue estimates based on network fees and block subsidy data from Coin Metrics assume miners sell their bitcoins immediately.

* Over 15% of the week’s revenue was from network fees, continuing a trend of strong growth in fee-based revenue from May 2020, per CoinDesk’s prior reporting.

* “Our miners are incredibly bullish on the future of mining,” Vera told CoinDesk. “January and February 2021 have been record months for most of them, and they are taking all of their profits and reinvesting it back into their business to grow future hashrate.”

Updated: 2-16-2021

Chinese Lottery Service 500.Com Acquires Bitcoin Mining Pool BTC.com

Chinese sports lottery service 500.com has entered a share exchange agreement to acquire major Bitcoin mining pool BTC.com.

Chinese sports lottery service 500.com has acquired a major Bitcoin (BTC) mining pool, BTC.com.

500.com has entered into a share exchange agreement with Blockchain Alliance Technologies Holding Company in the Cayman Islands, according to a Tuesday announcement.

As part of the deal, 500.com will acquire the entire mining pool business of Bitdeer Technologies Holding Company, including the domain name and a cryptocurrency wallet. Both the domain name and the wallet are operating under BTC.com but belong to Bitdeer, which is the parent company of Blockchain Alliance.

According to the announcement, the first transaction under the share exchange agreement is expected to occur on or before April 15.

500.com and Blockchain Alliance have also made certain agreements related to net operating profits. If BTC.com records a net operating profit in the fiscal year ending in December, 500.com will have to issue additional shares to the Blockchain Alliance.

Assuming that the minimum amount of the net operating profit is $20 million, a maximum of 22 million additional Class A ordinary shares can be issued.

In contrast, if the BTC.com mining pool business records a net operating loss during the same period, 500.com will be entitled to repurchase certain Class A ordinary shares held by the Blockchain Alliance.

500.com is a New York Stock Exchange-listed company (WBAI) offering a range of online lottery services. The company has been moving into the crypto industry recently. In early February, 500.com purchased 5,900 Bitcoin mining devices at $8.5 million. In January, 500.com announced that its private placement subscription price will be settled both in the U.S. dollar and Bitcoin.

Mining Machine Maker Canaan Rises 20% As Bitcoin Reaches A New All-Time High

Canaan shares have gained 230% so far in February.

Nasdaq-listed cryptocurrency mining machine maker Canaan Creative (CAN) has rocketed 27% Tuesday morning as bitcoin hit a new all-time high.

* Canaan is currently trading at $16.55, up from its Friday close of $13.04, according to TradingView.

* The company has gained nearly 250% month-to-date outpacing the rise in the cryptocurrency its machines mine.
Bitcoin has gained over 65% so far in 2021 after setting new record highs above $50,000 Tuesday.

* Higher prices for bitcoin (BTC, +0.19%) means increased demand for mining machines and a bigger premium for those machines.

* Shares of Canaan first closed above the company’s November 2019 listing price on Friday of around $12 before the U.S. holiday weekend.

* CEO Nangeng Zhang recently said the company “can now forecast our revenue much more precisely” after shifting its client base in late 2020 “to mostly publicly traded companies and bitcoin-focused investment funds which tend to place sizable orders with longer-term commitment.”

* Previously, the company mostly sold mining machines to individual operators “who may not have longer-term planning,” Zhang said.

* The Hangzhou, China-based company has a market value of $1.7 billion, per TradingView.

Updated: 2-17-2021

Mining Machine Manufacturer Ebang To Start Mining Bitcoins For Itself

The new venture is expected to increase revenue and “optimize” its product offering structure.

Nasdaq-listed mining machine manufacturer Ebang (EBON) announced its plans to start mining bitcoins using its own machines.

* Per a press release, the company’s board approved plans to operate a bitcoin mining business involving a combination of deploying its own machines, machines bought from other manufacturers, and leased computing power from other mining farms.

* Ebang expects mining to “increase our revenue in cryptocurrency business and optimize our product offering structure,” CEO Dong Hu said in the statement.

* The company also plans to build data centers for its mining farms.

* The proprietary mining venture is the latest expansion for Ebang. In late December 2020, the company announced its plans to launch a cryptocurrency exchange by April 2021.

* Shares of the Hangzhou, China-based company are trading at $10.38, up 44% this year. But other public mining manufacturers such as Canaan (CAN) have significantly outperformed Ebang with a 205% gain year to date.

GPU Hardware Firm Riles Gaming Community By Flirting With Crypto Miners

Hungry for coin? A computing hardware firm has angered gamers after apparently marketing the already scarce Nvidia RTX 30 series to cryptocurrency miners.

Computing hardware manufacturer Zotac angered a customer base of loyal gamers on Feb. 16 after it posted a tweet apparently marketing its new Nvidia 30 series graphics cards to cryptocurrency miners.

Zotac’s post showed a stack of what looks to be GeForce RTX 3070 White Edition GPUs, along with the caption, “An army of ZOTAC GAMING GPUs hungry for coin!”

An army of #ZOTACGAMING GPU’s hungry for coin!

IG: @pc.lad#ZOTAC #PcGaming #Gaming #Gamers #Tech #PcHardware #PcComponents #PCMR #PcMasterRace #RTX pic.twitter.com/8vFtgPZvP4

— ZOTAC USA (@ZOTAC_USA) February 16, 2021

The availability of Nvidia’s 30 series graphics cards plunged moving into the new year, while their cost exploded. By late December 2020, Ether (ETH) miners could make $12,000 a month (depending on electricity costs) by combining 78 of Nvidia’s RTX 3080 GPUs. Since then, potential mining income has more than doubled, after the value of Ether increased 140% in the intervening period.

Not every Zotac follower on Twitter was pleased with the apparent attempt to court cryptocurrency miners. One user replied:

“Too bad those aren’t in the hands of all the gamers and PC enthusiasts as well…Especially the white limited edition that miners don’t care about.”

Another user, MWausE, tried to persuade Nvidia to stop supplying Zotac with GPUs if they weren’t going to be sold to gamers. They wrote:

“Dear @NVIDIAGeForce @nvidia, could you please Stop supplying Zotac with any New GPUs!! They are clearly not interested in selling them to loyal gamers.”

The shortage of high-end graphics cards amid a renewed cryptocurrency bull run saw the cost of Nvidia’s 30 series cards almost double since release — from $699 in September, to around $1,300 at the time of publication.

Even portable computers that contain the 30 series GPU have been snapped up by Ethereum miners in China, who have constructed mining farms made from stacks of interconnected laptops.

In January, Nvidia’s chief financial officer, Colette Kress, assured gamers that they were still the main focus of the firm’s attention, and claimed the current shortage was a result of increased demand from gamers alone.

Updated: 2-18-2021

Russian Crypto Mining Firm Scrambles To Meet Foreign Demand

Russian crypto mining giant BitRiver is rushing to build two new data centers to meet increasing demand from global crypto miners.

Global cryptocurrency mining operators are increasingly moving their equipment to Russia and the Commonwealth of Independent States as they chase lower energy prices.

Igor Runets, founder and CEO of Russian crypto mining firm BitRiver, told local news agency Kommersant Thursday that the company is actively building up its power capacity to meet increasing demand from American and European investors.

According to the executive, BitRiver has run out of spare capacity at its data centers, having fully reserved all of its power for the next 18 months. During this period, the company expects to co-locate mining equipment of total mining power estimated at 1 GWh.

BitRiver, which operates the largest colocation services for Bitcoin (BTC) mining in Russia and the CIS region, is now building two new data centers in Russia, including an 80 MWh facility in Krasnoyarsk and a 300 MWh center in the Republic of Buryatia. The company expects to deploy 100 MWh by fall 2021, meeting only half of expected demand.

The CEO noted that the growing demand is mainly coming from the United States and Europe, with investors partly moving their operations from China, Africa and Latin America, seeking lower energy prices.

But the main reason for the increasing demand is the ongoing crypto rally with prices hitting new records, Runets stated. BitRiver has been already aggressively tapping the demand, setting up a massive batch of Bitcoin miners in December 2020.

Nikita Vassev, founder of CIS mining market-focused forum TerraCrypto, said that many miners are actively moving their operations from China and the U.S. to CIS countries. The exec suggested that the growing demand is coming from investment strategies intending to distribute power among different continents. Vassev said that mining operations in the U.S. and Canada are more expensive due to logistics and energy costs.

Amid a parabolic spike in mining-generated rewards, crypto mining has become more popular than ever, which has caused a significant surge in crypto’s energy consumption. As previously reported, Bitcoin energy consumption has been at its highest historical levels since late 2020, with the estimated annual consumption level staying above 75 TWh for a record period of time.

Updated: 2-21-2021

Mining Bitcoin With Flared (Wasted) Gas

As part of our Bitcoin is an energy solution, not an energy problem mini-series, I will be dedicating this one to mining bitcoin with flared gas. Since the demand for oil is not going away anytime soon, there is a massive opportunity to harness one of the largest energy byproducts in the world and convert it into bitcoin.

Here’s how I see one of the world’s next massive digital gold rushes taking place.

What Is Flared Gas?

Flared gas is a byproduct of extracting oil from the ground. Oil wells produce oil as the primary product but they also produce a byproduct; natural gas which is mostly methane. If this gas is just released into the atmosphere, it is much worse for the environment than if it were to be burned off. This burned gas is called flared gas.

You have probably seen flared gas if you have ever driven by an oil well or refinery and a torch seems to be burning for what seems like no reason. It’s actually being burnt for a reason.

Why Do They Flare Gas Anyway?

There are a number of reasons why they flare gas. They can extend from releasing excess pressure from an oil well to testing the flow and mixture of natural gas in a well. The most common reason why gas is flared is to reduce the environmental impact of a well and avoid being fined by governments. I tend to think that the latter is the main reason.

You might be asking “Why not collect the gas and sell it to consumers to heat homes or run gas stoves or something?”

That’s a great question but the answer may not be so obvious to those who don’t understand the economics of the energy industry. Depending on the local infrastructure, it actually has both a greater financial and environmental cost to trap the gas than to just burn it off.

How Can We Harness The Power Of Flared Gas?

Since natural gas is valuable, oil companies would rather capture the gas and sell it to reduce operating costs or even increase profits but capturing gas doesn’t come without its own set of challenges. Often times oil wells are in remote parts of the world where there is no infrastructure to collect the gas. The hard part is how to capture the gas in an efficient and environmentally feasible manner.

Imaging spending $10 worth of resources to produce a $5 product. It simply does not make sense. It’s actually worse than that because it also would create 10 units of pollution to reduce pollution by 5 units. These numbers are figurative (not actual) to help you to understand why it doesn’t make sense to capture all flared gas.

Since flared gas is already considered waste, it makes sense that we would look for ways to turn that waste into something useful for society. Instead of further investing in fossil fuel infrastructure to harness and use that gas, it makes more sense to find ways to convert that into something of value at the well’s flare site.

I believe that bitcoin mining is the solution.

Mining Bitcoin With Flared Gas

This is where the interesting part begins. To turn that surplus energy into bitcoin, you need to convert the gas into electricity via a natural gas generator. Once you have electricity at your oil well, what do you do with it?

The next step is to run bitcoin miners with what is essentially free electricity (minus the cost of the natural gas generator and your bitcoin miners.) Since some oil wells produce a LOT of oil you are potentially talking about tens of millions of dollars of free energy that is otherwise going to be wasted. Talk about “money to burn”.

”Free” Electricity

According to a report from the Environmental Defense Fund (EDF), in 2017, nearly $322 million dollars of natural gas was flared in the Permian basin of Texas alone. That seems like a REALLY big number to an individual like you and me but in the multi-billion dollar oil industry, that’s pocket change.

Imagine being able to mine bitcoin with $322 million worth of free electricity. Again, that was just in ONE region, in ONE state, in ONE country, in ONE year. Think of the global amount of energy that is being wasted each year as gas flare. It’s likely well into the BILLIONS.

Flaring Fines

There is also a political benefit of mining bitcoin with flared gas. I’m talking about flaring fines imposed by local and state governments. Oil wells can’t just flare as much and as long as they want. There are often heavy fines for flaring as well as fines for not complying. If oil companies could utilize some of this waste, they could save big on flaring fines.

Combined with reducing overhead from the mined bitcoins, that’s a nice double-edged sword to stay profitable in an incredibly competitive industry.

How Do I Mine Bitcoin With Flared Gas?

How do I mine bitcoin with flared gas? This is going to be a multimillion dollar question in the next decade.

As soon as oil companies realize that they can convert this excess gas into money with little to no infrastructure as well as avoid flaring fees from local and state governments, there will be a new mining arms race to see who establish the most efficient flared gas bitcoin mines.

Currently, there are only a handful of companies who have the foresight to jump on this new gold mine of opportunity but that will change. As soon as someone starts to make absurd gainz with little risk, the competition will heat up. Here are the companies that I was able to find after a pretty substantial amount of Googling.

Upstream Data

Upstream Data, based in Canada, sees this waste of flared gas as an opportunity to turn wasted energy into bitcoin. They already offer a mining skid that is basically a 20-foot shipping container with a natural gas generator and a remote internet connection pre-installed.

If you have an oil well in a colder climate that is producing lots of natural gas, then you just need to add some bitcoin miners and start turning that natural gas into bitcoin.

When a well runs dry, you can just move the shipping container to your next well and start all over again. No need to run expensive pipelines or invest any further in fossil fuel infrastructure.

Final Thoughts

I personally believe that finding ways to harness waste is going to be one of the next waves of innovation in bitcoin. Instead of looking for ways to purchase electricity from the energy grid, we will instead be looking for opportunities to convert wasted energy into useable energy via bitcoin mining.

It does nothing but make mathematical sense for both energy producers and energy consumers alike to turn waste into something useful, reduce overhead and keep the bitcoin network secure.

Updated: 2-23-2021

Bitcoin Mining Operator Northern Data Reportedly Considering $500M IPO

Swiss investment bank Credit Suisse is reportedly backing German Bitcoin mining operator Northern Data in its $500 million IPO.

Major European Bitcoin (BTC) mining company Northern Data is reportedly considering going public in the United States.

Germany-based Northern Data is planning to raise up to $500 million in an initial public offering, or IPO, Bloomberg reported on Monday. The company is working with Swiss investment bank Credit Suisse to proceed with the IPO, anonymous people familiar with the matter told the publication.

According to the report, the company is considering conducting a sale of new shares later in 2021, intending to boost Northern Data’s shareholder base along with its global profile. Northern Data’s shareholders include investors like Galaxy Digital founder Mike Novogratz as well as companies like investment firm Cryptology Asset Group and EOS developer Block.one.

Northern Data has been listed on Germany’s over-the-counter market since 2015, and its stock has surged more than 300% over the past year. At publishing time, Northern Data stock is trading at 112 euros ($136), down more than 11% over the past 24 hours amid a major sell-off on the crypto market, according to data from Bloomberg.

Based in the outer parts of Germany’s financial hub of Frankfurt, Northern Data operates mining data centers in areas with cheap electricity. Its largest facility, located in Rockdale, Texas, is one of the world’s largest crypto mining facilities with a planned capacity of 1 gigawatt hour by the end of 2021. The company reportedly started as a Bitcoin mining firm but later moved to operating data centers on behalf of customers.

Credit Suisse declined to comment to Cointelegraph on its involvement in Northern Data’s IPO. As previously reported, Credit Suisse was once among IPO backers for Bitcoin mining giant Canaan Creative. However, the bank renounced its involvement amid concerns over the order sufficiency in November 2019.

Northern Data declined to comment on the matter to Cointelegraph, as well.

Updated: 2-23-2021

Bit Digital Expands Its North American Hosted Mining Partnerships

The company plans to expand U.S. mining with Compute North, Core Scientific and others, per a release.

Nasdaq-listed bitcoin mining company Bit Digital (BTBT) announced plans to expand its North American-hosted mining presence through its partnership with Compute North, Core Scientific and Link Global Technologies.

* To date, the company hosts 2,100 machines with Compute North. The updated partnership will see Bit Digital move an additional 3,000 S17+ machines during Q2, per a press release.

* Interim CEO Erke Huang said partnerships with Compute North and others will allow his company to “quickly expand U.S. based bitcoin production.”

* While it plans to expand in the U.S., Bit Digital is currently facing class-action lawsuits based on allegations of fraud misrepresenting its Asia-based mining capacity. Those allegations first surfaced in a report by J Capital in late January.

* The company has also undergone some senior-level leadership changes after removing its former CEO Min Hu and accepting the resignation of board Chairwoman Ping Liu, per CoinDesk’s prior reporting.

* Shares of the mining company have dropped over 45% to around $16.16 at last check, per TradingView data.

Updated: 2-26-2021

Companies That Have Nothing To Do With Crypto Are Pivoting To Mining

While these moves seem opportunistic at first glance, some of the companies are well-positioned to get involved in bitcoin mining.

Baked goods and tea. Emergency rescue. Online lotteries. These are some of the products and services offered by U.S.-listed Chinese companies that have pivoted to bitcoin mining in recent months, trying to capitalize on the current bull run.

This is not just short-term opportunism. Access to Chinese miners, state-owned energy providers and the U.S. capital markets make these companies well-positioned to swiftly expand mining operations. They can also earn high premiums in the stock market, according to industry pros.

These companies’ connections to Chinese bitcoin miner makers, local hosting mining sites and state-run electricity companies give them an edge over their competitors in the west, said Ethan Vera, CEO of Seattle-based crypto mining company Luxor.

“Some of the companies are partially owned by the Chinese government. They could get permits to operate in hydro power-rich areas or great deals with state-run electricity companies,” Vera said.

For example, Shenzhen-based lottery firm 500.com, which used to profit from helping China’s state-run lottery centers sell tickets, has signed contracts with the State Grid Corporation of China, a state-owned energy company, to enjoy discounted electricity for its data centers. The company’s subsidiary, Loto Interactive, also has permits to run data centers in the “excessive hydro power” areas designated by the local government in Sichuan and the Tibetan autonomous region.

Adding bitcoin mining to these companies’ businesses can significantly boost their valuation multiples, said Yulong Liu, managing director at Babel Finance, which is one of the largest Chinese crypto lenders.

“These stocks are trading at a very high premium,” Liu said.

Bitcoin Premium

Shares of Nasdaq-listed Chinese online gaming company The9, which had the exclusive license to distribute World of Warcraft in China, rose by over 750% year to date after it announced plans to make investments in crypto in January. Sino-Global Shipping, an international shipping company that said it would invest in bitcoin mining, gained over 300% on its stock price on Feb. 3. SOS, a Chinese emergency services provider, had an over 300% year-to-date gain on its stock price.

The stock price of Urban Tea, a Chinese bakery and specialty retailer, increased by over 200% year to date after its pivot to bitcoin mining.

Given some of the companies’ current investments in bitcoin mining versus their valuation, these stocks might have been traded at a very expensive price, Liu said.

Being listed on the U.S. stock exchanges also helps these companies expand their mining operations quickly, said Lingxiao Yang, COO of crypto hedge fund Trade Terminal.

However, the largest mining companies, such as f2pool and Poolin, have not gone public yet, which means they can not just issue shares to raise money for expansion.

If miners in China want to expand their operations or maintain cash flow, they would need to sell mined bitcoin through the over-the-counter (OTC) desks or collateralize their bitcoin to take out a fiat loan. Further, there are growing risks for them to do so because China continues to crack down on OTC trading and make financial transactions related to bitcoin in Chinese banks even more difficult.

Price Impact

The sustained bitcoin bull run appears to have emboldened these companies to make hefty investments in bitcoin mining.

Loto Interactive, which is majority-owned by 500.com, set up data centers in China’s bitcoin mining hub, Sichuan province, in early 2019. The firm now has at least three data centers in Sichuan, which contributed 96.7% of its total revenue in 2019.

The data centers combined could generate up to 6.27% of the hash rate on the bitcoin network, which would make it the sixth-largest mining pool in the world.

“500.com has been quietly developing its bitcoin mining businesses for a few years,” Liu said. Now, “the lottery firm seems to be doubling down on bitcoin mining as bitcoin is seeing the biggest bull run in history.”

500.com’s stock price soared in December 2020 after its chief executive announced the firm would focus on bitcoin mining, and saw a few more spikes when the company announced that it would to buy $8.5 million mining machines, purchase more shares of Loto Interactive and acquire the mining pool services of Bitmain spinoff Bitdeer.

One reason the companies are going all in on cryptocurrency is the sustained bull run.

“We are currently around $50,000 per bitcoin, which makes it extremely profitable for the miners,” he said. “Even if the price drops to $30,000, the miners are still going to make money.”

It’s not only bitcoin pushing these stocks up. Historic gains on ether (ETH, -5.91%), the native asset to the Ethereum network, which is the second-largest cryptocurrency, is another driving force. The9 plans to invest in ether mining, which has been highly profitable thanks to increasing gas fees and its staking services.

High Risks

A continued rise in bitcoin may push mining companies’ stocks higher but a decline could hit many of these firms when they may not be financially sound otherwise. These companies are searching for a strong revenue stream while they are struggling with their non-crypto businesses.

For example, 500.com has posted continuous losses since it suspended all of its online lottery ticket sales due to China’s nationwide inspection on the industry in 2015.

The risks know no boundaries. In the U.S. Riot was a biotech company that made diagnostic machines before rebranding as Riot Blockchain in October 2017. Its penny stock doubled in price after the shift.

But what rises can fall. Shares of Riot Blockchain as well as Marathon and Hive fell dramatically when bitcoin’s price dropped this week, with the companies losing over $1 billion combined. In the meanwhile, 500.com suffered a 16% decrease.

Riot is a success story, at least for now, but another firm pivoting to blockchain at about the same time as Riot, Long Blockchain Corp, is a cautionary tale for many non-crypto-turn-bitcoin public companies.

Long Island Tea Corp, a lemonade and iced tea company, announced plans to invest in blockchain and crypto amid bitcoin’s 2017 bull run. It changed its name to Long Blockchain Corp.

The move came at a time when the tea company was desperately trying to stay listed on Nasdaq. However, it aborted its plan when the bitcoin price crashed in 2018. The company later faced an investigation by the U.S. Securities and Exchange Commission (SEC) and wound up losing its Nasdaq listing anyway.

The boom in Chinese blockchain-related stocks in late 2019 is another lesson for companies that make opportunistic investments in this emerging technology.

Shortly after Chinese President Xi Jinping called the nation to seize the opportunity on blockchain, a slew of companies that were unrelated to blockchain claimed they had launched ambitious blockchain projects. Their stocks soared.

Some of the companies, including one obscure porcelain manufacturer, were accused by Chinese financial regulators of misleading investors by saying they are involved in blockchain whereas no financial disclosures had shown they were. The stocks have steadily dropped to their previous levels since the gold rush in blockchain cooled off in the country.

Updated: 3-1-2021

China Region Declares War On Crypto Mining, Stirring Wider Fear

China’s Inner Mongolia has banned cryptocurrency mining and declared it will shut all such projects by April, spurring fears the world’s No. 2 economy will take more steps to eradicate the power-hungry practice.

The autonomous region, a favorite among the industry because of its cheap power, also banned new digital coin projects, according to a draft plan posted on the Inner Mongolia Development and Reform Commission’s website Feb. 25. The aim is to constrain growth in energy consumption to about 1.9% in 2021.

Bitcoin extended gains on Monday amid reports of the move, increasing as much as 6% in the session to $47,970.

The announcement unnerved an industry that’s already been through a years-long Chinese campaign to clamp down amid concerns over speculative bubbles, fraud and energy waste. The draft policy was released weeks after China’s top economic planner blasted Inner Mongolia for being the only province to fail to control energy consumption in 2019.

The region now aims to cut emissions per unit of gross domestic product by 3% this year and limit incremental growth of energy consumption to about 5 million tons of standard coal, according to the draft plan.

Chinese officials first outlined proposals in 2018 to discourage crypto-mining — the computing process that makes transactions with virtual currencies possible but consumes vast amounts of power.

Inner Mongolia, which is clustered with large coal mines, is famous for inexpensive energy and has attracted investment from a plethora of power-intensive sectors such as aluminum and ferro-alloy smelting over past decades.

The region accounted for 8% of global Bitcoin mining computing power, according to the Bitcoin Electricity Consumption Index compiled by Cambridge University. China overall had over 65% of the network’s total, with its appealing combination of inexpensive electricity, local chipmaking factories and cheap labor.

The local crackdown is reviving old fears. Beijing since 2017 has abolished initial coin offerings and clamped down on virtual currency trading within its borders, forcing many exchanges overseas. The country was once home to about 90% of trades but the lion’s share of mining and major players like Bitmain Technologies Ltd. have since fled abroad.

Taiwan Semiconductor Manufacturing Co. and Nvidia Corp. are among listed chipmakers that supply crypto miners in China and around the world.

Updated: 3-2-2021

Mining Bitcoin For Heat, Strawberries And Chickens

More and more people are turning to crypto mining to heat their homes and businesses – and earn a profit.

There are strawberries growing in the village of Neuville, Quebec, in the middle of a Canadian winter. The small farm Le Caveau à Légumes is funneling the excess heat from crypto miners to battle the frost, and grow a rarity for the region.

“Now is really cold, so we need the heat,” Melissa Girard, an agronomist at the small producer, told CoinDesk in a phone interview. “We couldn’t afford to produce strawberries if we had to pay for electricity.”

The farm is among a growing number of businesses and individuals turning to crypto mining for supplementary income, but approaching the highly consumptive industry in a carbon-neutral way.

Bitcoin is wasteful by design. The distributed network eliminates centralized and trusted parties by trading energy for consensus. Miners – essentially specialized graphics chips designed to churn through cryptographic math problems – audit the network and receive the occasional subsidy for that work.

Some see this as an inborn inefficiency, others as a necessary price to pay for an open and uncensorable payment network. No matter your view, however, it’s a fact that bitcoin (BTC, -1.67%) mining expends a ton of power.

Cambridge University estimates the global bitcoin network consumes more energy than Ukraine did in 2019. This figure has certainly increased along with the cryptocurrency’s meteoric price rise, which draws in less-efficient miners that could now operate in profit. This is to say nothing of another bitcoin externality: heat.

Enterprising folks see that byproduct as crypto mining’s saving grace. For most of Bitcoin’s existence, it has not been economical for individuals to participate in the network by mining. But with a little know-how and some PVC pipe and duct tape, bitcoin mining can generate profit while helping to cut power bills.

Le Caveau began mining cryptocurrencies to generate heat for its greenhouses, and help offset the cost of electricity, in 2018. It was part of a pilot for the upstart hobbyist mining manufacturer Heatmine, also based in the region, which never got off the ground.

Founded by Jonathan Forte, Heatmine pitched itself as an ethical solution to crypto’s worrisome environmental footprint. The manufacturer wanted to offer a way for home and business owners to spin up a miner, earn passive income and recycle some of the heat generated in the process.

While the startup has folded (the website is offline, and Forte now says his partners “never delivered”) the idea has taken hold even without dedicated heat-producing miners.

Kevin Carthy, founder of bitcoin ATM operator WinnipegBTC, has been reducing his carbon footprint while participating in the Bitcoin mining ecosystem by recycling heat into his office since 2013, he said in a direct message. He also uses it to keep his “little electric car warm in the winter,” he said.

Canada’s cheap energy and cold weather make it the ideal location to “mine for heat,” he said. While our conversation ran short, Carthy estimated his cost in 2018 to operate a bitcoin miner at $70 with revenue of $100 in crypto per month.

“We have cold weather, and we have inexpensive hydro,” Carthy told local news station CTV News. “You mine for heat and you still make a profit.”

Those figures line up with returns seen by other people experimenting with small-scale crypto mining. Christian Haschek, a computer scientist and tech blogger, recently started solo-mining ether (ETH, -3.59%) (ETH) in his home in Austria.

“It has always been my lifelong wish to warm my home with the server heat,” Haschek said. After designing his own environmentally efficient house, which is primarily powered by solar energy, he started experimenting.

Haschek uses four crypto miners (that run at about 176°F) to preheat the air in his central ventilation system. “It’s basically just a funnel,” he said. “It’s a pretty low-tech solution.” Even still, he said the incoming ETH covered half his electricity bill in January while also lowering the heat pump’s electricity needs by about 50%.

“Mining is not very efficient,” he said. “I’m reusing the heat I’m self-producing, so it’s almost a closed loop.”

Haschek estimates his mining operation would be profitable as long as ETH stays above about $900 (at the time of writing, it is above $1,500). Despite the allure of nearly free money, it’s only a solution for colder months, he says.

“It would definitely in the summer end up cooking my tomatoes on the vine,” Thomas Smith, a tech photographer and CEO of Gado Images, told CoinDesk. At the beginning of the pandemic, Smith began pumping heat from his crypto miners into a greenhouse in California.

Smith’s crypto mining adventures go back several years, when he decided to see if a rig could warm his home. The trial was a success, though he realized the variable nature of mining might be better suited to hobbyist pursuits.

Now in a new house, Smith is using the radiant heat to keep his chickens happy at night. “It’s a little bit easier because chicken coops have to be pretty well ventilated, so you’re putting the heat into the coop, but it’s circulating and being vented out.” (Chickens produce more eggs when coop temperatures reach 70 degrees F or so.)

He’s now thinking through how he might be able to automate when his rigs to turn on and off, adjusting to the temperature of his home, garden or coop. Not counting the value of his farm birds or caprese salad, Smith estimates he’s earned about $1,600 worth of cryptocurrencies.

It’s mostly just a hobby that helps pay for itself. But Smith, like Haschek, thinks it could provide a path forward for others looking to help secure cryptocurrency networks without adding to their climate guilt.

Of course, these efforts are small, and nowhere near significant to counterbalance the larger geopolitical forces at play in corporate crypto mining. But it’s a start.

And it couldn’t come at a better time. With bitcoin’s price going parabolic, alarm over the network’s consumption has never been sharper. Projects like Layer1 in Texas, which is making use of excess renewable energy production in West Texas as well as the numerous hydro-powered mining farms across the U.S., Canada and China are doing little to improve bitcoin’s image.

“Even if I scale this up as much as I could as one individual, it’s not going to take me super far. But if a lot of people take these ideas and apply them at a larger scale, that could start to have a major impact on how much electricity and carbon emissions come out of these technologies,” Smith said.

Even neophytes such as Melissa Girard, from Le Caveau, who only lets the machines run while she tends to the plants, could see a future in crypto.

“It could be a nice way to heat houses,” she said.

Bitfarms Set To Acquire 48,000 New Miners In 2022 Despite Chip Shortage

Chinese supplier MicroBT will be providing the new hardware over the next two years.

One of the largest publicly traded Bitcoin mining operations in the world, Bitfarms, has undertaken to purchase 48,000 new miners over the next two years.

The Canadian mining company has sourced the equipment from Chinese supplier MicroBT in a bid to increase its hashing capacity by another 5 EH (exahashes) according to reports. Bitfarms was founded in 2017 and currently has a capacity of 1 EH. It has targeted a 200% increase by the end of 2021.

The hashing capacity is the amount of pure computing horsepower that can be dedicated to mining Bitcoin or cryptocurrencies.

The firm anticipates the initial shipment of hardware to take place on or before January 2022, with the final mining rigs expected to arrive in December 2022. It will increase its overall hashing capacity to a total of 8 EH over the next two years. Emiliano Grodzki, CEO of Bitfarms, stated it was getting harder to secure mining rigs:

“The supply of miners will be one of the greatest challenges in for the foreseeable future due to a global shortage of wafers used to create semi-conductor chips which is a vital component in mining rigs.”

The report did not specify which units would be purchased but MicroBT’s flagship product is the “WhatsMiner M30S++” boasting 112 TH/s and retailing at $9,300. The company website currently reports all mining devices are sold out.

Over the past eight months, Bitfarms has acquired over 12,000 mining rigs from MicroBT, citing reliability and power efficiency as reasons for the purchases.

In December 2020, Bitfarms deployed 1,000 new Whatsminer M31S mining rigs and placed an order for an additional 3,000 Whatsminer M31S+ miners scheduled for delivery in late February 2021.

Bitfarms was the first Bitcoin mining company to complete its long-form prospectus with the Ontario Securities Commission and started trading on the Toronto Stock Exchange in July 2019. The company has five industrial scale facilities located in Quebec, all powered with hydroelectric energy.

Updated: 3-3-2021

Kentucky Bill To Provide Tax Breaks For Local Crypto Miners

Kentucky needs to attract more crypto mining businesses by offering tax breaks, local lawmakers believe.

Lawmakers in Kentucky are looking to impose tax breaks for local cryptocurrency miners.

Kentucky lawmakers on Tuesday approved several state tax breaks including House Bill 230, which would remove the sales tax from electricity purchased by local crypto mining operators.

According to a report by the Lexington Herald-Leader, Kentucky legislators voted 19 to two for the new measure.

The bill’s fiscal note is reportedly estimated to cost the local budget at least $1 million annually. The exact cost cannot be calculated so far because “it is unknown how many of the businesses might choose to locate here to avail themselves of this exemption,” lawmakers said.

The bill’s sponsor reportedly urged that Kentucky needs to attract more cryptocurrency mining businesses by offering tax breaks on consumed electricity. Representative Steven Rudy emphasized that cryptocurrency mining needs to be supported as an industry in the state.

“Mining for cryptocurrency takes a lot of electricity. It is very heavily impactful on industrial-type things. It is not just a few people sitting in their mom’s basement or in their parents’ basement writing code. This is actually highly sophisticated, highly technical,” he said.

Kentucky has been attempting to attract crypto business to the state. In January 2021, Kentucky economic development officials approved tax incentives for Blockware Mining to open a crypto mining operation in Paducah, with a total investment of $28 million. The Kentucky Senate has been also advancing its own tax break bill for cryptocurrency mining, Senate Bill 255.

Bitcoin Miners Saw Record $1.36B Revenue In February

Miner monthly revenue increased 21% from January.

Bitcoin miners broke a record of more than three years in February, generating $1.36 billion in revenue, up 21% from January, according to on-chain data from Coin Metrics analyzed by CoinDesk.

The previous revenue record of $1.25 billion was set in December 2017 during the peak of the cryptocurrency’s previous bull market. Last month’s surge in revenue came as bitcoin (BTC, +0.04%)‘s price climbed during the month from $33,000 to a new all-time high of just above $58,000 before dropping sharply to $43,000 in the last week.

Revenue estimates assume miners sell their BTC immediately.

Measured by per terahash per second (TH/s), miner revenues bounced between $0.23 and $0.38 through February, ending the month near $0.30, per data from Luxor Technologies.

Network fees brought in $186 million in February, or 13.7% of total revenue, a significant percentage increase from the 10.3% of revenue represented by fees last month. Fee revenue hit its highest mark since January 2018, per Coin Metrics data.

Notably, fees as a percentage of total revenue continues a strong upward trend since April, prior to the network’s third-ever block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.

Updated: 3-4-2021

How The Oil Market Bounced Back From A Year Of Crisis

A fall in stockpiles, restraint among U.S. producers and the speedy recovery in Asian demand have driven the rally.

Oil prices have staged a rapid recovery since the biggest crisis to strike the energy industry in decades.

The Organization of the Petroleum Exporting Countries and its allies stepped in last spring to backstop the market by slashing production in the teeth of a collapse in crude prices. This week, the cartel is expected to reach a deal on unwinding some of those cuts.

Here is why U.S. crude prices have roared back above $60 a barrel from a low of minus $37.63 a barrel last April.

Traders and analysts say supply and demand, rather than speculation, have underpinned the rally so far. The ratio of positions held by money managers in WTI futures and options contracts who expect oil prices to rise, versus those who expect them to fall, is below levels seen during the last big run-up in oil prices in 2018. That suggests investors aren’t in the driving seat.

Analysts say that may change if money managers pile into the oil market to bet on the reopening of economic activity.

Supplies Shrink

Oil stockpiles that ballooned at the start of the pandemic have shrunk thanks to output cuts by OPEC, its partners and companies in the U.S. and elsewhere. Concerned that another round of lockdowns would derail efforts to rebalance the market, Saudi Arabia made an additional cut in January.

Analysts say the winter storm in Texas, which briefly knocked out almost half of U.S. crude production, will also help to drain global supplies.

Global demand now exceeds production by 2.8 million barrels a day, according to Morgan Stanley strategist Martijn Rats. The first three months of the year are on course to be the most undersupplied quarter for the oil market since at least 2000, he estimates.

“This market is in a severe deficit right now, which is why the inventories are dropping like a brick,” said Jeffrey Currie, head of commodities research at Goldman Sachs Group. The bank forecasts that Brent crude prices will hit $75 a barrel in the third quarter. They are currently at just under $64 a barrel.

Crude Curves

Measuring output and demand in real time is tricky, but the relationship between prices for barrels of oil delivered at different dates suggests buyers are vying for crude. Traders are willing to pay a chunky premium to take hold of crude right away instead of in a year’s time, a far cry from last spring when spot prices fell to a massive discount.

“That’s telling you the market is hungry for oil, that we need oil out of inventories,” said Saad Rahim, chief economist at commodities trader Trafigura Group. “This is not a market that has fully healed, but it is definitely a market that is healing.”

Demand On The Mend

Demand has recovered in China and India and is on the mend in the U.S. and Europe. Americans consumed 18.6 million barrels a day of gasoline and other fuels in January, the Energy Information Administration estimates. That is 26% more than last April, though still down about 7% from January 2020.

Forecasts for further price gains are predicated on the idea that vaccinations and fiscal stimulus will unleash economic activity in the U.S. and Europe. “Beyond Easter is where people will really start to travel and get back on the road,” said Mr. Rahim.

Paola Rodríguez-Masiu, vice president for oil markets at consulting firm Rystad Energy, is more cautious. Based on data such as road and air traffic, she doesn’t expect crude demand to recover to pre-pandemic levels until late 2022.

The Shale Question

Producers are holding back millions of barrels a day of crude, raising a question: Will prices come under pressure if they open the spigots? Analysts expect the OPEC-plus group to boost output gradually through the year, starting with a decision to unwind some of its cuts on March 4.

But traders and analysts say the U.S. won’t churn out 13 million barrels a day, as it did on the eve of the coronavirus crisis, soon. Under pressure from shareholders and creditors to give priority to cash flow, companies haven’t rushed to pump more oil in response to higher prices.

The industry’s newfound discipline has pinned the number of horizontal drilling rigs below levels needed to maintain production at 11 million barrels a day, let alone return output to pre-pandemic levels. That resolve will be tested if prices keep rising, said Ronald Smith, senior oil-and-gas analyst at BCS Global Markets.

After a brutal 2020 for energy companies, expectations of a return to economic normality have propelled the sector to the top of the S&P 500 leaderboard this year. Yet shares of companies like Exxon Mobil Corp. and Royal Dutch Shell PLC have lagged behind the oil market itself, and stock prices haven’t returned to pre-pandemic levels.

One reason is that investors are mindful that the market’s current strength might not last, analysts say. Another is that money managers expect some oil companies to give priority to reducing their debt loads over shareholder returns. Even before the pandemic, electric vehicles and the proliferation of renewable sources of energy were raising questions about the future of the fossil-fuel industry.

Executives are circumspect. “I feel as good as you can, given some of the uncertainty out there with the residual pandemic effects,” Exxon Chief Executive Darren Woods told analysts in early February.

Updated: 3-8-2021

Argo Blockchain Buys 320 Acre Land Plot In Texas To Expand Mining Operations

The acquisition will provide Argo with access to up to additional 200MW of cheap and renewable electrical power.

Publicly-listed mining company Argo Blockchain has finalized its acquisition of a new, 320 acre land plot in West Texas, United States, which it plans to use for the construction of a new 200NW cryptocurrency mining facility.

News of the planned acquisition first broke in mid-February, after Argo entered into a Letter of Intent with DPN LLC of New York. Details of the deal indicate that the acquisition was completed at an initial price of $5 million, satisfied by the issue of roughly 3.5 million new shares in Argo to DPN shareholders. A further payment of shares worth up to $12.5 million will occur once milestones related to the project are fulfilled.

The cryptocurrency miner, which is based in London and trades on the London Stock Exchange under the ticker ARB, has until now tapped cheap hydroelectric power in Quebec, Canada, for its cryptocurrency mining operations. In mid-January of this year, the company had raised fresh funds through a private placement with institutional investors in order to purchase new hardware and contribute towards financing its expansion.

Chief Executive Peter Wall has said that the new site in Texas will provide the firm with “access to some of what we believe is the cheapest renewable energy worldwide, in a location where innovation in new technologies is encouraged and incentivised.” In correspondence with Cointelegraph, Wall added that:

“[The acquisition] provides Argo with an excellent opportunity to make a very significant expansion to our current mining capacity. It also highlights the opportunities for miners within the US to build out their mining capabilities at some of the most competitive electricity rates globally.”

Cheap and deregulated energy production in Texas is indeed one of the key factors contributing to the state’s rising reputation a popular jurisdiction for blockchain firms in the U.S., with well-known names like Bitmain already operating there.

A trade association called The Texas Blockchain Council was, moreover, formed back in November 2020, with the aim of coordinating a “Blockchain Caucus” of lawmakers in the state legislature to promote blockchain-friendly initiatives and legislation at a state level.

Argo, which focuses on mining Bitcoin (BTC) and Zcash (ZEC), plans to construct its 200MW mining facility within the next 12 months. Following the acquisition, it will have access to up to a total of 800MW of electrical power.

In response to Cointelegraph’s question regarding the possible implications of the recent, high-profile power blackouts in Texas this winter, Wall said that Argos “understand[s] fully the Texas power grid challenges and opportunities,” but that the company still “think[s] it’s a great place to build a facility.”

Reflecting the bullish mood of the cryptocurrency markets in 2021, Argo has also recently revealed that Wall has ostensibly become the first executive of a publicly traded company to take his entire salary in Bitcoin.

Updated: 3-9-2021

More FUD About Bitcoin Ruining The World’s Climate

Asset managers are warning industry giants like Tesla and PayPal that investing in energy-intensive assets like Bitcoin could diminish their popularity among investors.

Allocating capital to Bitcoin risks a backlash from environmentally conscious investors, according to author and co-anchor of CNBC’s Squawk Box, Andrew Ross Sorkin.

In a piece for the International New York Times, syndicated worldwide, Sorkin pointed to statements by Lawrence Fink, CEO of Black Rock — the largest asset managers in the world — indicating his company would make all future investment decisions based on “how they plan to meet the climate challenge.”

Tesla’s $TSLA recent bet on bitcoin sullies its green credentials. Mining and transacting the cryptocurrency requires huge amounts of computing power and electricity, much of it from fossil fuels #btc #ev pic.twitter.com/lv0pvossdr

— Michael A. Gayed, CFA (@leadlagreport) February 21, 2021

Sorkin mentioned PayPal, Square and Tesla as examples of BTC-buying companies with strong green initiatives. But such initiatives seem in principle at odds with Bitcoin’s energy inefficient method of making transactions which adds to the carbon in the atmosphere:

“All of which raises a crucial question: Does the movement among investors toward companies that rank highly for environmental, social and governance issues pose an existential threat to Bitcoin’s success?”

Sorkin authored a book on the Wall Street banking crisis, Too Big to Fail, in 2009, which was on the New York Times bestseller list for six months and made into a movie in 2011.

Tesla received $1.5 billion in environmental subsidies in 2020, funded by U.S. taxpayers. The subsidies are intended to reward and encourage environmentally friendly behavior. #Tesla then spent the same amount buying #Bitcoin, which wastes electricity and harms the environment.

— Peter Schiff (@PeterSchiff) February 11, 2021

Tesla came under fire in Feb. after Ben Dear, the CEO of sustainable products investor Osmosis Investment Management told Reuters that the company should “concentrate on measuring and disclosing to their market their full suite of environmental factors,” in light of its Bitcoin purchase. The statement emphasized the need for greater transparency by Tesla when it comes to environmental accountability:

“(We hope that) if they continue to buy or indeed start mining Bitcoin, that they include the relevant energy consumption data in these disclosures.”

According to the 3rd Global Cryptoasset Benchmarking Study published by the University of Cambridge, up to 39% of all proof of work mining globally is conducted using renewable sources of energy, mostly hydroelectric power. Other estimates put the figure higher.

Approximately two-thirds of all Bitcoin mining takes place in China. While a significant portion of this is done using renewable energy, coal remains the country’s biggest source of energy. Mining operations in Inner Mongolia were recently curtailed after failing to meet the standards of a government-mandated energy efficiency review.

Regardless of attempts to utilize green energy, Bitcoin currently suffers from an image problem in the form of a “massive carbon footprint,” as described by Forbes in a recent article. In February, a self-professed “green hacker” called for the destruction of Bitcoin on the basis that it is immensely damaging to the environment.

As the Bitcoin network consumes as much energy as a mid-sized country on a daily basis, some companies, like Jack Dorsey’s Square, have allocated funds to green Bitcoin mining projects in an effort to further alleviate the cryptocurrency’s reliance on fossil fuels.

Updated: 3-21-2021

Crypto Mining Stocks Could Keep Beating Bitcoin In ‘Modern-Age Digital Gold Rush’

Crypto mining stocks could deliver amplified returns during a bitcoin bull market, according to FundStrat research.

Over the past year, crypto mining stocks have outperformed bitcoin (BTC, -2.59%) (BTC), and the trend has accelerated since the cryptocurrency climbed past $20,000 a few months ago, according to the financial research firm FundStrat.

The dynamic might hold if bitcoin stays in a bull market, the firm predicts.

* “Bitcoin and the wider crypto market are the modern-age digital gold rush,” wrote FundStrat, which means crypto mining stocks could see further upside.

* Because “miners play such a critical role in ensuring the Bitcoin network functions properly, investors have sought opportunities to gain exposure to mining companies,” which generate revenue in the form of mined bitcoin.

* The largest publicly listed mining companies include Riot Blockchain (NASDAQ: RIOT), Hive Blockchain (OTCMKTS: HVBTF), and Marathon Patent Group (NASDAQ: MARA).

* As the bitcoin price increases, miners spin up new rigs or upgrade hardware in pursuit of higher block rewards. And FundStrat expects more-efficient mining machines will help some firms remain competitive, which could boost profit margins.

* But buyer beware: “Mining company equities may serve as a high-beta play on bitcoin … [and when the cryptocurrency] enters a bear cycle, we would expect mining equities to have greater downside volatility than bitcoin,” according to FundStrat.

Pakistani Province To Pilot Crypto Mining Farms

The Pakistani province of Khyber Pakhtunkhwa will build two pilot cryptocurrency mining firms as part of a new state policy.

The Pakistani province of Khyber Pakhtunkhwa, or KP, has formed a federal committee to create a new cryptocurrency policy including government-backed crypto mining.

As part of the new policy, the KP Crypto Advisory Committee has already decided to pilot two hydroelectric-powered crypto mining farms, a minister overseeing the policy told Reuters.

The committee held its first meeting on March 17, Zia Ullah Bangash, advisor to the provincial government on science and technology announced on Twitter. “The KP Government on the directions and guidance of chief minister Mahmood Khan is taking serious steps regarding cryptocurrency and mining. We’re consulting with all stakeholders and experts for this initiative,” Bangash wrote.

The KP Crypto Advisory Committee was formed in order to review and discuss “necessary steps to regulate, legalise, and necessary legislation.” Local crypto advocate and influencer Waqar Zaka apparently played a significant role in setting up the committee, claiming that he was the one who convinced the local government to launch the initiative. “I’m thankful to Waqar Zaka for his full cooperation and support to the KP government,” Bangash said.

According to local reports, the KP is the first of four provinces in Pakistan to launch an advisory committee focused on crypto and mining. The province has been urging the central government to legalize crypto, going so far as to pass a resolution in December 2020 that demanded legislative action on a federal level.

The State Bank of Pakistan banned crypto in the country in 2018, declaring that cryptocurrencies like Bitcoin (BTC) were not legal tender. Despite the years of an official ban, Pakistan residents apparently did not stop investing in crypto. “It’s really just our government that is not participating right now, people all over Pakistan are already working on this, either mining or trading in cryptocurrencies and they are earning an income from it,” Bangash said.

Updated: 3-25-2021

Riot Blockchain Stock Plunges With Bitcoin As Market Correction Deepens

RIOT stock was down by as much as 14.4% on Thursday.

Shares of Riot Blockchain (RIOT) and other cryptocurrency miners sold off sharply on Thursday, as Bitcoin’s (BTC) gravitational pull on the market continued to broaden.

RIOT declined by as much as 14.4% during Thursday’s session, extending its losing streak to four days. The stock has declined 29% over that stretch and is down over 44% from its all-time closing high on February 17.

At the time of writing, RIOT had pared most of its daily losses to trade above $43.00. Its market cap currently stands at just under $3 billion.

RIOT wasn’t the only crypto-focused stock to decline on Thursday. Shares of Marathon Digital Holdings (MARA), Hive Blockchain (HIVE) and Hut 8 (HUT) all posted heavy losses.

The selloff by crypto miners coincides with a sharp correction in the price of Bitcoin, as the flagship cryptocurrency struggled to find support despite bullish industry news. Bitcoin’s price bottomed at $50,360 on Thursday, according to TradingView data. It has since reclaimed the $51,000 level, having declined over 9% in the last 24 hours.

As Cointelegraph recently reported, a strengthening U.S. dollar may have taken the sails out of the BTC rally after Federal Reserve Chairman Jerome Powell hinted that monetary stimulus could be withdrawn due to substantial progress in the economy.

Publicly-traded companies like Riot Blockchain provide investors with indirect exposure to digital assets like Bitcoin. With a strong focus on Bitcoin mining, Riot’s fortunes reflect underlying demand for the digital currency.

Investors can also gain exposure to Riot through JPMorgan Chase’s Cryptocurrency Exposure Basket, a new debt instrument that consists of 11 U.S.-listed companies. Riot is listed alongside MicroStrategy, Square and Nvidia, among others.

Riot’s stock price surged alongside Bitcoin in the first quarter, with the company announcing that it expects to meet its hash rate capacity in the calendar year.

US Miner Blockcap Plans To Have 40,000 ASICs Operational By Q4

Despite launching in December, Blockcap plans to possess an operational hash rate of 3.5 EH/s by 2022.

Blockcap, one of the largest Bitcoin mining firms in North America, has added more than 12,000 additional Bitmain Antminer S19s to its inventory.

The firm — which currently mines approximately 6 Bitcoin (BTC) each day — is now expecting to deploy more than 40,000 Bitcoin miners by the fourth quarter and projects an operational hash rate of roughly 3.5 exahashes per second, or EH/s. This would equal roughly 2% of BTC’s current combined hash rate of 171.3 EH/s.

Reportedly combining the assets of five pre-existing mining companies, Blockcap was founded in December 2020 by veterans of major blockchain-hosting company Core Scientific.

After launching with roughly 13,000 Antminer S19s, and 500 upgraded S17s, Blockcap added another 10,000 S19s to its inventory in mid-February before acquiring 8,400 new-generation miners earlier this month from Canaan. Blockcap estimates its mining hardware is valued at $270 million on the secondary markets.

In an announcement, Darin Feinsten, Blockcap’s executive chairman, emphasized the company’s intention to bolster U.S.-based hashing power:

“With this latest hardware acquisition, we are doubling down on our mission to become a world leader in the mining of bitcoin and other digital assets. We are moving at high speed to position the United States as a global player in this increasingly strategic industry.”

Bitcoin mining firms are increasingly capturing the imagination of traders. Fundstrat analyst Leeor Shimron recently noted that on average, the four largest publicly listed mining firms outperformed BTC by 455% over the past 12 months.

“Until a Bitcoin ETF is approved, investors may view public mining companies as one of the only ways to get exposure to Bitcoin,” he speculated.

On March 22, Greenidge Generation announced its plans to go public by combining with Support.com. Greenidge anticipates its shares will trade on the Nasdaq. Majority-owned by private equity firm Atlas Holdings, the company possesses its own power generation facility in Upstate New York.

Updated: 3-26-2021

Argo Blockchain To Launch Clean Energy Bitcoin Mining Pool

Hydroelectric energy will power a new Bitcoin mining pool following Argo’s partnership with DMG Blockchain.

Publicly-traded cryptocurrency mining firm Argo Blockchain will launch a Bitcoin (BTC) mining pool powered solely by clean energy, the company announced on March 26.

Argo has partnered with fellow eco-friendly mining firm DMG Blockchain to create Terra Pool — a Bitcoin mining pool consisting of a hash rate derived from both company’s hydroelectric power sources, which the firm claims is the first of is kind.

Argo Blockchain PLC is a United Kingdom-based mining company with three operational facilities in Canada set up to mine Bitcoin, and the privacy coin, Zcash (ZEC). The firm recently acquired a 320-acre plot of land in Texas, which it plans to use to expand its mining operations with an additional 200-megawatts of electrical power, also derived from renewable energy sources.

Chief Executive of Argo, Peter Wall, Said Making Bitcoin More Green Was A Major Priority, And Urged Other Bitcoin Mining Companies To Follow Suit:

“Addressing climate change is a priority for Argo and partnering with DMG to create the first ‘green’ Bitcoin mining pool is an important step towards protecting our planet now and for generations to come. We are hopeful other companies within the Bitcoin mining industry follow in our footsteps to demonstrate broader climate consciousness.”

Bitcoin’s energy usage rose to match the yearly consumption of the country of Chile last month, a fact that critics and skeptics are quick to point out. However, few think to level the same criticisms at a technology like the internet, which already uses more energy than Bitcoin, and like cryptocurrencies, has yet to expand to anything close to global usage.

“[DMG’s] focus on eco-friendly Bitcoin mining has the opportunity to drive transformations in how the Bitcoin mining community acts towards a climate-conscious future. DMG’s ongoing commitment to clean energy-based capital deployment is a key industry development,” said chief executive of DMG Dan Reitzik.

Hut 8 Buys $30M Worth of Nvidia’s New Crypto Mining GPUs

The batch of processors will add 1,600 GH to Hut 8’s mining capacity.

Hut 8 (HUT) has purchased $30 million of Nvidia’s new crypto mining-specific graphics processing units (GPU) to help the company expand into mining for other cryptocurrencies besides bitcoin (BTC, +6.82%).

Called a Cryptocurrency Mining Processor (CMP), the new GPU was launched earlier this year to target professional cryptocurrency miners. Nvidia introduced the GPU, in part, to steer those miners away from its other GPUs following complaints by the company’s core gaming customers frustrated by shortages caused by miner demand.

In the company’s Q4 earnings call, Nvidia CEO Colette Kress said she expected about $50 million in total CMP sales during the new product’s first quarter this year, per CoinDesk’s prior reporting. Hut 8 filled 60% of that target in one order.

The machines “open up new opportunities” for Hut 8’s plans for diversified revenue streams, said CEO Jamie Leverton in a statement. The new CMPs will add roughly 1,600 GH of power to the firm’s mining capacity, which it will use to mine alternate blockchains. Hut 8 expects full delivery and deployment of the CMPs this summer.

Allocating mining capacity to alternate blockchains like Ethereum “has been rewarded handsomely by public market investors as seen by the stock price of Hive compared to [its] Canadian-traded counterparts who have focused on Bitcoin to date,” said Ethan Vera, co-founder of Seattle-based mining company Luxor Technology, in a direct message with CoinDesk. Now Hut 8 wants some of the profit.

Shares of the Toronto-based company have gained 130% year to date to just above $7. Bitcoin has climbed 77% over the same period.

Updated: 4-2-2021

Bitcoin Mining Difficulty Hits All-Time High As Delayed ASIC Shipments Come Online

The adjustment, spurred forth by fleets of newly booted ASICs, could be a harbinger of even larger difficulty increases in the coming year.

Bitcoin’s mining difficulty hit an all-time high today after a roughly 6% increase, a move that follows a record month in earnings for Bitcoin miners as new-generation ASICs come online.

“Difficulty” refers to the relative measure of the amount of resources required to mine bitcoin (BTC, +1%). This measurement climbs or falls depending on the amount of power consumed (or “hashrate” produced) by the network at a given time.

Bitcoin is programmed to adjust its difficulty level every 2,016 blocks, or roughly every 2 weeks to ensure that new blocks are mined at a stable rate.

This difficulty is measured on a relative scoring scale where Bitcoin launched with a mining difficulty of “1,” the lowest it’s ever been. (Difficulty kind of works like Google Search scores in that the scoring system is internal and has no reference point or unit for measurement outside of the networks themselves).

As of today’s adjustment, Bitcoin’s current mining difficulty is 23.1 trillion, according to data pulled from this CoinDesk journalist’s Bitcoin node. Per figures from BTC.com, this is a roughly 6% increase from its last level of 21.8 trillion, which makes it the second largest adjustment of the year and the fifth upward adjustment in the last six difficulty periods.

The difficulty adjustment is arguably one of Bitcoin’s most important features as it ensures block times remain relatively stable while also preventing a large miner from eating up too much hashrate.

New ASICs Online Lead To Increased Difficulty, Hashrate

This latest adjustment is a notable bump, Compass mining CEO Whit Gibbs told CoinDesk, because it’s likely attributable to tens of thousands of new machines coming online that were previously on backorder in the ASIC supply chain.

He said the current adjustment is just a sampler of the flood of hashrate that will come online in 2022 as more backordered shipments are filled.

“Today’s moderately large difficulty increase is not surprising, and I expect it’s only a taste of what will come later in this year and into 2022, as delayed machine shipments start arriving and being deployed. The pending flood of hashrate about to enter the market will only continue pushing bitcoin’s mining difficulty higher, which should track with bitcoin’s price,” Gibbs said.

As bitcoin’s price has gone stratospheric, mining investments are shooting the moon along with it. North American miners like Hut 8, Marathon, Blockcap and others have used 2021 as an opportunity to aggressively expand operational capacity.

As these machines come online, Bitcoin’s hashrate and difficulty are rising in step with miner revenues, which hit a record $1.5 billion in the month of March.

Updated: 4-4-2021

Riot Blockchain’s Hashing Capacity Grew 460% In 2020: Report

Riot Blockchain has published its 2020 financials and revealed it has increased its hashrate by 460%.

According to its latest annual financial report, leading U.S.-based mining firm Riot Blockchain increased its hashing capacity by 460% and more than doubled the amount of Bitcoin held on its balance sheet in 2020.

Riot saw a 78% growth in total mining revenues from $6.7 million to $12 million, owing to the increase in operational hash rate from 101 pentahashes per second, or PH/s, as of December 2019 to 566 PH/s as of December 31.

While the company said it achieved profitability in the fourth quarter with $3.9 million in net income on a GAAP basis, Riot posted an overall net loss of $12.7 million for 2020.

However, this was an improvement over its 2019 performance, when it posted a net loss of roughly $20 million.

The company increased its cash and cryptocurrency holdings from $11.3 million in 2019 to $235 million last year, and doubled its Bitcoin holdings from 514 BTC to 1078 BTC — with its BTC stash worth roughly $63.6 million at the time of writing.

Riot noted that it is still reliant on equity and debt financing to fund its operations, with its deficit increasing from $221 million as of Q2 2020 to $299 million at the end of the fourth quarter.

The firm celebrated its “strategic decision to solely focus on Bitcoin mining” throughout 2020, positioning Riot as a leading miner globally by hash rate.

“We are pleased to have invested into continuing our deployed hash rate growth, allowing us to capitalize on the extraordinary current opportunities in Bitcoin mining.”

Riot is one of the four largest publicly traded Bitcoin mining firms alongside Marathon Digital Holdings, Hut 8, and Hive Blockchain. Despite all four firms reportedly operating at a loss, their stocks outperformed Bitcoin by 455% over the past 12 months on average.

Blockcap, one of North America’s fastest-growing Bitcoin mining firms, currently mines around seven Bitcoin per day, with the firm set to expand its output to 30,000 per day by the end of 2021, after they closed off two investment rounds with a combined haul of $75 million.

Riot’s shares tagged an all-time high of $77 on Feb. 17 but have since fallen 30%. By contrast, BTC is up roughly 15% since Feb. 17, having posted a record high of $61,700 on March 13.

Updated: 4-5-2021

Marathon Digital Stock Soars After Company Ramps Up BTC Mining In Q1

The company mined 196 BTC in the first quarter, bringing its total holdings to 5,143.2 BTC.

Shares of Marathon Digital Holdings (MARA) surged on Monday after the cryptocurrency miner announced a significant increase in mining capacity in the first quarter, allowing it to up its stake in Bitcoin (BTC) by a considerable margin.

MARA stock jumped 15.8% to close at $56.56, marking a new all-time high. The crypto mining stock rose by as much as 17.1% earlier in the day.

By comparison, the technology-focused Nasdaq Composite Index rose 1.7% on Monday. Meanwhile, the Bitwise 10 Crypto Index Fund advanced 1.9%

At current values, Marathon Digital has a total market capitalization of $5.6 billion, putting it among the largest crypto proxy stocks.

Marathon mined 196 BTC in the quarter ending March 31, bringing its total holdings to 5,134.2 BTC, the company announced Monday. At current values, Marathon’s Bitcoin holdings are worth nearly $302 million.

In addition to mining the digital asset, Marathon purchased 4,812.66 BTC in January at an average price of $31,168.

The company was able to scale up its mining operations in the first quarter after receiving 10,300 S-19 Pro ASIC miners from Bitmain. Marathon’s mining fleet now consists of 5,800 miners collectively generating 0.71 exahashes per second in hashing power.

Cash on hand at the company was $212 million at the end of the first quarter. Total liquidity, which is defined as cash and BTC holdings, was worth approximately $513.9 million.

As Cointelegraph recently reported, Marathon plans to divert all hashing power to its new, regulatory compliant mining pool on May 1. The mining pool has been set up to adhere to all U.S. Anti-Money Laundering guidelines and other regulators set forth by the Office of Foreign Assets Control.

Riot Blockchain Purchases 42,000 Antminers From Bitmain

The $138.5 million deal will add an estimated 3.7 EH/s to Riot’s existing and planned mining capacity.

Riot Blockchain, a cryptocurrency mining company, has expanded its fleet and mining capacity with a new purchase order for 42,000 S19j Antminers from Bitmain.

Megan Brooks, Riot’s COO, said the latest purchase order positions her company and the United States at the center of the Bitcoin mining industry:

“By nearly doubling its planned hash rate capacity, Riot continues to take great strides forward in growing both the Company’s and the United States’ share of the global network hash rate. We are proud of this accomplishment and remain focused on continuing to evaluate additional opportunities in the space.”

The purchase order, valued at $138.5 million, is part of a coordinated growth plan to significantly increase Riot’s Bitcoin (BTC) mining hash rate. As a result of the current and previous orders, Riot said it is scheduled to receive a minimum of 3,500 S19j Antminers per month beginning in November and running through October 2022.

As Cointelegraph previously reported, Riot expects to achieve a hash rate capacity of 3.8 exahash per second by the end of 2021. Once deployed, the new order of 42,000 Antminers will more than double the capacity to 7.7 EH/s.

Once fully operational, Riot’s mining fleet will consist of 81,150 Antminers, of which 95% are the latest generation S19 miners.

Shares of Riot Blockchain were down sharply Wednesday, reflecting the overall downtrend in the cryptocurrency market. The stock is down 7% at the time of publication and has corrected 36% from last month’s all-time high. Astonishingly, Riot’s 52-week low is $0.93. It peaked at $79.50 in mid-March and currently trades just above $50 a share.

Updated: 4-8-2021

Miners Are Hoarding Bitcoin From Record Daily Earnings

Miners are back in accumulation mode, with 5,000 BTC added to Bitcoin’s unspent supply since the start of February.

Bitcoin (BTC) miners are stashing away their coins for higher prices, with direct transfers from miners to exchanges having plummeted nearly 40% since mid-March.

Data from on-chain analytics provider Glassnode shows that miners’ BTC balances have been increasing since late March, following heavy outflows throughout January and consistently reduced selling during February and earlier in March.

Glassnode chief technology officer Rafael Schultze-Kraft noted several metrics pointing to recent miner accumulation — including flows from miner addresses, unspent BTC supply and miner position net change.

Glassnode’s data shows that unspent supply — BTC that has never been transferred from the (miner’s) original recipient address — has begun to rise after seeing a sharp drop in January, when 15,000 previously dormant coins were moved from mining addresses for the first time.

Since February, roughly 5,000 newly minted BTC have been added to Bitcoin’s unspent supply, bringing the total up to 1.765 million Bitcoin.

Direct transfers from miner wallets to exchanges have also dropped substantially in recent weeks, falling from a 30-day moving average of nearly 450 BTC in mid-March to 275 BTC today.

Schultze-Kraft described Bitcoin mining as showing “great fundamentals,” noting a new all-time high for daily hash rate of 178 exahashes per second on Tuesday and new record highs for Bitcoin mining difficulty.

He also shared data showing that miner revenues are up by 300% in roughly one year, pushing into new all-time highs above $50 million to currently sit at a seven-day moving average of nearly $60 million.

“Miners have little to no incentives to be cashing out right now,” he concluded, adding “selling or capitulation [is] not in sight.”

The apparent prosperity of Bitcoin miners can be seen in the share performance of North America’s listed mining firms, with recent analysis finding the stocks of the four-largest publicly traded Bitcoin mining companies gained 5,000% in 12 months, while spot BTC prices went up 900% over the same period.

Updated: 4-9-2021

Bitcoin Miners Are Again Stacking Coins In A Positive Sign For The Market

“Miners may be holding in anticipation of a price rally,” one analyst said.

Blockchain data shows bitcoin (BTC, +0.47%) miners are accumulating coins and adding to bullish pressures in the market for the first time since December.

Analytics firm Glassnode’s miner position change metric, which gauges the 30-day change in the supply held in the miners’ addresses, recently turned positive in a sign of renewed holding by those responsible for making coins.

The balance held in miner wallets has increased by 4,435 BTC to 1.806 million over the past two weeks, Glassnode’s data shows.

“Miners [now] have a net accumulation of liquid assets as they have enough cash in reserve to run their future operations, having liquidated holdings when the bitcoin price was between $20,000 and $40,000, or most of them are holding in anticipation of a price rally,” Flex Yang, CEO of Hong Kong-based Babel Finance, said in an email.

Miners predominantly operate on cash and liquidate holdings to meet expenses. However, the pace of miner selling varies from time to time depending on mining-specific factors and bitcoin’s price expectations.

The return to accumulation mode observed since March 31 comes after almost four months of largely negative readings – miners decreasing positions and taking profits. Peak distribution of roughly 17,000 BTC to 24,000 BTC was seen throughout January, according to Glassnode’s weekly newsletter, dated March 8.

While miner flows constitute a small part of the total network volume, as tweeted by Glassnode’s CEO Rafael Schultze-Kraft, accumulation by miners is analogous to increased promoter holding of corporate stock and is considered a positive indicator. “Their spending patterns provide insight into the sentiment of some of the biggest bulls in the Bitcoin market,” Glassnode said in a newsletter published on April 5.

Whales, or large investors with the ability to influence prices, have also stopped selling coins.

The number of whale entities – clusters of crypto wallet addresses held by a single network participant holding at least 1,000 bitcoin – has steadied above 2,000 since March 31.

The figure dropped from 2,230 to 2,004 in nearly two months to March 31, mainly due to quarter-end rebalancing, according to blockchain analyst Willy Woo. It remains to be seen if these positive on-chain developments fuel the next leg higher in the cryptocurrency.

While bitcoin is currently trading moderately higher on the day near $58,500, it remains trapped in a narrowing price range. A breakout would mark a continuation of the broader uptrend typically experienced in the seasonally strong month of April.

Updated: 4-11-2021

Bitcoin Mining Company Follows Tesla By Setting Up Shop In Austin

Tech companies like Oracle, Tesla, Hewlett Packard, and now Blockcap are moving to Austin, causing many to call the state capital the Silicon Hills.

North America-based crypto mining company Blockcap announced over the weekend it would be establishing new offices in Austin, Texas.

In an announcement from Blockcap on Friday, the mining company claimed once its new facilities are operational in the Lone Star State’s capital, its hashing power will be roughly 3.5 exahash per second from a total of 42,000 rigs, reportedly doubling its capabilities.

According to blockchain data, this would represent more than 2% of the hashrate for the entire Bitcoin (BTC) network, roughly 167 million terahash per second at the time of publication. However, Blockcap claims its total fleet will account for only 1% of the network’s hashing power.

“Austin is our home base from which we will pursue our mission and bring this great city closer to the center of the United States’ blockchain technology ecosystem,” said Blockcap chair and founder Darin Feinstein. “We also see the city as an ideal location from which to continue expanding our operations as we grow at both national and international levels.”

Blockcap cited electric car manufacturer Tesla setting up one of its “Gigafactories” in Austin in announcing the move. Tesla CEO and billionaire Elon Musk recently purchased a home in the Texas state capital for more than $3 million on Lake Austin west of the downtown area, while the firm is breaking ground on the Gigafactory on the east side closer to the Austin-Bergstrom International Airport.

The mining company did not immediately respond to questions regarding where it plans to establish its offices in the Austin area or how many jobs would be created as a result, though Feinstein said it would be “hiring locally.” Musk said in a tweet last month that the new Giga Texas location would bring in more than 10,000 jobs, effectively increasing the number of employees at the electric car manufacturing company by more than 14%.

Though some tech companies like Oracle and Hewlett Packard are moving to Austin — causing many to dub the city the “Silicon Hills,” in reference to Silicon Valley — the state capital has in many ways become a microcosm of the U.S. housing market.

Many employees of these firms may be seeing all-cash buyers purchasing homes, making them unavailable to those with only the financial means of saving for a 20% down payment. Musk highlighted the dearth of Austin housing in an April 4 tweet, seemingly in reference to Tesla employees relocating there.

However, the addition of Blockcap and other blockchain firms to the Lone Star State has the support of former Texas governor Rick Perry, the Republican politician who once famously forgot the name of the Department of Energy as a federal agency he would eliminate if elected president.

Perry claimed Texas had “become the premier location for forward-looking industries like blockchain” and that Blockcap would likely lead to job creation and economic growth in the state.

Founded in 2020 by a group of blockchain veterans, Blockcap now controls roughly 12,000 mining rigs generating more than 7 BTC daily, or $416,550 at the time of publication. The company raised more than $75 million in two funding rounds led by Off The Chain Capital and Foundry Digital. According to Blockcap, the firm recently acquired more than $500 million worth of Bitcoin mining machines.

Updated: 4-12-2021

Riot Blockchain Bitcoin Production Jumps 80% Over Pre-Halving Levels

The company said it held more than $94 million in crypto as of March 31, all from Bitcoin it has mined.

In an announcement on Monday, Riot Blockchain reported that it produced 187 Bitcoin (BTC) — roughly $11.2 million — last month, an 80% increase over its BTC mining in March 2020. The company said it held more than 1,565 Bitcoin on its balance sheet as of March 31, representing more than $94 million in crypto.

The mining report follows Riot’s $138 million purchase of 42,000 S19j Antminers from crypto mining giant Bitmain. Roughly 6% of the rigs — 2,400 Antminers — are reportedly already on route to Coinmint’s facility in New York, where Riot runs a portion of its mining operations. By the end of April, Riot claimed it will have 16,146 Antminers in operation capable of producing 1.6 exahashes per second.

As more of the Antminers are put into operation, Riot expects its hashing power to rise significantly. By the end of the year, the mining firm expects to achieve a hash rate capacity of 3.8 EH/s, while the total fleet capacity of 81,146 Antminers — expected to be fully operational before the fourth quarter of 2022 — may produce a hash rate of 7.7 EH/s. According to blockchain data, this would represent more than 4% of the hash rate of the entire Bitcoin network, roughly 171 million terahashes per second at the time of publication.

Riot is also reportedly planning to purchase a major mining facility in the state of Texas. The mining firm said last week that it would buy the Northern Data-owned Whinstone company for $650 million. The deal would seemingly allow Riot to run its rigs in Texas with a total capacity of 750 megawatts, with an additional 300 MW expansion planned.

Updated: 4-13-2021

North American Crypto Miners Prepare To Challenge China’s Dominance

“Just consider that half of the network’s hashrate is physically located in China, that’s a major security risk.”

Springtime is coming to the North American cryptocurrency mining industry. With access to robust capital markets, cheap power, a stable political climate and increasing participation of technological innovators, industrial-grade mining operations are burgeoning in the United States and Canada, providing competition to Chinese mining pools that now control more than half of the world’s hashing power.

These new ventures are acutely aware of the need to minimize mining’s carbon footprint. In March, when Neptune Digital Assets and Link Global announced they would develop a new five-megawatt Bitcoin mining facility in Alberta, Canada, for instance, Neptune CEO Cale Moodie cited the “substantial global pressure to develop sustainable [emphasis added] Bitcoin mining operations around the world” — adding that the project would be powered by solar, wind and natural gas.

“A large investment in North America mining infrastructure is currently taking place,” Ethan Vera, co-founder and chief financial officer of Luxor Technologies and of Hashrate Index, tells Magazine, while CoinShares chief strategy officer Meltem Demirors writes in a recent blog post: “We have seen over $200M of capital deployed into building onshore mining capacity in the United States alone.”

“There’s an upwards trend in mining companies looking at the U.S. and North America,” Amy Davine Kim, chief policy officer of the Chamber of Digital Commerce, tells Magazine, and there is a growing willingness among some U.S. states to support such crypto mining ventures. Kentucky, for instance, passed two bills in March that give tax breaks to crypto miners, whom the state wants to attract in order to create jobs and energize local economies.

“North American capital has been unleashed,” Vera explains, adding: “Public and private markets are pouring money into Bitcoin mining,” and it is all setting the stage “for large-scale North American build-out.”

What Took So Long?

Some wonder how and why Western nations allowed China to take such a lead in crypto mining in the first place. China now accounts for 65% of global BTC mining, according to the Cambridge Centre for Alternative Finance. This is compared with only 7.24% for the U.S., which is the second-largest hub, though no one really knows the global distribution with certainty.

Some have pegged the Chinese share to be lower. For example, a 2020 study commissioned by Fidelity Investments estimates that 50% of global mining power capacity is “likely” in China, with 14% in the United States.

Meanwhile, an April 6 paper written by academics from the University of the Chinese Academy of Sciences, Tsinghua University, Cornell University and the University of Surrey in Nature Communications, a peer-reviewed journal, estimates the Chinese share to be much higher: “As of April 2020, China accounts for more than 75% of Bitcoin blockchain operation around the world.”

The paper goes on to explain that some of China’s rural areas are considered an “ideal destination for Bitcoin mining” because of cheaper electricity prices and large tracts of undeveloped land for mining pool construction.

“In the early days, the Wild-West nature of the mining industry held back major investments,” says Vera, explaining how Bitcoin mining became so geographically skewed. “The opaqueness of the ASIC supply chain” — the application-specific integrated circuits that are specifically designed to perform the hashing calculations demanded of miners — “and mining pool auditability led capital to be sidelined.”

With regard to “auditability,” he further explains that “Most miners didn’t know if they were getting underpaid for their hashrate to mining pools. If mining pools quoted them a fee it was very hard to check that was the actual fee being charged.

In many cases miners blamed mining pools for underpayment.” More recently, however, “There has been a large improvement in the mining supply chain professionalism,” Vera adds.

China’s dominance is perhaps better explained in macro terms, suggests Yu Xiong, associate dean international at Surrey University and chair of business analytics at Surrey Business School — and one of the authors of the Nature Communications paper.

North America is saddled with higher labor costs and energy costs than China, which leads the world with roughly 30% of global hydropower capacity and a 50% share of coal power generation. “Those facilitated the mining industry in China,” Xiong tells Magazine.

Chase Lochmiller, CEO and co-founder of Crusoe Energy Systems — a Colorado company that uses waste gas from oil well sites to power Bitcoin mining rigs — tells Magazine that more miners are now migrating to North America, driven by the increased attention paid to BTC by investors and society in general.

Bitcoin Mining “Slammed” By Environmentalists

Any movement to North America could also invite further scrutiny from environmentalists who have attacked Bitcoin’s prodigious consumption of energy — and its related climate-threatening emissions.

The annualized energy consumption of the Bitcoin mining industry in China alone will peak in 2024 at 296.59 terawatt-hours, according to the Nature Communications paper, which “exceeds the total energy consumption level of Italy and Saudi Arabia” in 2016.

In March, Bank of America analysts “slammed” Bitcoin mining for its environmental wantonness, noting that “A single Bitcoin purchase at a price of ~$50,000 has a carbon footprint of 270 tons, the equivalent of 60 ICE [internal combustion engine] cars.”

The proof-of-work consensus mechanism used to verify Bitcoin transactions requires would-be miners to compete against each other to solve complicated mathematical puzzles.

Computers, such as ASICs, specially built to solve those problems burn through immense amounts of electricity. Miners that solve the puzzle get to form and confirm the next “block” of transactions, and they receive BTC as a reward for their efforts.

Still, “This is a security feature of PoW not a bug,” says Vera. If the puzzles to be solved — the answers to which are called “hashes” — are too easy to solve, the network invites denial-of-service attacks from hackers.

Lochmiller says that high energy usage in itself is “not necessarily a bad thing” if it is done right. Crusoe Energy, for instance, has developed a technology that captures the natural gas that is “flared” into the atmosphere at oil well sites and uses this waste gas “to power modular data centers [mining rigs] deployed directly at the wellsite.”

When co-locating rigs in this manner — as the company has done in Colorado, Montana, Wyoming and North Dakota — the result is an overall 71% reduction in CO2 emissions when compared with flaring, Lochmiller tells Magazine. “It’s a net benefit to the environment, and a net advantage to BTC.”

The ecological challenges attached to crypto mining “are easily addressable,” Clark Swanson, CEO of Blockcap — one of the largest Bitcoin mining operations in North America — tells Magazine, adding:

“The Bitcoin network is the first use of energy that does not require its source of energy to be co-located near the end user population.”

Swanson stresses that BTC mining is moving toward making renewables the primary source “and perhaps one day the sole source of energy to the Bitcoin network.” Even today, Blockcap utilizes power that achieves a nearly 50% carbon-neutral output.

“We are continuing to drive our carbon-emission target to neutral.” At present, however, most Bitcoin mining globally is not powered by renewable energy sources like solar, wind or hydro. According to the Cambridge Centre for Alternative Finance, “39% of hashing’s total energy consumption comes from renewables.”

Not all are impressed by recent measures, however. Alex de Vries, founder of Digiconomist, calls the co-location solution preposterous, telling Magazine: “We’re not having a climate change problem because fossil fuel extraction is not efficient enough.” He adds:

“Using a byproduct of fossil fuel extraction still means Bitcoin is running on fossil fuels, and it only adds to the bottom line of fossil fuel companies.”

De Vries admits that solar panels provide green energy and are an improvement over using flared gas, “but so far the only substantial source of renewable energy going into the Bitcoin network is dodgy hydropower that can only be obtained for just a couple of months per year,” as is the case in China’s Sichuan province — the world’s largest BTC mining hub.

Even if the Bitcoin network were to run entirely on renewable energy, continues de Vries, it wouldn’t solve all its PoW-related problems. “This network runs on highly specialized equipment that cannot be repurposed,” and the growing demand for the ASIC machinery “already adds to the disruption in the global semiconductor supply chain.”

The end result will be “a substantial pile of electronic waste on top of all that energy consumption. No amount of green energy can fix that.”

Optics will become more important, arguably, if the mining industry’s center of gravity shifts from China to North America, where regulators and environmentalists might be more sensitive than China’s energy authorities to the industry’s energy consumption and carbon footprint.

A Security Risk?

Beyond the energy and environmental questions, others see significant security risks in Bitcoin’s consensus mechanism. “Just consider that half of the network’s hashrate is physically located in China,” says de Vries. “That’s a major security risk.”

Something similar was suggested by Ripple co-founder Chris Larsen in an opinion piece for The Hill in August 2020. He wrote: “At least 65 percent of cryptocurrency mining is concentrated in China, which means the Chinese government has the majority needed to wield control over those protocols and can effectively block or reverse transactions.”

Crypto Mining Will Be A Bridge To 100% Renewable Energy Production, Says Mike Colyer

“At some point Bitcoin mining will look like a utility, and it’s going to be a part of critical infrastructure for countries,” said the Foundry Digital CEO.

Mike Colyer, CEO of Foundry Digital, a crypto mining subsidiary of Digital Currency Group, says that mining Bitcoin could eventually help the world transition to green energy.

Speaking at the Crypto Mining Forum online event today, Colyer said he believes that as major energy companies see the economic benefits of mining cryptocurrencies like Bitcoin (BTC), it may lead to a restructuring of both capital and operations.

Calling Bitcoin mining “a great stabilizer” for the power grid, the Foundry Digital CEO said the technology could become a “bridge between the current energy production and a world where 100% of our energy is produced from renewables.”

“Bitcoin mining provides a steady base load and yet it’s still intermittent to allow grids stability,” said Colyer. “This creates a really powerful economic dynamic for renewable energy products.”

“Nation-states, they can’t sleep on this, and they’re going to find ways to take advantage of their natural resources to be involved in Bitcoin mining […] At some point Bitcoin mining will look like a utility, and it’s going to be a part of critical infrastructure for countries.”

Colyer cited examples in the U.S. of the technology moving forward including lawmakers in Kentucky pursuing tax breaks for local cryptocurrency miners, and New-York based Bitcoin mining company Greenidge Generation, which operates a power plant that runs only when there is high demand. According to the CEO, it could be a “10- to 20-year journey” for this transition to renewables to begin, but Bitcoin would likely play an important role.

According to Colyer, Digital Currency Group has now invested more than $225 million in North American cryptocurrency miners seemingly in an effort to make the U.S. competitive against other countries’ operations. China is still the leader in crypto mining, with one recent report suggesting that 75% of Bitcoin mining takes place in the country.

“Institutions have arrived. I can hardly keep up with the news every day of new Bitcoin mining companies. I’ve always thought the U.S. would be a leader in Bitcoin mining.”

US Firm Splashes Out On 4,800 Bitcoin Miners Worth $34M

A U.S. firm expects to double its Bitcoin hashing power after the purchase of 4,800 new S19J mining rigs from Bitmain.

Pennsylvania software firm Integrated Ventures has announced the purchase of 4,800 Bitcoin (BTC) mining rigs from Chinese manufacturer Bitmain. The deal is worth just over $34 million and will see 400 of Bitmain’s Antminer model S19J’s delivered to Integrated Ventures each month for the next year.

Integrated Ventures partnered with Wattum Management, a mining solutions provider, to carry out the deal, with Wattum expected to help host and manage INTV’s mining operations. The mining rigs deliver 100 terahashes each, giving IV close to 0.5 million TH/s by the time the full shipment of mining rigs is delivered in 2022.

Based on Bitcoin’s current hash rate of 170 million TH/s, this gives the firm a sizable, if still a relatively modest, share of the coin’s hashing power. It’s worth noting that Bitcoin’s hash rate doubled in the past year alone, meaning IV’s equipment could feasibly be worth much less come next year.

Perhaps with this in mind, INTV secured downside price protection for 12 months as part of the deal, as well as the right to replace the current S19J mining rigs with newer models when they are released in the coming year.

Few would expect the cryptocurrency market to remain static for any great length of time, however, INTV calculates expected revenues of between $19 million and $21 million in the next 12 months, based on the current Bitcoin price of around $60,000.

Integrated Ventures CEO Steve Rubakh said the deal effectively doubled the firm’s existing Bitcoin hashing power, adding that he was pleased to secure the purchase of mining equipment at a time when the hardware was scarce.

“The Company is very pleased to secure this large scale purchase agreement, especially during a period of scarce supply of mining hardware. Going forward, INTV is committed to deploy any raised capital for purchases of the mining equipment,” said Rubakh.

Canaan Reports $33M Net Loss For 2020 Despite Bullish Bitcoin Price Action

The Bitcoin miner manufacturer saw its year-on-year revenue tumble amid supply chain disruptions and a global chip shortage.

Bitcoin’s bullish 2020 closeout was not enough to prevent Canaan from incurring a net loss in 2020.

According to the company’s unaudited financial report for Q4 2020, the Bitcoin (BTC) miner maker’s net loss for 2020 was about $33 million. However, Canaan’s 2020 net loss is significantly lower than the $148 million recorded in 2019.

Indeed, the reduction in net loss for Canaan was a common theme across the company’s quarterly performance in 2020. As previously reported by Cointelegraph, significant growth in gross margin on the sale of mining rigs helped the company lessen its year-on-year net loss by over 90% in Q2 2020.

As part of the report issued on Monday, Canaan revealed that its 2020 net revenue amounted to about $68.6 million — a 66% decline from the revenue figures in the 2019 financials.

The marked revenue decline also meant Canaan’s year-on-year gross profit took a steep tumble falling from $79 million in 2019 to under $6 million in 2020.

However, despite the drop in net revenue, Canaan said the trend will reverse in 2021, with the company forecasting a $61-million net revenue target for Q1 2021.

Like other Chinese miners, Canaan’s crypto mining inventory is on backorder amid the ongoing global semiconductor shortage.

According to Canaan CEO Nancheng Zhang, the volume of pre-orders for the company’s Bitcoin mining hardware will drive revenue growth, stating:

“Although the outbreak of COVID-19 caused supply chain disruptions and thus negatively impacted our revenues in the fourth quarter of 2020, our market leadership has enabled us to attain $174 million contracted orders with $66 million of cash advance from customers as of December 31, 2020, thus laying a solid foundation for substantial revenue growth for 2021.”

At the time of writing, the stock price of the Nasdaq-listed Canaan is about 50% down from its 2021 high attained a month ago. Despite the drop, Canaan is still up 179% year-to-date.

Updated: 4-17-2021

Bitcoin’s Green Haven Is Running Out of Surplus Electricity

The Nordic region is losing its edge in green Bitcoin mining, just as the industry faces growing scrutiny for its carbon emissions and everyone from Elon Musk to mom-and-pop investors pile in.

Iceland, Sweden and Norway have been popular mining locations because of an abundance of geothermal, hydro and wind power. China, where most coins are mined, relies mainly on coal. That Nordic power surplus is set to dwindle as aluminum smelters, oil rigs and steelmakers thirst for renewable energy.

“There could be very little excess energy in 2021 and 2022,” said Hordur Arnarson, chief executive officer at Landsvirkjun, Iceland’s national utility. “Because of the climate issues we see a lot of very interesting segments that are growing rapidly, and several of them need electricity.”

The coins are mined by computers that process complex algorithms in halls as big as airport hangars. That makes electricity one of the key inputs, consuming as much power as thousands of households. And it keeps growing. Bitcoin mining now uses 66 times more electricity than in 2015, and carbon emissions from the process may face increasing regulation, Citigroup Inc. said in a recent report.

Emissions from mining coins in China are expected to peak in 2024, releasing as much carbon dioxide into the atmosphere as all of Italy, according to a study published in Nature Communications.

Iceland was the pioneer in green mining. Until four years ago, it hosted as much as 8% of global Bitcoin production, the nation’s Blockchain foundation said, a figure that’s now down to less than 2%. The University of Cambridge put the contribution even lower at 0.35% in April 2020, the most recent data available. By comparison, China accounted for 65% then.

Growing concern about China’s cryptocurrency clout is fueling demand for mining locations elsewhere. Kevin O’Leary, the chairman of O’Leary Funds Management LP, told CNBC earlier this month that two kinds of Bitcoin will emerge, “blood coin” from China and “clean coin” mined using sustainable hydroelectricity, where the provenance can be proven, and that he would opt for the green one.

Iceland’s biggest electricity consumers are the giant smelters built decades ago to benefit from the cheap power. With aluminum prices surging, plants owned by Rio Tinto Plc and others will consume more electricity after a slowdown in 2020, according to Landsvirkjun.

Bitcoin Rush

It’s unclear exactly how many cryptocurrency miners operate in the region. Hive Blockchain Technologies Ltd. from Canada has expanded mining at home as well as in Iceland and Sweden this year. Hong Kong-listed Genesis Mining Ltd. has facilities in Sweden and Iceland. Bitfury Holding BV has also been active on the volcanic island. None of them responded to questions about the region’s future role.

Gisli Kr. Katrinarson, chief commercial officer at AtNorth, Iceland’s biggest data center operator and home to some miners, says he doesn’t see an energy shortage.

As Bitcoin sailed through $60,000 for the first time this month, Daniel Fannar Jonsson, the CEO at new mining company GreenBlocks, is bullish. He cites Iceland’s prominent history in the industry and says carbon-free power is still a big plus.

Elsewhere in the Nordic region, new green and energy-intensive industries will produce everything from carbon-free steel to hydrogen and ammonia. Their selling point is that they boost the economy by creating thousands of jobs while helping to reduce emissions. Bitcoin mining, on the other hand, offers little back to society.

Bitcoin mining is problematic as “it leads to an almost infinitely increasing energy demand,” said Espen Barth Eide, the Norwegian Labor party’s top energy lawmaker. “It will displace other far more productive industries.”

Norway’s electrification program will boost power demand 30% by 2040, according to grid manager Statnett SF. The country, known as Europe’s green battery because of its vast hydro resources, is poised to send more electricity to the continent through new cables, which will curb availability for new large users.

The Nordic power surplus, excluding Iceland, is expected to shrink by 90% from 2023 to the end of the decade, according to industry consultant Volue Insights AS. New demand will mainly be for hydrogen production and data centers.

Rocky Path

While Iceland built a separate hydropower plant to allow for a new smelter in 2008, that courtesy won’t extend to Bitcoin miners, according to Arnarson, the utility chief.

“Nobody would build a power plant for Bitcoin,” he said. “There’s a lot of uncertainty about the future development.”

Cryptocurrencies emerged as an alternative investment in the last decade, but have famously whipsawed investors. A spectacular crash three years ago left it ice cold. It’s been spurned by billionaire investors including Warren Buffett, and loved by business mavericks such as Musk.

It’s on a tear again, having doubled in value this year.

Goldman Sachs Group Inc. and Morgan Stanley plan to offer their clients access to crypto investments. Tesla Inc. earlier this year disclosed a $1.5 billion investment in Bitcoin and now accepts it as payment for its electric cars.

Back on Iceland, Johann Snorri Sigurbergsson, business development manager at the HS Orka power plant, says the nation is closer to an energy shortage than a glut. His company is busy adding capacity on the Reykanes peninsula in the southwest.

While he’s open to eventually taking on more customers, right now the price would need to be “pretty high.”

“We would need to buy some energy from the market to be able to serve them,” he said. “But that kind of business case is not the price the miners are looking for.”

Updated: 4-19-2021

DMG Purchases 3,600 ASICs In North American Bitcoin Mining Expansion

The Canadian firm is the latest of many North American companies to chase Bitcoin’s hashrate with new machine purchases.

DMG Blockchain Solutions, a public bitcoin mining company, has purchased 3,600 bitcoin mining machines.

The Canadian company expects the order to push its hashrate to over 500 petahashes per second from roughly 140 petahashes. (The seven-day moving average for Bitcoin’s total hashrate is 144 exahashes per second, according to Luxor Tech.) DMG’s stock is trading at $1.39 CAD ($1.11 USD) at press time and is down 15%.

DMG will receive the first shipments of these application specific circuit (ASIC) miners – computers optimized for one function only, in this case, producing hashes to mine bitcoin – this August. The company anticipates it will receive the final batch of the order next August.

This delay underscores a pain point in a mining industry that is teeming with demand but short on the metal to meet it. As industrial-scale miners including Marathon, Riot, Blockcap and others purchase machines by the tens of thousands, there aren’t enough machines to go around, especially for North American bitcoin mining companies, considering that most of these machines are manufactured in Asia.

North America’s mining footprint is growing, but China still holds a significant foothold in the industry, as evidenced by the network’s recent hashrate troubles.

Updated: 4-23-2021

Texas Wants To Protect Privacy Elements Of Blockchain Companies, Says Blockcap

According to Darin Feinstein, the Chinese government isn’t helping to protect the private property of its crypto miners.

Crypto mining company Blockcap, which recently announced it would be setting up new offices in Austin, said Texas could become an alluring region for the industry.

In an exclusive interview with Cointelegraph, Blockcap founder and executive chair Darin Feinstein said the firm had chosen Texas for its headquarters based on the potential hiring pool as well as the regulatory environment. According to Feinstein, blockchain companies operating in the United States — and Texas in particular — may face fewer geopolitical risks than those in China and other countries.

“Texas certainly is a place that we see protecting the privacy elements and some of the other aspects of blockchain technology that some states and some governments around the world don’t like.”

The Blockcap executive said that areas of China with a high concentration of Bitcoin (BTC) miners, like Xinjiang, don’t “protect private property” and may encourage firms to set up shop elsewhere. This week, the hashing power of top Bitcoin mining pools in the Chinese region fell due to a regional blackout reportedly aimed at allowing safety inspections, implying that the Chinese government could have some significant control over the Bitcoin hash rate.

However, in the United States, Feinstein said that support of private companies coupled with endorsements from lawmakers like Texas Governor Greg Abbott make the state “a really good hub” for crypto and blockchain. Last month, Abbott tweeted that he supported legislation to better adapt commercial law for blockchain innovation and digital asset regulations.

Other locations in the U.S. like Wyoming have “really good blockchain legislation,” according to the Blockcap founder.

However, he said Elon Musk’s decision to set up a Tesla Gigafactory — as well as his personal residence — in Texas may be a better indication of the state’s growth and opportunity for finding qualified new hires.

“We’re all in the first inning of a very long game,” said Feinstein. “The final regulatory decisions are going to take place over the next decade and the jurisdictions that are robustly looking to foster this technology along are jurisdictions that we’re interested in being a part of.”

Blockcap now controls more than 12,000 mining rigs, generating roughly 7.5 BTC daily, with the firm aiming to bring an additional 43,000 miners online by 2022. Along with Riot Blockchain — which also plans to set up shop in Texas — the firms are two of the largest crypto mining operations in the United States.

Chinese Mining Pools’ Hash Power Plummets Amid Regional Blackouts

Blackouts for safety inspections in China’s Xinjiang region have significantly impacted the hash rate of many top Chinese Bitcoin mining pools.

The hashing power of top Bitcoin mining pools located in Northwest China appears to have plummeted due to a regional blackout to enable safety inspections.

The news was reported by Wu Blockchain, the author of Chinese crypto newsletter Wublock, who noted significant drops in the hash rate of several major pools — with Antpool crashing 24.5%, Binance Pool dipping 20%, BTC.com falling 18.9% and Poolin dropping by 33%.

The hashrate of Bitcoin mining pools plummeted in 24 hours. Antpools fell by 24.5%, https://t.co/1YRYr58dLy fell by 18.9%, Poolin fell by 33%, Binance pools fell by 20%. The reason is that Northwest China is undergoing a complete blackout for safety inspections. pic.twitter.com/vaWgYsMEFH

— Wu Blockchain (@WuBlockchain) April 16, 2021

According to an article on Chinese media outlet Wu Talk, the region of Xinjiang is currently experiencing a “comprehensive power outage safety inspection.”

The inspections follow a recent flooding accident at a coal mine in Xinjiang that saw 21 miners temporarily trapped at three different locations. The mine was swamped in a sudden flood while making technical upgrades, resulting in communication interruptions and power outages underground. Nearly 1,500 rescue personnel were deployed to the mine to assist with the emergency.

Xinjiang is a major source of global Bitcoin hash rate, with the Cambridge Bitcoin Energy Consumption Index, or BECI, estimating the region currently represents nearly roughly 36% of China’s combined hashing power. With China comprising two-thirds of global mining power, BECI estimates Xianjian to comprise 23.3% of the global hash rate.

According to Ycharts, the outages appear to have driven a roughly 2.2% drop in the Bitcoin network’s combined hash rate in the past 24 hours, which has slid from 169.4 million terahashes per second, or TH/s, to 165.8 TH/s as of this writing.

Updated: 5-3-2021

Blockcap Plans To Have 50K Bitcoin Miners Operational By 2023

Executive chair and founder Darin Feinstein said the firm plans to make the U.S. a global leader in making blockchain technology mainstream.

One of the largest crypto mining firms in North America said that it has acquired an additional 8,000 rigs and has begun mining other cryptocurrencies.

In an announcement from Blockcap on Monday, the mining firm said it planned to have more than 50,000 mining rigs online by the end of 2022. Blockcap now controls more than 12,000 mining rigs, generating more than 6.6 Bitcoin (BTC) daily — roughly $380,000 at the time of publication. The firm added that it was accelerating its move to mine other cryptocurrencies including Ether (ETH).

According to the firm, the addition of the ETH mining rigs in operation would account for 1.229 terahashes per second, or roughly 0.21% of that of the Ethereum network. The more than 50,000 Bitcoin miners, when fully operational, are projected to control roughly 2% of BTC’s current combined hash rate.

“Blockcap’s growth strategy is focused on bringing various peer-to-peer digital assets directly to the people who will utilize them to improve their lives,” said Blockcap executive chair and founder Darin Feinstein. “We strive to contribute to the critical infrastructure necessary for mass adoption of these digital asset technologies so people can participate more fully in the global financial system.”

Both Blockcap and Riot Blockchain — two of the largest crypto mining operations in the United States — have announced plans to set up shop in Texas for their corporate offices and their mining facilities, respectively. Blockcap raised more than $75 million in two funding rounds led by Off The Chain Capital and Foundry Digital.

Updated: 5-5-2021

Bitcoin Miners’ Revenue Rebounds To $60M Per Day — Is The Bull Run About To Resume?

Miners are returning to Bitcoin as difficulty drops and revenues reach all-time highs.

Bitcoin (BTC) miners collected $60 million on a thirty-day average time frame as of May 5, showing the first signs of recovery after last month’s severe revenue drop that followed mass miner outages in China’s energy-rich provinces.

In April, coal mining accidents and subsequent inspections in Xinjiang lacerated energy supply to the regional cryptocurrency mining industry. That forced miners to turn off their ASIC hardware, which exclusively generates computing power to secure and put the “work” into Bitcoin’s proof-of-work.

According to data from Blockchain.com, Bitcoin mining revenue fell from its 30-day average peak of $60 million — recorded on April 16 — to as low as $57.08 million on May 2. The resource collects miners’ data from block rewards and transaction fees paid to miners.

The drop in profits coincided with a decline in the Bitcoin network’s hash rate, signifying that many ASIC miners went offline after losing their chief energy source. The total hash rate per second (seven-day average) plunged from a record high of 172 exahashes per second on April 16 to 131 EH/s on April 23, a drop of roughly 30%.

It since recovered to 168 EH/s on May 5, indicating that miners are resuming their Bitcoin operations following a considerable mining difficulty drop four days ago.

Effects On Bitcoin Spot Prices

Bitcoin prices suffered significant declines following China’s outages.

The benchmark cryptocurrency was already correcting lower after establishing a historic peak near $65,000 on April 14. The China FUD — fear, uncertainty and doubt — apprehensively accelerated the sell-off, causing the BTC/USD exchange rate to plunge to as low as $50,591 on April 25.

Bitcoin’s price and hash rate drop occurred almost simultaneously, providing further evidence for a higher positive correlation between the two metrics.

Simply put, the hash rate represents the computational power of the Bitcoin network. This means that the higher the hash rate, the higher the theoretical cost of “attacking” Bitcoin, making this metric synonymous with the network’s security.

Bitcoin’s price has recovered to a little over $55,000 as of May 5, much in line with the hash rate, signifying that the network reset is helping to maintain the cryptocurrency’s prevailing bullish bias.

More upside tailwinds come from Bitcoin mining difficulty projections. For example, data from BTC.com shows it should rise by a modest 1% in the subsequent bi-monthly (or 2,016-block period) adjustment on May 13.

The network difficulty, which shows how difficult it is for nodes on the Bitcoin network to solve the equations necessary for mining operations, had dropped 12.6% on May 2. That tends to increase margins for both inefficient and efficient miners, promising lower risks of a Bitcoin sell-off at the producers’ end.

Meanwhile, with an upside adjustment looking more likely and mining activity rising on the Bitcoin network, the long-term projections for the cryptocurrency remain bullish.

An earlier report from Cointelegraph compared the correlation between Bitcoin’s price, hash rate and mining difficulty, ruling out that the first has a lagging correlation with the latter two, despite the popular mantra that “Price follows hash rate.”

The BTC/USD exchange rate closed 2020 at $28,990 after Bitcoin’s network difficulty plunged to 17.438 terahashes per second from 19.679 TH/s in the November–December 2020 session. The period also saw a significant drop in the hash rate but left Bitcoin’s overall upside bias untouched.

Updated: 5-5-2021

New York Bill Would Freeze Bitcoin Miners Pending Environmental Review

The new legislation seeks to counter an industry that critics blast as detrimental to New York’s decarbonization goals.

A new bill in the New York state legislature seeks to place a three-year moratorium on crypto mining pending an environmental review by the state.

The bill, from state Sen. Kevin S. Parker (D-Brooklyn), would lift the moratorium only for mining facilities that “will not adversely affect” New York’s carbon-cutting benchmarks. The legislation is in its earliest stages and was referred to the Senate’s environment committee Monday.

If passed, the bill would empower state inspectors to evaluate the impact mining facilities have on water quality, air quality, carbon emissions and wildlife. Miners would be allowed back online only after they complete an environmental impact statement. Those deemed to be hurting New York’s carbon-cutting plans would be nixed.

Parker’s bill comes as state power plants roar back from their grave as bitcoin (BTC, +4.76%) mining operations. In the Finger Lakes region in upstate New York, for example, a long-dormant coal plant now burns 19 megawatts worth of natural gas to feed its armada of power-hungry mining rigs. The endeavor has proven so profitable that site operator Greenidge Generation is planning to boost capacity to 500 megawatts by 2025.

But environmentalists argue mining plants like Greenidge counter New York’s decarbonization goals. The state is seeking to slash its greenhouse gas emissions 70% by 2030. Burning more natural gas kneecaps that effort, advocates say.They also question the wisdom of allowing a plant that could power nearby homes to mine bitcoin instead.

The fight over Greenidge’s expansion plan foreshadowed what could be a monumental blow to New York’s miners – one that if successful would freeze every commercial mining operation in the state and likely threaten those found to be irreconcilable with the state’s climate and environmental goals.

Just two weeks ago, the operator convinced local politicians to approve its expansion plan without subjecting it to an environmental review. Environmentalists were aghast. The politicians said they were too. But their hands were tied by state law.

“We got all the same issues you do,” David Granzin, chairman of the planning board in the upstate town of Torrey, which is located near the Greenidge plant, told skeptical attendees at the approval hearing, according to Binghamton NPR affiliate WSKG.

“We know that Bitcoin is a big waste of energy, but we’re bound by the law. We have to follow the rules,” Granzin said.

Updated: 5-7-2021

Canadian Bitcoin Miner Bitfarms Approved For Nasdaq Global Market Listing

With its forthcoming listing, Bitfarms will join Hut8, Riot and other publicly traded miners on Nasdaq.

Toronto-based Bitcoin miner Bitfarms will soon be coming to the Nasdaq exchange.

Nasdaq has approved the company’s common stock listing under the ticker BITF on the Nasdaq Global Market, according to a press release. Nasdaq’s market has three tiers that each feature different levels of capital and financial requirements. The tier which requires bigger financials and larger cash flows is the Nasdaq Global Select, followed by Nasdaq Global Markets and Nasdaq Capital Market.

Bitfarms stock on the TSX Venture Exchange, formerly listed as BFARF, will adopt the new ticker.

Once Bitfarms shares are cleared for electronic settlement (the last step in the listing process), the shares will be live for trading.

Bitfarms listing is emblematic of the increasing legitimacy the Bitcoin mining industry has experienced lately alongside bitcoin itself.

Updated: 5-9-2021

Marathon Miners Have Started Censoring Bitcoin Transactions; Here’s What That Means

Despite Marathon’s efforts, transactions from a dark web market still made it into the block.

Marathon Digital Holdings’ (MARA) new mining pool has mined a bitcoin block that is “fully compliant with U.S. regulations,” meaning the company has started excluding transactions from entities it believes are sanctioned by the U.S. Department of Treasury or have been involved in dark web activity.

The Marathon OFAC pool, which was first announced in late March, “refrains from processing transactions from those listed on the U.S. Department of Treasury’s Specially Designated Nationals and Blocked Persons List (SDN)” to stay “compliant with U.S. regulatory standards,” according to the company.

Marathon said it is addressing a concern among “many large funds and corporations” that have” expressed interest in purchasing bitcoin” by marketing its mined bitcoin as OFAC-compliant. Marathon spokesman Jason Assad confirmed that the firm’s first OFAC pool block censored some transactions, but didn’t specify which ones.

“By excluding transactions between nefarious actors, we can provide investors and regulators with the peace of mind that the bitcoin we produce is ‘clean’, ethical and compliant with regulatory standards,” Marathon said in a statement.

It should be noted that Marathon is mining “compliant” blocks of its own volition and that nothing in the current U.S. regulatory or legal code explicitly mandates that practice for miners.

The company uses DMG’s Walletscore blockchain surveillance software to filter transactions, Assad told CoinDesk. The blacklist is “based on information provided by the U.S. Department of the Treasury and Office of Foreign Assets Control, databases of OFAC restricted cryptocurrency addresses, as well as other sources including the dark web,” he said.

Iran, which is included on OFAC’s sanctions list, is a hotbed of bitcoin adoption, partly in response to the pressures sanctions place on its citizens. (Notably but unrelated, Iran’s government just said that only bitcoin produced in Iran is legal to trade.)

What Are ‘Clean’ Bitcoins?

The practice of censoring transactions, sanctioned or otherwise (put another way, excluding them from blocks because of the sender’s presumed identity), is a subject of heated debate within the Bitcoin community. Satoshi Nakamoto designed Bitcoin mining to facilitate permissionless and censorship resistant transfers of value, but initiatives like Marathon’s undermine that feature for no reason, critics say.

“It is totally against the Bitcoin ethos as they are trying to make it a permissioned protocol instead of open for all,” said Ben Carman, a Bitcoin Core and Suredbits developer.

He also said Marathon’s approach doesn’t make sense. “They are mining blocks that will not have the highest fee transactions, but (are) still on top of blocks with transactions they deem ‘bad,’ giving them more security,” he said.

Others also questioned the practicality of making a compliance claim.

Indeed, despite Marathon’s surveillance, transactions from a Russian dark web market, Hydra, were still processed in the “clean” block.

Further, shortly after Marathon blazoned the “clean” block on social media, bitcoiners from Iran and around the world began to send bitcoin to the address that received the Marathon “clean” block reward.

The gesture was meant to display how easy it is to undermine Marathon’s initiative (and thus demonstrate how futile the chase is for “clean” coins).

Miners speaking to CoinDesk from other pools declined to go on the record about Marathon and its compliance push, but the sentiment was generally negative. One miner laughed at the notion, while another called it a manufactured issue.

The Economics Of A ‘Compliant’ Bitcoin Block

Marathon began directing its hashrate, or computer processing power, to the OFAC pool on May 1 and mined its first block on May 5, Bitcoin block 682170. That block’s transaction fee reward, 0.05 BTC (worth less than $3,000 at the time) is substantially less than the fees collected in the blocks before or after it (both of which were 0.31 BTC or ~$17,800). Block 682172 included 0.48 BTC for nearly $28,000.

BitMEX Research’s diagnosis notes that the block “contained 0.00330944 BTC less transaction fees than expected.” The block excluded a number of transactions that BitMEX’s own hypothetical template would have included, which “could indicate censorship,” the post said.

Interestingly, it also included many transactions that BitMEX’s model excluded because their fees were too low to be considered a priority. That could indicate “out-of-band payments” for the fee, BitMEX says, which are under-the-table payments that are not included in the payer’s transaction.

If Marathon is not receiving out-of-band fees, then so far its “compliant” blocks are netting significantly less in transaction fees. That portion of the block reward has become increasingly important for miner profits as bitcoin’s block subsidy has dwindled to its current rate of 6.25 BTC per block and demand for bitcoin has grown.

Marathon’s block occurred only a minute after the one before, which could explain the block’s lower fee reward and transaction count. Marathon, however, still used it to censor transactions that, for other miners, would have gone through.

Iran’s Central Bank Reportedly Bans Trading of Crypto Mined Abroad

The move is said to be an attempt to stop capital flight from Iran.

In a somewhat bizarre move from the Central Bank of Iran (CBI), trading of cryptocurrency mined outside the country has been banned, according to news reports Thursday.

The ban attempts to stymie capital flight from the country that could be attributed to the effects of its depreciating national currency, the rial. That’s according to Fatemeh Fannizadeh, Swiss qualified independent practitioner and attorney at law, who spoke on the matter via Twitter on Friday.

Iran has already banned the use of cryptocurrency for payments, while the country’s financial institutions are free to use cryptocurrency, derived from sanctioned miners, to pay for imports.

How exactly the central bank intends to regulate the inflow of fungible cryptocurrency from outside the country’s borders remains unclear.

CoinDesk attempted to contact the CBI but did not receive a reply by press time.

Updated: 5-14-2021

Renaissance Technologies Amassed $140M Position In Mining Stocks In Q1

The quantitative hedge fund placed heavy bets on Riot, Marathon and Canaan in early 2021.

Renaissance Technologies cranked up its exposure to the cryptocurrency ecosystem last quarter, amassing its largest-ever positions in mining stocks, worth over $140 million in total at the end of March.

The storied quant fund manager of $115 billion ended Q1 with 1.16 million Riot Blockchain shares ($61.8 million), 1.56 million Marathon shares ($75 million) and 203,672 Canaan shares ($4.2 million), according to Thursday disclosures.

Renaissance Technologies has chased crypto mining’s upside since at least 2017 with occasional bets on MARA, RIOT and CAN. But those positions had never eclipsed $1 million, and the hedge fund ended 2020 with no exposure to the crypto mining sector at all.

Crypto mining stocks rallied to new heights during the recent bull run, giving U.S. investors a sideways route to speculate on crypto without actually owning any. RIOT and MARA actually outperformed bitcoin at times.

The combined positions far outstrip RenTech’s 2020 positions in MicroStrategy, another crypto bellwether stock that raced upward with bitcoin’s rise. In fact, RenTech, which at one point held over $40 million in MSTR, according to The Block, appears to have closed out its MSTR holdings, ending Q1 2021 with no MSTR on the books.

In April 2020 RenTech gave its Medallion funds the green light to invest in cash-settled bitcoin (BTC, +1.96%) futures.

Turkish Customs Confiscate Over 500 Smuggled Bitcoin Mining Rigs

Turkey’s biggest bust against crypto mining smugglers resulted in the seizure of $600,000 worth of illegal Bitcoin ASIC miners and the detention of four suspects.

Turkish customs enforcements brought down an illegal smuggling operation in what is said to be a record bust against illegal Bitcoin (BTC) mining equipment in the country.

After receiving a tip, Turkey’s Customs Protection’s anti-smuggling and intelligence teams raided a warehouse earlier this week in Karabağlar, İzmir, where they found 501 ASIC Bitcoin mining rigs in closed cardboard boxes.

Customs enforcement reported the estimated value of the seized equipment at 5 million Turkish liras, or $600,000. Four suspects were detained as part of the investigation. Reports claim that law enforcement is carrying out another active operation in İstanbul, the biggest city and a major customs checkpoint in Turkey.

Application-Specific Integrated Circuits, or ASICs, are the most popular way to mine Bitcoin, but they are also known for their high electricity usage, a widely known issue that has caused Elon Musk to pull back on his decision to accept Bitcoin payments for Tesla cars.

Once known as a crypto-friendly country, Turkey has recently stepped up its monitoring of crypto frauds and transactions. Last month, Turkish crypto exchange Thodex halted operations with over $150-million missing, rendering thousands of users unable to access their funds.

Shortly after Turkish police detained 62 suspects in the Thodex investigation, another local exchange, Vebitcoin, shut down in the same manner.

More recently, the Turkish Minister of Treasury and Finance Lütfi Elvan announced that the Financial Crimes Investigation Board, or MASAK, has full authority to audit and oversee crypto exchanges. As a countermeasure for fraud and illegal money trafficking, any crypto exchange with a presence in Turkey is now obliged to inform MASAK about crypto transactions over 10,000 Turkish liras ($1,200).

Local blockchain and crypto experts agree that Turkey needs a clear regulatory framework to prevent fraud in the ecosystem.

Updated: 5-16-2021

Crypto Industry Brass Explains Harnessing Renewable Energy Could Help BTC Miners

Bitcoin mining via renewable energy is already prominent, one CEO explains.

The energy consumed by mining — the process that keeps Bitcoin’s blockchain running — has been an increasingly popular topic of discussion in recent weeks.

On Friday, CNBC posted an interview with SUKU CEO Yonathan Lapchik, during which he explained the Bitcoin mining scene as it relates to renewable energy. The interviewer noted Lapchik previously claimed that 75% of Bitcoin mining comes from renewable energy.

“We think that 75% is an actual figure,” Lapchik told CNBC, “The miners are truly incentivized to use renewable energy.” Turning his thoughts to electric car-maker Tesla, which recently announced it would no longer accept Bitcoin for purchases due to environmental concerns, Lapchik said “It’s surprising that Elon didn’t consider that before getting into the space, before accepting Bitcoin as a payment mechanism for Tesla.”

Tesla opened its doors to payments via Bitcoin by United States clientele back in March. The move went public following the car company’s purchase of $1.5 billion worth of BTC, announced in February.

Musk, however, recently stated disapproval of the fossil fuel energy Bitcoin mining calls on, via a Tweet on Wednesday. He also discontinued payments to Tesla in BTC, albeit seemingly a temporary move until Bitcoin mining reaches satisfactory energy usage levels.

“Really the data has been there forever,” Lapchik said of the 75% number. “We’ve been proving over and over and over that that’s a real case for miners in the Bitcoin network.”

Alliance Of Major Firms Aims To Reduce Crypto’s Carbon Footprint

One of the group’s long-term goals involves transitioning all of the world’s blockchains to 100% renewable energy by 2025.

A group of more than 20 firms comprising crypto, finance, technology, energy, and nongovernmental organizations has banded together to focus on the environmental impact of cryptocurrency.

In an announcement on Thursday, the Crypto Climate Accord — reportedly inspired by the 195-signatory Paris Climate Agreement — said it aims to address the “large and growing energy consumption of cryptocurrency and blockchain, and the climate impact of their energy use.”

Launched by nonprofits Energy Web Foundation, the Rocky Mountain Institute and the Alliance for Innovative Regulation, the group’s partners include high-profile firms in the crypto space like blockchain-based payments company Ripple, Canadian mining firm Hut 8, digital asset investment firm CoinShares, Ethereum software company Consensys, and others.

“Industries from across the global economy are beginning to decarbonize their operations,” the group stated. “We can do the same in crypto. We have the opportunity to decarbonize the industry.”

Among the Crypto Climate Accord’s long-term goals are transitioning all of the world’s blockchains to be powered by 100% renewable energy — by the time of the United Nations Framework Convention on Climate Change in 2025 — and developing an open-source accounting standard for measuring emissions from the cryptocurrency industry. The group has also set a target for the entire crypto industry to become carbon net-zero by 2040.

Many fintech and crypto firms have made public pledges for greener initiatives as the environmental impact of digital assets becomes more apparent. Last year, Ripple announced it was committing to becoming carbon net-zero by 2030 by partnering with the Energy Web Foundation and investing in carbon-removal technologies.

We’re proud to join the @CryptoClimAcc alongside @energywebx, @UNFCCC, @AIRinnovate, @Consensys, @CoinSharesCo, @RockyMtnInst & more. Together, we can decarbonize all #blockchains! https://t.co/YY5wGX5wkl

— Ripple (@Ripple) April 8, 2021

“The Crypto Climate Accord recognizes that financial technologies — including blockchain and cryptocurrency — are well-positioned to lead global finance’s commitment to a sustainable future,” said Ripple in response to the launch on Thursday. “Recent studies suggest that now through 2023 are the most critical years of adoption growth for crypto and we know it will be more difficult to ‘reverse engineer’ a systemic characteristic like sustainability the longer we wait.”

Both Bitcoin (BTC) and blockchain have received praise for their roles in transforming global finance, but have also drawn criticism over the technology’s impact on climate change. The energy required to maintain the Bitcoin network is estimated to consume roughly 95.4 terawatt-hours per year — an amount comparable to the power consumption of Kazakhstan — according to data from the Digiconomist’s Bitcoin Energy Consumption Index. Bitcoin also has an annual carbon footprint — 45.34 megatons of carbon dioxide — that rivals Hong Kong’s.

If “decarbonizing the cryptocurrency industry in record time” is the goal of the Crypto Climate Accord, the challenges it faces will be comparable to those of the signatories to the Paris Agreement, which aims to prevent the Earth from warming more than 1.5 degrees Celsius above “pre-industrial levels.”

Reports suggest that global carbon dioxide emissions fell by 6.4% last year, as many industries were slowed or stopped by the impact of the pandemic. However, this still fell short of the 7.6% cut the United Nations Environment Programme estimated was required to meet the numbers set in the Paris Agreement.

Bitcoin Mining In China Set For ‘Stricter Supervision’ Due To Carbon Concerns

China is reportedly paying more attention to the crypto mining sector, amid concerns of its growing carbon footprint.

China’s crypto mining operations may be set for stricter supervision in the future, with the Government reportedly concerned about the energy consumption of Bitcoin mining in particular.

Beijing sent an “emergency notice” to conduct checks on data centres involved in Bitcoin and other cryptocurrency mining operations on April 27, which was reportedly met with some panic in China.

However Chinese columnist Colin Wu or Wu Blockchain on Twitter, was quick to downplay fears of how this could impact Chinese Bitcoin miners in the short term, noting that:

“This caused some panic in China. However, the Chinese government said it was only conducting an investigation. Data centers are difficult to use for Bitcoin mining, and are mainly used for ETH Filecoin.”

According to Chinese state media PengPai (accessed via translation), the “emergency notice” was routine work for the Beijing Municipal Bureau of Economy and Information Technology, as it seeks to account for a clearer picture of the energy consumption from the mining operations of Beijing-based data centers.

It has yet to be revealed if the checks will be carried out on a national scale, or what the future ramifications could be. However, according to PengPai, Yu Jianing, the rotating chairman of the Blockchain Committee of the China Communications Industry Association, it’s a sign of things to come. He believes that “under the background of carbon neutrality, the future blockchain mining will indeed have stricter supervision.”

This notion holds up when looking at Inner Mongolia for reference — which will no longer be a mining hub. Crypto miners have been given until the end of April to shut down operations after China recently banned crypto mining in the area in order to meet its new carbon-reduction goals.

China’s 14th “five year plan” outlines a set of targets which include an 18% reduction target for “CO2 intensity” and 13.5% reduction target for “energy intensity” from 2021 to 2025.

Beijing is not known as a crypto mining hub as its electricity prices are higher than other regions, which may mean other hubs such as Xinjiang and Sichuan are targeted in the future.

Data from the Cambridge Bitcoin Energy Consumption Index or CBECI, estimates Xinjiang accounted for 35% of China’s Bitcoin hashing power in April, and accounted for roughly 23% of the world’s hash rate.

More stringent mining conditions could have global effects, with some believing Bitcoin’s sharp crash to $50,000 earlier this month was in part a result of Xinjiang’s drop in hashrate due to power outages around April 17.

Popular crypto Analyst Willy Woo speculated a “whale with closer knowledge to happenings in China,” sold off before mining pools were temporarily shut down, citing a transfer of 9000 Bitcoins to Binance on April 16.

The power outage in Xinjiang (which powers a significant amount of the BTC mining network) was known before the BTC price crash. Here’s local news on 15th April.https://t.co/dGS7GRPj2y

— Willy Woo (@woonomic) April 18, 2021

Inflation Winds Stiffen As Bitcoin Ballast On Balance Sheets Proves Its Value

Firms with iconoclastic leaders, like Musk and Dorsey, “would be the most likely to take the plunge” and commit sizable cash balances to crypto.

As corporate finance leaders prepare to set sail into the post-COVID-19 world amid inflation storm warnings, an increasing number of corporations are taking stock of their treasury reserve holdings. If the worst happens, and the dollar and other reserve currencies weaken, are they sure that all their balance-sheet cash is lashed down securely?

It surely hasn’t escaped their notice, after all, that a number of public companies that “joined” Bitcoin (BTC) in a big way over the past year recently broadcast strong Q1 2021 earnings. Square, which holds $472 million worth of BTC, for instance, reported a quarterly gross profit increase of 79% year-over-year, doubling analysts’ expectations.

While Tesla, which plunked down $1.5 billion — 8% of its cash — into BTC in February, posted record earnings with revenues surging 74%. MicroStrategy, which made Bitcoin its primary corporate reserve in 2020, notched a 10% gain in Q1 revenues.

“If inflation picks up, or even if it doesn’t, and more companies decide to diversify some small portion of their cash balances into bitcoin instead of cash, then the current relative trickle into bitcoin would become a torrent,” wrote storied investor Bill Miller in a market letter earlier this year.

Already, “companies such as Square, MassMutual, and MicroStrategy have moved cash into bitcoin rather than have guaranteed losses on cash held on their balance sheet,” he added.

Elsewhere, Ark Investments commented in a company newsletter: “Microstrategy, Square, and now Tesla are showing public companies the way to add bitcoin as a legitimate alternative to cash on their balance sheets.”

But Bitcoin remains a volatile asset — as the most recent BTC price drop to $46,000 reminded users again — so maybe its embrace by corporate treasurers is really just a short-term happenstance? On the other hand, if the trend does have legs, is it really appropriate for all companies? If so, at what level of allocation is appropriate?

Overall, what does this say about the global economy if public firms now look to a 12-year-old digital currency to keep its cash stockpiles liquid and secure?

A Longer-Term Trend Or Seasonal Fashion?

“I do not view this as a fad,” Paul Cappelli, a portfolio manager at Galaxy Fund Management, told Cointelegraph. Bitcoin’s “inelastic supply curve and deflationary issuance schedule” make it a “compelling hedge against inflation and poor monetary policies that could lead to cash positions becoming devalued over time,” he told Cointelegraph, predicting:

“Corporations will continue to use Bitcoin as one of the tools available to preserve the value of their balance sheets.”

David Grider, lead digital asset strategist at Fundstrat, informed Cointelegraph that as crypto becomes more mainstream, he expects to see “more corporates holding crypto for legitimate business purposes.” Exchanges could hold it as inventory, tech companies might use it to stake tokens and participate in networks, while multinational corporations could accept it for payments.

“I expect two types of companies to consider early adoption of crypto — ones led by leaders who are strong believers in crypto, as well as companies that may have unique cross-border needs that are a good fit for Bitcoin transfers,” Gil Luria, director of research at D.A. Davidson & Co., told Cointelegraph.

If so, doesn’t this represent a sea change for corporate finance officers? “When I did my treasury exams, the thing we were told as number one objective is to guarantee security and liquidity of the balance sheet,” Graham Robinson, a partner in international tax and treasury at PricewaterhouseCoopers and adviser to the United Kingdom’s Association for Corporate Treasurers, told Reuters. BTC with its volatility might simply not fit the bill.

If Bitcoin were to be used as a corporate treasury reserve, and its price plunged, that company might not be able to meet its working capital requirements, noted Robert Willens, adjunct professor of Columbia Business School, in January, when he described it as “a high-risk, high-reward strategy.”

Has Willens changed his views? “I still believe it is a high risk/high reward strategy,” he told Cointelegraph, acknowledging that “lately, the rewards have far outweighed the risks.” He does see more firms following the lead of Tesla and Square, “as crypto investments become more ‘respectable’ and emerge as a viable outlet for corporate cash balances.” Asked who might lead the way, Willens answered:

“I think companies with iconoclastic leaders — not necessarily confined to a particular industry — would be the most likely to take the plunge and commit a decent amount of the corporation’s cash balances in crypto.”

Fundstrat’s Grider, citing the OTC trading firm Genesis’ Capital trading data, told Cointelegraph that more corporations may be buying crypto than has been reported in earnings statements.

The Genesis Q1 2021 “Market Observations Report,” for example, reported a striking jump in “corporates’” share of crypto trading volume to ~27% from ~0% in the quarters prior. “As corporate clients began buying bitcoin for their treasuries in Q1, our ratios shifted,” noted Genesis.

Tesla Allocated 8% — Is It Too Much?

Assuming that a company believes that crypto should be part of its treasury reserves, how much should it actually allocate? Last year, Cappelli told Cointelegraph that an investment of 50 basis points to 2% of reserves was about right, given crypto’s volatility.

But since then, crypto prices have skyrocketed, and Tesla allocated a whopping 8% — or $1.5 billion — to its corporate cash reserves. Is the recommended allocation growing?

“I don’t think there’s a bright-line rule that we can apply here across the board,” Willens told Cointelegraph, “but I think something well north of 2% would be appropriate — perhaps as much as 8%–10% might even be acceptable.”

“It will all depend on the company,” Cappelli said this past week. “Corporations manage their balance sheets to fund operations and maintain a certain amount of liquidity.” Bitcoin is still a very volatile asset, “so while it does provide a hedge against inflation, it does come with a certain amount of market risk. I’d be very surprised to see a company allocation much more than a ballpark of 5% currently, but that may change over time.”

Still, what about Robinson’s contention that a corporate treasurer’s job is to guarantee liquidity and security of the balance sheet — and could Bitcoin not do that?

“If you think about crypto purely as cash, it is still very volatile relative to the dollar,” Grider told Cointelegraph. “But some assets like Bitcoin are becoming less volatile lately, and we are seeing strong liquidity emerge in crypto, which is encouraging.”

One way a firm could think about holding crypto is as an alternative to cash, continued Grider, “but you can also think about it like inventory or a marketable securities investment or an intangible long-term asset. That means even if not an ideal treasury asset in all respects, corporates could still hold crypto for other reasons,” such as:

“Certain incumbent businesses could buy crypto as a hedge against tech disruption, just like doing M&A of a competing startup.”

“I think the liquidity concern is a valid one,” responded Willens, “but limiting the investment to 8%–10% of the investible funds ought to insulate treasurers from criticism since the balance of the funds would be deployed in cash and cash equivalents with a readily realizable value.”

There is a sizing exercise that occurs for every investment, added Capelli, and “taking all balance sheet investments into account” is part of any corporate treasurer’s or chief investment officer’s job. Meanwhile, Luria declared that “crypto assets are liquid enough that this should not be a constraint.”

A more significant disincentive to using crypto as a corporate treasury reserve, in Willens’ view, may be the accounting treatment to which it is subjected at present — i.e., “the odd way investments in crypto are accounted for — they are treated as ‘indefinite-lived intangible assets,’ and thus any declines in the value of the asset must be reflected in income from continuing operations, whereas price increases cannot be so reflected.” He described this “unfavorable accounting treatment […] as the most unattractive aspect of an investment therein.”

A “Tectonic Shift” In Global Finance?

All in all, the current monetary environment has raised serious corporate concerns about inflation and the continued strength of the United States dollar. It should not be surprising, as Grider said, “that corporations would become more open to alternatives like crypto.”

But something even larger may be going on. As Perianne Boring noted recently in the New York Times, a “tectonic shift” may be underway in global finance thanks to cryptocurrency. “Digital assets have brought forth a new paradigm in global finance,” concurred Cappelli, though we are still in the very early stages:

“With every cycle, there are always pockets of froth, but structurally, what we have seen built over the last few years certainly provides a strong foundation for this new asset class.”

Upstate NY Bitcoin Miner Greenidge To Offset Rigs’ Carbon Emissions

The power station that sparked controversy over a bitcoin mining expansion plan will also invest in renewable energy projects.

Greenidge Generation Holdings, whose natural gas-powered bitcoin mining operation has sparked controversy in upstate New York, plans to counteract the emissions that its rigs produce with carbon offset credit purchases starting on June 1.

The power station operator said it will invest in a “portfolio” of greenhouse gas reduction projects to offset 100% of its miners’ carbon footprint. It also plans to invest some of its mining profits in renewable energy projects in New York, according to its statement on Friday. The miner owns its own ~40 MW natural gas plant, the energy source prompting the carbon credit purchases.

Greenidge, which is planning to go public through a merger with a special purpose acquisition company, or SPAC, came under fire last month for its plans to expand its upstate New York bitcoin mining facility. Environmentalists objected to the power station burning natural gas to mine bitcoin as well as to its cooling system’s alleged impact on a local lake.

“Each project has been reviewed and certified by one of three well-recognized Offset Project Registries, the American Carbon Registry (ACR), the Climate Action Reserve (CAR) and Verra, ensuring that any projects funded by Greenidge reduce emissions or increase sequestration of greenhouse gas in a manner that is real, permanent, and verifiable,” the release reads.

The Greenidge case is one battlefront in a growing war over bitcoin’s environmental footprint. Critics have blasted energy-hungry crypto miners for in their view needlessly contributing to the climate crisis, while defenders of bitcoin’s proof-of-work blockchain argue that the crypto amounts to an insignificant blip in global emissions.

“All miners should follow their example and buy offsets; they’re only around 10 bps (basis points) to neutralize the climate impact,” Nic Carter, a partner at Castle Island Ventures and frequent commentator on the mining controversy, said of Greenidge. “Offsets are an expedient and efficient tool to solve this problem.”

Greenidge’s carbon offset announcement comes as new waves of media attention foment controversy surrounding Bitcoin’s energy use.

The Chinese government has begun cracking down on coal mining in Inner Mongolia, expressly for its carbon footprint.

Earlier this week, Tesla CEO Elon Musk suspended the electric-car maker’s policy of allowing bitcoin as a payment because of environmental concerns. He said Tesla could revisit the crypto once “mining transitions to more sustainable energy.”

In response, some North American miners have begun making moves toward 100% renewables in their energy sourcing. In MONTH, the Crypto Carbon Accord was created, with a growing number of companies pledging to make the crypto mining industry carbon neutral by 2040.

Though Greenidge’s bitcoin rigs will remain dependent on energy from fossil fuels and will use more energy once it expands its mining operations, the company appears to be one of the first crypto miners with a carbon emissions offset plan.

Notably, bitcoin mining’s energy mix trends from 36-76% renewables depending on the time of year. Currently, Chinese miners are migrating away from the coal-rich region of Xinjiang to the hydro-rich Sichuan region.

Updated: 5-17-2021

Iranian Crypto Miners Using Household Energy Will Face Large Fines

Iran is fighting against unauthorized crypto mining amid ongoing energy supply shortages.

The Iranian government continues to closely monitor the cryptocurrency mining industry by initiating new measures against home crypto miners, according to a new report.

Mostafa Rajabi, a spokesperson for Iran’s Ministry of Energy, said that crypto mining with household electricity is not legal and, thus, home miners will have to pay heavy fines if discovered, local news agency The Tehran Times reported Sunday.

Crypto miners using household energy will be also required to provide compensation for potential damages caused to the electricity network, the official stated.

Rajabi said that the government has undertaken these measures in order to get a handle on Iran’s power shortage — the result of foreign sanctions on hydrocarbons and decreased hydroelectric production due to less-than-average rainfall.

Rajabi stated that unauthorized crypto mining can damage the local power grid and lead to blackouts. He said last week that as much as 87% of crypto mining operations in Iran are illegal.

The energy crisis in Iran has led the government to strictly control the energy-intensive industry. Back in 2018, the secretary of Iran’s Supreme Cyberspace Council said that various ministries of the country’s government had accepted mining as an industry. Eventually, the Iranian government approved crypto mining as an industrial activity in 2019, subjecting it to a licensing scheme and regulated electricity price regime.

In April, the central bank authorized banks and licensed foreign exchange shops to use cryptocurrency as payment for imports to mitigate the impact of sanctions imposed by the United States.

Almost All Major Bitcoin Mining Pools Now Signaling For Taproot Activation

The largest Bitcoin mining pools are signaling for Taproot, but the activation may not reach the 90% critical consensus mark during this current difficulty epoch.

The top-10 Bitcoin (BTC) mining pools by hash rate distribution are now signaling for Taproot activation with BTC.Top being the latest among them as of the time of writing.

Indeed, 90% of Bitcoin’s hash rate briefly signaled for the protocol upgrade with the figure now standing at about 73%.

Tweeting on Monday, crypto exchange giant Binance announced that Binance Pool had begun signaling for Taproot. According to the Taproot Signal Twitter bot, Binance Pool’s maiden Taproot signal occurred at block height 683,878.

Based on community feedback, #Binance Pool has begun signaling for Taproot.

It is estimated that #Binance Pool will fully support Taproot before Friday this week. https://t.co/eukp3FlEA8

— Binance (@binance) May 17, 2021

As previously reported by Cointelegraph, the two largest Bitcoin mining pools — AntPool and F2Pool — were among the earliest supporters of the protocol upgrade in the mining arena. SlushPool — the 12th-largest pool by hash rate distribution — was the first to mine the first transaction block with a Taproot signal.

BTC.Top, the last of the top-10 pools to signal for Taproot, did so on block height 683,945. The mining pool had previously announced that it had completed the testing protocols necessary to begin including Taproot activation signals in mined transaction blocks.

Data from Taproot.watch, a webpage created by Bitcoin developer Hampus Sjöberg, shows there have been multiple occasions of at least 10 successive blocks with Taproot signals during the current difficulty epoch.

However, with 190 non-signaling blocks so far, Taproot activation being locked in during this current difficulty window appears unlikely. The protocol upgrade can only move forward if 90% out of the 2,016 mined blocks in a difficulty epoch include an activation signal.

At 190 blocks, the non-signaling blocks are now over 9%. At 202 non-signaling blocks, the Taproot lock-in threshold requirement will be pushed to the next difficulty adjustment in about 11 days.

Taproot activation must be locked in before Aug. 11 for the network upgrade to happen in November. If that happens, it will arguably be the most notable protocol-level improvement in the last four years for the largest crypto by market capitalization.

The Taproot upgrade will essentially mask spending conditions prescribed by transacting parties, a feature touted to have significant implications for both privacy and smart contract capabilities of the Bitcoin protocol.

Updated: 5-18-2021

Blockstream Hosts BlockFi’s New Bitcoin Mining Venture

The crypto lender is entering Bitcoin mining in the midst of a boom in North America’s bitcoin mining industry.

Bitcoin and crypto lender BlockFi is now in a bitcoin mining partnership with Blockstream.

Blockstream Mining is hosting BlockFi’s new mining machines in one of its warehouses in Adel, Ga., which supports up to 300 megawatts of capacity, according to a press release.

“As BlockFi looks to expand our offerings to the mining community and accumulate bitcoin on our balance sheet, mining directly to support the Bitcoin network provides a means to vertically integrate our supply chain while diversifying our revenue streams,” said Joe Chu director of portfolio credit and mining at BlockFi.

BlockFi said it is running a mix of MicroBT and Bitmain miners but would not reveal how many it has purchased. The firm also didn’t state how much hashpower its venture would add to the network.

North American Bitcoin Mining

The partnership marks BlockFi’s first foray into mining at a time of increasing investment in the North American bitcoin mining industry.

A product of Blockstream, a builder of Bitcoin and blockchain infrastructure, Blockstream Mining is one of a handful of companies that operates machines on behalf of itself and others in so-called colocation facilities. The largest of these, Core Scientific, recently expanded its operational capacity to accommodate a mass of new chip orders for itself and its partners.

With North America’s bitcoin mining rush in full tilt, mining machines are backordered for months, and miners are struggling to find warehouse space to hold those computers.

Updated: 5-20-2021

Inner Mongolia Sets Up Hotline To Report Suspected Crypto Miners

Authorities in Inner Mongolia are cracking down further on crypto mining operations that may be jeopardizing the region’s bid to reduce carbon emissions.

A new announcement from the Inner Mongolia Autonomous Region Development and Reform Commission, or DRC, has informed the public that they now have a direct way to report any outlying cryptocurrency operations in the region.

As previously reported, Inner Mongolia was once home to a vast network of crypto mining operators, who collectively accounted for 7.71% of the global Bitcoin network hash rate between September 2019 and April 2020.

As part of Beijing’s increasingly proactive, ambitious agenda to reduce carbon emissions, Chinese authorities have increasingly scrutinized the coal-rich region of Inner Mongolia, where plentiful, cheap electricity remains reliant on fossil fuels. According to a Greenpeace report from the end of March, Inner Mongolia approved the highest amount of new capacity for coal-fired power plants between 2016 and 2020 of any DRC in China.

Wednesday’s announcement makes it clear that regional authorities are attempting to turn the tide on the energy front, in part by strengthening their crackdown on illegal and energy-intensive crypto mining operations. A dedicated telephone hotline, email and mail service will provide the local public with a reporting method they can use to inform authorities of any suspected crypto mining activity in the region.

The announcement notes that suspected entities may be masquerading as data centers and enjoying preferential policies in tax, land and electricity prices while illicitly engaging in cryptocurrency mining.

The creation of the hotline is just the latest in local authorities’ bid to get a handle on residual mining operations in their jurisdiction. In August 2020, officials considered implementing a policy that would prevent crypto miners from using inexpensive, state-subsidized electricity.

By March, a proposal was drafted to “comprehensively clean up and shut down virtual currency mining projects” by the end of April. Wednesday’s announcement echoes the same wording, indicating that the region is committed to reversing its earlier failures to meet energy-saving targets set by Beijing.

Bitcoiners Waving Eco-Friendly Bona Fides Bet On Green Premium

Bitcoin’s environmental dark side has been glossed over for years. Elon Musk changed that with a tweet.

And with it, the Tesla Inc. chief executive officer threw open what some see as a new market opportunity for crypto “miners” brandishing their eco-friendly credentials. Some are working to sell what they are calling green Bitcoin — coins whose transactions are verified on the blockchain by computers powered only by renewable energy. The bet is that they will be able to command a premium of up to 10%.

“There’s a market that doesn’t know it yet,” said Sheldon Bennett, CEO at crypto miner DMG Blockchain Solutions Inc. His firm has had discussions with “multiple banks and financial institutions” that want to buy Bitcoins that can fulfill increasing demand for environmental, social and corporate governance compliance, he said. “More and more, they are saying if there’s an option, I am willing to pay a premium to get it.”

The corporate world has increasingly focused on environmental concerns in recent years — or at least on appearing to care about green issues. With the shift, investors are hot to buy into renewable energy as the next big thing. Companies in every sector are pledging to cut their carbon emissions. And the Biden administration has set tough carbon goals and promised to fund new green technologies.

Even before Musk helped to roil the crypto world with his tweet saying Tesla would no longer accept Bitcoin as payment, industry participants have been moving to address the green backlash. In addition to the mining pool focused on specifically using renewable energy, DMG recently joined the Crypto Climate Accord, a private-sector initiative to decarbonize the crypto industry by 2030. The group was inspired by the Paris Climate Agreement.

The idea of paying a premium for green Bitcoin may not be such a stretch, considering that coins that don’t use energy-intensive mining — such as Cardano and Polkadot — actually enjoyed a short rally following Musk’s comments when Bitcoin tumbled. The protocols they use to secure their networks and process transactions use less power than the system that supports Bitcoin.

A growing number of companies in the crypto industry are alert to the danger of being tagged as not green, said Isaac Maze-Rothstein, a research analyst at Wood Mackenzie.

Intense Competition

“There are a bunch of miners who saw what happened with the coal industry,” he said. “So they only pursue a project if it’s carbon negative. There are others who want to co-locate with wind, or with solar.”

Miners’ willingness to shoulder potentially higher costs to go green may depend on Bitcoin’s price, of course. When the going gets tough, many green miners may be forced to change their game and go for lower cost, and dirtier energy, instead, said Christopher Bendiksen, head of research at CoinShares, a provider of digital-asset investment services.

Updated: 5-23-2021

Bitcoin Miners Are Giving New Life To Old Fossil-Fuel Power Plants

The lofty prices of cryptocurrencies have investors sinking money into electricity generation, risking a backlash.

Across America, older fossil-fuel power plants are shutting down in favor of renewable energy. But some are getting a new lease on life—to mine bitcoin. In upstate New York, an idled coal plant has been restarted, fueled by natural gas, to mine cryptocurrency. A once-struggling Montana coal plant is now scaling up to do the same.

The lofty price of bitcoin and other cryptocurrencies has investors pouring money into power generation—and risking a backlash. Elon Musk tweeted last week that Tesla Inc. would no longer accept bitcoin as payment for vehicles over concerns about fossil-fuel use in bitcoin mining. That rocked the market; bitcoin prices are now down around 25% since last week.

The drive for power has its roots in bitcoin’s intractable mathematics: To operate securely, the cryptocurrency’s network relies on computers solving puzzles; in return the solvers get fresh bitcoin. The higher the bitcoin price, the more of these miners compete to solve the puzzles—a process that chews up electricity. The more competition, the harder the puzzles get and the more electricity is used.

A University of Cambridge index pegs the annual power consumption of bitcoin mining at around 130 terawatt-hours, more than three times higher than at the beginning of 2019. That would be more than the power consumption of Argentina.

The coal-fired Hardin Generating Station in Montana had been struggling for years. Late last year, a Nasdaq-listed miner called Marathon Digital Holdings Inc. MARA -4.57% partnered with Hardin’s owner to transform the power plant into a hub for mining bitcoin.

“It was an idle asset,” Fred Thiel, Marathon Digital’s chief executive, said in an interview. “We were able to get access to a large amount of power at a very attractive price.”

The project is in the process of scaling up, with more than 100 megawatts of power capacity planned. Marathon Digital, whose investors include BlackRock Inc. and the hedge fund Renaissance Technologies LLC, said that by tapping the Montana coal plant, its break-even costs to produce a bitcoin will fall to $4,600, 38% less than previously.

The company is aiming to produce at least 55 bitcoins daily by the first quarter of next year, up from an average of two a day in 2020.

Besides mining bitcoin, Marathon Digital said that as of March it had nearly $300 million worth of bitcoin on its balance sheet, in an effort to signal its confidence in bitcoin’s future and attract institutional investors to the stock who might want exposure to the cryptocurrency but were unable to or unwilling to invest in it directly.

BlackRock and Renaissance declined to comment.

Hey Elon, Bitcoin Can Green The Grid

Decentralization of the energy system and the money system can go hand in hand, says CoinDesk’s chief content officer.

Identifying a core reason for the gut-wrenching plunge in cryptocurrency prices this week is complicated because falling prices create their own reality, prompting investors to sell even more. In this case, this was exacerbated by debt.

As prices fell, investors who’d borrowed to finance their bets had to liquidate them to cover their positions. This is an ever-present danger in all financial markets but that it played out so violently this time speaks to how deeply lending and borrowing is now integrated into crypto.

This hints at systemic challenges, a rich topic that we’ll save for another newsletter. This week’s column addresses a system of a different kind, in the energy economy. We take on one of the popular narratives that contributed to the sell-off – the idea, invigorated by Tesla’s reversal on bitcoin payments last week, that investors and companies should avoid it due to the high energy consumption involved in mining.

The mainstream discussion on this issue is frustratingly superficial, but so, too, is the standard “whataboutism” and denialism of the crypto community. I suggest we consider how bitcoin can fit into a system-wide design of the economic incentives that dictates how society generates, distributes and uses power. Doing so leads to a different conclusion, with mining viewed not as a toxic creator of greenhouse gases but as a driver of renewable energy development.

This will be a major topic at next week’s Consensus by CoinDesk, a huge, four-day affair with more than 300 speakers, including Federal Reserve Governor Lael Brainard and Bridgewater Associates founder Ray Dalio. (Register here.)

In particular, my “Money Reimagined” podcast co-host Sheila Warren of the World Economic Forum and I will lead two one-hour special sessions on CoinDesk TV on Monday and Friday discussing the opportunity and challenges that crypto and blockchain pose for companies and investors looking to meet environmental, social and governance (ESG) objectives.

For this week’s podcast, we travel to Haiti to address a topic that falls under the “S” in ESG: how the ugly legacy of international debt keeps the poorest, aid-dependent countries forever removed from capital markets, and whether new blockchain systems of money and record-keeping can break that cycle and help these countries gain control of their destiny.

We talk to Terry Tardieu, a Haitian author, entrepreneur and politician who represents Petion-ville in the Chamber of Deputies, and Daniele Jean-Pierre, the co-founder and COO of Zimbali networks, which delivers smart ledger solutions for the decentralized economy.

Bitcoin Can Decentralize The Grid

The factors contributing to this week’s crypto market rout were many – from excessive leverage to China’s regulatory bluster – but two stories last week play a trigger role in shifting sentiment to the negative: the Colonial Pipeline ransomware attack and Elon Musk’s newfound concern about bitcoin’s carbon footprint.

The first, which resulted in the pipeline owners acceding to the hackers’ demand for payment in bitcoin, inevitably revived the public misconception that cryptocurrency is rife with criminality and raised fears of a U.S. regulatory backlash.

The second took a once-popular cheerleader out of the mix, drew attention to bitcoin’s vast energy consumption and raised the idea that environmentally conscious companies and institutions might sour on it as an investment.

Yet, taken together, those two developments point to an opportunity to shape a completely different narrative, one that’s far more positive on the relationship between bitcoin and energy. This column attempts to do that. One can only hope Musk is reading.

Optimizing Energy Systems

Let’s Start With These Points:

* Climate change is real, accelerating and demanding a major shift to renewable energy.
* Digitalization means that, as currently designed, our energy infrastructure is increasingly vulnerable to attacks like the one that shut down the Colonial Pipeline and interrupted fuel deliveries along the U.S. East Coast.
* Energy is vital to broad-based economic prosperity.
* Bitcoin, whether people like it or not, is here to stay.
* The economics of bitcoin pits miners in constant competition with each other for the lowest-cost, most efficient source of energy. And they will go anywhere to tap it.
* Thanks in part to some ever-improving technology, renewables are already the lowest-cost energy source in the world.

(By contrast, fossil fuels are commodities that are likely to become more expensive over time.)

With all that in mind, I’ll make the argument not only that bitcoin can be greener with far lower carbon emissions but can also help society optimize its energy system for efficiency, sustainability and security.

Bitcoin can help foster a more decentralized energy system than the one we have now. Our electrical grids are mostly built on centralized models, with large-scale generation plants and heavy-duty transmission lines carrying power from generation centers to the users in the regions. The fuel distribution supply chain is also centralized, reliant on single refineries that attach to single, long pipelines such as that of Colonial’s.

This structure made sense originally because, until humans understood the costs to the environment, the cheapest sources of energy were fossil fuel-based. Unlike abundant and distributed solar and wind sources, these were only available in certain places and required large-scale industrial activity to convert them into usable power.

So long as we keep the existing hub-and-spoke model in place, we continue to justify and serve the fossil fuel industries that feed into it.

The inefficiencies of the existing system are now clear. It’s expensive to build, maintain and operate long-distance transportation infrastructure and, in the case of electricity transmission, significant amounts of power are lost between the generating plant and the final destination.

The system design also makes it an especially appealing target for hackers. Taking down a single delivery element, such a pipeline, supporting a large economic community offers an attractive payoff relative to the cost of organizing and deploying an attack. By contrast, it’s much less profitable for attackers if they have to go after multiple mini-systems to achieve the same impact.

We need a decentralized system, one that taps energy sources that are closer to users. Solar power in particular, and wind to a lesser degree, allow this. The model implies a patchwork of interconnected microgrids, each primarily servicing local residents but also offering backup to other users outside their community in case their services are interrupted or insufficient.

Designed properly, such a system would emit much less CO2, it would be more efficient and, because of its wide distribution and built-in “redundancy” or backups, would be less vulnerable to attack. Hackers would have little incentive to act as they would have to break into multiple grids to acquire the same financial leverage that the Colonial Pipeline attackers obtained in holding the entire eastern seaboard to ransom.

Tesla drivers have no use for the gasoline transported by pipelines. But one can imagine them happily tapping into simple, low-cost charging stations that microgrid operators set up around the country to help monetize their operations. This is the kind of system Elon Musk should want to see built, in other words.

Bitcoin As A Force Multiplier

What does this have to do with Musk’s new whipping boy, bitcoin?

It’s that bitcoin mining can help communities overcome the one obstacle that disincentivizes them from developing renewable microgrids: the significant cost involved in the initial outlay.

Bitcoin mining is location agnostic. It can be easily deployed anywhere there is available, sufficiently low-cost power and it immediately generates value. This is why many bItcoin mining operations in the U.S. are increasingly striking deals with developers of renewable energy infrastructure, such as microgrids based on solar, wind or small hydro dams.

As Harry Sudock, vice president of strategy at mining infrastructure provider GRIID explained in a recent episode of our “Money Reimagined” podcast, miners can provide revenue guarantees to these operators, allowing them to raise the capital needed to start building their systems.

It goes further than that. As has been seen in Texas, where Peter Thiel-backed Layer1 is working, grid operators can strike useful deals with miners such that they consume excess power in periods where demand is low but turn their machines off when demand surges.

This helps solve the so-called “duck curve” problem caused by household solar panels, which generate a lot of otherwise wasted power during daylight hours when people are away from home at their workplaces and not enough in the evenings when they’ve returned home. It makes the grid operator’s perennial load management challenges easier to address.

There’s a real opportunity here for policymakers to accelerate the buildout of renewable energy and build a more sustainable, secure system. But they need to start looking at bitcoin differently and think about what incentives could encourage bitcoin-underwritten energy development projects.

Bitcoin miners, whose operations often run on low margins, are ruthless in deciding what energy source to use. If it’s cheap they’ll use it, regardless of where it comes from. If explicit or implicit subsidies make fossil fuel energy viable for mining, they will go there. If we don’t change the dynamic, bitcoin’s carbon footprint will continue to be problematic.

Bitcoin is not a moral good or bad. It is an economic system, one that’s here to stay, whether we like it or not.

Decentralization, in the form of renewable energy created closer to where it’s consumed, is key to a more sustainable future.

Bitcoin, as the decentralized value network, can help engineer that.

Updated: 5-24-2021

Marathon Digital Plans ‘Carbon Neutral’ Data Center For Bitcoin Mining

“Once all our miners are deployed by the end of the first quarter of 2022, our hashrate will be 10.37 EH/s, and our operations will be 70% carbon neutral, with our long-term objective being to obtain a 100% carbon neutral footprint,” said Fred Thiel, Marathon’s CEO.

Marathon Digital Holdings, a United States enterprise Bitcoin (BTC) mining company, has unveiled plans to achieve 70% carbon neutrality for its cryptocurrency mining operations.

The company aims to reduce its carbon footprint by constructing a new data center that will host approximately 73,000 previously purchased Bitcoin miners as part of a new 300-megawatt operation located in Texas. To achieve this goal, Marathon plans to begin construction in October 2021 alongside Compute North, a long-standing industry partner.

Under the terms of the agreement, Marathon will provide Compute North an 18-month bridge loan worth up to $67 million.

“Compute North is a long-term partner of ours, and by expanding our working relationship with them through this new agreement, we have now secured economical hosting arrangements for all 103,120 of our previously purchased Bitcoin miners,” said Marathon CEO Fred Thiel, adding:

“This agreement sets us on a clear path to becoming one of the largest, most efficient, and most environmentally conscious Bitcoin miners in North America.”

Commenting on the news, MicroStrategy CEO Michael Saylor said “Marathon is acting decisively to expand its US-based mining capacity in a carbon neutral fashion,” adding that publicly-traded miners will “lead the way on ESG initiatives.” ESG stands for environmental, social and corporate governance.

Marathon is acting decisively to expand its US-based mining capacity in a carbon neutral fashion. Publicly traded Bitcoin miners like $MARA are going to drive standards of excellence for other miners around the world & lead the way on ESG initiatives. https://t.co/jrnWnkxqjf

— Michael Saylor (@michael_saylor) May 24, 2021

Marathon Digital’s announcement is timely, given the negative attention Bitcoin mining has received in recent weeks. With China planning to crack down on cryptocurrency mining within its borders, at least three mining pools have announced plans to halt activities in the country.

As for Marathon, the company has continually ramped up its Bitcoin mining capacity, having only recently received a shipment for 10,300 S-19 Pro ASIC miners from Bitmain.

Marathon claims to have North America’s first fully compliant Bitcoin mining operations after the company began migrating its hash power to a new mining pool on May 1, 2021. As Cointelegraph reported, the new mining pool adheres to U.S. anti-money laundering guidelines established by the Office of Foreign Asset Control.

Updated: 5-25-2021

Bitcoin’s True Social Cost Is Impossible To Ignore

The cryptocurrency’s future growth is now linked inextricably to real-world sustainability issues that go beyond carbon.

As Bitcoin attempts its latest price rebound after a 40% slump in three days, its long-term potential as an investable asset is becoming linked inextricably to its cost for the rest of society.

This is increasing the pressure on policy makers to do more. The U.S. Federal Reserve’s Lael Brainard nodded to this on Monday, when she warned that a proliferation of alternative payments systems might lead to fragmentation and increased costs for households and businesses, suggesting there was a need to expand crypto’s regulatory “perimeter.”

Bitcoin’s “dirtiness” is still the chief concern, however. The carbon footprint of power-hungry miners, which raised red flags during the pandemic melt-up in prices at the start of 2021, is now inseparable from the way politicians, investors and even the laser-eyed faithful view crypto.

There was some good news for the crypto bulls overnight, with yet another tweet from Elon Musk, the Tesla billionaire who’s gone back and forth on Bitcoin’s environmental impact. He said North American crypto mining companies had promised him greater transparency on their energy mix — a “potentially promising” hint of greener days ahead.

This debate is essential. Citizens need to know the broader societal impact of the computing resources used up by mining new Bitcoins and running transactions. The cryptocurrency’s power demands have outpaced entire countries.

An estimated $5 billion of costs had been sunk into mining by the start of 2018, according to a report from Germany’s Institute for Economic Research, but this didn’t include all of the costs paid by society — not least the more than 80% of Americans who don’t own crypto. One 2020 study, based on energy required per coin, estimated that each $1 of Bitcoin value created was responsible for $0.49 in health and climate damages in the U.S. and $0.37 in China.

Another paper, cowritten by Southampton University’s Larisa Yarovaya, found a strong connection between Bitcoin’s price volatility and that of electricity company shares in highly active mining areas. More transparency on mining may encourage a bigger shift to renewables, but it will also bring greater scrutiny of what one lawmaker called “almost infinitely increasing energy demand” from the crypto industry.

These effects feed into the real economy, and not in a good way that might get policy makers excited about job or wealth creation. Demand for computer hardware to mine crypto has made buying it more expensive — often too expensive — for everyone else, to the point that chipmakers such as NVIDIA Corp. have purposely altered their products to make them less efficient when used by miners.

For the evangelists, these costs are balanced by the decentralization benefits that Bitcoin brings: “An electronic payment system based on cryptographic proof instead of trust,” as the original white paper put it. Billionaire investor Ray Dalio calls it, “A hell of an invention.” Without wasteful mining there wouldn’t be a Bitcoin blockchain, given the two are interlinked.

And yet, the virtuous narrative of a decentralized currency promises future utopia while delivering present dystopia. Bitcoin encourages hoarding and speculation, similar to digital gold, rather than offering a socially useful medium for everyday payments.

It’s also a cost to society when money is lost or when crypto-assets evade taxation, something the Biden administration is trying justifiably to remedy. Crypto-speculation also encourages malicious activity, including hacking computers to mine cryptocurrency and holding people’s data to ransom. The cost of cybercrime hit $1 trillion last year.

Encouragingly, not all crypto insiders dismiss social costs as “FUD.” Early pioneer Ray Dillinger warned in January that Bitcoin had become a “disaster” and a “failure,” citing the corruption and waste of mining in particular.

Vitalik Buterin, one of Ethereum’s cofounders, is smartly promoting the shift to “proof of stake” mining, as opposed to Bitcoin’s “proof of work,” as a much more energy-efficient alternative. (Proof of work is used to validate transactions and mine new tokens, but it requires a global network of computers running around the clock.)

But the implication is that Bitcoin’s problems are hardwired and won’t be fixed without regulation. “If we let Bitcoin grow, the social costs will be very high,” says the University of Surrey’s Yu Xiong, coauthor of a paper on mining. He suggests the idea of specific mining licenses. Musk’s latest comments haven’t shut down the threat of intervention.

Compute North To Host Marathon’s 73K New Bitcoin Miners In Texas

Marathon cited Texas’ favorable regulatory climate and low energy prices, as well as environmental considerations as key factors in the decision.

Compute North’s new 300-megawatt Texas data center will host Marathon Digital Holding’s recently purchased bitcoin miners, adding approximately 10.37 EH/s to the facility’s hash power. Marathon claims that its operations there will be 70% carbon neutral.

The two companies have signed a binding letter of intent that spelled out the conditions of the deal.

According to a statement, Compute North will receive an 18-month bridge loan from Marathon to help finance the construction of its Texas facility. The terms the initial three-year contract will be implemented in stages from October 2021 and March 2022.

Marathon’s executive chairman, Merrick Okamoto, cited Texas’ favorable regulatory climate and low energy prices as well as environmental considerations as key factors in the decision.

“The new agreement with Compute North allows us to operate our mining fleet in regulatory environments that have proven to be friendly to bitcoin miners and at rates that we believe are among the lowest in the country,” he said.

Shifting Bitcoin Mining From China To North America

This deal is the latest development in a trend toward expanding bitcoin mining investment in North America from industrial-scale miners including Marathon, Riot, Blockcap and others, which have been purchasing machines by the tens of thousands.

It also comes at a time when Chinese miners are scaling back operations in the wake of recent bitcoin mining crackdowns over regulatory and environmental concerns.

Earlier this month, Marathon announced its bitcoin mining pool had mined a block that was “fully compliant with U.S. regulations” by rejecting transactions from addresses listed on the U.S. Department of Treasury’s Specially Designated Nationals and Blocked Persons List (SDN).

Bitcoin Resumes Slide As Energy Usage Debate Whipsaws Investors

Bitcoin traded lower on Tuesday as prices pulled back from a double-digit percentage rally, stoked in part by Elon Musk’s effort to bolster the token’s green credentials on Twitter.

The largest digital currency slipped as much as 6.5% to $36,494 in New York, following a 16% jump on Monday. The wider Bloomberg Galaxy Crypto Index and peer coins including Ether also dropped, while Dogecoin stayed lower in the wake of another Musk tweet about his influence over the token.

In a tweet sent Tuesday in reply to a post that said “With Elon as ‘Doge CEO’, we are in good hands!” Musk said Dogecoin had “no formal organization & no one reports to me” and implied his control over it was “limited.” Dogecoin was down 4.1% as of 4:33 p.m. in New York, according to CoinMarketCap.com.

The Tesla Inc. CEO has roiled Bitcoin’s — and others’ — price this month, triggering a selloff by criticizing its energy profile and suspending Bitcoin payments. Heightened regulatory rhetoric on cryptocurrencies from China also pressured the sector.

“If the market continues to see wild swings based on Elon Musk tweets, it’s going to be a big set back for this asset class,” said Matt Maley, chief market strategist for Miller Tabak + Co. “The fact that it sees such wild swings to the tweets from one person takes away the legitimacy of the asset class.”

Pledges to make the industry more green have picked up since Musk’s criticisms. Several miners joined the Crypto Climate Accord, a private-sector initiative to decarbonize the crypto industry by 2030.

Musk and Michael Saylor, another long-time Bitcoin booster, tweeted Monday that they had held a call with major North American miners, including Michael Novogratz’s Galaxy Digital and publicly traded Hut 8 Mining Corp., to discuss “energy usage transparency.”

Saylor said the group agreed to form the Bitcoin Mining Council “to standardize energy reporting.” Saylor reiterated his comments during a conference interview Tuesday.

Musk and Saylor’s initiative to make Bitcoin “‘greener’ bodes well for ESG narrative and institutional adoption,” David Grider, strategist at Fundstrat Global Advisors LLC, wrote in a note.

At the same time, it will take years for many of the largest miners to recalibrate where they source their energy.

Bitcoin’s heavy use of power fired by polluting fossil fuels is a long-standing problem. Miners use hundreds of computers that run around the clock to verify Bitcoin transactions in exchange for new coins.

Despite that, Musk in February plowed $1.5 billion of Tesla’s corporate cash into the token and said the electric-vehicle maker would accept it as payment for vehicles, before rescinding the latter decision earlier in May.

Nursing Losses

While the billionaire has since said he strongly believes in cryptocurrencies as long as they don’t drive a massive increase in fossil fuel use, digital tokens are still nursing losses from his spate of comments.

The market value of more than 7,000 coins tracked by CoinGecko is down more than $800 billion from a May peak of some $2.6 trillion. Bitcoin is about $25,000 off its mid-April record.

A measure of implied volatility on Bitcoin comparable to the U.S. equity market’s VIX indicator sits at 129, higher than the stock version has ever reached in 30 years.

‘This Isn’t The Start Of Opec’: New Bitcoin Mining Council Just Wants To Promote Greener Practices, Member Says

The Saylor- and Musk-led group won’t mess with Bitcoin’s code or fungibility, says Argo Blockchain CEO Peter Wall.

The new Bitcoin Mining Council has no intention of altering the cryptocurrency’s software and merely wants to promote sustainable energy practices and transparency in the industry, a founding member said.

The council, spearheaded by Tesla CEO Elon Musk and MicroStrategy CEO Michael Saylor, will respect bitcoin’s fungibility, and does not advocate discrimination between so-called clean and dirty coins, said Peter Wall, CEO of Argo Blockchain.

“We’re not talking about Bitcoin code or block size or anything related to changing the nature of Bitcoin,” said Wall, whose publicly traded company was one of a handful of mining firms that met with Saylor and Musk over the weekend. “We all love Bitcoin the way it is, as a decentralized, permissionless system.”

Further, “discussions with the group so far have been very clear that one 1 BTC is 1 BTC, and that the fungibility and essential properties of Bitcoin shouldn’t be changed,” Wall said in an interview Monday evening.

In the hours since Musk and Saylor revealed the meeting on Twitter Monday, hardened Bitcoin veterans have been comparing it to the controversial and ultimately unsuccessful New York Agreement of 2017. That closed-door gathering of startup executives was a major flashpoint in a highly acrimonious debate over how best to scale the Bitcoin network, and widely viewed as inimical to the currency’s ethos of leaderlessness.

As then, many users are questioning how a small group of companies and two charismatic figureheads can profess to lead a global community where, by design, no one is in charge.

“It’s extremely concerning that this group of bitcoiners wandered into this ‘meeting’ without any sense of self-awareness,” wrote Marty Bent, co-founder of Great American Mining, in his newsletter Monday. ”Do they not recall the last time there was a closed-door meeting that involved industry stakeholders who attempted to speak on behalf of an entire industry? How did they think this would turn out? The hubris is astounding.”

Wall said such concerns are unfounded in this case.

“This isn’t the start of OPEC,” he quipped. “The group is a way to get together and discuss. We are all independent, decentralized miners who have formed a voluntary group to influence the industry and each other.”

The group is not exclusive, he added, though it is still working out mechanisms for other mining operations to join. “This is an international challenge for Bitcoin and needs to be addressed on an international level.”

Bitcoin Goes ESG?

The council’s formation also comes as public figures such as “Shark Tank” star Kevin O’Leary are pushing the idea that bitcoins can be “clean” or “dirty” depending on how they are mined, and that green-minded institutional investors can, and should buy only the former.

Throughout his conversation with CoinDesk, Wall said the council’s two goals were to promote disclosure of and improve energy practices. Beyond those broad objectives, the companies haven’t agreed on much else, he said.

“What we do want to do is to make sure valid ESG concerns about people mining bitcoin with coal are being addressed,” Wall said, referring to the shorthand for environmental, social and corporate governance. “At this point, It’s not going any further than that.”

When asked about the efficacy of carbon credits, he declined to speak on the council’s behalf. “We haven’t gone beyond the two things I’ve laid out, which is energy transparency and improving sustainable mining practices.”

Pressed on how promoting mining transparency squared with protecting fungibility, Wall said the council wasn’t considering labeling which coins were mined sustainably and which ones with coal-powered equipment. The information would begin and end on the company level, he said.

“What we’re saying is we need to promote energy transparency around individual miners, not necessarily about coins that are coming out from individual miners,” Wall said. The question is “what kind of energy mixes are individual miners, publicly traded miners, using, with the goal to then take that knowledge and encourage people to move more towards renewables.”

Besides Argo, the other miners in the group are Hut 8, Galaxy Digital, Riot Blockchain, Marathon, Core Scientific, Hive Blockchain and Blockcap.

Combined, they control less than 10% of the global computing power on the Bitcoin network, Coin Metrics co-founder and Castle Island Ventures partner Nic Carter estimated. Notably, all of them are based in North America; much of the environmental controversy centers around China, where mining activity is concentrated and said to rely heavily on coal and fossil fuels in areas like Xinjiang and Inner Mongolia.

Fred Thiel, CEO of Las Vegas-based miner Marathon Digital Holdings, said he wasn’t on the call Sunday but broadly seconded Wall’s comments.

“It’s more just an interest group that wants to get together and discuss,” Thiel said in an appearance on CoinDesk TV during Consensus 2021. “I think if you look at the ambitions of the council, you’ll find that the council wants to be open to anybody who’s a miner and it’s really about sharing best practices.”

In other words, “nobody’s trying to centralize or control anything,” he said.

In 2021, listed firms have to meet institutional investors’ expectations for corporate social responsibility, Thiel pointed out. “For a publicly-traded company with over a $2 billion market cap, ESG is important to our shareholders.”

Saylor, the MicroStrategy CEO who claims to have organized the group, is scheduled to speak at Consensus 2021 Tuesday afternoon.

3 Things You Need To Know About China’s Crypto Crackdown

The crackdown notice from the State Council has sent shockwaves across the crypto industry in China.

Crypto exchanges and miners in China are grappling with the aftermath of last Friday’s notice from the State Council, which calls for a crackdown on crypto trading and mining in the country. Here are some of the results of the warning.

Mining

Chinese miners have been scrambling to look for overseas sites to host their mining machines following the State Council’s warning that it may crack down on crypto mining due to environmental concerns.

“I have been having conversations all weekend, starting since last Friday, with Chinese miners looking to co-locate in the U.S.,” said Ethan Vera, chief operating officer at Seattle-based mining firm Luxor. “All the Chinese miners that I know are reaching out, they are getting pricing and quotes.”

While the Chinese authorities have yet to release any concrete plans to enforce the crackdown, some major crypto mining companies are already taking steps in response to the warning.

Cryptocurrency exchange Huobi has shuttered its miner hosting services in mainland China. Crypto mining pool BTC . TOP suspended its operations in China and HashCow said it will stop buying new rigs.

“I think the consensus right now is there are too many uncertainties to tell if this is actually going to take place or not,” Vera said. “But there is for sure the risk of it.”

If China enforces the crackdown, the migration to hosting sites abroad could be costly and take a lot of time.

There is not much idle capacity in major mining hubs such as North America and Kazakhstan, Vera said. He estimated the idle capacity in the U.S. is less than 30 megawatts in the entire country at the moment. To put the number in perspective, that is less than 1% of the hash power required to support all the mining machines that are currently in China, according to Vera.

Chinese miners cannot move to these overseas sites and start mining right away. It would take between 60 and 90 days for a mining farm to build out another 10 or 20 megawatts, Vera said, noting the base rate for these hosting sites would be very high. So after moving it could take up to half a year before all that hashrate comes back online.

In the long run, crypto mining will continue to exist in China but will shift from industrial-size data centers to home miners or small or medium-sized miners, Zhuoer Jiang, CEO of BTC.TOP said on Twitter.

Jiang noted in his tweet that miner makers such as Bitmain would sell most of their machines abroad as the regulations on big-scale mining operations are getting tougher.

Exchanges Pull Back

Huobi, a major crypto exchange that provides trading services for Chinese investors, has scaled back its offerings following the State Council’s notice.

While Huobi’s spot trading remains largely unaffected, it has suspended futures contracts, exchange-traded products (ETP) and certain other leveraged investment products.

“The move indicates that the Chinese authorities are trying to prevent more capital from flowing into a more volatile market with high systemic risks,” Jason Wu, CEO of crypto lending platform DeFiner. “If you look at what exact services have been suspended on Huobi, they are among the most risky trading activities.”

Leveraged investment products, including ETPs, on crypto exchanges let investors amplify their profits by giving them up to 100 times the amount of cryptocurrencies they actually have on hand. But when prices in the crypto assets that are collateralized decrease, these investors need to put in more as collateral. Their assets will be liquidated if they can not add enough to the collateral.

Financial stability is one of the top priorities for Chinese regulators, and they might not want to see more people investing in such a volatile market.

Compared to the crackdowns in 2013 and 2017, crypto trading in general has become much more leveraged given the boom in financial derivative products in crypto and decentralized finance (DeFi).

The rise of more sophisticated structured financial products on centralized exchanges and lending protocols in DeFi has made it easier to do leveraged trading, Wu said.

OKEx, which is another major exchange for Chinese investors, had planned to suspend transactions between its platform token OKB and China’s local fiat currency renminbi. The exchange later aborted the plan due to “customer concerns.” The token’s price fell as low as 70% after they announced the suspension.

This is a less-noticeable move given the low volume of transactions for OKB. But such transactions have a significant legal risk for exchanges.

“Platform tokens can be regarded as a form of illegal fundraising,” Wu said. “Imagine a centralized trading platform is a company, the platform token in nature is similar to its stocks.”

Some exchanges would require the users to hold their platform tokens in exchange for discounted transaction fees and other premium services.

State Media’s Rant

The Economic Information Daily, a state newspaper that covers Chinese securities, published an article on Monday giving more details on why the Chinese government is intensifying the crackdown on crypto mining and trading businesses.

Crypto’s biggest risks include more interest from average Chinese investors, financial risks associated with high leverage, security concerns with crypto trading platforms and compliance issues related to money laundering and illegal fundraising, the newspaper said.

As for the crackdown on mining, the media outlet said it is mainly due to environmental concerns. However, the newspaper’s characterization of data centers that are used as crypto mining sites indicates the discrepancy in the local and central government’s stance on crypto mining.

“Bitcoin mining activities tend to be in the disguise of data centers so that the miners can trick local governments into supporting such projects and waste a lot of electricity,” the newspaper said. But many local governments are aware of large-scale mining operations, some of which even put forward preferential policies for bitcoin miners.

A few counties in Sichuan province of South China, which is a major mining hub, have set up hydropower consumption parks, where many large bitcoin mining companies run their operations. Bitcoin mining operations have existed in Inner Mongolia and Xinjiang for several years.

Local governments’ more permissive attitude towards crypto mining may be due to its pursuit of higher tax revenues, while the central government prioritizes environmental protection.

Compared to the crackdown notice on Tuesday from three financial industry associations, the warning from the State Council, which is a higher-level government body, will deter more people from operating crypto trading or mining businesses, the newspaper said.

Updated: 5-27-2021

How China Rivals Elon Musk In Rattling Crypto Markets

Not much moves cryptocurrency markets like Elon Musk tweets — except, perhaps, the idea of another crackdown in China, the world’s second-largest economy. From a trading ban on domestic exchanges to squeezes on power-consuming digital currency miners, Chinese regulators have tried to tamp down risks related to the stratospheric rise of Bitcoin and its peers for years.

However, a recent spate of official warnings has unnerved traders anew, even though some appear to reiterate previous positions. While the statements can be tough to decipher, they seem to indicate that China is watching crypto closely and could take further steps to rein it in as President Xi Jinping seeks to reduce financial risk in the economy and meet the country’s ambitious goals for combating climate change.

1. What Has China Done?

In 2017 China told exchanges to stop trading in cryptocurrencies and banned initial coin offerings or ICOs, which are the equivalent of initial public offerings for new virtual currencies. The government also bans financial institutions and payment service providers from getting involved in crypto trades even tangentially — like opening a bank account for those who engage in them. It also has moved to discourage Bitcoin mining — the energy-intensive computing process involved in creating the digital currency and verifying transactions — which has long been concentrated in China.

2. Why The New Attention?

On May 21, China’s State Council — the country’s cabinet — called for a renewed crackdown on Bitcoin mining and trading activities at a meeting focused on promoting financial stability, according to a government statement. It was the first time that top Chinese officials singled out crypto mining at the national level since dropping it from a proposed list of dirty industries to be eliminated in 2019.

Previously there have been regional clampdowns in places with cheap energy such as Inner Mongolia, but enforcement has always been a big question mark. Starting in April, however, the government in the coal-rich region banned mining, set up a whistle-blowing system and said it would raise penalties for violators. Meanwhile, a slew of semi-official financial industry associations issued a notice to remind businesses not to get involved in crypto.

3. Why Is China Cracking Down?

There’s been no explicit explanation, but cleansing risk from financial markets has been a government mantra for years, as evidenced lately in the crackdown on fintech giants including Jack Ma’s Ant Group Co. and the central bank’s work to develop a digital yuan. Digital currencies also provide a way to move money out of China, potentially adding to outflows that officials have aggressively set about stemming.

As for mining, local governments have grown wary of the industry’s huge energy consumption — more annually than the entire country of the Netherlands — at a time Xi’s government has pledged to achieve carbon neutrality by 2060. More immediately, the trigger at the State Council meeting was said to be in part concern that crypto mining has stoked a surge in illicit coal extraction, following a jump in deadly accidents this year. Some crypto miners generate their own power off the grid.

4. Wait, Isn’t Crypto Huge In China?

China dominates the world in crypto mining in a couple of ways: Companies like Bitmain, MicroBT, and U.S.-listed Canaan Inc. are the biggest manufacturers of crypto-mining machines; others like F2Pool and Poolin run online services where users combine their computing power and split rewards for a better chance of unearthing new coins.

China is also home to most of the planet’s miners — humming from warehouses and data centers that tap cheap coal or hydro power in regions like Xinjiang, Inner Mongolia, Sichuan and Yunnan. As of April 2020, China provided 65% of the world’s computing power for Bitcoin mining, versus 7% for the runner-up, the U.S., according to an estimate by the University of Cambridge. As for trading, Bitcoin and its peers can still be traded, but only directly between two parties in over-the-counter markets run by the likes of Binance and Huobi, a slower process.

5. What’s The Impact Been?

Updated: 5-30-2021

Chinese BTC Miners Equivalent To Quebec’s Output On The Move: Slush Pool

According to Edward Evenson, who works for Bitcoin miners Slush Pool, Chinese BTC mining machines are on the move.

Edward Evenson, head of business development at Slush Pool owner Braiins, reports that a large number of Chinese BTC mining machines equivalent to Quebec’s entire output will be moving to North America and Europe.

For those interested in the #Bitcoin mining news coming out of China

I’ve had 300-400MW of mining machines contact me to help them distribute their machines across NA and some parts of EU. Some have also begun shipping machines to Kazakhstan.

— Edward Evenson (@WillHash4Coins) May 27, 2021

In Twitter thread on May 28, Evenson revealed that some Chinese BTC miners also have their eyes on Europe, and while others have already began moving machines to Kazakhstan:

“I’ve had 300-400MW of mining machines contact me to help them distribute their machines across NA and some parts of EU. Some have also begun shipping machines to Kazakhstan.”

To put that in perspective, Jonathan Côté of Hydro-Québec recently told Global News Canada that the 90 mining outfits in Quebec use around 400 megawatts between them.

China’s decision to crack down on crypto mining last week due to environmental concerns (while possibly also aiming to strengthen the digital yuan) has seen a rapid evolution in the Bitcoin mining landscape.

According to estimates from the Cambridge Bitcoin Electricity Consumption Index, or CBECI, China accounted for an estimated 65% of Bitcoin’s global hashrate in April. The ban has since triggered several large Bitcoin mining firms to cease operations in the country such as BTC.TOP — which accounts for an estimated 2.5% of the global hashrate.

Along with a rapid-fire mining hardware sell off that is happening across the nation, Everson also added that the ban has speed up plans for the geographic diversification from Chinese suppliers such as MicroBT and Bitmain, noting that:

“These parties were interested in having more geographically distributed operations for some time. Recent events have simply accelerated the process.”

The recent spotlight on the environmental efficiency of Bitcoin mining appears to be shifting the hold China had over Bitcoin’s hash rate — something that U.S.-based Bitcoin miners have been deliberately seeking to do for quite some time. This also seems likely to increase the energy efficiency of mining practices.

MicroStrategy’s Michael Saylor chimed in on China’s crackdown on CNN earlier today:

“I think there is a dynamic where a lot of hash power will come to the U.S. and will come to other parts of the world.”

“#Bitcoin is the greatest customer for renewable energy in the world. In the history of the world!”@michael_saylor CEO @MicroStrategy weighs in on China’s #crypto crackdown, Iran’s ban on #mining, and having happy shareholders.

PART 2 pic.twitter.com/hpxv6OaXby

— Julia Chatterley (@jchatterleyCNN) May 27, 2021

Quebec has become a Bitcoin mining hub over the past few years due to its cheap electricity prices, with reportedly “dozens” or large mining operations in the area relying on hydroelectricity.

Côté of Hydro-Québec said mining using the abundant green energy in Quebec rather than China was a big win.

“If these companies are going to be mining using renewable energy here instead of mining in China, which uses mostly coal, we can decarbonize part of that industry by having some of it here,” he added.

Updated: 5-31-2021

Marathon Digital Holdings, Inc. one of the largest enterprise Bitcoin self-mining companies in North America, announced that the Company’s Bitcoin mining pool, MaraPool, has adopted and implemented Bitcoin Core version 0.21.1.

Bitcoin Core version 0.21.1 is the latest update to the Bitcoin client software, which is maintained and updated by a large open-source developer community that collaborates to launch new features and fixes.

This latest update contains a variety of features, including the Taproot soft fork, which are designed to improve privacy, improve scalability, and lay the groundwork for future enhancements to Bitcoin’s functionality. According to the official release from Bitcoin Core:

“If activated, these improvements will allow users of single-signature scripts, multisignature scripts, and complex contracts to all use identical-appearing commitments that enhance their privacy and the fungibility of all bitcoins. Spenders will enjoy lower fees and the ability to resolve many multisig scripts and complex contracts with the same efficiency, low fees, and large anonymity set as single-sig users.

Taproot and schnorr also include efficiency improvements for full nodes such as the ability to batch signature verification. Together, the improvements lay the groundwork for future potential upgrades that may improve efficiency, privacy, and fungibility further.”

Marathon will adopt the update without modification. As a result, Marathon’s mining pool, MaraPool, will no longer filter transactions. Once the update is complete, the pool will begin validating transactions in a manner consistent with all other miners who use the standard node.

“Marathon is committed to the core tenets of the Bitcoin community, including decentralization, inclusion, and no censorship,” said Fred Thiel, Marathon’s CEO. “Over the coming week, we will be updating all our miners to the full standard Bitcoin core 0.21.1 node, including support for Taproot.

By adopting the full standard Bitcoin core node, we will be validating transactions on the blockchain in the exact same way as all other miners who use the standard node. We look forward to continue being a collaborative and supportive member of the Bitcoin community and to realizing the vision of Bitcoin as the first decentralized, peer-to-peer payment network that is powered by its users rather than a central authority or middlemen.”

To hear a full statement on Bitcoin Core version 0.21.1 from Fred Thiel, Marathon’s CEO, please click here: Statement

Amid Pullback, Argentine Bitcoin Miners Thriving

Institutional miners and hobbyists alike are taking advantage of energy subsidies to cash in.

While the broader crypto market suffers through a painful slump, a new report on Monday indicates that Bitcoin (BTC) miners in Argentina are thriving as they take advantage of convoluted energy policies.

A report from Bloomberg that was republished in the Buenos Aires Times says that residential mining is picking up due to a mix of factors, including currency controls, energy subsidies and rampant inflation.

The favorable mix of conditions has even brought international attention, as Canadian mining company Bitfarms Ltd. looks to set up what will reportedly be the largest mining operation in South America — part of a flourishing crypto business scene throughout the country. Earlier in the year, Bitfarms estimated that the new facility could mine BTC at a cost of just over $4,000 per coin.

“Although the price of Bitcoin is at its lowest level in the last few months, mining BTC in Argentina is still profitable due to the low cost of energy in dollars,” said Agustin Beltramino, an international crypto reporter for Cointelegraph in an interview.

However, Beltramo cautioned against families rushing out to buy mining equipment, saying that the upfront costs can be more prohibitive than some expect.

“The reality is that even though energy in Argentina is cheap, not everyone is going to see profits overnight. Mining power is a key factor in calculating the benefits of mining in Argentina,” he said.

“Those who have been mining for some time are the real winners, since they have had mining equipment for a long time and it is assumed that they have already amortized it. Those who are just getting started in cryptocurrency mining will see profits in the medium/long term.”

One cheaper option for Argentines looking to make passive income may be operating a Lightning Network node. Nicolas Bourbon, an Argentine Bitcoin advocate quoted in the report, is a vocal proponent of the layer-two solution:

Muchos se preguntan sobre Lightning. que mejor que escucharlo a @negrunch en @lunaticoin para esto

Además Francisco pobre lo vengo volviendo loco con preguntas desde que monté yo mi nodo y siempre es una fuente de referencias y sabiduría para estohttps://t.co/fn6hHLFjl6

— Nico ₿⚡️ (@bourbonni) May 31, 2021

Updated: 6-1-2021

Bitcoin Miner Eyeing SPAC Sees Token Riding Out ESG Outcry

Bitcoin will likely ride out the current renewed scrutiny on its energy-intensive mining process, according to Iris Energy Pty, a miner of the largest token that uses renewable power.

Bitcoin’s use case has been validated over the past year by massive liquidity, and secured by the mining process that both produces the coins and verifies transactions, Daniel Roberts, co-founder of the Sydney-based company, said in an interview.

“It plays a valuable role,” Roberts said. “I don’t think it’s up to any individual to decide where energy should be used. It’s a market-based decision where Bitcoin, by virtue of the attraction and adoption it’s gained, is commanding that level of energy to secure it, to secure people’s savings.”

Debate over the massive energy demands of Bitcoin’s mining process has intensified again in recent weeks after crypto proponent Elon Musk shocked the industry by reversing Tesla Inc.’s acceptance of the coin for vehicle payments due to environmental concerns. The abrupt about-face has roiled crypto prices, sending Bitcoin plummeting some $30,000 from its record high of almost $65,000 in April.

The digital currency rose 2.5% to about $37,000 as of 12:30 p.m. in London, according to data compiled by Bloomberg. Bitcoin recently fell below its 200-day moving average in a sign of slowing longer-term momentum.

Iris Energy has plans for a number of projects including data centers and infrastructure and is continuing to “explore options for SPACs” to help fund those ambitions, Roberts said.

The firm has been approached by several special purpose acquisition companies about a potential U.S. listing that could raise $300 million to $500 million, Bloomberg reported in May, citing people familiar with the matter.

“The recent news in the space and the focus on ESG continues to highlight that the business model we embarked on many years ago is likely the right one,” Roberts said. “We are hopeful of attracting the right capital partners to help us grow.”

Crypto Mining Booms On Cheap, Subsidized Energy In Argentina

Bitcoin miners in Argentina are capitalizing on the inefficiencies of the country’s interventionist economy to reap outsize returns, fueled by memories of currency busts and powered by government-subsidized electricity.

While numerous countries have experienced booms in crypto mining this year, ultra-low utility rates and the resurgence of capital controls are helping supercharge profits for miners in the South American nation. For many experts, it’s yet another example of Argentines’ perennial ability to bend the nation’s heterodox policies to their advantage.

“Even after Bitcoin’s price correction, the cost of electricity for anyone mining from their house is still a fraction of the total revenue generated,” said Nicolas Bourbon, who has experience mining digital currencies from Buenos Aires.

Cryptocurrencies have long been trumpeted in Argentina as a way for locals to hedge against cyclical economic crises, including repeat currency devaluations, defaults, hyperinflation, and now, a three-year recession made worse by the pandemic.

In addition to cheap power, the return of foreign-exchange controls in recent years have given Argentines banned from buying dollars even more incentive to mine digital tokens, as surging demand for non-peso assets has sent the value of Bitcoin skyrocketing to almost 5.9 million pesos in unofficial markets as of Sunday, versus about 3.4 million pesos at the official rate.

Miners are benefiting from the country’s longstanding residential electricity subsidies, a policy intended to win political points with voters yet one that’s increasingly fueling tension within the ruling left-wing Peronist coalition.

Despite Argentina being a net importer of gas, consumer electricity bills are only about 2% to 3% of an average monthly income, compared to about twice that in other Latin American markets like Brazil, Colombia or Chile, according to Ezequiel Fernandez, an analyst at Balanz Capital Valores in Buenos Aires.

Moreover, with inflation running at about 50% annually and currency restriction permitting individuals to legally convert just $200 per month, rampant demand for any store of value is fueling a plunge in the peso in parallel markets, where it’s now about 70% weaker than the official rate.

“The crypto that miners generate is typically sold at the parallel exchange rate, but the energy is paid for at a subsidized rate,” Bourbon said. “At the moment, revenues are very high.”

International mining firms are sensing opportunity. Last month, Canada’s Bitfarms Ltd. said it secured a deal to tap directly into a local power plant to draw as much as 210 megawatts of natural gas-powered electricity, in a bid to run what would be the largest Bitcoin-mining facility in South America.

“We were looking for places that have overbuilt their electrical generation systems,” Bitfarms President Geoffrey Morphy said in an interview. “Economic activity in Argentina is down, and power is not being fully utilized. So it was a win-win situation.”

To be sure, industrial power demand is not fully covered by subsidies. But the $0.022 cents per kilowatt hour price Bitfarms says it will pay for the electricity is far below the wholesale market rate of around $0.06 per kilowatt hour for industrial customers not connected to the local grid, according to Fernandez of Balanz Capital.

“For certain power generators with easy access to gas, selling excess power to Bitcoin miners during part of the year makes sense, especially if the power generator somehow avoids foreign-exchange controls by getting paid in hard dollars outside of Argentina, or in Bitcoin,” Fernandez said.

A spokesman for Argentina’s energy ministry declined to comment on the deal, as did a spokesman for Argentina’s tax agency.

Regardless of Bitcoin’s volatility in the coming months, mining in Argentina will almost certainly remain profitable for individuals as long as the government is footing at least part of the electricity bill.

“Miners know the subsidies are ridiculous,” Bourbon said. “They simply take advantage of it.”

Updated: 6-2-2021

Fortunes Turning? Specialized GPUs And SSDs Come To Aid Crypto Miners

Manufacturers restrict mining of cryptocurrencies due to a shortage of GPU cards: Will this lead to the end of mining as we know it?

After an exceptional start to the year, the crypto market entered a bearish period in mid-May, causing some to reevaluate their stance on some of the fundamentals surrounding the crypto industry.

The prolonged fall of Bitcoin (BTC) — by more than 50% — and the subsequent dip in mining difficulty by 16%, which are suspected to have been partially caused by news of China’s intention to take tough measures against crypto mining and trading, as well as Tesla’s decision to stop accepting Bitcoin as payment for its electric vehicles, have turned out to be a turning point that brought criticism of crypto to a new level.

Against this background, some commentators and crypto enthusiasts have started talking about the possible end of the mining era. Or is it just a new beginning and a way for the industry to reinvent itself and make use of new solutions to appease the ever-expanding number of stakeholders?

Hardware Deficit And Price Growth

The first bell actually rang back in February this year, when buyers of GPU cards, whether they are miners or gamers, had begun talking about a severe shortage of available cards, which led to exorbitant price increases.

For example, in the United States, some models of cards have risen in price by 120%. It should be noted, however, that the lack of components that make up the video cards have played an important role in such a price hike. What’s more, the slowdown in global supply chains on the back of COVID-19 restrictions has only exacerbated the already dire situation.

Given the spread of hysteria surrounding the short supply of GPU cards, miners were looking for alternative ways of mining cryptocurrencies as new cryptocurrencies, such as Chia (XCH), appeared. Mining this cryptocurrency requires the use of a solid-state drive (SSD), which is used for storing user data on a personal computer and is several times cheaper than GPU cards.

Chia uses free space on the device’s storage, and the more free gigabytes there are, the faster this cryptocurrency will be mined.

In addition, Bram Cohen, creator of Chia Network, argued that his cryptocurrency is environmentally friendly compared to others because hard drives consume significantly less power than GPU cards, which means less harm to the environment.

Of course, critics were quick to point out a key shortcoming of such a strategy, arguing that the lifespan of this equipment gets reduced to just 80–160 days, which means it must be constantly disposed of for something new.

Despite an alternative to the GPU cards, the emergence of Chia has also inevitably led to a shortage of storage devices and an increase in their prices. In China, back in April, consumers began to buy hard disc drives with a capacity of 4–18 terabytes, while SSDs were also in hot demand. In Hong Kong, the excitement instantly provoked a rise in prices for these components; depending on the model, the cost increased by $25–$75.

Fighting Miners

In the wake of price increases, GPU card manufacturers began to actively fend off crypto miners back in February.

Spearheading the assault, Nvidia tried to prevent mining by releasing a special driver 470.05 for its RTX 3060 cards, which are widely used for mining Ether (ETH). However, the block did not work in most cases, as miners bypassed it using cheap plugs for HDMI ports that mimic the operation of a monitor.

The unsuccessful attempt to limit the performance of GPU cards forced Nvidia to try a hardware block. At the end of May, the company announced a line of GPU cards called GeForce RTX 30 Lite Hash Rate. The GeForce RTX 30 LHR series includes video cards of the 3060, 3060 Ti, 3070 and 3080 series.

Protection against mining on these cards is implemented at the hardware level: When Ether is mined, the performance drops by half, and the overall mining efficiency decreases by more than 50%. The start of sales was scheduled for late May to early June, but the company has not yet released this product.

Nvidia’s partners have also joined the initiative by releasing GeForce RTX 30 LHR cards under their own brands, and Zotac was among the first. These cards are distinguished with a new marking so that buyers can differentiate the cards when buying one.

Anti-mining cards have letters “GE” or “G” in the name, for example, Zotac RTX 3060-12GD6 Destroyer GE Pro.

Moreover, at the end of May, PC manufacturer Asus registered the v2 series GPU card with the Eurasian Economic Commission. Most likely, this is how the company labels the LHR models, which have hardware and software protection against Ether mining.

It is noteworthy that AMD, the only big competitor to Nvidia in the GPU cards market, has not yet reacted in any way to the attempts of its competitors to return the prices of gaming cards to their previous values.

The company has announced no plans to release special anti-mining modifications of its accelerators. Meanwhile, the company said that it would not limit the computing power for mining cryptocurrency so that users can determine what to use the computing power of the GPU for.

Double Game

Having deprived crypto miners of using gaming cards, Nvidia simultaneously offered miners an alternative in the form of a series of CMP HX accelerators. These products are focused specifically on mining, which is expressed in the presence of a special crypto mining processor (CMP) and the complete absence of external interfaces. In other words, it’s simply impossible to connect a monitor to them — thus, it can’t be used for gaming.

Asus CMP 40HX will be able to provide mining efficiency of up to 43.77 megahashes per second, while the official number announced by Nvidia stands at 36 MH/s. The 21% higher hash rate is due to memory and power consumption optimization of the video card.

It was assumed that a specialized mining card CMP 40HX would go on sale before the end of the first quarter of this year. Like all other models of specialized video cards of the CMP HX series, they will be distributed by NVIDIA partners. Asus was the first to announce possible prices for such cards: CMP 40HX could cost $699 and the younger model, CMP 30HX, whose mining efficiency is 26 MH/s, around $599.

AMD is also preparing a new GPU that will be designed for cryptocurrency mining. The cards will be based on Navi 10 and Navi 12 chips, which will be capable of mining Ether. AMD has stated that the new GPU would be released without VCN and Display Core Next DCN technologies, which will prevent them from streaming video to the display, once again, rendering them useless for gamers.

Known manufacturers of other mining equipment are not sitting on the sidelines either. Sabrent announced at the end of May the sale of PlotRipper SSDs for Chia Coin miners. The main advantage of the new SSDs is their larger capacity, which will be used gradually as the drives wear out. The PlotRipper and PlotRipper Pro models contain 4TB and 8TB NAND chips, respectively.

Is The End Of Crypto Mining Canceled?

The desire of manufacturers to separate their mining cards from gaming ones is understandable, especially when the company is experiencing problems with resources for the production and tarnishes its image in the process.

But in any production, the main thing is demand, which generates income. At the end of the first quarter of 2021, Nvidia made $155 million in revenue from the sales of GPUs designed specifically for cryptocurrency mining. In the second quarter of the fiscal year, it expects to generate $400 million.

AMD also released its first-quarter report showing impressive revenue growth, recording a 93% rise to $3.45 billion over the same period last year.

The management explained this dynamic by the surge in demand for consumer Ryzen processors and Radeon graphics cards.

The average selling price has been rising in both the CPU and graphics segment. In fact, the revenue from the sales of client processors and their average price have reached record levels.

 Updated: 6-3-2021

Nasdaq Listed Bitcoin Miners Urge China To Open Doors To Green Mining

The CEO of Canaan Inc called for a less indiscriminate mining ban in China.

The CEO of Nasdaq-listed Canaan Inc, a China-based firm that specializes in Bitcoin (BTC) mining equipment, argued that China’s Bitcoin mining ban should make allowances for green-energy users during a conference call on Tuesday.

Zhang Nangeng said that an indiscriminate ban on Bitcoin mining failed to take into account the potential economic benefits that could arise from embracing green-energy mining. Zhang stated that mining could present a solution to the oversupply of electricity in certain regions of the country, where resultant low energy prices already attract miners.

“For-profit miners prefer regions with low electricity prices that indicate oversupply, and likely energy waste. Bitcoin miners also help create jobs in impoverished regions and contribute to fiscal coffers,” said Zhang.

Canaan’s stock price increased 24% on Tuesday, adding to 42% growth for the week. The surge in Canaan’s share price came amid the release of the firm’s financial results for the first quarter of the year, which show spectacular growth since this time in 2020.

The company’s revenue grew 490% year-on-year, primarily from the sale of its ASIC mining equipment. The company also recorded a net income of $22.4 million after recording a net loss of $5.9 million the year before.

“Our financial performance improved significantly in the quarter, driven by the Bitcoin price rally, higher customer demand for quality mining machines, and our ability to ramp up mining machine production and deliveries,” wrote Nangeng in the quarterly report.

The surge in the firm’s share price represents a swift turnaround after it sunk 41% over the course of the previous month amid the Bitcoin price drop. The firm’s business outlook predicted an increase in sales but stopped short of providing further financial guidance due to the volatility in the value of Bitcoin, which has a knock-on effect on mining demand.

“The Company recognizes that the trends in Bitcoin prices are currently hard to predict and cannot provide financial guidance due to Bitcoin’s price volatility in late May of this year,” the report stated.

Canaan Forecasts Second-Quarter Revenue As High As $250M

The mining equipment maker said total shipments for the second quarter would either maintain or surpass Q1 2021.

Canaan, a Nasdaq-listed maker of cryptocurrency mining equipment, expects to book net revenue of between $150 million and $250 million in the second quarter, the company said Wednesday.

The China-based Canaan (Nasdaq: CAN) said total shipments would either maintain or surpass levels of the first quarter, when it reported net income of $200,000.

Canaan said partnerships with large customers generally involve multi-batch mining machine purchases over a long period, reducing the impact of crypto price fluctuations and vagaries around delivery schedules. The ASIC maker said 29 customers, each with purchase orders of more than 1,000 mining machines, accounted for 94% of orders this quarter.

As of May 31, 2021, Canaan has a total order volume of more than 149,000 mining machines with over $190 million in advance payments. Looking ahead, purchase orders of more than 10,000 mining machines have been signed with both Mawson, a U.S.-listed company, and Genesis, an international bitcoin (BTC, +4.73%) mining giant, Canaan said.

In Q4 of last year Canaan failed to meet the surging demand for mining equipment due to supply chain issues exacerbated by the onset of COVID-19.

Gryphon Digital Mining To Become Publicly Traded On Nasdaq Via Merger With Sphere 3D

Based on the current price of Sphere’s shares, the merger is valued at $184.3 million.

Gryphon Digital Mining, a privately held company focused on mining bitcoin (BTC, +3.84%) using 100% renewable energy, is going public through a reverse merger with Nasdaq-listed Sphere 3D, a data management company.

* Under terms of the deal, Sphere said it will issue 111 million shares to Gryphon shareholders, who will control 77% of the combined company. Sphere holders will own the remaining 23%.

* In recent trading, shares of Sphere are down 6.32% to $1.66 a piece. Based on the current price, the merger is valued at $184.3 million.

* Gryphon CEO Rob Chang, who previously served as CFO of bitcoin miner Riot Blockchain, will be CEO of the combined company, which will take the Gryphon name.

* Closing of the deal, which needs shareholder and regulatory approval, is slated for Q3.

Updated: 6-5-2021

Jack Dorsey’s Square Inc. To Invest $5M In Blockstream Bitcoin Mining Facility

Blockstream is a leading blockchain development company founded by Adam Back in 2014.

Square Inc., a crypto-friendly mobile payments company, is planning to invest $5 million in a solar-powered Bitcoin (BTC) mining facility for Blockstream Mining, offering further insight into Jack Dorsey’s continued support for blockchain infrastructure.

Chris Cook, Blockstream’s chief information officer, announced the collaborative partnership on Saturday, where he outlined plans to build the open-sourced mining facility at one of Blockstream’s United States operations.

“Together, we plan to provide public transparency by sharing the project economics and knowledge we’ve gained from building a Bitcoin mine powered by renewable energy,” he said, adding:

“Ultimately, we hope to demonstrate how bitcoin mining in conjunction with renewable energy can help drive the clean energy transition.”

In addition to providing regular reports on the status of the project, the new initiative will also feature a so-called public performance dashboard, where anyone can pull real-time metrics of the mining facility.

Bitcoin mining has been the subject of extreme media scrutiny after Tesla CEO Elon Musk decided to stop accepting BTC payments for Tesla cars, citing grave environmental concerns.

MicroStrategy’s Michael Saylor brokered a truce between Musk and the Bitcoin mining community last month by bringing both sides to the table for high-level talks. The industry-led Bitcoin Mining Council emerged out of the meeting, with miners vowing to accelerate sustainability initiatives.

As for Square Inc. the Jack Dorsey-led company has been ramping up efforts to boost adoption of Bitcoin and cryptocurrencies.

Cointelegraph reported Friday that Dorsey is strongly considering developing a Bitcoin hardware wallet in an effort to bring self-custody and financial inclusion to the masses.

“If we do it, we would build it entirely in the open, from software to hardware design, and in collaboration with the community,” he said in a Twitter post.

Square To Invest In Solar-Powered Bitcoin Mining Facility

Square Inc. will invest $5 million to build a solar-powered Bitcoin mining facility at a Blockstream Mining site in the U.S. through a partnership with the blockchain technology provider.

The facility will be a “proof-of-concept for a 100% renewable energy Bitcoin mine at scale,” Blockstream said in a press release on its website. Information on operational costs and return-on-investment will be open to the public.

We’re committed to driving further adoption and efficiency of renewables within the bitcoin ecosystem, which is why we’ve teamed up with @Blockstream to launch an open-source renewable energy mining project as part of our Bitcoin Clean Energy Initiative. (1/2)

— Square (@Square) June 5, 2021

Updated: 6-6-2021

Death Knell For Chinese Crypto Miners? Rigs On The Move After Gov’t Crackdown

The latest events in China have pushed crypto miners to reevaluate domestic risk as they may now look toward international expansion.

When it comes to China, few things are crystal clear, and the nation’s recent crackdown on crypto mining is no exception. The State Council’s Financial Stability and Development Committee reported on May 21 that it is curtailing Bitcoin (BTC) mining amid financial risk concerns, which prompted the South China Morning Post to proclaim that “China’s place at the centre of global bitcoin mining is fading.”

“We are seeing the cryptocurrency market enter a path to ‘de-China-isation’ — first on trading and now on computing power, based on a series of stronger steps taken against cryptocurrencies and Bitcoin mining last week by Beijing,” Wang Juan, associate professor on blockchain at Xi’an Jiaotong University and a member of the OECD Blockchain Expert Policy Advisory Board, told the publication.

But maybe not. Darin Feinstein, founder and executive chairman at Blockcap — one of the largest crypto miners in North America — isn’t absolutely convinced that Bitcoin mining is finished in China, the world’s current mining center. In 2017, China made a similar announcement, he told Cointelegraph, further explaining:

“After that announcement, another company I founded, Core Scientific, entered into multiple contracts with Chinese miners to help them relocate some percentage of their miners back to the United States. None of those deals ever came to fruition, and all those miners continued to mine in China to this day.”

Still, three mining companies — BTC.TOP, Huobi and HashCow — announced they were closing shop on the mainland, while China expert Bill Bishop reported in his newsletter “Sinocism” that the eight government draft measures taken against mining activities in the Inner Mongolia region were “harsh,” and “it is going to be much harder to think that this is just a passing crackdown and that things will return to normal relatively soon.” Other provinces and regions, including Sichuan and Xinjiang, might follow suit.

No one can be certain what is going on behind the curtain in China, as Feinstein notes, but it’s worth asking: What is the real impetus behind the latest (apparent) crypto mining clampdown, and why now?

Is it purely to ward off financial risks, as the state announced, or might something else might be involved, including energy/environmental concerns?

Will China-based mining businesses now move offshore, and if so, where might new crypto mining centers arise?

Finally, is this another signal that energy-intensive proof-of-work validation protocols, the sort used by Bitcoin and other cryptocurrencies, are increasingly problematic in an ecologically anxious world?

A Threat To “Old Systems?”

“Control over monetary policy and financial systems is important for a central government, and Bitcoin is a threat to that,” Ethan Vera, chief operating officer of Luxor Tech, told Cointelegraph in reference to the new mining restrictions, adding, “Bitcoin is clearly cementing its place in the world and proving itself as a valuable store of value for people globally. This threatens the old systems.”

Yu Xiong, associate dean international at Surrey University and chair of business analytics at Surrey Business School, cites environmental concerns as the number one reason for the crackdown. Countries like China, which have declared they want to become “carbon neutral” at some point in time — 2060 in the case of China — are now feeling increasing pressure “to stay away from emissions-intensive sectors.”

Bitcoin mining is one sector that can be easily sacrificed “without too much cost at the national level,” Xiong told Cointelegraph.

Why now? “Bitcoin grew too fast recently and has impacted many investors’ behavior,” said Xiong, adding, “Governments normally want to see a sector grow reasonably rather than radically — so some action had to be taken.”

It might not necessarily be the end of mining on the mainland, however, in Xiong’s view. The sector could emerge later as a regulated industry. To put things in economic terms, “they already earned money in this round, so now they cash out, wait for the price to go down, then join again,” according to him.

“It is too early to tell the actual effects of the vice premier’s comments,” said Vera, adding, “We have seen a couple hundred megawatts of power requests cross our desk this week.” He further explained:

“Miners based in Inner Mongolia and Xinjiang have reached out to international providers to try to get their mining equipment out immediately. Some miners in Sichuan have begun looking to move some of their operations overseas to diversify geopolitical risk.”

Are Environmental Concerns Valid?

Vera suggested that ecological concerns about the energy usage and carbon footprint of crypto mining may be something of a “scapegoat,” while Feinstein opined that the environmental question had some nuances.

For instance, in the Sichuan region, “the majority of power is renewable, sourced from a large collection of hydroelectric plants running renewable energy. Those plants have massive excess energy during the Chinese rainy season,” with electricity costs close to zero.

Elsewhere, though, China uses vast amounts of coal, Feinstein continued. “I would assume that to meet their internal climate goals, the coal regions will face pressure to close,” while miners located where renewable energy sources are prevalent may face fewer restrictions. “But we have yet to see a comprehensive document come out, so it’s pure conjecture at this point.”

Winston Ma, adjunct professor at New York University School of Law and author of The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace, told Cointelegraph that environmental concerns were, indeed, a large factor in the clampdown, and while hydropower — as used in the Sichuan region — is considered as clean energy, “the Chinese government has pledged to meet energy efficiency targets, which could still limit the expansion of high energy-consuming industries like crypto mining,” adding:

“Yes, carbon neutrality is a major consideration. […] Recent research by Chinese scientists noted that this emission output in China [from crypto mining] would exceed the total annualized greenhouse gas emission output of some smaller countries, such as the Czech Republic and Qatar.”

Feinstein, however, disputes the carbon footprint and energy consumption arguments — insisting they lack context. “The total energy produced in the world is 160,000 terawatts per hour of energy. This is all energy from every source. The Bitcoin network uses 120 TWh of that energy. That means, simply, that the Bitcoin network uses .00075 of available energy in the world,” or less than one-tenth of 1%.

Similarly, the carbon released “as a result of the energy used in plugging the machines into the grid power” is also less than 0.1%, and that number drops sharply as more mining rigs switch to renewable energy sources. Feinstein added:

“There are industries that are criminally responsible for destroying our environment and ecosystem, but this is not one of them.”

Could North America Pick Up The Slack?

If China is indeed down-throttling crypto mining, will North America replace it as mining’s regional center — as some were suggesting even before the new restrictions? Who else might profit?

According to the Cambridge Center for Alternative Finance, Bitcoin currently consumes around 110 terawatts per hour per year, while Ethereum adds another 44.5 — according to Digiconomist — and this doesn’t even include other PoW cryptos, so if a significant portion of that gets shut down in China, it will have to find a new home. Says Vera:

“North America is primed in the mid-term to take a lion’s share of that power requirement but will not have the ability to take it all immediately.

We expect significant growth in South America, the Commonwealth of Independent States region [e.g., Kazakhstan], and Northern Europe.”

“If the Chinese miners are nervous about future policies, they will slow down on new equipment purchases,” said Feinstein, “and those equipment purchasers will go to the next-best customers, which I believe are in the United States. So, we should see United States mining companies increasing hash rate.”

But there are potential hindrances here, including the lack of infrastructure companies to supply the electricity needed to power the computers that validate crypto’s block transactions. “In terms of plugging those machines in, you need to have […] companies building enough infrastructure at a pace to accommodate those miners. Currently, the demand to plug in miners exceeds the available infrastructure,” Feinstein said.

“Kazakhstan and Canada are regions that Chinese miners are talking about these days for potential relocation,” adds Ma. But relocating may not be as simple as it sounds. “Chinese miners may have to deal with unfamiliar partners, unstable power supplies and unexpected new compliance costs. Adding on the relocation costs, probably only the biggest and most resourceful mining operators can make the exodus smoothly.”

It’s important to note that all of the large Bitcoin ASIC manufacturers are located in China, Thomas Heller, co-founder and chief business officer of Bitcoin mining service provider Compass Mining, told Cointelegraph. Bitmain, MicroBT and Canaan are the only three companies with new-gen Bitcoin ASICs.

Heller Stated Further:

“If the Chinese government cracked down on the ASIC manufacturers, then there would be a huge impact on the mining industry. Currently, Bitmain has a factory in Malaysia, and MicroBT has been exploring setting up a factory in Southeast Asia, and I would expect these companies to ramp up efforts overseas.”

Elsewhere, “Russia and Kazakhstan are preferred for shifting large quantities of old-generation miners due to lower power prices,” added Heller, “while North America is more suitable for new-gen units. The challenge right now in North America is a severe shortage of rack space for hosting miners.”

Taking the longer view, what does all this contention say about Bitcoin — and other cryptocurrencies that use energy-gobbling validation protocols? Is this a sustainable sector over the longer term? “While we don’t believe the crackdown in China has to do with the environment, we do think it’s a pressing issue in North America,” answered Vera, adding further:

“Western miners that are accessing capital markets for expansion must push towards renewable energy or carbon-neutral methods of mining in order to attract capital. Publicly listed mining companies are the first companies in the spotlight and must react as we saw with Greenidge purchasing carbon offsets and Marathon pivoting to Compute North from their Hardin site.”

Bitcoin can continue to grow, especially if all its mining pools move to renewable energy, Xiong told Cointelegraph. Indeed, the sector has the opportunity to be a shining example to other industries — i.e., “the first sector that achieves Zero Carbon.”

Elsewhere, Xiong wrote that “regulations and rules should be enacted as soon as possible to standardise bitcoin’s coin mining behaviour, and explicitly require that only renewable energy sources such as solar energy and hydrogen energy can be used for cryptocurrency mining.”

Is There Still A Long-Term Role For China?

All in all, have the recent events marked the beginning of the end of Chinese crypto mining dominance — estimated to be as high as 80% of the world’s capacity — though some put it lower?

“In the long term, nearly all of Chinese crypto mining rigs will be sold overseas, as Chinese regulators crack down on mining at home,” wrote BTC.TOP founder Jiang Zhuoer in a blog post, as reported by Reuters. “China will lose crypto computing power to foreign markets,” including European and United States mining pools.

Reflecting on the similar mining clampdown announcement by China in 2017, Feinstein told Cointelegraph: “I would predict a similar result this time. These miners will be mining in 2024 when we can expect another similar announcement. We will see certain countries banning Bitcoin and mining over and over again forever. If it was possible for a country to completely ban Bitcoin or Bitcoin mining, it would only happen once.”

But maybe the paradigm really has shifted. “We still believe that China will play a role in mining in the long term,” stated Vera. “But this event has fundamentally changed the way Chinese miners perceive domestic risk and will encourage international expansion.”

Updated: 6-8-2021

Crypto Markets Tumble After Miners Unload 5,000 BTC In One Week

With Bitcoin’s price consistently trending below its 200-day moving averages and heavy selling identified among miners, some analysts are bracing for further bearish momentum.

The crypto markets are against dropping, with Bitcoin (BTC) crashing below $33,000 for the first time since May 23 as Ether (ETH) similarly broke below support at $2,500.

The downward momentum comes as bearish indicators continue to stack up for Bitcoin, with popular analyst William Clemente III identifying that miners sold more than 5,000 BTC over the past week — worth roughly $164 million at current prices.

Miners have sold over 5,000 BTC in the last week pic.twitter.com/5pEvLgIls2

— William Clemente III (@WClementeIII) June 7, 2021

Crypto author Timothy Peterson also highlighted that BTC’s price has remained below its 200-day simple moving average (SMA) for 17 days consecutively.

”This metric has *always* marked the end of a bull run and the start of a bear market,” he asserted.

#Bitcoin price has dropped below 200-SMA for 17 consecutive days and counting. This metic has *always* marked the end of a bull run and the start of a bear market. pic.twitter.com/6dpiFbUI7A

— Timothy Peterson (@nsquaredcrypto) June 7, 2021

Although the markets appear to be posting a small intra-day bounce — with BTC currently hovering near $33,000 after dropping to $32,400 and ETH currently changing hands for $2,500 after bouncing off a local low of roughly $2,430 — both markets have crashed approximately 15% since posting respective local highs of $39,600 and $2,900, respectively, on Thursday.

However, while both Ether and Bitcoin have been shedding value over recent weeks, capital flows for crypto investment products suggest that institutional investors are pivoting toward Ether.

According to a Monday report from CoinShares, Bitcoin investment products saw record outflows of $141 billion this past week, while Ether products reported inflows of $22 million.

Updated: 6-9-2021

Proposed New York Bitcoin Mining Ban Watered Down To Allow Green Projects

New York senators have amended a proposal to ban all crypto mining for three years, and are now seeking to only stop mining firms backed by carbon-based fuel sources.

A proposed crypto mining ban calling for a forced three-year hiatus on all mining operations in New York has been watered down — and will now allow green projects.

The bill passed in the senate on June 8, and has now been referred to the state assembly. If the bill is passed in the assembly, it will be delivered to Governor Andrew Cuomo to either approve or veto the proposed legislation.

The initial New York Senate Bill 6486A sought to halt all crypto mining for three years in order to conduct environmental impact reviews on mining operations in the tri-state area.

However, the bill was amended in the senate to get it over the line, and the revised 6486B-bill is now focused solely on any firm that uses carbon-based fuel sources to power proof-of-work crypto mining.

#NYSenate Bill S6486B, sponsored by @SenatorParker, passed (36-27, unofficial). Establishes a moratorium on consolidated operations that use proof-of-work authentication methods to validate blockchain transactions:https://t.co/P2gDKdPnL5

— New York State Senate (@NYSenate) June 8, 2021

There is no longer a specific time frame on the crypto mining ban with the bill preventing the expansion of any carbon-fuel powered mining operations, along with the establishment of any new mining operation using non-renewable energy sources.

The amended bill also calls for documentation regarding the energy output, carbon footprint, and type of fuel used by all crypto miners.

Governor Cuomo stated on June 7 that he was not well versed in the proposed ban, however, he is aware of the environmental concerns surrounding the crypto mining industry:

“There are serious concerns. There’s no doubt about that. There are serious concerns. And I’ll look at the legislation.”

New York legislators’ examination of crypto mining appears to be related to its sustainable energy targets, with the bill referring the state’s “Climate Leadership and Community Protection Act”

The Protection Act set a target of reducing greenhouse gas emissions by 85% by 2050, and zero net emissions from all sectors of the economy within that time frame.

An ongoing issue concerning some New York residents, is the approved expansion of Greenidge’s gas-fired Bitcoin plant on Seneca Lake — which intends to dedicate 85 megawatts of power to Bitcoin mining by 2022.

The firm’s reported transition from coal to natural gas, along with its recent shift to carbon neutrality through carbon offsets, hasn’t dampened down the opposition of environmental group Seneca Lake Guardian.

The group noted on June 5 that the Greenidge had merely switched from being a coal-fired plant to a “fracked-gas burning plant,” and complained that the Department of Environmental Conservation (DEC) has failed the citizens by not “completing a new Environmental Impact Statement”:

“Greenidge is now burning fossil fuels simply to make fake money in the midst of climate change, with no regulation or oversight.”

China’s Qinghai Province Has Ordered All Crypto Miners To Shut Down

It follows orders to other provinces, including Xinjiang and Inner Mongolia, to shut down miners.

China’s Qinghai province has announced a ban on virtual currency mining operations, a government document said Wednesday.

Qinghai is the latest coal-based crypto mining hub that is set to completely eliminate the industry. The news came on the heels of another crackdown notice against some crypto miners in Xinjiang and follows Inner Mongolia, which had previously imposed restrictions on miners.

The document was issued by Qinghai Industry and Information Technology Department, which is part of the provincial government.

The local government cited the central government’s concerns about high energy-consuming industries and environmental pollution as well as the State Council’s directive to maintain financial stability by cracking down on crypto mining and trading as the two reasons why they will eliminate all mining activities in the province.

China’s bitcoin miners use a mix of coal and hydroelectric power to power their miners, depending on the season. The use of coal in particular has drawn attention from the government, which is seeking to reduce its carbon footprint.

The State Council of China, one of the highest government bodies in the country, told local governments to crack down on crypto mining and trading in May.

China’s government has been trending in this direction for a while. Inner Mongolia implemented regulations on energy-consuming firms in April, while Sichuan – another mining hub – indicated it may end a local energy policy of which miners had taken advantage.

Earlier this year, when a number of coal plants shut down due to accidents in local mines, bitcoin’s hashrate (a measure of how much computing power is securing the network) fell over 16%.

Bitcoin’s price, which rose close to $4,000 over the past 24 hours as El Salvador recognized the cryptocurrency as legal tender, dipped slightly on the news.

The Translated Document Can Be Read In Full Below:

* The Qinghai government will prohibit any local authorities from setting up or permitting any new crypto mining projects. It will also close down all the current crypto mining operations in the province.

* The Qinghai government will strictly inspect and punish any projects that operate mining activities in the disguise of big data centers or supercomputing centers. It will bar any company from providing venues or electricity to crypto mining projects.

* The government will carry out follow-up inspections and randomly select companies for the inspections. It advises the companies to prepare for related paperwork and other support evidence in case of the inspections.

* Local authorities are required to give further updates on the implementation of these measures to the energy saving department of the Qinghai provincial government before June 20.

Updated: 6-10-2021

How Farmers Are Using Cow Manure To Power Crypto Mining Operations

Farmers with renewable energy sources like anaerobic digestion can earn 10 times more running crypto mining machines than selling energy to providers.

An entrepreneur who has set up a cryptocurrency mining business powered by cow manure has seen business boom since Tesla TSLA, Elon Musk questioned bitcoin BTCUSD, 3.67% over its environmental credentials.

U.K.-based Josh Riddett, who started Easy Crypto Hunter in 2017 in Manchester, has carved a niche selling farmers equipment powered by renewable energy such as anaerobic digestion, which turns animal dung into energy.

Bitcoin is probably the best known cryptocurrency, a form of digital money. Mining is a form of auditing or record-keeping that uses computer-processing power and consumes a large amount of electricity.

Riddett’s mining machines — measuring 70 cm x 35 cm x 40 cm.

The company’s mining rigs typically retail for £18,000 ($25,000) and have averaged approximately £30,000 each in annual profit over a three-year period, with the bulk of these gains made in 2021 as digital currencies won institutional acceptance.

Farmers with renewable energy sources like solar, hydro, wind or anaerobic digestion can sell their power back to energy companies for around 4-7 pence per kilowatt-hour — but they can earn up to 10 times that running a crypto mining machine instead.

Riddett — who was among delegates at a European Union summit on crypto last year — says the company has been experiencing huge growth in sales among the U.K.’s agricultural community, as farmers tap into on-site renewable energy like solar, hydro, wind or anaerobic digestion.

Riddett said in a statement: “Elon Musk wiped billions off global crypto markets when he said bitcoin mining was bad for the environment but what we’re doing couldn’t be greener.

“When we started this business four years ago, green energy wasn’t on our customers’ radar, but now it’s approximately 40% of our business, and growing every day.”

Bitcoin Miner Luxor Eyes North American Expansion With $5M Funding Round

Luxor and NYDIG have teamed up to foster growth for the North American crypto mining industry.

Seattle-based mining software company Luxor has closed a Series A funding round led by institutional Bitcoin technology and financial services firm NYDIG.

Luxor announced the $5 million funding round on June 9, adding that NYDIG will collaborate with Luxor on a number of mining-related ventures and hashrate-based products.

Also participating in the equity round were mining companies Blockware Solutions, Celsius Network, DPO, Navier, and Supplybit. A number of angel investors along with Bitnomial, Hodl Capital, and Routemaster also participated.

According to the announcement, Luxor and NYDIG aim to help grow the North American mining industry with Luxor working on making hashrate a commodity, and NYDIG providing Bitcoin investment and technology solutions to insurers, banks, corporations, and institutions.

Luxor provides a software solution called Switch that employs a profit-switching algorithm designed to maximize earnings by switching between blockchains and venues to capitalize on the best block rewards. Nick Hansen, CEO, and co-founder of Luxor, commented:

“Luxor is uniquely positioned to capitalize on industry tailwinds that see hashrate continuing to migrate to North America.”

The announcement comes as China continues to crack down on crypto mining operations and U.S. lawmakers grow increasingly agitated over Bitcoin payments for ransomware attacks.

As reported by Cointelegraph, China’s dominance over hashrate is dwindling while America’s is increasing as mining operations can tap into an abundance of cheap renewable energy in states such as Texas.

Robert Gutmann, Co-Founder And CEO of NYDIG, Stated:

“We’re confident in Nick’s vision and his team’s ability to drive and expedite the hashrate migration to North America, and the development of instruments that can strengthen the Bitcoin ecosystem.”

On June 4, Cointelegraph reported that a number of Chinese mining operations were closing up shop on the mainland and seeking international expansion.

Updated: 6-12-2021

Bill Banning Crypto Mining For 3 Years Dies In NY State Assembly

The NY state assembly needs to approve any bill or propose amendments before it can be signed into law by Governor Andrew Cuomo.

A bill which would have required miners in New York to halt operations for three years as part of an apparent effort to slow the environmental impact of crypto has been defeated in the state legislature.

New York Senate Bill 6486 failed to pass the state assembly today after lawmakers in the Democrat-controlled state senate approved the legislation earlier this week. The bill was aimed at establishing “a moratorium on the operation of cryptocurrency mining centers” while experts considered the environmental impact of mining, particularly those backed by fossil fuels.

According to a Connecticut-based National Public Radio affiliate, the International Brotherhood of Electrical Workers labor union spoke out against the anti-mining legislation, saying it was unfair to its members. Some in favor of the bill’s passage have cited environmental concerns, given the large energy demands for mining crypto — miners currently need a permit from New York state environmental regulators to operate.

First introduced to the state legislature by Democrat senator Kevin Parker on May 3, Bill 6486 was almost immediately referred to the Environmental Conservation Committee. Lawmakers in the New York state senate passed the mining ban legislation by a 36-27 vote on Tuesday. However, the state assembly needs to approve any bill or propose amendments before it can be signed into law by Governor Andrew Cuomo.

Updated: 6-16-2021

Crypto Miners Eye Cheap Power In Texas, But Fears Aired Over Impact On The Grid

Miners dislocated by China’s crackdown are looking to Texas for cheap electricity, but the state’s grid is already on the brink of disaster amid a sweltering summer.

The recent crackdown on crypto mining in China has seen concerns expressed over the potential impact a hashrate migration could have on Texas’ unreliable electricity market, as an increasing number of dislocated miners eye the Lone Star State.

Texas’ abundant sources of renewable energy and highly deregulated power grid make the state an obvious choice for migrating miners from China and elsewhere, with 20% of Texan electricity being generated by wind as of 2019.

Speaking to CNBC, Brandon Arvanaghi, a former security engineer at crypto exchange Gemini, predicted Texas will see “a dramatic shift over the next few months” as miners look to set up shop.

“We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible,” he said, adding:

“Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe.”

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:

“Every Western mining host I know has had their phones ringing off the hook. Chinese miners or miners that were domiciled in China are looking to Central Asia, Eastern Europe, the U.S., and Northern Europe.”

Global hash rate has fallen by one-third since early May following reports that China’s mining industry would be subjected to stricter supervision.

But is the Texan power grid up to the challenge of providing power for an influx of more crypto miners? The Electric Reliability Council of Texas (ERCOT) has just requested that Texans curb their electricity usage amid the recent heatwave that saw many residents turning up their air conditioners earlier this week.

Roughly 12,000 megawatts of generation capacity was offline as of Monday — enough to power 2.5 million homes. ERCOT described the scale of forced outages as “very concerning.”

The regulator warned that a failure to heed the request could result in a repeat of the widespread winter power failures that left 69% of Texans without electricity, and roughly half without water in February. According to Buzzfeed, February’s outages could have resulted in up to 700 deaths in the state.

Angela Walch, a Texas research associate at University College London’s Centre for Blockchain Technologies, tweeted her concerns regarding the share of Texas’ electricity being devoted to Bitcoin mining, emphasizing that her family has been “asked to reduce our air conditioning use, not run washing machines & dryers, etc.”

Obviously, Bitcoin is not the sole cause of this cluster*^% that our poor political leadership in Texas has caused.

But, I am curious to know the portion of the grid it uses. Maybe Bitcoin miners are the first to be shut down in times of grid stress.

— Angela Walch (@angela_walch) June 15, 2021

However Tierion CEO Wayne Vaughan responded by asserting that much of the electricity used to power Texan mining operations comprised stranded resources that “would never be able to reach your home to power your appliances.”

Others argued that wholesale Bitcoin mining operations could actually alleviate Texas’ power issues, with Texas’ seasonal surges in electricity demand incentivizing miners to sell power back to the state’s grid that otherwise go uncaptured.

In September 2020, the Peter Thiel-backed crypto miner Layer1 in West Texas reported it had reaped profits exceeding 700% by selling renewable electricity back to the grid amid surging summer demand.

While up-to-date data for global hashrate distribution is not available, the Cambridge University’s Bitcoin Electricity Consumption Index (BECI) estimates that China represented 65% of the world’s hashing power as of April 2020.

Earlier this month, district regulators in Western Xinjiang and Yunnan issued notices mandating the suspension of virtual currency mining enterprises. BECI estimates the two regions account for 40% of the country’s hash rate.

Bitcoin Miners Can Prove Green Potential By Undergoing ESG Ratings Check

Bitcoin miners may opt for ESG ratings to prove “greenness” as environmental concerns loom over the entire crypto industry.

Environmental concerns regarding the energy-intensive, proof-of-work (PoW) mechanism that Bitcoin (BTC) uses to produce new coins and verify transactions have been front and center lately. Debates regarding Bitcoin’s energy use particularly surged following a tweet sent out by Tesla CEO Elon Musk in May saying that his company would no longer accept Bitcoin payments due to the network’s “increasingly rapid use of fossil fuels.”

Since then, a number of ways Bitcoin mining companies could go green have been discussed, many of which include using 100% renewable energy sources. For example, El Salvador president Nayib Bukele recently disclosed plans for a geothermal power company, letting Bitcoin miners use its facilities to ensure clean mining.

Proof Of Green Potential Through ESG Ratings

While innovative, these initiatives may be easier said than done. Moreover, if these mechanisms were to be achieved, proof of Bitcoin’s green potential may still be required to show its impact.

In order to demonstrate true energy conservation, Bryan Bullett, CEO of Bit Digital — one of the largest publicly listed Bitcoin mining companies — told Cointelegraph that the company recently submitted for a third-party environmental, social and corporate governance (ESG) review. Bullett noted that the international ESG framework is used by many companies and favored by institutional investors to track and verify companies’ environmental standards and adherence.

Sam Tabar, chief strategy officer of Bit Digital, further told Cointelegraph that the firm may be the only Nasdaq-listed miner that has engaged an independent ESG firm:

“Our ESG rating will be provided by Apex Group ESG Ratings & Advisory, a well-known ESG specialist. Apex met our requirements for an independent process to ensure relevance and consistency surrounding ESG and shares our commitment to creating ESG transparency for investors.”

According to Tabar, once completed, the ESG report from Apex will allow Bit Digital to draw meaningful conclusions to better understand the firm’s ESG performance against international standards and its peers, and then identify areas for improvement, all while tracking progress over time.

It’s important to point out that Bit Digital’s ESG rating is not yet available, as Tabar added that he is not sure when the firm will receive the score. “It’s not up to us, but we are willing to be reviewed.

Our miner fleet has been running on a majority of carbon-free energy mix on average, so we expect that will be reflected in our score.”

Will ESG Ratings Become An Ongoing Trend For Miners?

Although Bit Digital may be one of the first mining companies to undergo an ESG review from a third-party firm, other miners may also choose to do the same.

For example, Rob Chang, CEO of Gryphon Digital Mining — a clean energy Bitcoin mining company — told Cointelegraph that the company is using 100% hydroelectricity to mine Bitcoin.

While Chang noted that Gryphon has already achieved 100% carbon neutrality, Brittany Kaiser, chair of the board of directors at Gryphon, explained that an ESG rating will be performed upon the launch of the company’s first mining machines, which is set for the beginning of August.

“We have not seen ESG rated yet, as we are pre-operational. However, our electricity source is 100% renewable and we have purchased more than 250x more carbon credits to offset the delivery of our mining machines than the footprint it will create.”

Tabar additionally pointed out that it’s important for publicly listed mining companies to undergo ESG ratings for their shareholder’s knowledge:

“Institutional investors increasingly require transparency on, and compliance with, international ESG standards. Therefore, to attract institutional investment, miners face an imperative to operate sustainably, and to provide consistent ESG metrics to the market.”

While the case for ESG ratings is clear, it may be challenging for Bitcoin miners to obtain an ESG score, as a lot of data must be disclosed. Andy Pitts-Tucker, ESG managing director for Apex Group, told Cointelegraph that the ESG rating process varies based on the provider in question.

“For listed businesses or funds, companies are evaluated based on publicly available information such as media sources and annual reports, with scores given for each ‘E,’ ‘S’ and ‘G’ category, alongside an overall score.” He added, “For private companies and their investors, data must be provided by the companies themselves.”

Pitts-Tucker further added that an ESG rating specifically provides a consistent standard against which a company’s ESG performance can be measured. As such, he noted that ESG ratings really gained attention last year, as the global pandemic renewed the world’s focus on risks of all types, including non-financial and ESG factors:

“Companies are now facing increasing pressure from investors, employees and customers to disclose their ESG credentials. Companies now not only want, but need, to show their ESG credentials and compliance as their hands are forced by the implementation of regulations.”

Is Bitcoin An ESG Disaster?

Although a recent decarbonization report from Big Four firm KPMG reinstates that ESG ratings are quickly becoming a best practice for companies, some traditional financial service firms consider a Bitcoin ESG to be near impossible.

For example, Benefit Financial Services Group, a registered investment advisor for both institutions and individuals, recently published a blog post on the challenges of obtaining a Bitcoin ESG score. Unsurprisingly, the post mentions that by nature, Bitcoin mining is an “undeniable environmental offender.” As such, the entire document slams Bitcoin for being unethical and harmful toward the environment.

While this may be a common opinion, Sam Wyner, cryptoasset services director and co-lead at KPMG, told Cointelegraph that in some cases, Bitcoin mining operations may be better positioned than larger organizations for an ESG score since they are typically smaller, more focused and, therefore, more agile:

“They will face the same challenges any corporation trying to obtain an ESG rating would face: Organizational maturity, when it comes to ESG and availability, and granularity of the data needed to support the rating.

This is something even the largest corporations currently struggle with. And, like any corporation going through this for the first time, there is always the risk that the rating comes back less favorable than desired.”

Kazakhstan To Make A $700 Million Bet On Bitcoin Mining

Kazakhstan’s new digital development minister Bagdat Mussin plans to reinforce the country’s economy by expanding its crypto mining sector with a 300 billion tenges (approximately $715 million USD) investment.

Talks of expansion are already underway. On Wednesday, Mussin made the case that fueled by the country’s access to cheap electricity, an extension to Kazakhstan’s already successful mining operations could boost revenues higher.

“More than 80 billion tenge (approximately $190 million USD) has been invested in the sector,” Mussin said on Wednesday in a quote cited by Reuters. “Today we have preliminary agreements on attracting investments worth 300 billion tenge.”

The central Asian country already boasts 13 mining farms with Mussin noting that an additional four are currently under construction.

Miners Migrate To Kazakhstan

According to the University of Cambridge’s Centre for Alternative Finance (CCAF), Kazakhstan accounts for over 6% of Bitcoin’s global hash rate as of April 2020 – making the country the fourth-largest Bitcoin mining hub after China, the US, and Russia.

Kazakhstan’s transformation into a crypto mining hub began soon after thinning post-halving margins left Bitcoin miners in search of discounted electricity.

Thanks to its oil-driven economy, Kazakhstan boasts some of the cheapest electricity in the world with prices as low as $0.04 per kilowatt-hour (kWh).

As a knock-on effect, the country has witnessed a 334% uptick in hash rate since Q3 2019, per data from the CCAF.

“Kazakhstan has definitely been one of the fastest-growing countries for Bitcoin mining over the past few years,” Thomas Heller, chief operating officer at Bitcoin mining and media company HASHR8, told the BTC Times.

“There is an abundance of cheap, coal power that is available for mining – hundreds of megawatts,” Heller added. “The conditions in Kazakhstan are very suitable for mining. It’s close to China and the climate is cool. It’s becoming a popular location for Chinese miners to move old-gen machines from China to Kazakhstan to take advantage of cheaper electricity prices outside of the Sichuan Hydro Season.”

According to Heller, however, it is Kazakhstan’s favorable stance on mining regulation that truly cemented its position as a formidable mining contender. In June, Kazakhstan passed legal revisions effectively legitimizing Bitcoin mining, in hopes of attracting further business.

This is a far cry from the country’s previously harsher stance on cryptocurrencies. In 2018, the National Bank of Kazakhstan moved to outlaw cryptocurrencies altogether. A u-turn from the Kazakh Government several months later instead pushed for the regulation of the industry.

Still, even with $700 million in backing, Heller remains skeptical of whether Kazakhstan’s budding mining hub will overtake the frontrunners.

“It’s unlikely it would become bigger than the big 3 player [sic] of mining in the near future: China, USA and Russia, due to the established nature of Bitcoin mining, as well as the continued expansion of new mining farms in those countries,” he explained.

Why Kazakhstan Is Attracting Bitcoin Miners

Cheap electricity and a crypto-friendly government make it a desirable destination for investors.

Kazakhstan is becoming an important destination for bitcoin (BTC) miners seeking cheap electricity in the post-halving market driven by thinner margins. According to recent reports, the oil-rich Central Asian country expects the total amount of money invested in local crypto mining operations to double by the end of 2020 and attract $738 million over the next three years, Cointelegraph journalist Stephen O’Neal reported.

From Blanket Crypto Ban To Legalization

The Kazakh government has adopted an overall friendly approach to crypto recently, although there is still little regulatory clarity on the subject. However, positive developments were preceded by regulatory turbulence, and at one point, its central bank went as far as to suggest a blanket ban on cryptocurrencies.

In early 2018, the chairman of the National Bank of Kazakhstan, Daniyar Akishev, declared that his agency was considering outlawing all cryptocurrencies. Just a few months later, Kazakhstan’s president, Nursultan Nazarbayev, called for global cooperation in crypto regulation but did not mention whether this regulation should encourage the sector’s growth or its containment.

Previously in 2017, Kazakhstan’s government-supported Astana International Finance Center signed a deal with Malta-based firm Exante to develop the Kazakh digital asset market, while the central bank announced it was considering using blockchain to sell short-term debt notes to investors.

Things started to look more concrete and positive for local crypto miners in 2019. In December of last year, local media reported that Kazakhstan’s lawmakers wouldn’t be taxing cryptocurrency mining until the mined assets are exchanged for fiat money, as crypto mining would not be treated as an entrepreneurial activity but rather a “purely technological process.”

A recent bill, which was approved by the Kazakh Senate and signed into law by Nazarbayev earlier in June, essentially legalizes mining, saying that people involved in digital mining are obliged to inform the authorities about their activities. It also stresses that miners are the legal owners of the digital assets they produce.

Didar Bekbauov, founder of crypto mining marketplace Xive – a local company providing hosting services for large-scale international miners – and who previously worked at Hive Mining, said the current regulation is not strict, but stressed that the framework hasn’t been finalized yet: “The bill says miners need to report to [the] government about their activities. But nobody still knows how it will be in practice. Other than that no regulations.”

Cheap Electricity Attracts Foreign Players

According to Bekbauov, the main mining players in Kazakhstan are foreign companies from China, Japan and “other Asian countries.” There is also Genesis Mining, an international cloud mining company with farms located across several countries, and Bitfury, another non-Chinese mining powerhouse headquartered in Amsterdam.

“They are miners with experience, some private funds, private investors,” Bekbauov said of the companies mining away in Kazakhstan. The Xive founder added that around 90% of their mining activities are performed on the bitcoin blockchain, and he said that the arrival of foreign companies doesn’t make it harder for local mom-and-pop mining operations, as Kazakhstan “still has excess electricity generation.”

Therefore, the main attraction for miners is not the regulatory framework, which still remains ambiguous despite some positive developments, but rather the abnormally cheap electricity rates.

As of December 2019, the price of electricity in Kazakhstan was $0.041 per kilowatt-hour for households and $0.049 for businesses. For comparison, the average electricity price in the United States is $0.14, although some states such as Texas seem to be offering competitive prices under certain conditions.

The price of electricity has always been one of the main factors when it comes to cryptocurrency mining, but it has become even more important after the bitcoin halving took place back in May. The halved reward prompted miners to either sell their equipment or relocate to regions with cheaper electricity such as Kazakhstan, Russia, the Middle East and South America.

Along with the abundance of cheap electricity, Kazakhstan’s geographical position also makes it “a fast-growing hotbed for bitcoin mining action,” according to Thomas Heller, global business director of F2Pool, who said: “Kazakhstan is located in an optimal location for mining.

The climate is cool, and is in close proximity to China. It’s becoming a popular location for Chinese miners to move old-gen machines from China to Kazakhstan to take advantage of cheaper electricity prices outside of the Sichuan Hydro Season.”

Bekbauov said that most local mining operations are located in regions with high electricity generation – such as Ekibastuz, Karagandy, Pavlodar and Taraz – while the country has an overall good climate for crypto mining throughout most of the year.

Dmitrii Ushakov, chief commercial officer of BitRiver – a major co-location services provider for bitcoin mining in the Commonwealth of Independent States region – confirmed that the cheap electricity prices in Kazakhstan are luring investors in, saying: “Miners can currently find very attractive electricity prices for mining in Kazakhstan and some other former Soviet countries. This is the main reason for the current interest in mining in Kazakhstan.”

However, Ushakov added that there are “no natural prerequisites for cheap electricity in the country,” as it is mainly produced by coal-fired power plants. He elaborated, expanding on some other drawbacks of Kazakhstan-based mining, namely an overall unstable situation in the region and inadequate safety of local mining farms: “This is risky because the markets and other factors affecting the price of such electricity within a nation can change quickly.

Another aspect that should be considered here is the safety of these mining sites, which are often set up in a very short time by using pre-existing infrastructure that is old and unreliable.”

Will Kazakhstan Become A Top-Three Mining Destination?

Last month, Kazakhstan’s minister of digital development, innovation and aerospace industry, Askar Zhumagaliyev, announced that the department is planning to attract 300 billion tenge, or $738 million, worth of investments by 2023 for activities related to cryptocurrency mining.

Kazakhstan’s ambitious mining plans might seem staggering at first, but the country has some statistics to back them up. According to Zhumagaliyev, there are currently 14 cryptocurrency mining farms that have already brought in approximately $201.7 million of investments combined.

Further, the Bitcoin Mining Map designed by the Cambridge Center for Alternative Finance at the Judge Business School of the University of Cambridge shows that the countries in the CIS region combined comprise the fourth-largest region for crypto mining globally.

In the second quarter of 2020, mining in Kazakhstan has reportedly made up about 6.17% of the average monthly bitcoin hash rate, which is only slightly behind Russia (6.9%) and the United States (7.24%), while China remains the undisputed king (over 65%).

Alejandro De La Torre, vice president of mining pool Poolin, agreed that under certain conditions, Kazakhstan could become third in the near future: “With the abundance of cheap electrical prices, mild temperatures and the governments ’hands-off’ approach to mining, I do indeed foresee Kazakhstan becoming a top-3 crypto mining destination.”

Other experts are more skeptical. BitRiver’s Ushakov argued that although low electricity prices are a solid advantage for Kazakhstan in the mining race, the region itself isn’t stable enough to witness significant growth: “Although low electricity prices make Kazakhstan a hot destination to mine, we believe that China, Russia and the USA will continue to be the top-3 mining destinations in the world because of increasing investments in mining, predictable energy policies and a more stable political as well as economic environment for mining.”

Updated: 6-18-2021

China Is Kicking Out More Than Half The World’s Bitcoin Miners – And A Whole Lot Of Them Could Be Headed To Texas

China has long been home to more than half the world’s bitcoin miners, but now, Beijing wants them out ASAP.

In May, the government called for a severe crackdown on bitcoin mining and trading, setting off what’s being dubbed in crypto circles as “the great mining migration.” This exodus is underway now, and it could be a game changer for Texas.

Mining is the energy-intensive process which both creates new coins and maintains a log of all transactions of existing digital tokens.

Despite a lack of reserves that caused dayslong blackouts last winter, Texas often has some of the world’s lowest energy prices, and its share of renewables is growing over time, with 20% of its power coming from wind as of 2019. It has a deregulated power grid that lets customers choose between power providers, and crucially, its political leaders are very pro-crypto – dream conditions for a miner looking for a kind welcome and cheap energy sources.

“You are going to see a dramatic shift over the next few months,” said Brandon Arvanaghi, previously a security engineer at crypto exchange Gemini. “We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible.”

China’s Mining Dominance

2021 data for the global distribution of mining power is not yet available, but past estimates have shown that 65% to 75% of the world’s bitcoin mining happened in China – mostly in four Chinese provinces: Xinjiang, Inner Mongolia, Sichuan and Yunnan.

Sichuan and Yunnan’s hydropower make them renewable energy meccas, while Xinjiang and Inner Mongolia are home to many of China’s coal plants.

The drawdown in miners has already begun in Inner Mongolia. After failing to meet Beijing’s climate targets, province leaders decided to give bitcoin miners two months to clear out, explicitly blaming its energy misses on crypto mines.

Castle Island Ventures founding partner Nic Carter says that while it’s not totally clear how China will handle next steps, a phased rollout is likely. “It seems like we’re going from policy statement to actual implementation in relatively short order,” he said.

The way this exodus is measured is by looking at hashrate, an industry term used to describe the computing power of all miners in the bitcoin network.

“Given the drop in hashrate, it appears likely that installations are being turned off throughout the country,” continued Carter, who also thinks that probably 50% to 60% of bitcoin’s entire hashrate will ultimately leave China.

Although China’s announcement hasn’t been cemented in policy, that isn’t stopping miners like Alejandro De La Torre from cutting their losses and making an exit.

“We do not want to face every single year, some sort of new ban coming in China,” said De La Torre, vice president of Hong Kong-headquartered mining pool Poolin. “So we’re trying to diversify our global mining hashrate, and that’s why we are moving to the United States and to Canada.”

One of bitcoin’s greatest features is that it is totally location agnostic. Miners only require an internet connection, unlike other industries that must be relatively close to their end users.

“The cool thing about bitcoin that is underappreciated by a lot of the naysayers is that it’s a portable market; you can bring it right to the source of energy,” said Steve Barbour, founder of Upstream Data, a company that manufactures and supplies portable mining solutions for oil and gas facilities.

That said, the exodus won’t be instantaneous, in part, because it will take miners some time to either move their machines out of China or liquidate their assets and set up shop elsewhere.

Where They’re Going

Because miners at scale compete in a low-margin industry, where their only variable cost is typically energy, they are incentivized to migrate to the world’s cheapest sources of power.

“Every Western mining host I know has had their phones ringing off the hook,” said Carter. “Chinese miners or miners that were domiciled in China are looking to Central Asia, Eastern Europe, the U.S. and Northern Europe.”

One likely destination is China’s next-door neighbor, Kazakhstan. The country’s coal mines provide a cheap and abundant energy supply. It also helps that Kazakhstan has a more lax attitude about building, which bodes well for miners who need to construct physical installations in a short period of time.

Didar Bekbauov runs Xive, a company that provides hosting services to international miners. Xive also sells the specialized equipment needed for mining.

Bekbauov says that he’s stopped counting the number of Chinese miners who have called him to ask about relocation options, ranging from operations with 15 rigs to thousands.

“One miner told us that only government electricity plants have restricted mining and private ones will continue to service miners,” Bekbauov told CNBC.

“But most of the electricity is generated by government power plants, so miners will have to move. That makes them uncertain and desperate to find other locations,” he said.

Whether Kazakhstan is a destination or simply a stopover on a longer migration west remains to be seen.

Arvanaghi is bullish on North America and thinks the hashrate there will grow over the next few months.

“Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe,” he said. “It’s also very easy to start up a mining company … if you have $30 million, $40 million, you can be a premier miner in the United States.”

Wyoming has also trended toward being pro-bitcoin and could be another mining destination, according to Arvanaghi.

There are, however, a few major limitations to the U.S. becoming a global mining destination.

For one, the lead time to build the actual physical infrastructure necessary to host miners is likely six to nine months, Carter told CNBC. “The U.S. probably can’t be as nimble as other countries in terms of onshoring these stray miners,” he said.

The move logistics may also prove difficult. There is a shipping container shortage, thanks to the tail winds of the Covid pandemic.

But perhaps the biggest question is the reliability of the Texas power grid. A storm that devastated large swaths of the state in 2021 has reignited a debate over whether Texas should winter-proof its systems, a potentially costly project that might affect taxes or other fees for those looking to tap into the state’s power grid. More recently, ERCOT, the organization that operates Texas’ grid, asked consumers to conserve energy amid what officials called an unusual number of “forced generation outages” and an upcoming heat wave.

Answering The Musk Critique

Tesla CEO Elon Musk has bashed bitcoin mining, claiming that it is bad for the environment. It’s not a new criticism.

For years, skeptics have maligned the world’s most popular digital token for polluting the planet, while supporters have extolled the virtues of bitcoin and its role in accelerating the rise of renewable energy.

It is unclear whether the China mining exodus will make or break the case for bitcoin enthusiasts in the debate around the token’s carbon footprint. The dominant narrative, to date, has been that much of the world’s bitcoin is mined with Chinese goal.

“From a narrative perspective, it’s definitely an improvement,” said Carter. “But China also has the most abundant stranded hydro resources in the world.”

The country offers significant energy vectors from wind, solar and especially hydropower in the south. Xinjiang’s grid, for example, is 35% powered by wind and solar energy inputs.

If all the miners do end up leaving China, it will mean less fossil fuel-powered mining, but it will also mean that the network’s share of renewable energy-powered mining will drop. This is why the question of where these migrant miners end up could prove critical to bitcoin’s future. “It’s the biggest story of the year for bitcoin,” said Carter.

De La Torre says they’re looking to expand operations using green energy, a trend that is already years in the making. He says that hydro plants are generally cheaper than fossil fuels in most parts of the world.

“Mining is price sensitive, so as to seek out the lowest cost power and the lowest cost power tends to be renewable because if you’re burning fossil fuels .. .it has extraction, refinement and transport costs,” explained Blockstream CEO Adam Back.

Each year, investment bank Lazard releases a breakdown of energy costs by source. Its 2020 report shows that many of the most common renewable energy sources are either equal to or less expensive than conventional energy sources like coal and gas. And the cost of renewable power keeps going down.

But there are limitations to running crypto mines purely on renewable energy.

Though solar and wind are now the world’s least expensive energy sources, both power supplies face limitations at scale, so there is concern over the viability of miners turning exclusively to wind or solar energy.

Next Six Months

For the time being, there isn’t that much mining capacity worldwide that is ready to absorb the Chinese miner diaspora. While they scramble to find a new home, we could see hashrate go offline – and stay offline.

In practice, that would mean all the remaining miners are more profitable for a period of time.

Having more geographic dispersion would even out the global balance of power, and it would also reduce the ability of any one sovereign nation to co-opt or control the network.

We may also see special crypto economic zones pop up in the next few months.

“You will see jurisdictions adopting a very favorable stance and creating the equivalent of special zones to encourage miners to host locally,” said Carter. “We’re seeing it at the state level here. You’re also going to see it at the country level, you might even see subsidized electricity for mining.”

Crypto Miner Hive Blockchain To List Shares On Nasdaq

The shares will continue to trade on the TSX Venture Exchange.

Hive Blockchain Technologies, a publicly traded Canadian crypto-mining company, said it received approval to list its common shares on Nasdaq.

* Hive Blockchain mines ethereum (ETH, -5.12%) and bitcoin (BTC, -5.9%) continuously on the cloud and keeps hold of most of its production. It owns data-center facilities in Canada, Sweden, and Ireland.

* The Vancouver-based company went public in 2017 and said it will retain its listing on the TSX Venture Exchange, trading under the ticker symbol “HIVE.”

* The shares have gained about 33% this year.

* Hive did not say when the Nasdaq shares would start trading.

* In May, the firm sold its Norwegian subsidiary Kolos Norway AS after the government abolished power subsidies.

Sichuan Becomes Latest Chinese Province To Order Bitcoin Miner Shutdown For Inspections

The Sichuan government has joined other Chinese provinces in ordering local bitcoin mining operations to shut down pending an inspection.

The Sichuan branch of the National Development and Reform Commission (NDRC) and the Sichuan Energy Bureau have issued an order to crack down on crypto mining operations in the province on Friday, according to a notice obtained and verified by CoinDesk.

Sichuan, which is arguably the largest hydro-based crypto mining hub in China, is joining the ranks of Chinese provinces cracking down on bitcoin (BTC, -5.73%) mining. A number of provinces have been cracking down on mining operations within their borders recently. Xinjiang, Inner Mongolia, Qinghai and Yunnan have already announced crackdowns or partial bans on the industry.

Municipal governments, city governments and energy providers, including the State Grid Corporation of China, in Sichuan will lead the crackdown. Local authorities plan to shut down 26 companies that have been identified as potential crypto mining businesses by the State Grid.

These companies are located across 15 hydro-rich counties in five cities and regions in Sichuan province and will be shut down by June 20, according to the notice.

In the meantime, municipal and city governments will immediately carry out an inspection. Any company that is found to be a crypto mining project during the inspection will be shut down. The local governments are required to report updates on the process to the NDRC by June 25.

State and provincial level energy providers are required to conduct self-inspection and immediately suspend any crypto mining projects. The electricity companies should enforce the crackdown directive “without any discount”, according to the notice.

The notice also stresses the responsibilities of local governments in the crackdown. “Local governments must show and be more aware of their political stance, must guarantee the quality and quantity of the crackdown and maintain social stability,” the notice said.

The news came after Chinese local media reported miners at Ya’an in Sichuan province had received a notice that required them to shut off mining operations for self-inspection on Thursday night. Miners were expecting an official notice on Friday.

Read The Full Notice Below:

* Notice from the Sichuan National Development and Reform Commission and Sichuan Energy Bureau About Cleaning Up and Shutting Down Crypto Mining Projects

* Municipal and city governments, the State Grid Corporation of China in Sichuan, Sichuan Energy Investment Group, central electricity companies in Sichuan and provincial state-owned electricity companies:

* Based on the provincial government’s 73rd routine meeting and the requirements to crack down on bitcoin mining from the 51st meeting by the Financial and Development Committee of the State Council, we have issued the following:

1. Complete The Process To Filter Out And Shut Down Crypto Mining Companies

The local governments, with assistance of the State Grid and Sichuan Energy Investment Group, will filter out, clean up and shut down 26 companies that have been inspected and reported as potential crypto mining projects by the Sichuan branch of the State Grid by June 20. The NDRC will monitor the electricity usage and the shutdown, and make daily reports.

2. Carry Out Self-Inspection Among Electricity Companies In Sichuan

Central electricity providers in Sichuan and provincial state-owned electricity companies should investigate their clients and immediately cut off their electricity supply once found to be mining projects during the inspection. The companies should enforce the crackdown issued by the government without any discount and report their inspection results to the NDRC before June 25.

3. A Comprehensive Cleanup And Inspection

* Local governments should immediately cast a net to inspect and must immediately close the crypto mining projects found during the inspection. The local governments are required to report the results to the NDRC before June 25. Local governments are not allowed to approve any crypto mining projects.

4. Make Clear The Responsibilities Of The Entities That Are Carrying Out The Crackdown

* Local governments are the ones that are responsible for the crackdown. The local governments must be more aware of their political stance, must guarantee the quality and quantity of the task and must maintain social stability.

Updated: 6-19-2021

Canada’s Hive Blockchain Technologies Approved For Nasdaq Listing

The Canadian miner with a focus on green energy should be available to trade in the coming weeks.

While the SEC continues to slow-roll the listing of a Bitcoin ETF, traders on legacy exchanges eager to get some exposure to crypto will soon have another outlet.

In an announcement on Friday, Canada’s Hive Blockchain Technologies revealed that it has received approval to list shares on the Nasdaq stock exchange. Hive currently trades on the TSX Venture Exchange under the ticker HIVE.V, and focuses on both Bitcoin and Ethereum mining.

HIVE is excited to announce today that it has received approval to list its common shares on the Nasdaq Capital Markets Exchange, where it will begin trading soon. HIVE will also retain its listing on the TSX Venture Exchange (TSX.V). pic.twitter.com/6XyEFfSCL4

— H I V E (@HiveBlockchain) June 17, 2021

Per Hive’s website, the company has a particular focus on green energy — an increasingly important topic to critics of crypto’s significant energy consumption. This month, noted Bitcoin accumulator Michael Saylor revealed the details of the forthcoming Bitcoin Mining Council, which, among other duties, will help to shed light on the ecological impact of cryptocurrency mining.

“HIVE owns state-of-the-art green energy-powered data centre facilities in Canada, Sweden, and Iceland which produce newly minted digital currencies like Bitcoin and Ethereum continuously on the cloud,” reads Hive’s announcement. “Since the beginning of 2021, HIVE has accumulated the majority of its ETH and BTC coin production, which we hold in secure storage.”

Hive closed on Friday at 3.05 CAD, down 3.79% on the day and 44% from 6.8 highs earlier in the year.

Historically, Bitcoin miners have outperformed the base asset, often by significant margins. Analysis last month showed that while Bitcoin was up 900% on the year, four of the largest mining stocks rallied 5,000%.

Along with the rally in price, many miners are increasingly becoming powerful voices on the global political stage. This month, the CEO of Nasdaq-listed Canaan Inc called on China to lighten its Bitcoin mining ban.

Updated: 6-21-2021

Startups Race Microsoft To Find Better Ways To Cool Data Centers

Nonconducting liquids show promise in replacing expensive and wasteful air conditioning. Startups Race Microsoft To Find Better Ways To Cool Data Centers

All those videos, emails, bank statements, photos, shopping carts, airline reservations, and so, so, so much more sluicing around the internet eventually end up in the millions of data centers scattered across the globe. With all that stuff coming and going, those places are getting crowded—and hot. David Craig can’t do much about the congestion, but he says he’s got a fix for the heat: A liquid that bathes the cores of processors to keep things at a relatively chilly 50 degrees Celsius (122 Fahrenheit).

“As we process much more data, the chips are becoming three, four, five times hotter,” says Craig, chief executive officer of Iceotope Technologies Ltd., a U.K. startup focused on cooling strategies for computing.

Data centers consume 2% to 4% of the world’s electricity, and almost half of that power goes to cooling, according to the Uptime Institute, a consulting firm in Seattle. Early on, most data was kept on-site at the banks, universities, or corporations that generated it, where cooling often meant little more than opening the window. Today, a growing share of the world’s data is consolidated in megacenters with thousands of processors, and the vast majority of them use traditional air conditioning.

While some heat is good for computers, too much can cause systems to crash, and with each generation of computer chips running faster and hotter, the systems will soon be too hot for even the most efficient air conditioner. Finding better ways to keep temperatures down could save the industry some $10 billion a year on electricity alone, according to Uptime. “Air just isn’t a very effective medium for transferring heat,” says Rabih Bashroush, global head of IT advisory services at Uptime.

The market for equipment used to cool computer gear hit $10.5 billion in 2019 and is growing 13% a year, according to Allied Market Research, sparking a race among companies ranging from startups such as Iceotope to the likes of Facebook, Google, and Microsoft. Newer strategies focus mostly on liquid technologies, including circulating specially formulated fluids through tubes, submerging processors in the stuff, and even building data centers under the sea.

Market researcher PitchBook reports that venture capital investment in data-center-cooling startups more than doubled last year, to $34 million. “Liquid cooling can provide more service in less space,” says Arman Shehabi, a research scientist at Lawrence Berkeley National Laboratory who studies power consumption in computers.

Microsoft Corp., which runs more than 200 data centers globally, is testing systems in which servers are bathed directly in a fluid that doesn’t conduct electricity. It estimates liquid cooling could allow it to fit 10 times as much computing power in the same space. “We’re just starting down the liquid path,” says Christian Belady, chief of the unit that develops technology for data centers. “You’re going to see a lot of rapid change in how we do things.”

At least a dozen smaller startups have joined the fray. Spain’s Submer Technologies SL sells sealed pods that are filled with servers bathed in a nonconducting liquid and can be plugged directly into a network. The company says the excess heat can be used to warm nearby buildings, and the technology extends the life of the computer because no dust reaches the processor.

Netherlands-based Incooling BV uses a fluid that gets boiled into a gas by the processors before being cooled back into a liquid and recirculated, which the company argues is the most efficient way to absorb heat. “We’re able to maximize the potential of every component,” says co-founder Helena Samodurova.

Iceotope, based in Sheffield, a three-hour drive north of London, has raised more than $10 million from venture capital backers since its founding in 2005. It initially sought to manufacture its own cooling systems, but about five years ago it shifted to developing the underlying technology. Iceotope is raising another round of funding from strategic investors that it expects will give it better entrée to more customers, and last year it opened an office in the U.S., aiming to expand its business there.

Although the company had less than £10 million ($14 million) in 2020 sales, Craig says he aims to at least double revenue this year as partnerships with computer manufacturer Lenovo Group Ltd. and some smaller companies start to bear fruit. “The market is getting hot, fast—no pun intended,” he says. “If we don’t deal with cooling efficiently, we’ll be in real trouble.”

BOTTOM LINE – Data centers consume as much as 4% of global electricity, almost half of that for cooling. Better ways to keep temperatures down could save the industry $10 billion a year.

Updated: 6-21-2021

Nvidia GPU Prices In China Fall Amid Crypto Mining Crackdown

Graphics card prices in China reportedly dropped as much as two-thirds on Chinese e-commerce websites.

Amid the ongoing crackdown on cryptocurrency mining in China, prices of graphic cards from major GPU providers like Nvidia and Asus are becoming more affordable.

According to a Monday report by South China Morning Post (SCMP), prices of some graphic cards have tumbled as much as two-thirds on Chinese e-commerce platforms after Sichuan province terminated mining operations.

Asus’ flagship RTX 3060 card was reportedly down to 4,699 Chinese yuan ($730) on Monday from its peak price of 13,499 yuan ($2,100) in May on JD.com-operated online retail site Tmall.

Nvidia’s Quadro P1000, a less advanced card, dropped to 2,429 yuan ($380) on a JD.com franchise store, down from a peak of about 3,000 yuan ($470) in early May, the SCMP reported, citing price changes tracked by e-commerce data provider Manmanbuy.

The price downturn aligns with a major sell-off on the cryptocurrency market, with Bitcoin (BTC) tumbling to $32,500 amid another wave of FUD in China.

On Monday, China’s central bank reiterated the country’s ban on cryptocurrency trading, reportedly urging banks and payment institutions to halt services for accounts associated with crypto trading activity.

After banning crypto trading back in 2017, the Chinese government has been toughening its stance on crypto recently, launching a major crackdown on cryptocurrency mining. The latest news follows a series of mining bans in several major crypto mining hubs in China including hydropower-based provinces like Sichuan and Yunnan. Authorities in Xinjiang, Inner Mongolia and Qinghai have also ordered mining operations to shutter.

Updated: 6-23-2021

Chinese Crypto Mining Firm Canaan Sets Up Shop In Kazakhstan Amid Crackdown

Canaan has started mining Bitcoin with its latest Avalon Miner units in Kazakhstan after setting up a service center in the country earlier this month.

Major Chinese cryptocurrency miner provider Canaan has posted an update on its crypto mining business in Kazakhstan amid an ongoing crackdown on Bitcoin (BTC) mining in China.

Canaan announced Monday that the company has rolled out its own crypto mining business in Kazakhstan using its latest Avalon Miner units.

The firm’s move to Kazakhstan comes as part of the company’s broader strategic plans in the country. Canaan previously opened its first overseas service center in Kazakhstan earlier this month to provide local customers with after-sales services like machine testing, warranty services, maintenance and technical consultations.

Canaan chairman and CEO Nangeng Zhang said that the firm’s debut of a self-operated Bitcoin mining business will help improve the company’s financial performance. “ As we integrate more industry resources into our operations, we believe this business segment will enable us to revitalize our mining machine inventory, shield us from Bitcoin volatility, and ensure our inventory sufficiency during market upturns,” he said.

In recent weeks China has been hardening its stance on crypto, with the government shutting down crypto mining operations in Sichuan, Yunnan, Xinjiang, Inner Mongolia and Qinghai. In response to the crackdown, a number of Chinese crypto mining operators have considered or have already relocated to other countries, with major mining pool BTC.com successfully relocating the first batch of its miners to Kazakhstan earlier this week.

Bitmain is reportedly moving overseas to continue its mining business. According to Chinese journalist Colin Wu, the firm announced a full relocation abroad on Tuesday.

Chinese Bitcoin Miners ‘Not Even In The Mood To Drink Anymore’

Many Bitcoin miners in China are down with the blues as Beijing forces several operations to go offline.

China, once home to about 65% of the total Bitcoin (BTC) mining hash power, has given the boot to several miners in the country.

The country’s Bitcoin mining ban means miners have been forced to shut down their operations with some establishments already moving hardware overseas.

Tweeting on Wednesday, Kevin Zhang, vice president of crypto mining advisory outfit Foundry, said the mood among Chinese miners has grown sour, adding:

“Sentiment is obviously quite dreary and the reality is setting in that it’s GG for mining in China. Some mining friends have stuck around Sichuan since the Bitmain conference to drink their sorrows away. Now… 酒都不想喝了 — ‘not even in the mood to drink anymore.’”

According to Zhang, China’s Bitcoin ban has caused about 70% of the country’s mining capacity to shut down, and by the end of June, close to 90% will have gone offline.

For some miners, the ban goes beyond shuttering operations, as power stations in certain areas in the Sichuan Province have served eviction notices to Bitcoin miners. Affected miners reportedly have no more than a fortnight to uninstall all of their operating infrastructures including racks and containers.

As previously reported by Cointelegraph, some major Bitcoin miners have already begun to set up shop in other countries. BTC.com, the fifth-largest Bitcoin mining pool by hash rate distribution, is reportedly moving to Kazakhstan.

Earlier in June, Miami mayor Francis Suarez sent an open invitation to Chinese miners, offering the city’s cheap nuclear power and favorable regulations as incentives.

However, Zhang argued that the migration overseas for Chinese miners could be anything but seamless. With hosting capacities outside China reportedly oversubscribed, miners may have to deal with higher costs in other countries.

Moving to the United States might also present another major cost issue for miners on account of the 25% U.S. tariff on Chinese goods.

Bitmain Reportedly Suspends Bitcoin Miner Orders Amid Booming Secondhand Supply

By postponing the sales, Bitmain aims to help miners exiting the industry get better prices for mining equipment.

Chinese mining giant Bitmain is reportedly scrambling to respond to market conditions amid a major crackdown on crypto mining activity by local authorities.

According to a Wednesday report by Chinese news agency Sina Finance, Bitmain has halted global spot sales for its new Bitcoin (BTC) mining devices in order to avoid losses by customers amid massive selling on the secondary market.

By postponing the sales, Bitmain intends to help miners exiting the industry get better prices for mining equipment and protect the firm from further price declines over the longer term, Bloomberg reported. A Bitmain spokesperson said that the company will continue supporting future delivery of devices used to mine smaller altcoins. The representative did not elaborate on when Bitmain expects to resume global spot delivery.

Arthur Li, founder of Bitmain-backed mining startup Sai Technology, highlighted massive selling pressure for top-tier Bitmain miners in the secondhand market. Some of the flagship miner devices from Bitmain and rival Whatsminer are now sold at around 150 yuan ($23) for each terahash per second, down from 600 yuan ($93) in April, when Bitcoin hit an all-time high above $64,000.

A sharp decline in ASIC Bitcoin miner prices comes in line with a major price drop of Nvidia GPUs that are often used for cryptocurrency mining. As previously reported, some graphics card prices in China dropped as much as two-thirds on domestic e-commerce websites in June.

Bitmain is reportedly considering a move overseas. According to Chinese journalist Colin Wu, the firm announced a full relocation abroad on Tuesday.

US Miner Raises $105M To Recycle Waste Coal Into Crypto

Stronghold Digital Mining has raised more than $100 million in two private placements supporting its model for sustainable Bitcoin mining.

The Pennsylvania-based Stronghold Digital Mining has announced the completion of two private equity securities raises worth $105 million.

According to an announcement shared with Cointelegraph, the firm’s first power generation facility, the Scrubgrass Generation Plant in Venango County, converts waste coal into energy on a scale equivalent to “a large-scale hydropower plant” that is then used to mine Bitcoin and other cryptocurrencies.

The waste coal recycled by Stronghold was produced by coal mining operations in the 19th and 20th century. Stronghold’s power generation processes allow it to rehabilitate large areas of land that were devastated as a result by waste coal acid drainage (AMD).

AMD describes a process in which rain or snow mixes with the sulfur in coal waste, allowing it to run into water systems and threaten aquatic life. After removing the waste coal, Stronghold also plans to donate the restored land back to local communities.

The company estimates that for every Bitcoin it mines, 200 tonnes of waste coal is destroyed.

“Coal waste fires have been wreaking havoc in my home state of Pennsylvania for the last hundred years,” said Stronghold co-chairman, Bill Spence, adding:

“We employ 21st-century crypto mining techniques to remediate the impacts of 19th and 20th-century coal mining in some of the most environmentally neglected regions of the United States.”

Working in partnership with local environmental authorities, Stronghold has already reclaimed 1,000 acres of Pennsylvania land it describes as being “once-unusable.” In addition to removing more than 98% of mercury, NOx, and SO2 emissions, the firm’s production process creates fly ash — which is can be used as a fertilizer.

Stronghold hopes to have more than 28,000 cryptocurrency miners operational by 2022, and is in discussions to acquire facilities representing more than 200 megawatts of electricity generation capacity.

The raise comes as the Bitcoin community is becoming increasingly environmentally conscious, with Tesla CEO Elon Musk famously reversing course on the electric vehicle manufacturer’s decision to accept payments in Bitcoin, citing the environmental toll of coal-powered mining.

Earlier this month, Musk indicated Tesla would explore resuming support for BTC should the mining sector shift to being at least 50% powered by clean energy.

In Pennsylvania and many other regions around the world waste coal and acid mine drainage (AMD) is one of the largest sources of pollution. Because precipitation combines with coal waste, the AMD can pollute nearby waterways and threaten aquatic life. Stronghold’s main operation site located at the Scrubgrass Generating Plant in Pennsylvania takes the waste coal and uses it to not only mine cryptos like BTC, but it also donates the cleaned-up land back to local communities.

Stronghold will use the newly acquired funds to continue expanding as it expects to have roughly “28,000 cryptocurrency miners operating by year-end.” The mining firm is also partnered with the Pennsylvania Department of Environmental Protection (DEP) and so far stats show Stronghold has “reclaimed 1,000 acres of once-unusable land in Pennsylvania.”

Stronghold’s announcement details the firm is in the midst of “negotiations to acquire additional environmentally beneficial facilities” with around 200 megawatts of power.

Greg Beard, the CEO and co-chairman of Stronghold believes the venture makes the company’s mining model adaptable to ESG-friendly policy. The company’s announcement says the firm estimates it would take roughly 30 years to reclaim all the waste just in the near proximity of the Scrubgrass Generating Plant. “For each bitcoin mined by the company, an estimated 200 tons of waste coal is eliminated,” the company claims.

“A negative impact on the environment has long been a criticism of Bitcoin mining, with good reason. Our ownership of the Scrubgrass Plant combined with the environmental benefits which accrue to the region allow us to mine Bitcoin at what we believe to be some of the lowest costs in the industry while making a transformational contribution to the environment. Our vertically integrated model ensures we’re entirely self-sufficient and adaptable” Stronghold’s CEO said in a statement.

Meanwhile, other mining operations like EZ Blockchain, Upstream Data, and Crusoe Energy Systems are reducing emissions by mining bitcoin with flare gas. EZ Blockchain recently detailed that the company has partnered with Silver Energy, an oil and gas provider based in Texas.

Updated: 8-25-2021

KuCoin Encourages Greener Crypto Mining With Proof-Of-Work Pool

According to CEO Johnny Lyu, people using renewable energy sources for mining will receive discounts on fees.

Singapore-based crypto exchange KuCoin is launching a mining pool aimed at providing revenue to proof-of-work miners after integrating their rigs.

In a Wednesday announcement, the exchange said its KuCoin Pool product would allow miners around the world to contribute to the Bitcoin (BTC) and Bitcoin Cash (BCH) and share rewards. At the moment, miners are required to install and run the necessary hardware themselves to join the pool, but KuCoin said it would introduce mining in the cloud in the future.

KuCoin CEO Johnny Lyu also claimed the pool would be encouraging miners to participate in environmentally-friendly solutions — people using renewable energy sources for mining will receive discounts on fees. The move is seemingly part of a shift in many mining firms beginning to transition to cleaner or renewable energy.

“For existing KuCoin users, it will become straightforward to set up their mining devices to generate passive income right away,” said Lyu. “Miners can benefit from the one-stop mining service platform and its features to get up and running very quickly.”

The exchange is coming in late to mining when compared with major firms like Binance, which launched its mining pool in April 2020. According to blockchain data, some of the largest BTC miners include Antpool — owned by Chinese mining giant Bitmain — Poolin, ViaBTC, and F2Pool.

Launched in 2017, KuCoin reported this week that it had reached 10 million users, having risen by 1,114% in the last year. Last year, hackers stole roughly $275 million from the exchange before KuCoin was able to recover the majority of the funds.

Bitcoin Hashrate Triples Since June 28 In Recovery From China Syndrome

Hashrate has now recovered to early June levels indicating that miners are coming back online after China’s crackdown.

The hashrate for the Bitcoin network has made a remarkable recovery since it crashed following China’s crypto mining clampdown earlier this year.

The Bitcoin hashrate has now topped 150 Exahashes, or one quintillion hashes, per second according to data from analytics provider CryptoQuant.

On Aug. 24, the metrics provider reported a hashrate of 152 EH/s which has tripled since it bottomed out this year on June 28 at 52 EH/s.

The recovery of the BTC hashrate means that the network is much more secure and harder to attack.

The average Bitcoin hashrate — the amount of computing power in the network — hit an all-time high of 197.6 EH/s on May 13 according to Bitinfocharts. Over the six weeks or so that followed, it slumped by more than 65% as mining rigs across China were powered down for the “great miner migration”.

The metric is now approaching early June levels and, if the trend continues, could hit a new all-time high within the next couple of months.

Bitcoin hashrate recovered ~67% of its earlier exodus

Didn’t die then, didn’t die now, regulatory arbitrage pic.twitter.com/Abe7VYbitW

— //Bitcoin ack (@BTC_JackSparrow) August 24, 2021

In early May, Cointelegraph reported that there was already evidence that hashrate was moving away from China. Details on the migration are difficult to come by: Cambridge University’s well-sourced “mining map” has not been updated since April when it reported 65% of the hashrate residing in China.

Measuring hashrate data by mining pool is also inaccurate since many pools are a mix of hash power from physical facilities and miners from all around the world pooling computing resources.

Since the hashrate has now recovered, it would indicate that the miner migration is almost complete. This has resulted in an increase in difficulty, with the last rise of around 7% occurring on Aug. 13.

The next one is due any time now, which will mean higher computational costs for miners as more of the formerly China-based operations come back online to compete for blocks. The current estimate is for a 12.37% difficulty increase.

While the migrating operations were offline in June and July, miners already operating in countries such as the United States were able to rake in bigger profits due to the lower difficulty.

This week, Cointelegraph reported that U.S. mining firm Riot Blockchain announced record revenue for BTC mining during the second quarter.

Updated: 8-27-2021

Who’s Subsidizing This Bitcoin Miner IPO? You Are

Stronghold Digital gets hefty state credits for burning waste coal, exploiting a Pennsylvania law deeming this to be somehow environmentally friendly.

The best Bitcoins are the ones you bought early. The second best are the ones someone else helped pay for.

Stronghold Digital Mining Inc. is a cryptocurrency producer with a twist, one that features prominently in their recent IPO filing. Aware that Bitcoin has an ESG problem because of all the coal burned to produce it, Stronghold is buying its own power plants which … burn coal. Not just any coal; waste coal. Which is, in fact, worse than coal.

But not in Pennsylvania. There, giant piles of waste coal resulting from decades of mining leach nasties into the waterways and just look ugh. The state’s preferred solution is burning the waste to produce electricity. Specialized plants to do so have fallen on hard times, undercut by cheaper natural gas and renewables. Now channeling their electrons into crypto computing offers the plants a lifeline and gives Stronghold a PR toehold in environmental terms, as smaller piles of waste coal mean less runoff. Just don’t mention the carbon emissions.

There’s a reason Pennsylvania has an “alternative energy” portfolio standard rather than a “renewable” one. That reason is waste coal. Under legislation enacted in 2004, waste coal qualifies as a “Tier II” alternative energy source. Not up there with the more intuitive Tier I stuff like solar power. But equal with large-scale hydropower, according to Harrisburg’s worldview, which might also charitably be described as alternative. Thus designated, alternative energy generators gain credits that can be sold to help electricity suppliers meet their obligations.

But Tier II credits have generally been worth peanuts, averaging just 20 cents in the decade through 2019. 1

That all changed this year. Karbone Inc., a financial services firm specializing in renewable energy markets, says 2021 Tier II credits now trade at more like $15 or $16. Last month, 2022 credits actually traded at a premium to Tier I credits, which is very odd indeed. Karbone points to the state’s fiscal bill HB 2536 passed late last year. A provision slipped into that requires Tier II energy sources to be based within Pennsylvania; previously, out-of-state sources also qualified, and they accounted for 40% of the program last year.

At the stroke of a pen, the supply of credits shrank significantly, but the regulatory obligation to buy them did not. We all know what that does to prices.

Given waste coal accounted for three quarters of in-state credits last year, anyone burning it for power is enjoying quite the subsidized windfall — which is fortuitous timing indeed for Stronghold.

Stronghold claims fuel, operations and maintenance at its first plant cost $43 per megawatt-hour. The plant earns a capacity payment that Stronghold puts at $6, bringing its effective cost down to $37.

The real juice comes courtesy of the state’s ratepayers and taxpayers. On top of those suddenly golden Tier II credits, Pennsylvania provides a tax credit to waste-coal generators worth $4. Having pocketed $20 of subsidy, therefore, Stronghold puts its effective cost at just $18 per megawatt-hour, making these decades-old waste-coal furnaces competitive with the region’s gas-fired plants, which is wild.

Stronghold calculates this pushes its cost per Bitcoin-equivalent down below $3,000; not a bad margin when Bitcoin has averaged $44,000 so far this year. Take out Pennsylvania’s subsidies, and the implied cost would be more like $6,300. Add a carbon price of $50 a ton, and it would jump to more than $17,000. 2

Alchemy

Bitcoin’s surge is tempting for any wannabe miner, especially if they can secure subsidized power to produce it.

Even then, of course, that would be a gross margin of more than 60%. This is why the thesis espoused by the likes of Cathie Wood and Jack Dorsey that crypto-currency will spur a renewables revolution is so misguided. Quite the opposite: Crypto-mining frees the most stranded of fossil-fuel assets. Stronghold is even paying for its plants mostly with (as yet unlisted) shares in itself.

Yet Pennsylvania’s peculiar pyromania offers further succor. Greg Beard, the ex-Apollo Global Management partner who is now Stronghold’s CEO, said in a recent interview it’s “not economic” to burn waste coal without the state’s credits, noting the extra value provided by last November’s legislative tweak.

It isn’t just the margin. With Stronghold’s economics subject to the vagaries of cryptocurrency prices and ever more miners piling in, the solidity and greenish veneer of that subsidy makes it a real plus for the main event: pitching that IPO.

In return, Pennsylvanians get dubious benefits. That subsidy implies $16 per ton of waste coal burned, about half the estimated cost of just removing the refuse. So it looks like a bargain — but only if you ignore the emissions. At a notional $50 carbon fee, each ton of waste coal generates another $65 of cost to the environment. 3

Of course, there’s an arbitrage of politics and perception to exploit here, whereby local, tangible pollution takes precedence over the universal, abstract — but nonetheless real — kind. The upshot is that while the windfalls will be privatized, it isn’t just Pennsylvanians subsidizing them. Ultimately, we all are.

Source: Pennsylvania Public Utility Commission. Tier I permits averaged $8.78 over the same period, while solar credits averaged $121.56.

* These calculations assume a starting point of $3,000 per bitcoin-equivalent and a net cost of power at $18 per megawatt-hour, in line with Stronghold’s disclosures. These imply 167 megawatt-hours of power to produce one bitcoin. At an unsubsidized cost of $34 per megawatt-hour, that would imply$6,333 per bitcoin. Assuming carbon-dioxide emissions of 1.3 tons per megawatt-hour and a notional carbon price of $50 per ton, the all-in cost would rise to $17,167 per bitcoin.

* This assumes 1.25 tons of waste coal burned per megawatt-hour, the average rate for Stronghold’s Scrubgrass plant for the period 2015-19, according to Energy Information Administration data. The estimated cost of just removing waste coal of $33 per ton comes from “The Coal Refuse Reclamation to Energy Industry – A Public Benefit in Jeopardy”, published in June 2019 on behalf of the Anthracite Region Independent Power Producers Association. It should be noted that ARIPPA lobbies for the waste-coal power sector. The carbon-price impact assumes 1.3 tons of emissions per megawatt-hour.

Updated: 6-24-2021

Bitmain Ceases Bitcoin Miner Sales To Aid Second-Hand Sellers Following China Ban

The Bitcoin mining crackdown in China has significant ramifications for the cryptocurrency industry. Bitmain is stepping up its efforts to ease the burden on Chinese miners looking to offload their equipment in light of the ban.

Bitmain, the cryptocurrency infrastructure company behind the Antminer brand, will temporarily halt the sale of mining machines to help secondary sellers offload their supplies following China’s wholesale ban on Bitcoin (BTC) mining.

The suspension of new Antminer sales will begin immediately, Bitmain announced Thursday via WeChat. By suspending the sale of new mining devices, companies must resort to buying secondhand miners that previously belonged to Chinese mining rigs.

The “second-hand market is under great pressure,” Bitmain said, according to a Google translation of the announcement. “In order to help the industry transition smoothly, [Antminer] decided to temporarily suspend the global spot sales.”

Bitcoin miners have been in short supply for much of 2021, even as Bitmain raced to increase production during the cryptocurrency bull market. The supply-demand imbalance was felt across the industry as California chipmaker Nvidia limited the hash rate capacity of its new GeForce RTX 360 GPU, which was originally intended for gamers.

China’s crackdown on cryptocurrencies intensified this month as lawmakers extended their Bitcoin mining ban to the province of Sichuan. By Sunday, over 90% of China’s Bitcoin mining capacity was expected to be shut down, according to Global Times, a publication backed by the ruling Communist Party.

China, which used to control roughly two-thirds of the total Bitcoin mining hashing power, has been tightening the grip on the cryptocurrency industry since at least 2017 when the government imposed bans on trading. Although Chinese nationals have found various ways to circumnavigate the trading ban, miners have no such recourse due to the significant energy consumption associated with mining.

According to various reports, China’s mining crackdown is driving miners to more favorable jurisdictions, such as Texas. As Nikkei Asia reported Thursday, Shenzhen-based BIT Mining is planning a $26 million investment in the U.S. state, where it would join Bitmain in scaling up its Texas operations.

Updated: 6-25-2021

Bitcoin Miners Feed An Arms Race, Not A Commodity Boom

Mines are being taken offline, but that doesn’t change supply of the world’s premier cryptocurrency.

Bitmain Technologies Ltd.’s decision to stop selling Bitcoin mining machines amid a price drop highlights an oft-forgotten truth about the world’s premier cryptocurrency: The rate of supply is fixed.

Whereas opening a new copper mine would yield more of the metal being extracted from the earth, and vice versa, the same cannot be said for the digital currency. Instead, Bitmain halting the availability of new mining rigs — servers that calculate the complicated numbers underpinning Bitcoin — is more akin to a cessation of arms sales.

The Beijing-based company suspended shipments for immediate delivery (it also makes mining machines as part of long-term contracts) to help existing customers get a better price as many rush to sell into the secondary market for used equipment, Bloomberg’s Zheping Huang reported Wednesday.

This unusual move comes from a confluence of factors. Among them, the price of Bitcoin has dropped by 50% from its peak of more than $64,000 in April. Since miners get paid in Bitcoin, falling prices reduce the return on investment, a similar response to physical commodities.

And while the rigs themselves are capital expenditure, and thus a sunk cost, operating them also requires significant electricity, a variable cost. At some point, it makes more sense to close than keep paying electricity bills.

For many miners, though, ceasing operations wasn’t a financial decision. A renewed crackdown by Beijing, from mining to trading and payments, has sent a shudder through the sector.

Four years ago, regulators banned cryptocurrency exchanges from operating in China while also halting initial coin offerings — the release of new tokens used for fundraising. This time, the miners themselves are in the crosshairs. After direction from China’s State Council last month, local governments set about cutting power to the massive server farms used to mine Bitcoin.

One result of this upheaval has been a 75% plunge in the price of machines in the secondary market. There’s also been a big drop in the number of mines connected to the Bitcoin network, which can be estimated by tracking the hashrate that measures computing power deployed. This figure is down 39% from a peak in mid-May, according to data from Blockchain.com.

“We’re seeing a lot of those miners moving out of China to other places,” Zhao Changpeng, chief executive officer of crypto exchange Binance Holdings Ltd. told Bloomberg’s Tracy Alloway at the Qatar Economic Forum this week. “Some of them are sending mining equipment overseas.”

Whether the change in mining power is temporary or structural, the pace of Bitcoin mining won’t budge.

Thanks to the underlying structure of the Bitcoin protocol, the mathematical difficulty of the process gets readjusted every 2,016 blocks (which takes approximately two weeks), to ensure that the average time between the mining of each new Bitcoin block stays fixed at around 10 minutes.

This means that when more power is added, the difficulty escalates, and when rigs are pulled offline, it drops. As a result, the difficulty has fallen over 20% since the end of May and will likely dip further when the next adjustment is made around the end of June.

There’s a very real chance that many of the shuttered mines are never redeployed. Some use older technology that’s not as efficient as newer models, while many operators will struggle to find locations overseas able to offer the cheap electricity available in parts of China.

But more mines are still destined to come online because there are enough people who believe in Bitcoin, and what they see as an inevitable price rise, to make the financial calculations of owning mines seem worthwhile.

Colorado-based Riot Blockchain Inc., for example, has ponied up more than $145 million this year to lock in delivery of new Bitmain equipment that will be deployed in coming months. These machines will almost double Riot’s computing, measured as a hashrate. But rather than increase total Bitcoin supply, the company will merely shift the global balance of mining power a little in its favor.

There’s a comparison to be made with nation-states vying for international supremacy: It’s not the amount of munitions available that matters, but the relative size of their military war chests that gives either side an edge. A de-escalation can be undertaken without anyone losing much ground.

Rather than selling shovels in a gold rush, what Bitmain is really doing is more like supplying weapons in an arms race. A halt in selling rigs won’t stop Bitcoin being mined nor boost prices, but it may help cool competition for a while.

Updated: 6-26-2021

Why It Will Be Hard For China To Clamp Down On Bitcoin

Bitcoin’s founders wanted a decentralized system impervious to government control. Now they are facing their ultimate test: The People’s Republic of China.

Bitcoin’s price plunged 16%, then rallied most of the way back following a June 21 declaration from the Chinese central bank that cryptocurrencies “disrupt financial orders, breed criminal activity, and seriously infringe property safety.” Among other evils. That followed a sit-down where the country’s banks and payments systems promised to do better squeezing out crypto business.

Cracking down doesn’t mean stamping out, though. China first barred financial institutions from handling crypto in 2013, when it decided that Bitcoin lacked “real meaning.” In 2017 it closed crypto exchanges and outlawed “initial coin offerings,” sales of stock compensated by Bitcoin.

It broadened the banking ban this May, aiming to quash leveraged speculation as Bitcoin’s price soared.

“China’s position has been very clear and consistent from the beginning,” says Yan Xiao, project lead on digital trade at the World Economic Forum.

Also consistent has been crypto’s rising popularity with the Chinese population. “China has never gone so far as to make individuals holding and trading cryptocurrency illegal,” says Claire Wilson, a partner at Singapore-based consultant Holland & Marie. “They don’t want to criminalize something they can’t enforce.”

Chinese authoritarianism makes alternative currencies all the more attractive to its citizens. Strict capital controls make it hard to diversify wealth the usual way, with offshore accounts or real estate. Lack of rights against the state creates insecurity around domestic assets.

Until that changes, authorities will keep playing whack-a-mole with crypto. “All the banks promised not to support crypto-related transactions, but it’s hard to examine every transaction,” says Winston Ma, a global regulation scholar at New York University School of Law.

Beijing should have an easier time with the second front of its crackdown, reining in Bitcoin “mining,” which entails amassing supercomputers to solve fiendishly complex equations and being rewarded with fresh currency.

The energy involved has run afoul of China’s carbon-reduction targets, and power shortages that have shut down real factories this year. Producers could exploit loopholes here too, though, Ma explains. Mining operations could mask themselves within “digital infrastructure” projects, which the government is keen to promote.

Bitcoin is one area where China does not want to lead the world. It does anyway because its governance rather proves the founders’ point that a peer-to-peer currency can counterbalance national fiat. China’s experience also shows that states can quarantine Bitcoin.

The cryptocurrency lives on, but Chinese still can’t use it to buy a house, a plane ticket, or even lunch. The state’s lockdown will only tighten.“If they take out the banks, the individual on the street may think twice about owning Bitcoin,” consultant Wilson says.

The Free World, for all its differences with China, will likely treat cryptocurrency with similar caution, all the more so as other economies follow China’s lead in rolling out legal digital tender. “As countries launch their sovereign digital currencies, cryptos will be the losers,” Winston Ma predicts.

One more constituency is emerging to support constricted cryptocurrencies: the market. At least the institutional investors whose embrace of Bitcoin has tripled its price over the past year.

“The early endorsers were anarchists, but the Wall Street investors advocate regulation,” the WEF’s Xiao says.

Guess who will win that argument.

Updated: 6-27-2021

Bitcoin Miner TeraWulf To Merge With Nasdaq-Listed Ikonics

The new company will bear TeraWulf’s name and is expected to trade on Nasadaq under the ticker “WULF.”

TeraWulf – an environmental, social and governance-focused bitcoin mining company – is set for a Nasdaq listing after it agreed to merge with Ikonics, an imaging-technology company whose stock trades on Nasdaq.

* The two agreed to form a new holding company, an announcement Friday said.

* The new company will bear TeraWulf’s name and is expected to trade on Nasdaq under the ticker symbol, “WULF.” Paul Prager, chairman and CEO of TeraWulf, will hold the same positions in the new company.

* Ikonics (NASDAQ:IKNX) investors will receive $5 in cash and one share in the new company for each share they hold. Ikonics stock closed at $11.30 on Thursday.

* They will also receive one contingent value right (CVR). The CVRs, which won’t be publicly traded, entitle them to 95% of the proceeds from a sale of Ikonics’ imaging business and will expire after 18 months.

* TeraWulf aims to mine bitcoin with over 90% zero-carbon energy. It has more than 60,000 mining machines on order, giving it 50 megawatts of mining capacity. It expects that to grow to 800 MW by 2025, enabling a hashrate of more than 23 EH/s, which means the machines will be able to compute more than 23 quadrillion calculations per second.

* As of Thursday, Ikonics had a market cap of $22.3 million.

Updated: 6-28-2021

Iranian Trade Ministry Issues 30 Crypto Mining Licenses

Tehran Province, which houses Iran’s capital, was awarded only one license to operate a crypto mining center.

Iran’s Ministry of Industries, Mining and Trade issued operating licenses for 30 crypto mining centers in the country, the country’s Financial Tribue reported last Wednesday.

Citing data from the ministry’s website, the report says that Iran’s Semnan Province received the most licenses, with six crypto mining farms now authorized to operate in the region.

Alborz Province secured four such licenses, followed by Mazandaran, East Azarbaijan and Zanjan Provinces. Tehran Province, which houses the country’s capital, reportedly received only one license to operate a crypto mining center.

The ministry also issued 2,579 establishment permits for new industrial crypto mining units across the country, with 305 of them secured by Zanjan Province. Fars Province and West Azerbaijan follow Zanjan, with 262 and 247 permits, respectively.

According to the report, an operating license is mandatory for Iranian companies to start a legal crypto mining business. Eligible applicants should acquire establishment permits and set up their industrial unit within 12 months, and then apply for the operating license.

The report notes that cryptocurrency mining is legal in Iran, as miners are allowed to operate under rules approved by the government in July 2019. Despite the legal status of crypto mining in Iran, the government is actively fighting illegal crypto miners due to increasing pressure on the national power grid.

According to the report, authorized crypto mining companies are required to pay much higher energy costs for mining cryptocurrencies like Bitcoin (BTC) than are residential or other commercial customers.

The ministry did not immediately respond to Cointelegraph’s request for comment.

The news comes after Iranian President Hassan Rouhani announced in late May a blanket ban on Bitcoin mining in the country until September as a measure to alleviate pressure on the national power grid.

Subsequently, last Tuesday, Iranian provincial police confiscated more than 7,000 mining rigs at a farm operating in the capital of Tehran. The crypto mining farm was referred to as the largest, most significant drain on the country’s energy usage.

According to the Iran Power Generation, Distribution and Transmission Company, more than 188,000 units of crypto mining equipment have been seized over the past 12 months. These devices reportedly resulted in 180 trillion rials ($4.2 billion) in losses to the national grid and power distribution equipment.

Updated: 6-29-2021

Chinese Hydropower Plants On Sale As Crypto Miners Move Abroad

Advertisements for small-scale hydro plants have reportedly surged on Chinese secondhand e-commerce platforms.

Small-scale hydroelectric plants in China are reportedly looking for new customers as crypto miners go abroad amid a nationwide crackdown on mining activity.

According to the South China Morning Post (SCMP), advertisements for small-scale hydro plants with 50-megawatt capacity have surged on Chinese secondhand e-commerce platforms such as Xianyu.

According to the SCMP, some sellers claimed that their listings were unrelated to the cryptocurrency mining industry, while others said that their bids came as a result of the recent crackdown on crypto mining.

One seller reportedly said that small dams rely on crypto miners for a customer base because they have not obtained approval from state authorities and environmental protection agencies to connect to the power grid.

“You can secretly mine cryptocurrency if you buy a hydropower station,” one seller told the SCMP.

The news comes as Chinese Bitcoin (BTC) miners are capitulating or relocating their operations to other countries. Bitmain, the largest crypto mining equipment provider in the world, reportedly halted global spot sales for its new crypto miners last week in order to avoid losses by customers amid massive selling on the secondary market.

A number of key industry players including Bitmain’s rival Canaan and major mining pool BTC.com have been relocating operations to more crypto mining-friendly countries such as Kazakhstan.

Meanwhile, the price of GPUs in the mainland has dropped dramatically. Some reports found that this was a result of decreased demand from cryptocurrency miners. Asus’ RTX 3060 card was reportedly selling for $730 earlier this month, down from its peak price of $2,100 in May on JD.com-operated online retail site Tmall.

Active Bitcoin Miners Now ‘Unlikely’ Sellers Thanks To Profit Boost — Data

The upcoming record difficulty drop means mining Bitcoin is about to get a lot more profitable, while the hash rate slowly returns to the network, Glassnode predicts.

Bitcoin (BTC) miners are “unlikely” to pressure BTC price by selling coins in the coming weeks, new data says.

As part of its latest weekly report, “The Week On-chain,” analytics resource Glassnode sought to allay fears of another large miner sell-off.

Difficulty Drop A Gift To Remaining Miners

Amid the ongoing transfer of mining equipment — and, therefore, Bitcoin’s hash rate — out of China, fears have emerged over miners selling BTC to cover costs and liquidations.

Given the magnitude of the geographical changes — the China rout marks the largest hash rate shake-up in history — miners could compound selling pressure by disposing of coins that may not otherwise have moved in a long time.

The combined impact of selling and the reduced hash rate offers a “double whammy” for Bitcoin’s price action, reducing the potential for gains or even maintaining significant support levels.

For Glassnode, however, the situation appears to be already under control. Miners are in transit, it notes, and those still online face a giant windfall.

This is because later this week, Bitcoin’s difficulty will drop by almost 25% — again, the biggest move down ever — meaning it will be more profitable to mine Bitcoin for the remaining miners.

As such, there should be less incentive to sell, as network participants will be in an upward spiral of profitability until the missing hash rate returns and difficulty increases.

“The Bitcoin mining puzzle is 23.6% harder despite revenues being up 154% on a 7-day average basis,” the report explains.

“Since a very large proportion of hash-power is currently offline and in transit, and the next difficulty adjustment is estimated to be -25%. As such, miners who remain operational are likely to become even more profitable over the coming weeks, unless price corrects further or migrating hash-power comes back online.”

Glassnode added that miners are more likely to be liquidating coins amassed over time as part of the move.

“This largely indicates that miners who are in operation are unlikely to exert excessive compulsory selling… and thus it is more probable that Chinese miners liquidating treasuries is the dominant sell-side source,” it concluded.

Costing Opportunities

A separate source, meanwhile, highlighted just how profitable mining could be under current circumstances.

Using data that puts Bitcoin’s energy usage at around 2,520 gigawatt-hours per two-week difficulty period, writer Hass McCook underscored the 75% profit opportunity open to miners with specific operating and capital expenditure.

If it costs at the most $20,000 to mine 1 BTC, the difference between that expenditure and spot price, which was $34,500 at the time of writing, is plain.

“So if the cost to mine a coin is about $20k in the absolute worst of cases (probably closer to $13-14k for the professional shops now), how hard would you work right now to capture the 75%+ profit available to you…?” McCook concluded.

Updated: 6-30-2021

China Crackdown Shows Industrial Bitcoin Mining A Problem For Decentralization

The great hash rate plunge caused by an exodus of miners from China shows large scale Proof-of-Work mining facilities are vulnerable to regulation.

Bitcoin’s reliance on large-scale mining infrastructure and geographic concentration has been thrown into sharp relief by China’s recent mining crackdown. In May, China announced that it would be getting tough on crypto mining and trading as a response to financial risks.

The nation’s crackdown on crypto is not new, rather it’s a reiteration of previous standings on the risks of digital currency to economic stability, in response to recent price fluctuations.

For the first time, cryptocurrency miners are being targeted to enforce the existing guidelines. Mining hardware still presents a potential risk, even if mining moves to other locations.

This could prove that the Ethereum blockchain’s switch to proof-of-stake (PoS), which can run on consumer-grade equipment, is a more reliable path to decentralization and offers greater resilience against such risks.

Bitcoin (BTC) mining is reliant on large-scale, industrial cryptocurrency mining farms and has been largely concentrated in China, which accounts for 65% of the global hash rate. The manufacture of custom hardware in China has supported this trend, with one in two ASIC miners produced being distributed to Chinese miners. The crackdown has caused significant turmoil in Bitcoin markets.

The Bitcoin network’s hash rate has dropped to a 12-month low, with more provinces directing miners to shut down.

Uncertainty about what may happen with confiscated mining hardware has hit the overall network hard.

This is a massive loss to what was a multi billion-dollar industry for Chinese miners.

China’s policy position on Bitcoin seeks “financial stability and social order” and is possibly the result of geopolitical interests related to the desire to remove competitors to its own national digital currency, the digital yuan, in addition to its stated goals of lowering carbon emissions and redirecting energy toward other industries.

The swift crackdown has shown that Bitcoin’s reliance on industrial-scale mining farms, hardware supply chains and electricity — all of which are reliant on government policies — may be its Achilles’ heel.

Miners are now seeking to migrate to cool climates, cheap energy and “crypto-friendly” jurisdictions. This may open up healthy competition for other crypto-friendly policy positions in other jurisdictions to attract industry participants — as we’ve seen, for example, with Wyoming’s embrace of legislation friendly to decentralized autonomous organizations and crypto in general. Yet, it is unclear whether moving the hardware will keep it out of the reach of policy crackdowns.

Are We Decentralized Yet?

Hardware has always been a major vulnerability in decentralized infrastructure. In blockchain-based cryptocurrency networks that run on a proof-of-work (PoW) consensus algorithm, such as Bitcoin, the commonly agreed record of transactions relies on a distributed network of computers.

This is vulnerable to structural exploitations, including concentration of hardware mining in industrial-scale factories in certain geographies (such as China), “premining” cryptocurrency with upgraded hardware that is not yet available to the broader market (such as new model ASICs), or supply chain delays.

Having a majority of hashing power concentrated in one country, reliant on expensive hardware setups, and subject to regulatory crackdown is antithetical to the “decentralized” ethos of Bitcoin that was outlined by Satoshi Nakamoto.

The initial vision of Bitcoin in its white paper was a peer-to-peer system, whereby infrastructure could be run by individuals on a general-purpose computer in a distributed way (via CPU mining), so that the entire network could not be shut down by targeting a single point of failure.

This may also show why Ethereum’s move to PoS consensus is important — and why it has the potential to be more reliable and decentralized in the long term. Attacking a PoS network is more costly in time and money than the cost of hiring or buying hardware to attack a PoW blockchain, as an attacker’s coins can be automatically “slashed.”

Furthermore, it is much less conspicuous to run a PoS validator node on a laptop than it is to run a large-scale hardware mining operation. If anyone can run a node from anywhere with consumer-grade equipment, then more people can participate in validating the network, making it more decentralized, and regulators would find it almost impossible to stop people from running nodes. In contrast, the huge energy-consuming factories found in Bitcoin mining are much more easily targeted.

What’s Happening To The Hardware?

Mining is on the move, with miners moving their hardware to nearby areas, including Kazakhstan and Russia.

Some crypto-friendly jurisdictions — such as Texas, which is offering legal clarity for companies — are racing to attract miners.

Hardware is also on sale, with logistics firms reporting thousands of pounds of mining machines being shipped to the United States to sell.

Although China’s policy has caused some fear, uncertainty and doubt in the market, it may help to remove structural vulnerabilities from the network, which is why some Bitcoin supporters have welcomed the crackdown. The aim here for Bitcoiners is long-term decentralization. Yet, moving hardware is not the same as further decentralizing the network and removing vulnerabilities to regulatory crackdowns on miners.

Moving Hardware Vs. Removing Vulnerabilities

Hardware is a hard problem in decentralized networks. Bitcoin’s requirement for large-scale infrastructure has made it vulnerable to the policies and politics of countries like China.

Even if mining moves elsewhere, it may not be decentralized, meaning it could come under threat in other jurisdictions in a way that PoS networks relying on software that can run on a standard laptop likely will not.

These events demonstrate the interdependencies between blockchains and nation-state politics and interests.

How jurisdictions respond to the opportunity to attract hardware mining, along with how they approach blockchains that are transitioning to PoS, will have significant implications for the structure and risks to blockchain networks in the long term.

Hut 8 Buys $44M Worth of Miners, Doubling Its Hashrate

The purchase will bring the company 11,090 new miners from SuperAcme Technology.

Canadian crypto-mining company Hut 8 Mining will almost double its hashrate by the end of the year with the purchase of 11,090 new miners for $44.4 million, the company said in a press release today.

The purchase comes on the heels of a $82 million fundraise that the company said would help expand its crypto mining capacity.

The machines are MicroBT M30S, M30S+, and M31S miners from Hong Kong-based SuperAcme Technology. They’re expected to be delivered in October and fully deployed by December.

The extra capacity is set to push Hut 8’s hashrate to 2.5 exahashes per second (EH/s), increasing Hut 8’s current average production from 6.5-7.5 bitcoins mined a day to 14-16 bitcoins a day.

Blockware Raises $25M To Expand Bitcoin Mining Operations In Kentucky

The mining firm will use the funding to buy 14,000 rigs – 8,000 for itself and 6,000 to sell.

Blockware has raised $25 million as North American bitcoin mining looks to seize the moment.

Blockware founder and CEO Michael Stoltzner declined to name entities involved in the funding round, but told CoinDesk the list of investors included several “prominent” individuals and crypto funds. This round brings Blockware’s total capital raised to date to $32 million since its launch in 2019.

The money will be used to purchase 14,000 mining rigs over the next two years, which Blockware has sourced from both Bitmain and the open market. The company will use 8,000 of the rigs to build out its new mining facility in Paducah, Kentucky, and will sell 6,000 rigs to other U.S.-based bitcoin mining operations.

Stoltzner said he chose Paducah for Blockware’s first large-scale mining facility because the city had everything he was looking for: friendly government officials, plenty of skilled and unskilled labor and, most importantly, cheap energy.

The Paducah facility will be built on land that is 100 yards from the Big Rivers Electric-operated energy source that will power Blockware’s rigs.

The Chinese government’s crackdown on mining operations has caused many to shut down, and bitcoin’s hashrate has plummeted in response. The situation has caused many in the crypto community to call for a more global, decentralized mining structure to reduce the network’s reliance on Chinese miners. Miners have also been under increased scrutiny in recent months as bitcoin’s sustainability debate, led by unofficial crypto figureheads like Elon Musk, rages on.

Power Mix

Stoltzner said the company chose to source power from Big Rivers Electric because the company used a mix of renewable and non-renewable sources, including hydroelectric, wind and coal.

“Kentucky is the largest coal-producing state in the country,” Stoltzner said. “That’s the resource they have. It’s a tough argument, and people in Kentucky feel different about that argument than people in California.”

Stoltzner said Blockware is working on a program to purchase carbon offsets and is in the early stages of joining the Michael Saylor-led Bitcoin Mining Council.

According to Stoltzner, Blockware’s smaller-scale mining operations in Upstate New York, Washington and Newfoundland, Canada, are almost completely run on hydroelectric power.

Ensuring the sustainability of North American bitcoin mining is part of Stoltzner’s larger stated goal of increasing the bitcoin hashrate in North America, which currently only accounts for an estimated 10% of the hashrate worldwide.

Bitcoin must be mined domestically in order to fully go mainstream in North America, Stoltzner said.

“What we’ve seen coming out of China and Eastern Europe – that’s not helping to legitimize bitcoin in the industry,” Stoltzner said. “I believe that companies operating out of the United States are very much legitimizing crypto and bitcoin. It’s got to happen out of the United States.”

Updated: 7-2-2021

Greenidge Generation To Expand Bitcoin Mining With South Carolina Plant

Two-thirds of the electricity at the site is sourced from zero-carbon sources such as nuclear power.

Greenidge Generation said it plans to expand its bitcoin mining operations by adding a facility in Spartanburg, South Carolina. It already has an operation in New York.

* Mining at the site, previously a printing plant, will start later this year or early 2022.

* Greenidge Generation said it is committed to “environmental leadership” in cryptocurrency operations, and two-thirds of the electricity at the site is sourced from zero-carbon sources such as nuclear power.

* It plans to lease the site for 10 years from LSC Communications, an Atlas Holdings company.

* “This is an important step in Greenidge’s strategy to build upon our unique expertise in environmentally sound bitcoin mining at additional locations across the country,” CEO Jeff Kirt said.

Updated: 7-4-2021

Bitcoin Mining Difficulty Just Fell By A Record 28% — But Will This Help BTC Price Recover?

The ratio of Bitcoin price to hash rate presents bulls with a long wait, as hash rate is still migrating.

Bitcoin (BTC) has recorded its biggest mining difficulty drop of nearly 28% on July 3, but one model suggests that the BTC price will not bottom until October.

In a series of tweets on July 2, investment manager Timothy Peterson flagged the relationship between Bitcoin price and hash rate as arguable evidence that the dip is not over.

Hash Rate Model: Long Road Ahead To Bitcoin Bottom

Bitcoin mining difficulty dropped by an estimated 27.94% on Saturday at block height 689,472, the biggest in its history.

As Cointelegraph previously explained, the drop is in response to the ongoing miner migration out of China and the subsequent loss of hash rate.

For miners still at work, the decrease will be something of a profit boost — difficulty automatically accounts for changes in hash rate, making it more attractive to mine when it drops.

Miners in flux are not expected to return to their craft completely for several months. In that time, difficulty will likely increase again as hash rate goes up — more competition and more power competing for the same set reward.

It is a classic mantra among Bitcoiners that “price follows hash rate” — but if that is true, one model charting the phenomenon is painting a sobering picture of future price behavior.

Peterson noted that the relationship between price and hash rate is “useful” when it comes to marking macro price tops.

An accompanying chart shows spikes in 2013 and 2017, corresponding to tops which held for an entire four-year halving cycle.

2021 looks similar, but since the May capitulation, the relationship has been trending towards 1 — the point at which the Bitcoin price should have fully “corrected.”

“Based on the current trend in P(h), this bubble would finish collapsing by 31 October,” Peterson summarized.

“The ratio includes any combination of a higher hash rate and lower price. So increasing hash rate and stable price also resolves the bubble.”

In other words, the return of miners is likely to prevent further price dip episodes of the magnitude seen recently, but bulls may still need to wait longer than desirable to see higher levels return.

An important caveat came from Peterson, who cautioned that there are “many things wrong” with such a simple model, and that he himself does not use it.

Pick Your End-Of-Year Price Showdown

The model is not the only source catering to a return to form for Bitcoin in the latter half of the year.

As Cointelegraph reported, analysts have likened 2021 to both previous top years, these seeing a first local price peak, a correction then a surge to the ultimate top later on.

After BTC/USD posted its third consecutive monthly red candle, meanwhile, the stock-to-flow price model echoed the start of 2019, just after the pit of Bitcoin’s last major bear market.

The next six months, creator PlanB says, will be critical for its utility.

Updated: 7-5-2021

China Crypto Ban A ‘Huge Opportunity For Canada,’ Mining Group Head Says

The diversified location of Bitcoin mining facilities following China’s crackdown is great news for the rest of the world, iMining CEO Khurram Shroff says.

China’s regulatory crackdown on cryptocurrencies continues to alienate major miners. Dubai-based investment company IBC Group reportedly plans to end Bitcoin (BTC) and Ether (ETH) mining operations in China following ban announcements from the different provinces across the country.

The group has major mining operations in China and plans to distribute its operations to the United Arab Emirates, Canada, the United States, Kazakhstan, Iceland and various South American countries, according to sources. IBC Group recently relocated its headquarters to Toronto, Canada.

Commenting on the crackdown on crypto with a focus on mining activities, IBC Group chairman and iMining CEO Khurram Shroff said it’s a temporary inconvenience. He added that the diversified location of mining facilities is great news for the rest of the world:

“A shift of crypto mining operations out of China will be a huge opportunity for Canada. The Toronto Stock Exchange recently listed the world’s first Bitcoin ETF, so the nation is already ahead of the curve, in terms of mainstreaming cryptocurrencies.”

China turned its attention to the crypto mining industry’s energy consumption following the large-scale power outages in the Chinese mining hub of Xinjiang in mid-April. This was followed by stricter supervision by the government, sending a shockwave through the crypto markets.

However, experts from the industry have mostly agreed since then that while the initial shakeup will be arduous and challenging, miners’ migration out of China will nurture the decentralization of crypto.

Galaxy Digital’s Mike Novogratz saw “a big net positive” for the Bitcoin ecosystem for the long term, while former Gemini security engineer Brandon Arvanaghi stressed, “The crackdown means that Bitcoin is working, not that it’s failing.”

Updated: 7-5-2021

Startups Race Microsoft To Find Better Ways To Cool Data Centers

Nonconducting liquids show promise in replacing expensive and wasteful air conditioning. Startups Race Microsoft To Find Better Ways To Cool Data Centers

All those videos, emails, bank statements, photos, shopping carts, airline reservations, and so, so, so much more sluicing around the internet eventually end up in the millions of data centers scattered across the globe. With all that stuff coming and going, those places are getting crowded—and hot. David Craig can’t do much about the congestion, but he says he’s got a fix for the heat: A liquid that bathes the cores of processors to keep things at a relatively chilly 50 degrees Celsius (122 Fahrenheit).

“As we process much more data, the chips are becoming three, four, five times hotter,” says Craig, chief executive officer of Iceotope Technologies Ltd., a U.K. startup focused on cooling strategies for computing.

Data centers consume 2% to 4% of the world’s electricity, and almost half of that power goes to cooling, according to the Uptime Institute, a consulting firm in Seattle. Early on, most data was kept on-site at the banks, universities, or corporations that generated it, where cooling often meant little more than opening the window. Today, a growing share of the world’s data is consolidated in megacenters with thousands of processors, and the vast majority of them use traditional air conditioning.

While some heat is good for computers, too much can cause systems to crash, and with each generation of computer chips running faster and hotter, the systems will soon be too hot for even the most efficient air conditioner. Finding better ways to keep temperatures down could save the industry some $10 billion a year on electricity alone, according to Uptime. “Air just isn’t a very effective medium for transferring heat,” says Rabih Bashroush, global head of IT advisory services at Uptime.

The market for equipment used to cool computer gear hit $10.5 billion in 2019 and is growing 13% a year, according to Allied Market Research, sparking a race among companies ranging from startups such as Iceotope to the likes of Facebook, Google, and Microsoft. Newer strategies focus mostly on liquid technologies, including circulating specially formulated fluids through tubes, submerging processors in the stuff, and even building data centers under the sea.

Market researcher PitchBook reports that venture capital investment in data-center-cooling startups more than doubled last year, to $34 million. “Liquid cooling can provide more service in less space,” says Arman Shehabi, a research scientist at Lawrence Berkeley National Laboratory who studies power consumption in computers.

Microsoft Corp., which runs more than 200 data centers globally, is testing systems in which servers are bathed directly in a fluid that doesn’t conduct electricity. It estimates liquid cooling could allow it to fit 10 times as much computing power in the same space. “We’re just starting down the liquid path,” says Christian Belady, chief of the unit that develops technology for data centers. “You’re going to see a lot of rapid change in how we do things.”

At least a dozen smaller startups have joined the fray. Spain’s Submer Technologies SL sells sealed pods that are filled with servers bathed in a nonconducting liquid and can be plugged directly into a network. The company says the excess heat can be used to warm nearby buildings, and the technology extends the life of the computer because no dust reaches the processor.

Netherlands-based Incooling BV uses a fluid that gets boiled into a gas by the processors before being cooled back into a liquid and recirculated, which the company argues is the most efficient way to absorb heat. “We’re able to maximize the potential of every component,” says co-founder Helena Samodurova.

Iceotope, based in Sheffield, a three-hour drive north of London, has raised more than $10 million from venture capital backers since its founding in 2005. It initially sought to manufacture its own cooling systems, but about five years ago it shifted to developing the underlying technology. Iceotope is raising another round of funding from strategic investors that it expects will give it better entrée to more customers, and last year it opened an office in the U.S., aiming to expand its business there.

Although the company had less than £10 million ($14 million) in 2020 sales, Craig says he aims to at least double revenue this year as partnerships with computer manufacturer Lenovo Group Ltd. and some smaller companies start to bear fruit. “The market is getting hot, fast—no pun intended,” he says. “If we don’t deal with cooling efficiently, we’ll be in real trouble.”

BOTTOM LINE – Data centers consume as much as 4% of global electricity, almost half of that for cooling. Better ways to keep temperatures down could save the industry $10 billion a year.

Updated: 7-7-2021

Bitcoin Miners Like Compass Thwarted by Data Center Crunch

Now’s a great time to get into Bitcoin mining. That is, if you can find a place to plug in.

A crackdown in China has taken out a vast number of machines in the global network used to perform the calculations that verify transactions and create new Bitcoins. Now profitability for miners has surged as the amount of energy needed to solve for a Bitcoin block plummets.

That’s great if your equipment is already up and running. But the hunt for space in Bitcoin-friendly data centers has become so frenzied that bounties are being offered for referrals leading to new homes for stranded miners.

Christian Kaczmarczyk, a principal at venture capital firm Third Prime, said some Chinese miners are willing to pay substantial premiums above the ideal operating rate of less than five cents per kilowatt-hour.

“People are paying an arm and a leg to find hosting right now,” Kaczmarczyk said. “These miners from China are willing to pay 6, 7, 8, 9 cents to get in the game. They’ll pay whatever.”

The creation of new hosting facilities has long failed to keep pace with mining companies that are feverishly adding equipment to their arsenals. But what had been a persistent mild ache is becoming an excruciating pain. Getting the needed materials such as electrical transformers and switches has been complicated by disruptions in the global supply chain. Strict regulations for tapping into power grids means build times that can drag on for years.

The flood of displaced miners looking to relocate to the U.S. after China’s crackdown is exacerbating the crunch.

“Machines are no longer the bottleneck,” said Meltem Demirors, chief strategy officer at CoinShares. “Hosting facilities are. You just can’t build a massive co-location data center in a few months.”

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Chinese miners are in a mad dash because of what their being off line has wrought: Profits are surging.

The difficulty level of solving a Bitcoin block is adjusted about every two weeks to keep the average processing time at 10 minutes. Based on the amount of computing power flowing through the network, which has dropped following China’s crackdown, the latest adjustment brought the difficulty down to a level last seen when the digital currency traded around $9,000 in June 2020.

That means for the same amount of work put in at this time last year, the miner who wins a block reward will collect coins worth more than three times what they were valued at back then.

“The people with machines online now are in for a treat,” said Zack Voell, director of research and content at Compass Mining.

“Chinese miners are not only scrambling to get back online, but they’re now missing out on this huge economic incentive to mine.”

And that huge incentive will only further aggravate the crunch for space. Older computers like the Antminer S9 ASIC that were nearing obsolescence as solving Bitcoin’s puzzle got harder and harder are now gaining a second life, according to Jason Les, the chief executive officer of mining company Riot Blockchain Inc.

“Market conditions are such that the older generation of mining hardware is still profitable,” Les said. “You’d normally expect those older models to come off line, but if you have low enough energy costs the S9 is profitable today.”

Chinese miners may eventually face the tough decision of waiting for the government to have a change of heart, or sell their machines at a time when the market is already inundated.

“There’s limited hosting space and it’s such a concern that about 30% of the Chinese miners are just throwing up their hands and capitulating,” said Mason Jappa, the chief executive officer of crypto mining hardware broker Blockware Solutions.

“They’re selling rigs for 2020 prices.”

For those willing to navigate the complexities of getting machines out of China, the crackdown and lack of hosting capacity could create an ideal backdrop for distressed deal making.

“Ultimately a lot of this short-term mania will provide some very strategic opportunities for more efficient miners down the road,” said Third Prime’s Christian Kaczmarczyk. “You’ll see some strategic buyouts and private equity like deals.”

How long the data center crunch will last is unclear at this point, but Compass Mining’s Voell thinks it could be six months or more before new facilities can be brought online to absorb the excess capacity.

This may surprise you, but you can’t plug an ASIC into a volcano. And you can’t throw one at an oil rig.

Building more hosting infra takes time, and there was already a serious shortage before China’s crackdown flooded the market with homeless ASICs.

This won’t resolve quickly

— Zack Voell (@zackvoell) June 29, 2021

“The shortage that existed before just got blown out of the water,” said Zack Voell. “There’s absolutely no way all these ASICs will find space and be back online before the end of this year. The problem just got five-times worse.”

Updated: 7-22-2021

How To Set Up A Bitcoin Miner

While bitcoin mining is dominated by large companies with huge warehouses full of equipment, it’s still possible for individuals to successfully mine as part of a pool.

By this stage, you will understand how bitcoin works, and what mining means. But we need to get from theory to practice. How can you set up bitcoin mining hardware and start generating some digital cash? The first thing you need to do is decide on what hardware you’re going to use. There are two main things to think about when choosing it:

* Hashrate: This is the number of calculations your hardware can perform every second as it tries to beat the target hash described in a previous section. Hashrates are measured in megahashes, gigahashes, terahashes, and exahashes per second (MH/sec, GH/sec, TH/sec, and EH/sec). The higher your hashrate (compared to the current average hashrate), the more likely you are to solve a transaction block. The Bitcoin wiki’s mining hardware comparison page is a good place to go for rough information on hashrates for different hardware.

* Energy Consumption: When choosing your hardware, it’s worth looking at the device’s energy consumption. Bitcoin mining rigs have a healthy appetite for electricity, and that costs money. You want to make sure you don’t end up spending all your money on electricity to mine coins that won’t be worth what you paid.

To work out how many hashes you’re getting for every watt of electricity that you use, divide the hash count by the number of watts shown in the technical specifications of the hardware.

For example, if you have a 500 GH/sec device, and it’s taking 400 watts of power, you’re getting 1.25 GH/sec per watt. You can check your power bill or use an electricity price calculator online to find out how much that means in hard cash.

There are three main hardware categories for bitcoin miners: GPUs, FPGAs, and ASICs. We’ll explore them in depth below.

CPU/GPU Bitcoin Mining

The least powerful category of bitcoin mining hardware is your computer itself. Theoretically, you could use your computer’s CPU to mine for bitcoins, but in practice, this is so slow by today’s standards that there isn’t any point.

You can enhance your bitcoin hashrate by adding graphics hardware to your desktop computer. Graphics cards feature graphical processing units (GPUs). These are designed for heavy mathematical lifting so they can calculate all the complex polygons needed in high-end video games. This makes them particularly good at the Secure Hash Algorithm (SHA) – or SHA-256 in Bitcoin’s case – hashing mathematics necessary to solve transaction blocks.

One of the nice things about GPUs is they also leave your options open. Unlike other options discussed later, these units can be used with cryptocurrencies other than bitcoin. Litecoin, for example, uses a different proof-of-work algorithm to Bitcoin, called Scrypt.

This has been optimized to be friendly to CPUs and GPUs, making them a good option for GPU miners who want to switch between different currencies. However, similar to bitcoin mining, ASICs now dominate the litecoin mining landscape.

CPU and GPU mining are no longer viable these days. Bitcoin’s mining difficulty has accelerated so much with the release of ASIC mining power that simple graphics cards can’t compete.

FPGA Miners

A Field Programmable Gate Array (FPGA) is an integrated circuit designed to be configured after being built. This enables a mining hardware manufacturer to buy the chips in volume, and then customize them for bitcoin mining before putting them into their own equipment. Because they are customized for mining, they offer performance improvements over CPUs and GPUs. Single-chip FPGAs have been seen operating at around 750 MH/sec, although that’s at the high end, although manufacturers could put more than one chip on a board.

They were a significant upgrade over CPU and GPU mining at the time. However, today FPGAs are no longer competitive in bitcoin mining due to their low performance.

ASIC Chips

This is where the action is. Application Specific Integrated Circuits (ASICs) are specifically designed to do just one thing: mine bitcoin at mind-crushing speeds as efficiently as possible. Because these chips have to be designed specifically for that task and then fabricated, they are expensive and time-consuming to produce – but the speeds are stunning.

At the time of writing, units are selling with speeds anywhere from 7-14 Terahash/second (1 Terahash = 1 trillion hashes.) It will be interesting to see if there is more progress to be made past the 14 TH/sec point.

Before making your purchase, calculate the projected profitability of your miner, using mining profitability calculators online like this one. You can input parameters such as equipment cost, hashrate, power consumption and the current bitcoin price to see how long it will take to pay back your investment.

One of the other key parameters here is network difficulty. This metric determines how hard it is to discover new blocks, and varies according to the network hashrate. The difficulty is likely to increase substantially as ASIC devices come on the market, so it might be worth increasing this metric in the calculator to see what your return on investment will be like as more people join the game.

You may well need mining software for your ASIC miner, too, although some newer models promise to ship with everything pre-configured, including a bitcoin address so that all you need to do is plug it in the wall.

Now, you’re all set up. Good for you. But chances are you won’t stand much chance of successfully mining bitcoin unless you work with other people, by joining a bitcoin mining pool for example. Nowadays, the bitcoin mining industry primarily operates on a pool level rather than on an individual level. Some of the biggest bitcoin mining pools in the world right now are F2Pool, Poolin, Binance Pool and AntPool.

Updated: 8-19-2021

JPMorgan Chase Reportedly Shuts Down Bank Accounts Of Compass Mining

Delaware-based Compass Mining offers U.S. citizens exposure to Bitcoin mining via its private infrastructure.

American banking giant JPMorgan Chase has reportedly blocked all account activities of Compass Mining, a Bitcoin (BTC) mining company based out of Delaware. The information came to light when Compass Mining CEO Whit Gibbs announced:

“Shoutout to Chase for shutting down Compass Mining accounts for doing our part to replace the old guard with self-sovereign, future-focused supporters of hard money. Get behind #Bitcoin or get out of our way.”

Compass Mining has been involved in offering mining rigs and hardware hosting services for Bitcoin mining. Under the pretext of supporting the Bitcoin hash rate and network, the company allows individual users to undertake mining operations via its private infrastructure.

Cointelegraph has reached out to both parties for further comments and will update this article should they respond.

JPMorgan has previously shown support to the crypto ecosystem — all the way from seeking blockchain talent to allowing wealthy investors access to crypto funds.

On Aug. 6, in an effort to offer crypto exposure to clients, JPMorgan allowed access to six crypto funds in a span of three weeks. This move has now exposed traditional investors to a Stone Ridge Bitcoin Strategy Fund that intended to strategize around Bitcoin futures contracts and pooled direct and indirect Bitcoin investment.

Last month, Mary Callahan Erdoes, director of asset and wealth management at JPMorgan, highlighted the importance of meeting the demand for crypto investments. “A lot of our clients say, ‘That’s an asset class, and I want to invest,’ and our job is to help them put their money where they want to invest,” she said.

Updated: 7-9-2021

Korean Professor Uses Bio-Waste To Mine Crypto

Students in a South Korean college are earning crypto mined from the energy generated from their excrement.

“Shitcoin” may no longer be solely a term used to describe altcoin projects with questionable value propositions, as one South Korean university professor has taken the term to a more literal dimension.

Cho Jae-weon of the National Institute of Science and Technology in Ulsan, South Korea, has created an eco-friendly toilet system that produces fertilizer and energy from human excrement.

Jae-weon, a professor of urban and environmental engineering, said the toilet system incorporates a vacuum pump that redirects human waste into an underground tank to produce biogas (methane).

The professor’s experiment is reportedly utilizing the biogas to power a university building, gas stoves and water heaters among other things.

“If we think outside of the box, feces has precious value to make energy and manure. I have put this value into ecological circulation,” the professor said.

Jae-weon’s experiment also has a digital currency component with a native token called Ggool, which is used to incentivize the adoption of the eco-friendly toilet. Students earn 10 Ggool per day if they use the toilet and use the digital money to buy coffee, bananas and even books on campus.

Detailing the viability of human excrement as a power source, the professor stated that the excrement produced by an average person could produce up to 0.5 kilowatt-hour of electricity, which is sufficient to power an electric vehicle for up to three-quarters of a mile.

Crypto mining stakeholders are moving toward more eco-friendly power sources, especially amid the current backlash from policymakers over the supposed carbon footprint of the process. The Bitcoin Mining Council estimates that 56% of Bitcoin mining is currently using sustainable energy sources.

US-based Bitcoin Miner Gryphon Buys 7,200 Rigs From Bitmain

Gryphon has doled out $48 million to buy Bitmain’s latest Bitcoin mining hardware set for release in the summer.

Gryphon Digital Mining has signed a purchase agreement with Bitcoin (BTC) mining equipment maker Bitmain to purchase 7,200 Antminer S19J Pro mining rigs.

According to a release issued on Thursday, the entire outlay for the mining inventory amounts to about $48 million. Starting in August 2021, Bitmain will deliver 600 mining rigs to Gryphon each month as part of the deal.

The Antminer S19J Pro is the latest iteration of Bitmain’s Bitcoin mining hardware slated for release into the market this summer. According to the release, each rig offers 100 terahashes per second (TH/s) hash rate capacity with an energy efficiency ratio of 29.5 joules per terahash. With 7,200 of these machines in tow, Gryphon will theoretically see its hashing power increase by a factor of 720 petahash per second (PH/s).

Achieving a hashing capacity of 720 PH/s — or 0.72 exahashes per second — will put Gryphon in the top 15 Bitcoin miners by hash rate distribution according to data from BTC.com. Such a milestone could be an added achievement for the American Bitcoin miner as it sets out to achieve 100% renewable energy-based operations.

Back in June, Brittany Kaiser, chair of the board of directors at Gryphon, told Cointelegraph that the company’s electricity source was 100% renewable. Kaiser also revealed that Gryphon will receive its ESG rating upon the launch of its mining hardware in August.

Crypto mining has come under increased scrutiny in recent months over energy consumption. Earlier in July, the Bitcoin Mining Council estimated that the global Bitcoin mining industry was running on a 56% renewable energy supply.

As previously reported by Cointelegraph, data from the Cambridge Bitcoin Electricity Consumption Index has shown that BTC’s electricity consumption is down almost 60% from the highs recorded in mid-May.

This decline is most likely due to Chinese miners going offline following a sweeping crackdown from the authorities in the country. Several establishments have been forced to relocate their hardware overseas.

Hydro Plant From 1897 Earns 3X As Much Mining BTC As Selling Power To The Grid

An historic renewable energy facility in New York has tripled its profits by mining Bitcoin.

New York’s Mechanicville Hydroelectric Plant — one of the oldest hydropower generation facilities in the United States — is now a host to Bitcoin (BTC) mining.

The plant is owned by Albany Engineering Corp (AEC), which was asked to restore it by the National Grid in 1986. Jim Besha Sr., CEO of AEC, noted that cryptocurrency mining offers triple the profit margins compared to selling electricity back to the grid:

“We think this is the oldest renewable energy facility in the world that’s still running. We can actually make more money with Bitcoin than selling the electricity to National Grid.”

Besha noted he is content to liquidate the BTC as it comes in, expressing skepticism regarding the crypto asset’s longer-term potential.

Despite the robust profit margins, Besha laments not selling his electricity to be used as power, but a decade of fighting with the National Grid has left him looking to alternative revenue streams.

When AEC was asked to restore the plant, a contract was signed with the National Grid guaranteeing it would purchase power from Besha for 40 years at a discounted rate. However, after AEC received licensing to operate independently in 1993, Besha claims the National Grid reneged on its deal, leading to a protracted legal battle.

After the facility incurred substantial damages from a flood, and later a generator catching fire, the National Grid agreed to give up the plant, pay for repairs, and purchase electricity from AEC at market value in 2003. Despite National Grid giving up its price discount, the profits from Bitcoin mining still dwarf what AEC can make by selling electricity.

AEC is not the first firm to repurpose a landmark of modern industry to generate cryptocurrency.

In 2018, Bitriver launched a data center in what used to be the world’s largest aluminum smelter in Siberia, which had been constructed by the USSR in the 1960s. The facility, which is now used to mine Bitcoin, is also situated near a major hydropower plant.

That same year, Coinmint announced it had signed a 10-year lease on a 1,300-acre plot of land in upstate New York that had once been used for aluminum smelting to host BTC mining hardware.

Updated: 7-12-2021

Green Energy-Focused Bitcoin Miner Hive Joins North American Mining Pool

Hive aims to take advantage of the East-to-West shift in Bitcoin mining power after regulators in China have renewed efforts to crack down on the industry.

Following its approval for a Nasdaq listing, Canadian Hive Blockchain Technologies has bought more than 3,000 Bitcoin (BTC) mining rigs to get involved in the Bitcoin mining shift from East to West.

Purchased from Digital Currency Group subsidiary Foundry Digital LLC, the 3,019 MicroBT M30S miners acquired as part of the deal are already located at Hive’s facilities in Lachute, Quebec and Grand Falls, New Brunswick. Foundry will be issued cash and 1.5 million warrants of Hive, according to an official announcement.

Hive’s new hash power will join the Foundry USA Pool, which includes Blockcap, Hut 8, Bitfarms and Foundry as participants.

Noting the massive migration of mining power from China to the United States and Canada, Hive executive chairman Frank Holmes said that the firm’s entry into a North American mining pool furthers the company’s goal of increased transparency and accountability with its partners.

“We are excited to have Hive as a partner for the Foundry USA Pool as we continue playing our part in securing the global bitcoin mining network,” Foundry CEO Mike Colyer added.

The announcement says that the addition of the new miners would add an aggregate hash power of 264 petahash per second (PH/s), increasing Hive’s overall Bitcoin operating hash rate by 46% to approximately 830 PH/s. Based on the current difficulty and Bitcoin’s price, the newly enhanced mining setup would generate an additional $80,000 in daily income for Hive.

Hive is known for its green energy-based mining efforts. The company has green energy-powered data center facilities in Canada, Sweden and Iceland. It recently sold its Norwegian operations due to legislative challenges.

Updated: 7-13-2021

Bitcoin Miners Navigate Extreme World of Crypto Power-Hunting

A crypto crackdown sent them in search of cheaper, greener power sources.

One weekend in late June, hundreds of gloomy Bitcoin miners crowded into a luxury hotel in Western China. They had a big problem: Just weeks earlier, the Chinese government banned cryptocurrency mining over concerns about illicit coal mining and underlying financial risks. Now they had to figure out how to move millions of computers out of the country.

The miners sat in rows of white chairs in a hall at the Gran Melia Chengdu Hotel and listened intently to the executives at Bitmain Technologies Ltd., the world’s largest mining-equipment maker. In between presentations about Texas energy fundamentals and crypto mining in Kazakhstan, the attendees nibbled cupcakes, drank cocktails and discussed the dismal outlook for their local industry.

Bitmain’s employees were offering to serve as matchmakers, hooking miners up with data centers in the U.S., Central Asia and Europe. They also cautioned that an unchecked rush into new markets would jack up costs for all of them. One slide presented at the event read, “Hold Together for Warmth, Say No to Vicious Competition.”

Just hours after the conference, the urgency of the situation came into full view. Alex, a Chinese miner who didn’t want his last name published for fear of government retribution, was out singing karaoke with some of his fellow miners when he called to check in on his machines in the mountains outside Chengdu. His colleague told him that local authorities had just shut off the power to his facility, leaving the mine silent and potentially worthless.

“All my money is gone,” he said, cursing as he chugged a beer. “Every day I’m losing money by not running those machines.”

The Chinese miners forced to leave behind the country’s cheap electricity from abundant coal and roaring rivers have found themselves thrust into a wild and extreme world of crypto power-hunting.

Just as miners sprinted toward gold fields in California and Alaska over a century ago, Bitcoin miners now are bolting toward any source of inexpensive, reliable power they can find. Their next destinations matter greatly to an industry emphasizing decentralization and independence, and to other energy-consuming sectors, with which they are competing for access to greener power.

Cheaper Power

A Bitcoin mining rig doesn’t pull anything out of the ground, of course. Instead, it is usually made up of thousands of computers, specially built to run the complex calculations that maintain the cryptocurrency’s network. These computers are stacked on shelves in warehouses, often with huge water-cooling fans.

In China, the warehouses are usually situated close to their power sources, such as standalone hydropower stations and thermal plants affiliated with coal mines. Electricity accounts for about 80% of a miner’s operating cost, according to Tyler Page, the chief executive officer of Cipher Mining Technologies Inc.

The miners who complete the calculations are rewarded with new Bitcoin, which has ranged in value from a peak of almost $65,000 before China outlawed mining to about $33,500 today. Around 65 percent of the world’s Bitcoin mining took place in China as of April last year, according to the latest data from the University of Cambridge.

Cheaper power is the reason China’s neighbor, Kazakhstan, has become a top destination for fleeing miners. The former Soviet nation has over 22 gigawatts of electric power capacity, mostly from coal and gas-fired stations. It also borders the region of Xinjiang, which once held nearly 36% of the world’s bitcoin mining.

Bitcoin miners can get electricity for as low as about 3 cents per kilowatt-hour, according to Dmitriy Ivanov, sales director at Almaty-based Enegix LLC. The country is also cool enough that the data centers don’t require any air conditioning to keep them from overheating, which can add as much as 30% more power consumption.

Enegix runs a server-hosting business in Kazakhstan, where it is building data centers at which miners can pay a fee to plug in their machines. At the end of last year, the company built its biggest site yet, a 180-megawatt data center on 37 acres of land near the northeastern town of Ekibastuz. The region is an industrial hub fueled by one of the largest coal-fired power stations in the world outside of China.

In June, Ivanov started to get messages daily from miners in Sichuan and Inner Mongolia who needed to relocate after Beijing’s crackdown.

“We stand to benefit from it, but these people are facing devastating losses in terms of all the infrastructure that has to be deployed elsewhere,” he said.

Enegix’s clients will soon be shipping about 10,000 mining machines, a mix of Bitmain’s S19Pro and the Whatsminer M21S model from Chinese manufacturer MicroBT, to Kazakhstan by plane. Transport by land from China would be cheaper, but trucks can get held up at the border for weeks. Spending that time mining Bitcoin instead can make up for the extra cost of airfare.

Didar Bekbauov runs another Almaty-based Bitcoin mining hosting company, a smaller competitor to Enegix. He was similarly inundated with messages.

“So many Chinese are reaching out to us and asking for help to relocate the equipment,” Bekbauov said by phone. “They ask every Kazakh they know to help them with electricity.”

But there is a limit to Kazakhstan’s potential: Its electric grid has added only a little over 3 gigawatts of capacity in the last 20 years, according to data from BloombergNEF. That’s leaving little room for the surge in mining machines to get connected. Bekbauov now has to turn customers away.

“Every spare kilowatt is already booked,” he said.

Renewable Sources

For some miners, the decision to move out of China is also an opportunity to clean up their power supply.

It’s difficult to say how dirty Bitcoin mining is overall, but it’s a reflection of the power supply to a mine’s location. Earlier this year, tens of thousands of mining machines consumed about 45 million kilowatt-hours of power per month in an area of western China that depends on coal-burning power plants, the official Xinhua News Agency reported. That’s about 15,000 tons of standard coal. Overall, mining machines globally consume about as much power as all of Bangladesh, a country of more than 160 million people.

While some of that power is green, the majority of the world’s electricity still comes from burning fossil fuels. Earlier this year, Elon Musk said Tesla Inc. would no longer accept purchases in Bitcoin because of its carbon footprint. An alliance of companies launched the Crypto Climate Accord earlier this year to address criticisms and vowed to help the industry shift to 100% renewable power consumption.

Crypto miners are coming up against a much bigger drive to decarbonize power to combat climate change. The percentage of energy from renewable sources would need to increase to about two thirds of supply by 2050, up from around 12% in 2020, to keep temperatures from rising more than 1.5 degrees Celsius from pre-industrial levels, according to the International Energy Agency. Countries around the world, including China, the U.S. and the EU will have to ramp up construction of wind farms and solar parks to come close to hitting their targets.

Renewable energy sources like wind and sunshine may be abundant at times, but demand for them is set to surge as cars, home heating and heavy industries increasingly shift to electricity. The Nordic region, which has long been a popular Bitcoin mining spot because of its ample hydropower, began running out of excess electricity earlier this year as industrial users ramped up production.

“There’s a more noble use of renewable power than Bitcoin mining,” said Peter Wall, chief executive officer of London-listed mining company Argo Blockchain Plc. “But the fact is people are going to mine Bitcoin full stop. It’s not going away.”
Regulatory Concerns

Miners also want confidence they won’t wake up one morning to news that their business has been outlawed again. Bit Digital Inc., a Nasdaq-listed mining company, began moving some of the 30,000 machines it operated in China to North America back in October. By the time Beijing cracked down, Bit Digital was able to keep mining with as little disruption as possible.

Even within the U.S., there are regulatory differences among states. Cipher Mining Technologies Inc., the U.S. arm of Netherlands-based Bitfury Holding BV, is working to build up mining capacity in Texas, the only state with a deregulated power grid, and Ohio because of the state’s cheap power prices and low-carbon power sources. A state like New York, where lawmakers previously proposed a bill that would have limited crypto mining in the state, isn’t as attractive.

The physical attributes of a site matter too: extreme temperatures in either direction are a negative, as is an overly dry and gritty environment. “Literally the dust blows into the computers and you have physical problems,” said Cipher’s Page.

Some of Bit Digital’s mining rigs were shipped to a data center in Kearney, Nebraska, where the company already has about 5,000 machines noisily mining Bitcoin. “You can’t hear a damn thing in here!” Chief Executive Officer Bryan Bullett yelled on a recent tour of the facility as the machines’ fans whipped his hair around.

A warehouse a mile from the data center holds Bit Digital’s displaced Chinese rigs. The machines were piled to the ceiling on wooden pallets, waiting for an opening so they could be put to work. “It’s not great to see them sitting here in boxes, because they could be plugged in and making money,” said Bullett. He estimated that 500,000 mining machines are being shipped out of China as a result of the crackdown.

Bit Digital is considering setting up operations outside North America, but local regulations and stability are a concern. The president of El Salvador announced last month that his country would be the first to adopt Bitcoin as legal tender and directed the state-run geothermal electric company to come up with a plan for volcano-powered Bitcoin mining. Bullett and other Bit Digital executives flew to the Central American country late last month for two days of meetings with the president’s cabinet.

Bitcoin miners from other countries want to know that El Salvador’s enthusiasm for the digital currency will survive a change in leadership.

“The question is naturally going to arise about stability,” Bullett said, especially with a capital-intensive industry like mining. Asked whether he would send Bit Digital’s machines to a site El Salvador is developing, the chief executive paused. “It depends on the details,” he said. “It’s certainly worth monitoring.”
Power Brokers

Beyond the large U.S.-based mining companies, there are also smaller middlemen making a business out of the big move.

Ever since news of the beginning of the crackdown in China first broke in late May, Tim Kelly, chief executive officer of BitOoda has barely slept. Kelly started BitOoda in 2017 to provide research, investment banking and other services to Bitcoin-mining clients. From his beach-front home on the island of Nantucket off the coast of Massachusetts, Kelly spent most nights this summer on the phone with Chinese miners. When the sun rose, he would start calling people in the U.S. who could provide sites with enough electricity to host mining operations.

“There’s so much absolute desperation to secure sites as quickly as possible,” Kelly said.

While China’s restrictions strangled the Bitcoin mining industry for now, the pain will only be temporary. With increasing capacity in places like the U.S., BitOoda estimates that the amount of computing power used for mining will be back to its pre-crackdown level by early 2023 and continue growing for the rest of the decade.

Business for BitOoda had been progressing steadily. By May of this year, the company built up a pipeline of under 500 megawatts of grid connections for Bitcoin miners looking to plug into American power. Kelly’s sleepless nights helped that figure boom to about 2,000 megawatts of deals in the works, with about 70% going to Chinese clients.

It’s not easy to just set up a Bitcoin mining operation out of nowhere. Kelly’s clients need not only power supply, but also substations and transformers, devices that filter the high powered volts in the power grid to be gentle enough that they won’t fry all those valuable computers. Setting all the machinery takes time, in some cases as long as 18 months to get up and running.

Most of them have already made down payments on new machines and are looking for a new address in a hospitable location. This time, they want to make sure the sites will last. For many, that means trying to connect to renewable power sources, which the Biden administration has signaled are the future of the American electric grid. Chinese clients are even willing to pay higher prices for green credentials.

“Every conversation we have starts with the the site’s potential power source. What is it? If it’s coal we won’t even talk about it. Gas, maybe,” said BitOoda’s Chief Strategy Officer Sam Doctor. “They’re looking for renewables. That’s a really important step in the greening of bitcoin.”

Updated: 7-15-2021

Bit Mining Raises $50M To Take Operations Out Of China

Bit Mining is looking to exit China’s market in response to the recent government crackdown on mining.

Shenzhen-based crypto mining firm, Bit Mining, is raising $50 million to fund an expansion out of the Chinese market.

Announced on July 12, the firm has entered into an agreement with select institutional and accredited investors to raise $50 million through a private placement.

Bit Mining is raising the funds in response to the Chinese Communist Party’s crackdown on crypto mining in May, noting plans to “acquire additional mining machines, build new data centers,” and expand its infrastructure overseas.

US$50 Million Private Placement! Ready for greater expansion!

— BIT Mining Limited (@BITMining_BTCM) July 13, 2021

Bit Mining is owned by NYSE-listed Chinese lottery service provider 500.com and operates the major mining pool, BTC.com.

As part of the private placement, Bit Mining will offer 100 million Class A ordinary shares at a purchase price of $5.00 per 10 shares.

Each share comes with a warrant that investors can redeem to purchase additional shares in the future. The warrants will have a set term of three years and will be exercisable six months from the date of issuance, with an exercise price of $6.81 per 10 Class A ordinary shares.

New York-based investment bank, H.C. Wainwright & Co., is acting as the sole placement agent for the offering, with the private placement expected to close on July 16.

The fallout from China’s mining crackdown has seen numerous Chinese miners eye the state of Texas for its cheap electricity. According to a June 24 article from Nikkei Asia, Bit Mining has plans to invest $26 million into building a 57-megawatt data center in the crypto-friendly state.

Cointelegraph reported on June 22 that Bit Mining successfully delivered its first batch of mining machines to Kazakhstan. The first batch included 320 mining machines with an estimated total hash rate capacity of 18.2 petahash per second (PH/s).

The firm added that a second and third batch totaling 2,600 mining machines would be delivered by July 1.

The9 Signs Green Bitcoin Mining Deal With Russian Firm BitRiver

BitRiver utilizes only surplus hydroelectric power to operate its data centers in Russia and CIS countries.

The9, a Chinese internet company listed on the Nasdaq, is moving forward with its cryptocurrency mining plans by signing a contract with a major Russian data center operator.

The company announced Monday that it has signed a crypto-mining hosting agreement with Russian crypto mining services provider BitRiver through its fully-owned subsidiary, NBTC.

As part of the agreement, BitRiver will reserve 15 megawatts (MW) of its electric capacity for The9’s Bitcoin (BTC) mining machine deployment for an initial term of two years. After the contract expires, both parties have the right to automatically extend their cooperation for one more year, the announcement noted.

As part of the agreement, The9 will place a batch of Bitcoin miners at BitRiver’s data center located in Russia’s Republic of Buryatia, a spokesperson for BitRiver told Cointelegraph. The9 is now expected to determine the exact number and type of mining devices that they plan to send to BitRiver’s data center. The facility has an initial total power capacity of 100 MW and is capable of hosting more than 33,000 mining devices.

BitRiver is known as the largest crypto mining colocation services supplier in Russia, providing hosting services for large-scale crypto mining operations. The firm provides renewable energy sources for crypto mining, exclusively using surplus hydroelectric power to operate its data centers in Russia and the Commonwealth of Independent States (CIS), which are confirmed by certificates from the International Renewable Energy Certificate Standard Foundation.

The news comes as The9 continues to move into the crypto mining business after announcing plans to enter the industry earlier this year. The company said in January that it signed partnerships with several investors, including crypto mining giant Canaan.

In June, The9 reached a definitive agreement to acquire Canadian crypto mining firm Montcrypto to build a 20 MW supply of electricity in Calgary. The company said that Montcrypto provides a “greener and more environmentally friendly power supply” to The9’s mining business with its carbon-neutral infrastructure.

China Deals Another Blow To Its Crypto Miners

China dealt another blow to its beleaguered cryptocurrency industry, with Anhui province becoming the latest to pledge to crack down on the practice of using power-hungry machines to mint Bitcoin and other virtual currencies.

Anhui plans to shut down all crypto mining projects within the next three years due to a power supply shortage, hf365.com reported.

The province, which is located in eastern China less than three hours away from Shanghai via high-speed train, will also curb new projects that require large amounts of energy or power consumption and build data centers in an orderly manner, according to the news portal, which belongs a media group affiliated with the government of Hefei, Anhui’s capital. It did not cite anyone.

The latest development, which adds to a long list of actions taken in China recently to rein in the cryptocurrency industry, comes as Bitcoin has been trading toward the lower end of a recent range around $30,000 to $40,000. The digital asset slid as much as 2.6% to $31,665 on Wednesday, its lowest level in more than two weeks.

Late last month, Ya’an, a city with abundant hydropower in Sichuan province, is said to have taken sweeping actions, with a government source saying the city would root out all Bitcoin and Ether mining operations within a year.

Inner Mongolia vowed earlier this year to shut all crypto mining projects by April. Yunnan province has also started a probe into illegal electricity use by Bitcoin mining companies, Cailian reported.

The Anhui government is addressing growing electricity demand by shutting down local crypto mining operations.

The Chinese government continues cracking down on the cryptocurrency mining industry by suspending crypto mining operations in another province.

Authorities at Anhui, a small province in eastern China, have announced a set of measures to tackle growing electricity demand and an associated power supply shortage in the next three years, local news agency Hefei Online reported on Wednesday.

As part of Anhui’s efforts to curb energy consumption, the province plans to shut down crypto mining projects and scrutinize new initiatives that require large amounts of energy consumption. Local authorities also plan to adopt new practices for building data centers as well as promote the reform of electricity prices in order to optimize energy usage in the province.

The Anhui province of China is known for once being one of China’s poorest provinces, having only been removed from the country’s official list of impoverished areas in 2020. Anhui is the eighth largest province in the country by population. The province’s power grid reportedly comprises mostly coal-based power plants in addition to several hydropower facilities as well as wind- and solar-based plants.

Some reports suggest that the latest regulatory crackdown in Anhui is part of a broader country-wide initiative to shut down all crypto mining operations across China.

Chinese crypto journalist Colin Wu reported Wednesday that China’s State Grid Corporation has issued a notice to all parts of the country requesting the closure of virtual currency mining. “At present, some provinces with insufficient power in China, such as Henan and Anhui, have also begun to implement it,” he added.

The State Grid Corporation of China has issued a notice to all parts of the country requesting the closure of virtual currency mining. At present, some provinces with insufficient power in China, such as Henan and Anhui, have also begun to implement it. pic.twitter.com/kgDY1msDQ5

— Wu Blockchain (@WuBlockchain) July 14, 2021

The news comes amid a major regulatory crackdown on crypto mining in China, following a series of similar bans in other Chinese provinces including Yunnan and Sichuan, one of the country’s biggest hydropower-based mining hubs. Authorities in Xinjiang, Inner Mongolia and Qinghai also ordered mining operations to shutter in recent months.

Bitcoin Mining Ban An Easy Decision For China, Says Bitmain EMEA Partner

Half of what was lost due to China’s crackdown on Bitcoin mining will never go back online, Phoenix Store’s CEO says.

Two weeks after a 15% increase in electricity prices in Turkey, a new store selling professional mining equipment has opened its doors in Istanbul — the business hub of the country — on Tuesday.

Opening a mining equipment shop in a country with costly electricity seems counterintuitive. But Phoenix Store, Bitmain’s sales partner in the Middle East, did the math before opening its second store within the region.

Phoenix Store CEO Phil Harvey explained that the company’s primary goal with the Istanbul store is to educate Turkey’s crypto-friendly population about crypto mining. Then, customers can purchase mining equipment and hosting services that would operate in Canada, the United States or Russia. Mining in Turkey is simply unfeasible.

“It’s like you want to invest in gold mining,” he said, “You can come here and invest in a gold mine, but it’s not going to be in the back garden. It’s going to be outside.”

Cointelegraph Turkey sat down with Harvey after his presentation to learn more about the crypto mining landscape in the aftermath of China’s crackdown on mining operations.

“China needs to maintain its current growth for the projects in the country,” Harvey started, detailing the crackdown. The country is required to improve several areas, such as reducing its carbon footprint, to get funding from the International Monetary Fund or the World Bank:

“The easiest industry to reduce overnight was a gray area industry. Some 68,000 gigawatts of power was removed instantly from China just by saying no to Bitcoin mining.”

It’s a significant revenue stream, but even that would pale in comparison to how much the IMF or World Bank invest in China for projects like road initiatives. “So it was an easy decision for China to make to remove these miners and reduce the carbon footprint that they have,” Harvey added.

While several miners announced that they would relocate to cold-climate countries like Canada, Harvey believes that half of what’s lost due to China’s crackdown will never go back online:

“Because these are older machines that were in a warehouse for many, many years and were just making 5%–10%, and they were on. But it doesn’t make commercial sense to now take those off and move them.”

The value per machine might be $150–$200 at most, and it would take about the same amount of money per unit to relocate them. “It doesn’t make sense to do that,” he said, “That’s why I say half of what was on the network that we lost.”

Harvey expects regions such as Russia and Kazakhstan to increase their share in the mining landscape with new machines added to the network, but he doesn’t plan to open new stores in those countries for now. After Dubai and Istanbul, Phoenix only plans to open a store in London. “We won’t expand any further for the stores outside of those three locations,” he said.

Bitcoin Mining Firm Compass Inks Deal With Nuclear Microreactor Company Oklo

Salvadoran volcanoes aren’t the only novel source of power in the bitcoin mining industry.

Nuclear-powered bitcoin (BTC, -1.8%) mining appears to be gaining steam.

Compass Mining has signed a 20-year deal with nuclear fission startup Oklo under which Oklo will supply the bitcoin mining and hosting company with 150 megawatts of energy.

The first Oklo reactors will be deployed in 2023 or 2024 and the costs will be “considerably” less than the energy sources Compass plugs into now, Compass CEO Whit Gibbs said. Oklo plans to build mini-nuclear reactors that produce between one and 10 megawatts of electrical energy compared with the hundreds of megawatts produced at conventional reactors.

Oklo has applied for a 1.5-megawatt plant at the Idaho National Laboratory in Idaho Falls and is working on additional applications.

Nuclear energy is increasingly part of the conversation when it comes to energy sources for bitcoin mining. Mining firms and their vast racks of power-hungry specialized computers have drawn the ire of environmental groups as bitcoin has surged in price in the last year.

Earlier this week, nuclear power company Energy Harbor Corp. signed a five-year partnership with Standard Power to fuel bitcoin mining in Ohio. Talen Energy announced plans to attach a bitcoin mining operation to a nuclear power plant in Pennsylvania that it already owns and operates.

Compass is also in talks with Miami about getting power from the Turkey Point Nuclear Plant in Homestead, Fla., according to Gibbs. Miami Mayor Francis Suarez is said to be offering the plant to crypto mining firms as an inexpensive power source.
Decentralizing power

Compass allows individual miners to shop for a hosting facility and operates their mining hardware for them. In that sense, it operates as the Airbnb for facilities that host mining hardware. Gibbs said Compass aims to have as much of its mining network on carbon-free energy as possible.

Compass has distributed 0.5% of bitcoin’s hashrate into the hands of individual nodes around the world and plans to capture 10% by the end of 2022, Gibbs said.

Compass now uses third-party facilities that hold power-purchase agreements and can dictate power prices.

“While the facility’s power cost might be $0.030-0.035/kWh (kilowatt hours), they sell to Compass customers for $0.055-0.065/kWh,” Gibbs explained.

With Oklo, however, Compass holds the power-purchase agreement, and Gibbs said he expects power costs to be between $0.02-0.04/kWh.

Oklo’s View

As Compass takes advantage of cheaper energy, Oklo gains a partner that can take up extra energy supply at various reactors, said Oklo CEO Jacob DeWitte. Oklo could eventually build reactors that are solely dedicated to bitcoin mining.

This is the first cryptocurrency company that Oklo has gained as a customer and the first nuclear energy deal that Compass has secured. The deal could serve as a “beacon” for the future intersection of cryptocurrency and clean-energy development, DeWitte added.

Unlike other commodities, bitcoin doesn’t require a great deal of infrastructure. Once the bitcoin is mined, the commodity can be instantly transported with no shipping costs.

“As demand might change by a few megawatts here and there, you can put that off into bitcoin mining,” DeWitte said.

Updated: 7-18-2021

Four North American Bitcoin Miners That Could Benefit From The East-West Shift

With China seemingly out of the equation, North American Bitcoin miners are looking to exert hash rate dominance.

Even before China finally wielded the ban hammer on crypto mining, Bitcoin (BTC) miners in North America had been building up their capacity amid efforts to gain a larger share of the global hash rate distribution. From building bigger data centers to acquiring hardware inventories, these establishments have been making concert efforts to balance the hash-power dichotomy between the Eastern and Western hemispheres.

North American Bitcoin miners often have to contend with energy usage concerns as well and some have been keen to partner with oil and gas firms, becoming buyers of last resort for flared gas. Indeed, American oil drillers and Bitcoin mining firms continue to collaborate over natural gas utilization, proving once again that the potential for Bitcoin’s thermodynamic capacity is set to be a net positive for the environment, despite the criticisms put forward against proof-of-work (PoW) mining.

With North American-based entities seemingly on the cusp of establishing a greater presence in the global Bitcoin mining matrix, here is a look at four of the largest Bitcoin miners in the region.

Riot Blockchain

In 2020, China still controlled about 65% of the global Bitcoin hash rate, according to estimates from several data sources. However, Riot Blockchain was expanding its operations with a swathe of major hardware acquisitions from leading Bitcoin miner makers like Bitmain.

In August and December 2020 alone, Riot Blockchain spent millions of dollars to acquire thousands of Antminers from Bitmain. Indeed, as reported by Cointelegraph in April, Riot Blockchain’s hashing capacity increased by 460% in 2020.

Riot Blockchain’s expanded inventory drive has continued into 2021, with the company purchasing over 42,000 Antminers from Bitmain earlier in the year. The Nasdaq-listed company also announced a $650 million purchase of a major data center located in Texas.

By acquiring the Whinstone data center in Texas, Riot Blockchain is set to own the single largest Bitcoin mining facility in the United States. The American Bitcoin mining giant is even set to expand the original capacity of the site from 750 megawatts to over 1,000 MW.

With its upscaled capacity coinciding with sweeping crackdowns in China, it is unsurprising to see Riot Blockchain enjoying greater Bitcoin mining success, as evidenced by the figures quoted in its monthly production and operations update. In April, the company reported that it mined 187 Bitcoin (worth $11.2 million at the time) the previous month.

The March 2021 BTC production figure marked an 80% increase from its Bitcoin mining total for March 2020. In its latest report in June, the company stated it mined 243 BTC, a 406% increase from its June 2020 production figure.

The June report also put Riot Blockchain’s year-to-date Bitcoin mining total at 1,167 BTC (currently worth $36.5 million). As of June 2020, the company had only mined 508 BTC meaning that this year’s production figure represents a 130% year-on-year increase.

In total, Riot Blockchain says it holds over 2,200 BTC as of the end of June, with all of the Bitcoin coming from its mining operations.

Detailing the link between its recent production successes and the situation in China, the June report stated, “The exodus of Bitcoin mining from China has resulted in a downward difficulty adjustment and lower global network hash rate. As such, Riot is currently mining more Bitcoin per day than at any time in the Company’s history,” continuing:

“While it is broadly expected that many Chinese miners will eventually relocate, the company estimates that it could be quite some time before the global Bitcoin mining hash rate returns to its previous high of 180 exahash per second (“EH/s”), last observed earlier this year.”

Marathon

Marathon is arguably Riot Blockchain’s main competitor in the “North American hash wars” and, like its rival, the crypto mining giant has been expanding its hardware inventory since 2020. In October, the Nevada-based Marathon Patent Group acquired 10,000 Antminer S-19 Pros from Bitmain.

Such was the size of the order that it was estimated to boost the company’s operational hash rate capacity to 2.56 EH/s, a little more than the target 2.3 EH/s for Riot Blockchain’s expansion. With the Antminer order arriving in batches for Marathon, the company seems to now be focusing on achieving “carbon neutrality” and satisfying regulatory demands.

Back in March, the company first announced plans to divert all of its current hash power to a regulatory-compliant Bitcoin mining pool by the start of May. At the time, Marathon stated that the new pool adhered to U.S. Anti-Money Laundering (AML) protocols established by America’s Office of Foreign Control.

As reported by Cointelegraph in May, Marathon is planning a 300 MW carbon-neutral data center that will house 73,000 Bitcoin miners.

According to the announcement at the time, the deployment of the facility will bring the company’s carbon neutrality to about 70% while taking its hash rate to 10.37 EH/s.

According to data from BTC.com, achieving a hash rate capacity of 10.37 EH/s would put Marathon number five on the current Bitcoin hash rate distribution log.

While more than 50% down from its 2021 high of $56.56, the company’s stock is still up 122.34% year-to-date as of the time of writing. With Bitcoin exchange-traded funds yet to gain approval in the United States, Bitcoin mining stocks are seen as the next best thing in terms of gaining indirect exposure to BTC.

Marathon itself is a Bitcoin holder separate from its mining interests. At the start of the year, the company bought over 4,800 BTC, valued at about $150 million at the time. New York Digital Investment Group reportedly facilitated the deal.

Hut 8

United States.-based firms are not the only major players in the North American Bitcoin mining theater, as Canadian outfit Hut 8 is also a significant name in the conversation. Once the largest publicly traded Bitcoin miner by capacity back in 2018, the Toronto-based company seems to be recovering from its previous setbacks.

In 2018, the crypto market suffered a crippling bear market as coin prices tumbled from peaks reached in December 2017 and January 2018. In May 2019, Hut 8 reported losses north of $136 million for the previous year, which also culminated in significant staff cuts.

Having waded through the crypto winter of 2018 and 2019, Hut 8 has undergone a massive upscaling of its miner hardware, announcing the purchase of over 11,000 MicroBT rigs valued at about $44 million. Based on the capacity of the MicroBT miners, Hut 8’s hash rate capacity is expected to reach 2.5 EH/s once all the machines are installed in the company’s 100 MW facility, currently under construction.

At 2.5 EH/s, Hut 8 predicts its daily Bitcoin production will jump two-fold from between 6.5 to 7.5 BTCto between 14 to 16 BTC. Such a per diem BTC mining rate may also serve to preserve Hut 8’s status as the Bitcoin miner holding the most self-mined BTC in the world.

Back in January, the Canadian Bitcoin miner estimated that its total Bitcoin holdings will reach 5,000 BTC by the start of 2022. The company also outlined plans to expand its hash rate to six EH/s by mid-2022.

Hive Blockchain

The East-West shift in Bitcoin hash rate will ultimately involve sweeping changes to the energy mix for BTC mining, with more of an emphasis on “Green Bitcoin.” For the Canadian crypto miner, green energy is a major focus point for its operations.

From Canada to Iceland, and even to Sweden, Hive Blockchain operated green-energy-powered data centers for crypto mining. Back in May, the company was reportedly forced to sell its facility in Norway, citing issues with regulators in the country.

Earlier in July, Hive acquired 3,000 MicroBT M30S miners for its facility in New Brunswick, Canada. The added hash power will reportedly be contributed to the Foundry USA Pool that already aggregates hashing potential from other major North American miners like Hut 8, Blockcap and Bitfarms, among others.

Hive’s additional 3,000 mining rigs will reportedly take the company’s hashing potential up by 0.264 EH/s to reach a total hash rate of 0.83 EH/s. The company also recently joined the ranks of publicly traded Bitcoin mining firms after securing a Nasdaq listing back in June.

Meanwhile, Gryphon Digital Mining, another U.S.-based miner, may soon be challenging the more established names in the North American BTC mining industry. The company, which claims to run on 100% renewable energy, recently purchased 7,200 Antminer S19J Pro mining rigs.

Based on the hashing capacity of the machines, Gryphon’s hash rate will approximately increase by about 0.72 EH/s. This new inventory will reportedly be installed in August and upon that time, the company will receive its ESG rating.

Updated: 7-19-2021

Bitcoin Miner Iris Said To Seek New Funds Ahead of U.S. Listing

Bitcoin miner Iris Energy Pty is planning to raise about $200 million in a new fundraising round before it seeks a direct listing on the Nasdaq, according to a person familiar with the matter.

The Sydney-based company, which uses renewable energy to produce the cryptocurrency, is working with an adviser on the round and has met with prospective investors, the person said. The proceeds would help prepare the firm for a listing on the U.S. technology-focused exchange as soon as this year, the person said, asking not to be identified as the information is private.

The raising comes as cryptocurrencies are under scrutiny for the environmental impact of the energy-intensive process used to mine them.

Critical comments by Tesla Inc. Chief Executive Officer Elon Musk, as well as the electric-vehicle manufacturer’s about-face in May on whether to accept Bitcoin as payment for its products, weighed on sentiment. A crackdown on Bitcoin production by Chinese authorities also helped drive the price down to near where it had been at the start of the year.

Iris Energy Executive Director and Co-Founder Daniel Roberts said in May that the company was exploring options for special purpose acquisition companies, confirming an earlier Bloomberg News report that the company had been approached by several blank-check companies about a potential U.S. listing that could raise $300 million to $500 million.

The company is opting for a private placement, as a SPAC deal would have diluted the existing investors’ stakes more than a direct listing, in which new shares are not offered, the person said.

Discussions are ongoing and Iris Energy could decide not to proceed with the fundraising and direct listing plan, the person said. Iris Energy’s Roberts declined to comment when reached on Monday.

Iris Energy has signed new contracts locking in equipment that would allow it to reach a mining capacity of 15.2 exahash operations per second within a number of years, the person said. The firm is currently on track to reach 4.5 exahash by the end of 2022, up from its current capacity of 0.7 exahash, the person said.

The company’s flagship project is a 50 megawatt data center in British Columbia, Canada, that runs Bitcoin mining equipment powered by renewable energy, according to its website. In British Columbia, the majority of electricity comes from hydroelectric power.

In March, Iris Energy upsized a A$20 million ($15 million) fundraising, citing strong investor demand. That round was enlarged again, ultimately raising A$110 million, Roberts has said.

Bitcoin Mining Difficulty Drops For Fourth Time In A Row

Bitcoin mining difficulty has posted another negative adjustment on Sunday, with the difficulty rate almost halving since mid-May.

Amid the ongoing crackdown on cryptocurrency mining in China, mining new Bitcoin (BTC) continues getting easier as BTC has experienced another mining difficulty drop.

On July 18, the Bitcoin network posted its fourth consecutive negative adjustment of mining difficulty, dropping 4.8%, according to data from Bitcoin explorer BTC.com.

The latest mining difficulty adjustment occurred at block 691,488, reducing the difficulty rate from 14.4 trillion to 13.7 trillion, the lowest level recorded since June 2020. The difficulty metrics have now almost halved over the past two months, after reaching over 25 trillion on May 13.

The latest Bitcoin mining adjustment follows a series of consecutive difficulty drops that started with a nearly 16% decline on May 29. Further negative adjustments continued with a 5.3% drop on June 13 and a massive 28% decline on July 3 — the biggest mining difficulty drop on the Bitcoin network.

Bitcoin mining difficulty is a measure of how hard it is to mine a BTC block, with a higher difficulty requiring additional computing power to verify transactions and mine new coins. Bitcoin’s mining difficulty adjustment occurs every 2,016 blocks, or about every two weeks, as Bitcoin is programmed to self-adjust in order to maintain a target block time of 10 minutes.

Bitcoin’s continuing mining difficulty decline comes in response to the ongoing miner migration out of China caused by a major crackdown on the cryptocurrency mining by local authorities. The ongoing difficulty drop falls in parallel with declining Bitcoin hashrate as well as decreasing average BTC transaction fees.

Updated: 7-20-2021

Viral Video Shows Malaysian Police Destroying 1,069 Bitcoin Mining Rigs With A Steamroller

Call it a crypto crackdown — literally.

Malaysian authorities seized 1,069 bitcoin mining rigs, laid them out in a parking lot at police headquarters, and used a steamroller to crush them, as part of a joint operation between law enforcement in the city of Miri and electric utility Sarawak Energy.

Assistant Commissioner of Police Hakemal Hawari told CNBC the crackdown came after miners allegedly stole $2 million worth of electricity siphoned from Sarawak Energy power lines.

A video of the event posted last week by local Sarawak news outlet Dayak Daily has since gone viral on social media.

Acting on a tip, authorities on the island of Borneo confiscated the rigs in six separate raids between February and April. In total, police destroyed about $1.26 million of mining equipment.

Police opted to crush the mining gear rather than sell it, in accordance with a court order. Other countries, like China, have taken a different route, reportedly auctioning off seized rigs.

Hawari said that electricity theft by bitcoin miners led to three houses burning down in the city. The Miri police chief told CNBC that there are no other active mining operations underway currently.

Crypto mining is the energy-intensive process which creates new bitcoin. When people are “mining,” that actually means they’re trying to solve a complex math problem using a highly specialized computer. Solving that problem is both what unlocks new tokens and verifies new transactions. However, running those machines at full capacity draws a great deal of power, which can jeopardize local power grids.

While mining for cryptocurrencies is not illegal in Malaysia, there are stringent laws around power use. Section 37 of Malaysia’s Electricity Supply Act threatens those who tamper with power lines with fines of up to 100,000 Malaysian ringgit ($23,700) and five years in prison.

The Cambridge Center for Alternative Finance estimates that Malaysia accounts for 3.44% of all the world’s bitcoin miners, placing it in the top ten mining destinations on the planet.

Eight have been arrested in connection with the mining operation in Miri, and six people have been charged under Section 379 in the Penal Code for stealing energy supplies, according to Hawari. Those charged will be jailed for eight months and face a fine of up to $1,900 per person.

This is just the latest example of Malaysia’s struggle to track down crypto mining criminals.

In March, a bitcoin miner in the city of Melaka on Peninsular Malaysia stole $2.2 million worth of electricity from energy company Tenaga Nasional Berhad.

Malaysian Borneo is much less densely populated than Peninsular Malaysia.

China Is Pumping Money Out Of The US With Bitcoin

Chinese authorities seem to be putting things in order rather than declaring war on crypto, aiming to further weaken the U.S. economy.

The ongoing United States-China trade war is in its fourth year. Former U.S. President Donald Trump saw different results from what he initially expected: America has taken a hit from higher tariffs and sanctions against Chinese companies and hasn’t benefited from it nearly to the same extent.

It has cost the country up to 245,000 jobs. The U.S. Chamber of Commerce calculated that the situation puts the exports of each state at risk. For example, the damage to Florida’s exports alone has already reached $1.9 billion.

At the same time, China was taking a smarter approach: It not only imposed reciprocal sanctions and exported its products through intermediary countries (Vietnam, Taiwan and Mexico), but also made the U.S. pay for unsecured and poorly regulated assets — cryptocurrency.

Hidden Billions

The United States annually inject billions of dollars into the Chinese economy without even suspecting it. The reason is that the majority of Bitcoin (BTC), which is exchanged mainly for U.S. dollars worldwide, is mined in China. It hosts 65% of all mining farms.

To earn Bitcoin rewards, powerful computers solve complex math problems 24/7. Part of the newly mined coins goes directly to crypto exchanges, while the rest can be kept in the miners’ crypto wallets, but is eventually sold to dollars. On average, 900 BTC are mined every day, and the total daily revenue is about $31 million (as of the end of June). That means that in just a year, the miners have earned over $10 billion.

Taking into account China’s share of mining farms, the local miners have earned about $7 billion since last summer. If both the price of Bitcoin and its popularity keep increasing, the revenue will double or even triple each year. In one way or another, the money will circulate throughout the country’s economy: It will be spent, saved or invested.

Under The Party’s Control

The Chinese government is well aware of the volume and significance of U.S. dollar investments through cryptocurrencies.

Despite the heavily increasing regulation, the authorities are obviously not going to ban Bitcoin.

China restricted crypto transactions for banks and payment companies back in 2013. In 2017, the authorities also shut down local crypto exchanges and blocked access to foreign platforms. That said, locals could legally own cryptocurrency all this time.

What we see now is essentially a reminder of the previous restrictions imposed on financial institutions instead of the introduction of new ones. On one hand, the Chinese authorities want to prevent the “transmission of individual risks to the social field,” and on the other hand, they leave the door wide open for foreign investors.

At the same time, the Chinese authorities have begun to restrict mining, which concerns many people on the market. The official reasons are excessive energy consumption and carbon dioxide emissions that prevent the country from achieving carbon neutrality by 2060. But the real situation is a bit different from official statements.

First, the Chinese miners already source cheaper hydroelectricity, which is highly developed in southern provinces, and only switch to fossil-based fuel during the dry winter season when they migrate to the north.

Secondly, the authorities have fully banned new mining projects and the existing ones in three regions: Qinghai, Inner Mongolia and Xinjiang. Other provinces that are rich in hydropower resources, like Yunnan or Sichuan, are in no hurry to impose a total ban. While Yunnan was planning to shut down only illegal BTC mining farms “with a campaign against misuse of electricity,” later in June it was reported that all mining farms in Yunnan Province were shutted down.

Chinese authorities seem to be putting things in order rather than declaring war on cryptocurrencies. The technological limitations of the Bitcoin supply are to work in China’s favor: It allows the country to influence the price of the crypto while keeping it in miners’ possession and without selling it on financial markets.

However, if the restrictions keep tightening, the mining power may be redistributed between other countries. The Chinese mining equipment manufacturers — BTC.TOP, Huobi and HashCow — announced that they are suspending domestic sales and expanding their international presence, including to North America.

Who Will Pick Up The Idea

At face value, the possibility of Chinese miners moving to North America seems beneficial to the United States. But experts pointed out that the continent doesn’t have a lot of idle energy capacity. Besides, moving countries takes time that competitors can take advantage of.

The idea of ​​taking control over not only crypto transactions but also Bitcoin mining is quickly gaining traction in developing countries. In Iran, mining has become one of the most accessible industries amid tough U.S. sanctions.

The Iranian government is taking almost the same path as China: The authorities are to ban the use of cryptocurrencies generated abroad, but they allow paying for imported goods with domestically mined coins. Over the past year, Iran earned more than $400 million from cryptocurrency mining, with the United States’ revenue being only twice as much.

Another country planning the development of mining projects is El Salvador — the first country to adopt Bitcoin as a legal tender — that U.S. President Joe Biden refused to visit. El Salvador’s President Nayib Bukele is considering capitalizing on “very cheap, 100% clean, 100% renewable” energy from local volcanoes.

In this context, Kazakhstan seems to be the most politically neutral country. Here, a huge mining center by Enegix with a capacity of 180 MW, and up to 50,000 mining rigs will start operating in September. What’s more, Chinese manufacturer of mining equipment Canaan has set up a new service center in Kazakhstan.

China might exploit the export of their crypto farms as a means to further weaken the U.S. economy, while the U.S. government has no significant leverage to stop the dollar outflow caused by crypto transactions. Imposing a crypto ban for Americans would simply be undemocratic.

The only option for the U.S. government is to weaken the appeal of Bitcoin through every possible means. This would explain why Elon Musk, the owner of some of the largest American companies, Tesla and SpaceX, suddenly switched from supporting Bitcoin to criticizing its environmental impact.

The same thing happened to Greenpeace, which no longer accepts crypto donations, even though it had been doing so for the past seven years. It seems that the escalating campaign against Bitcoin has more to do with politics rather than the environment.

Green Energy Crypto Mining ETF Launches On New York Stock Exchange

The new exchange-traded fund will focus on environmentally friendly crypto mining infrastructure firms.

An exchange-traded fund focusing on more environmentally friendly crypto mining operations and infrastructure has been launched in the United States.

The new Viridi Cleaner Energy Crypto-Mining and Semiconductor ETF started trading on Tuesday, July 20, on the New York Stock Exchange under the symbol ‘RIGZ’.

The product is part of growing efforts to attract mainstream investors with a focus on environmental, social and governance (ESG) issues.

Viridi Funds, which launched the new investment product, stated that the fund also invests in crypto mining infrastructure businesses and semiconductor companies such as Samsung Electronics, Nvidia Corp., and Advanced Micro Devices, according to Law360.

Viridi CEO Wes Fulford, a former CEO of Bitfarms, said the fund will focus on clean energy screening. He said that the migration of mining out of China to North America was good news, as more than half of crypto mining operations in the region now use renewable energy sources:

“Obviously, with what’s happened in China the power used is dramatically lower than it was at the beginning of June. And it’s also providing the added benefit that more computing power is finding its way to other jurisdictions, sort of decentralizing the network even further, which adds to the security.”

Fulford added that Bitcoin and Ethereum address the ‘S’ and the ‘G’ from the ESG principles pretty well, and the new EFT will be adding the ‘E’. He stated that things are still in the early innings of this emerging asset class and a “tidal wave of institutional flows” has yet to come.

According to a July 20 CNBC report, new data shows that Bitcoin mining isn’t nearly as bad for the environment as it used to be, thanks to older less efficient machines being switched off in China and operations moving to more environmentally friendly locations. North America has jumped from fifth to second place and now accounts for nearly 17% of all global Bitcoin mining.

On July 18, Cointelegraph reported that large U.S.-based crypto mining operations will benefit greatly from increased market share and hash rate dominance. It named Riot Blockchain, Marathon, Hut 8, and Hive Blockchain as potentially the biggest beneficiaries of China’s great mining migration.

Updated: 7-21-2021

Crypto Mining Firm Argo Blockchain Files For US IPO

The company has been publicly traded on the London Stock Exchange since 2018.

Argo Blockchain, a U.K. publicly traded company focused on crypto mining, has begun the process of applying for an initial public offering in the United States.

According to a confidential draft registration statement filed Tuesday with the U.S. Securities and Exchange Commission, or SEC, Argo has proposed a dual-listing and initial public offering of American Depositary Shares, expected to occur in the third quarter of 2021. The company said the timing could depend on the SEC completing its review process and other conditions in the market.

Argo said the number of shares expected to be offered as well as the price has not yet been determined. According to an update on the firm’s Twitter account, it has mined 883 Bitcoin (BTC) up until July 6 and held 1268 BTC by June 30.

The IPO announcement comes two weeks after the said it would be exploring a potential secondary listing on the Nasdaq, having been listed on the London Stock Exchange since 2018​​. According to data from TradingView, Argo’s ARB stock is now trading at 111 pence sterling, having risen roughly 30% in the last 24 hours.

The crypto mining company also recently received a $20 million loan from Galaxy Digital to assist in building a data center in West Texas. Argo announced in March that it had secured a 320-acre plot of land it planned to use for the construction of a 200-megawatt crypto mining facility. The firm has cited Texas’ cheap renewable energy as well as its openness to innovation in new technologies as part of the reason for the move.

Updated: 7-22-2021

Core Scientific Plans To Go Public In SPAC Deal

The company will be valued at $4.3 billion.

Core Scientific, a cryptocurrency mining company, is planning to list its shares on Nasdaq through a merger with a special purpose acquisition company.

* Core Scientific, The Largest Host Of Bitcoin Mining Machines In North America, Plans To Merge With Power & Digital Infrastructure Acquisition, The Company Said In A Statement.
* The Company Will Be Valued At About $4.3 Billion.
* The Anchor Investor In Power & Digital Infrastructure Acquisition Is Blackrock, The World’s Largest Asset Manager.
* In May, Michael Levitt, The Co-Founder And Chairman Of Core Scientific, Took Over As Ceo After Kevin Turner Stepped Down.
* Levitt Will Continue As Ceo After The Combination.
* The Company Also Said It Mined 928 Btc In The Second Quarter, Taking Its Tally In The First Half Of The Year To 1,683 BTC.
* It Forecast Fiscal 2021 Revenue Of $493 Million And Fiscal 2022 Revenue Of $1.1 Billion. Its Fiscal Year Ends In January.
* The News Was First Reported By CNBC.

Updated: 7-22-2021

Bitcoin Miners Now Have A Tool To Verify Their Machines’ Hashrate

Data for independent ASIC operators is still fairly splintered in terms of transparency. Compass and Navier are hoping to provide a fix.

Think of it as the Carfax of bitcoin mining.

Announced Wednesday, Compass Mining and mining consultancy Navier are rolling out a new tool that lets buyers and sellers verify the advertised hashrate of their specialized bitcoin mining machines.

Like most third-party verifiers, the tool, HashTest, is working to answer a common question for buyers and sellers: How does something actually work versus how it’s advertised?

In the bitcoin mining context, it’s important because there are few ways to verify how a machine is actually performing when plugged in and running at a mining site. That data is usually kept private by mining companies.

“HashTest is a tool we have created for everyone to identify independent and unbiased information regarding an ASIC,” Compass Mining CTO Paul Gosker said in a statement, referring to the application-specific integrated circuit machines that power most bitcoin mining operations. “HashTest will allow sellers to demonstrate the performance of an ASIC to a buyer.”

Data for retail ASICs is still fairly splintered in terms of transparency. For example, the Compass mining marketplace lets crypto miners big and small purchase and deploy their rigs. A tool like HashTest would allow buyers of mining equipment to get better efficiency data on the machines they’re purchasing. Hashrate is a measure of the computational power working to add new blocks to the Bitcoin blockchain.

“HashTest is the first globally available independent hashrate testing service,” Navier CEO Josh Metnick said in a statement. “We are not a manufacturer, we are not a mine, we are not a pool, and we do not make firmware. Our only goal is to provide the most accurate and unbiased hashrate measurement. We believe these datasets will empower both small and large miners to make more informed decisions.”

Updated: 7-22-2021

A Green Revolution In Crypto Mining? Industry Answers Wake-Up Call

A number of leading mining firms have already started to make the transition toward clean renewable energy in recent months.

After having been hailed as a champion of sorts by many within the global digital asset market, Tesla CEO Elon Musk dropped a bombshell on the crypto community earlier in May, backtracking the company’s decision to start accepting Bitcoin (BTC) as a means of payment for various automotive sales. The reason cited was that Bitcoin mining processes were too resource-intensive and unsustainable in the long run.

As expected, almost overnight Musk became a heel, especially among Bitcoin maximalists who began calling him a sell-out and a market manipulator. Regardless of the name-calling, the episode did seem to shine a major spotlight on the energy consumption aspect of the crypto mining industry. This is best highlighted by the fact that recently, an increasing number of crypto companies have publicly announced their moves toward the use of greener energy alternatives.

Earlier this month, publicly traded North American Bitcoin mining company Bitfarms revealed that it had been successful in its efforts to power nearly 1.5% of the Bitcoin network using 99% clean energy. Not only that, even the concept of carbon-neutral exchange-traded funds (ETFs) is quickly gaining traction globally, with many major investment management firms, including Toronto-based Ninepoint Partners LP, already taking steps to ensure exactly this.

Lastly, BitMEX, a crypto derivatives trading platform, also recently announced its decision to go carbon neutral, while Marathon Digital Holdings, a United States-based Bitcoin mining firm, hopes to achieve its target of 70% carbon neutrality in the near future.

Is Green The Only Way Out?

To get a better sense of whether the mining industry is actually moving toward a greener direction, Cointelegraph reached out to Sam V. Tabar, chief strategy officer for Nasdaq-listed Bitcoin miner Bit Digital and former head of capital strategy for Bank of America Merrill Lynch. In his view, the “switch to green” is already happening rapidly across the global mining landscape, adding:

“Many miners have been actively striving for sustainable energy practices, especially publicly listed miners who wish to maximize their returns for shareholders and stakeholders. We believe this is an integral approach to improving our sustainable practices and mitigating our environmental impact.”

When asked about his own company’s sustainability efforts, Tabar highlighted that despite powering nearly 2% of the global Bitcoin network, a vast majority of Bit Digital’s energy comes from carbon-neutral sources such as hydroelectricity, solar energy and other wind-based technologies.

Additionally, he further highlighted that as the industry heads into an increasingly digitized future, more and more firm’s will enlist the services of well known independent Environmental, Social and Governance (ESG) consultants to self-monitor, set targets, provide transparency and help improve their percentage of green electricity and other sustainability initiatives.

He added: “We are currently working with independent ESG consultant APEX. By measuring our sustainability and mining footprint, we’re able to develop targets to continuously improve as we continuously shift towards 100% clean energy.”

Could Renewable Energy Actually Be Cheaper?

Providing his take on the renewable vs fossil fuel debate, Matt Hawkins, CEO of multi-algorithm CPU and GPU miner Cudo, told Cointelegraph that behind the scenes, several major players operating within this space have already started to transition to the use of renewable energy, something that he believes is a positive step forward for the crypto industry as a whole. He further added:

“The reality is, in many cases, that renewable energy is cheaper and therefore more attractive to mining farms, provided that there is stability to this power source that is unaffected by seasonal fluctuations, such as the dry season in China, where mining farms previously moved operations to fossil fuel-powered facilities during the dry season.”

Staying on the subject of China, Hawkins opined that the ongoing migration of hashing power out of the country should be viewed as a big positive, especially when it comes to the decentralization of the Bitcoin network. Tabar further believes that the ban on cryptocurrency-related activities has been a blessing in disguise for United States miners who have been seeking innovative ways to find clean energy in the United States.

Is Nuclear Energy An Option Worth Considering?

While a lot of talk surrounding renewable energy continues to circle around solar and wind primarily, North American mining and hosting firm Compass Mining announced that it had gone ahead and signed a 20-year deal with nuclear fission startup Oklo, providing the mining farm with 150 megawatts of energy once its mini-reactors are deployed within the next two to three years.

Also, according to data released by the U.S. Energy Information Administration, nuclear reactors do not contribute to any type of air pollution when in operation. In this regard, Compass CEO Whit Gibbs believes that once his company switches to nuclear power, the cost of mining for his firm will drop “considerably.” Not only that, but Compass is also discussing with the crypto-friendly city of Miami about getting power from the Florida-based Turkey Point Nuclear Plant.

On the matter of nuclear energy being explored by more mining farms in the future, Hawkins reiterated his belief that it “all comes down to cost efficiency,” adding that when the market is buoyant and bullish, Bitcoin mining is profitable across most regions, irrespective of the power costs incurred. He added:

“Mining is a very intensive process and consumes an enormous amount of energy. Thus, the more clean and green sources of energy that can be consumed by mining farms, the better for the industry and our planet. The caveat here is making sure you are not simply pulling renewable energy away from towns and cities to power Bitcoin operations.”

Miners Of The Future

Earlier this month, Bitcoin experienced its largest difficulty drop in its decade-old existence after China decided to issue a blanket ban on its mining industry. Following this decision, BTCs difficulty ratio dramatically tumbled to 45%, resulting in many mining farms being able to produce higher quantities of BTC at a lower cost per unit.

Ever since the ban, the move towards long-term sustainability has been extremely swift, with Musk recently hinting that the crypto industry may be on its way toward a greener future despite not rolling back Tesla’s decision to start accepting Bitcoin payments. Not only that, even recent data by the Cambridge Centre for Alternative Finance suggests that there has been a decline in the amount of energy used to mine BTC.

Therefore, time will tell how the future of the Bitcoin mining industry plays out from here on out, especially as more and more miners start to migrate to various crypto-friendly nations — such as those located in the Nordic countries or Central Asia — where there is a relative abundance of renewable energy.

China Crypto Miners Plot Their Next Moves To Evade Crackdown

The title of the forum was arcane even by cryptocurrency standards: Web 3.0 Blockchain Application Cum Computing Power Overseas and Distributed Storage Conference.

But attendees of the event in Chengdu, China, were clear about why they turned up in the middle of a government crackdown on Bitcoin mining.

They’re looking for ways to stay in crypto, even if it means testing their luck in lesser-known par