Plunging oil price presents an unexpected risk to the crypto market in April

Plunging oil price presents an unexpected risk to the crypto market in April

Plunging oil price presents an unexpected risk to the crypto market in April

The oil price is plummeting rapidly, dropping to as low as $5 in Canada.

The dumping of additional supply by Saudi Arabia and Russia is expected to rattle the oil market further in April, which may cause high-risk assets including stocks and crypto to drop off. Over the next several weeks, JPMorgan expects oil-rich sovereign wealth funds to vamp up their cash-buffer as the dispute between Saudi Arabia and Russia intensifies. A large sell-off of stocks at a time during which the U.S. stock market has just started to recover from recent lows could fuel the next leg down of equities. If crypto-assets continue to demonstrate a high level of correlation with the U.S. stock market, cryptocurrencies could also feel the pressure imposed by the declining oil market.

High probability the Dow Jones recovery is short-lived, prompting more crypto investors to be cautious

Throughout March, the U.S. stock market has dropped off substantially as fear towards the coronavirus pandemic worsened. According to worldometers.info, the U.S. has surpassed 160,000 in confirmed coronavirus cases, forcing major companies in the likes of Macy’s to lay off the majority of their workforce. The Federal Reserve’s projection of 47 million jobless claims in 2020 and the negative economic impact of the coronavirus pandemic is expected to apply significant selling pressure on U.S. stocks. In recent weeks, the crypto market has shown that cryptocurrencies are not immune to a global economic slowdown. When investors frantically start selling all types of assets including gold, crypto-assets remain highly vulnerable to a downturn.

JPMorgan strategist Nikolaos Panigirtzoglou said:

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations.”

A sell-off of an additional $75 billion in stocks, as estimated by the Sovereign Wealth Fund Institute, may slow down the effect the $2 trillion Senate stimulus package has had on the U.S. stock market.

Holger Zschaepitz, market analyst at Welt, said:

“Global stocks mixed as volatile quarter comes to an end and Hedge Fund redemptions could spark another rout. Significant bounce in China’s PMIs helps sentiment. US & European Futures little change.”

Oil price continues to plummet, leaving stocks and crypto more vulnerable (source: bloomberg.com)

Low volumes, rejection of same resistance levels

Both CME and spot exchange volume indicate that there is generally lacking buying demand for crypto assets at this time. The Bitcoin price has been unable to recover above $6,900, primarily due to the large number of sell orders stacked in the $6,900 to $7,100 range. After $6,900 was initially rejected, Bitcoin tested $6,600 and $6,500 each with a lower daily volume, which demonstrates that at this time, there is limited appetite from investors to reenter the crypto market. Many investors are sitting on the sidelines to wait for a better opportunity to enter into the crypto market, and at a period like this, the cryptocurrency market is often at risk of seeing another phase of consolidation.

Article Produced By
Joseph Young

Analyst at CryptoSlate

Joseph Young is a finance and tech journalist. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

https://cryptoslate.com/plunging-oil-price-presents-an-unexpected-risk-to-the-crypto-market-in-april/

Thomas ClaimCo.in

What’s holding Bitcoin back business or consumers?

What’s holding Bitcoin back – business or consumers?

Though Bitcoin started 2020 with a bang, it’s worth taking the start of a new decade

to reflect on the state of the original cryptocurrency. Doing that, we can really only draw one conclusion: it has failed to live up to the hype. Don’t get me wrong. Even over the past few months, we’ve seen some very encouraging news for bitcoin. There have been headlines about rapidly growing institutional adoption, as well as speculation on the rise of crypto in China. All this is great. The problem, especially apparent if you’ve been following the news around bitcoin for a few years, is that headlines like this come up EVERY few months, and bitcoin adoption remains low. Whenever this point is raised, it generates a blame game. Consumers (especially those holding bitcoin) blame businesses for not accepting them. Businesses (and especially those NOT holding bitcoin) say that the currency is simply too risky. Who is right? In this article, we’ll take a look.

The Hype

Before we get into the nuts and bolts of why bitcoin adoption hasn’t hit the levels that some expected, it’s worth reminding ourselves of why businesses and consumers are expected to embrace bitcoin, or indeed crypto more generally. For consumers, the most tangible benefit of bitcoin comes in terms of online privacy. That’s why it was the currency of choice for the Dark Web, and why cryptocurrency bans still lead to rising VPN usage. But here’s the problem: survey after survey has found that whilst consumers claim to care about their online privacy, in reality they appear keen to undermine it given the slightest opportunity. Given this, it doesn’t seem so surprising that many people just pick the easiest way to pay for goods and services, even if this is most insecure.

On the other hand, businesses are supposed to benefit from bitcoin because it offers their customers a more flexible way to pay. Yet many companies seem extremely reticent to start doing this. Not all, of course. Last month, Avnet, credited with being one of the world’s largest distributors of electronic components, said it would enable cryptocurrency payments thanks to a partnership with payment processor BitPay. But here’s the rub: companies saying they will accept bitcoin still makes news headlines. Why is that?

The Reality

In reality, there are barriers for both consumers and companies when it comes to working in bitcoin. So let’s break down the hype, and look at how bitcoin is perceived outside of the crypto community.

For Consumers

There are many reasons why consumers have been reluctant to use bitcoin, and many of them are covered in this excellent article at HackerNoon. In short, bitcoin is still seen as simply too risky for many consumers, not just in terms of the base volatility of the currency, but also due to difficulties in finding exchanges they can trust. This issue of trust is implied within a number of other reasons for slow adoption. Lacking a detailed knowledge of how crypto works, many consumers don’t know the difference between blockchain and cryptocurrency. In addition, in many countries trading in bitcoin is taxed and highly regulated, completely undermining the idea that bitcoin is a “more private” option. Then, finally, there are the hacks. ICO scams hit the headlines on a daily basis, as do stories about crypto-mining malware and ransomware as a service. This means that those consumers who are tech-savvy enough to know how bitcoin works are turned off by the poor level of cybersecurity in the space.

For Businesses

Now let’s look at bitcoin from the opposite perspective: that of businesses. If you look at the history of bitcoin adoption among large companies – and trust me, I have – a depressing trend emerges. Let me show you. In 2014 the travel giant Expedia started accepting Bitcoin after working with Coinbase to make this possible. However, the retailer then quietly stopped taking the cryptocurrency. Then there was Stripe, who also started to accept bitcoin in 2014, and then stopped again in 2018, citing the network’s scalability issues and the resulting decrease in customer’s willingness to pay using the digital currency. Steam started accepting bitcoin in 2016, leading many in the space to raptures. Then – you’ve guessed it – they announced they would stop taking bitcoin payments in 2017, this time due to “high fees”.

These reversals raise a troubling question: why did these companies accept bitcoin in the first place? After all, the fact that they were able to drop this functionality so quickly indicates that consumers were not so happy about paying in this way. In reality, it’s tempting to see these announcements not as business decisions at all, but rather as PR moves. Adult entertainment giant Pornhub launched a cryptocurrency subscription service last year but recently said that crypto accounted for “less than 1%” of it’s income. On the other hand, the site saw it’s organic search rates skyrocket as people came across their names in the media. And that, sadly, appears to be the major benefit for companies of adopting bitcoin at the moment: publicity.

The Solutions

So let’s come back to the question at hand. Are consumers or businesses to blame for the lack of adoption of bitcoin? For consumers, as we already mentioned the most tangible benefit of bitcoin comes as an enabler of online privacy; for businesses, things appear to be a little trickier. In reality, the issues that deter the use of bitcoin are different for both consumers – who worry about security – and businesses – who largely worry about their profitability.

So let’s ask a different, deeper question. Why is it so important that we see widespread adoption of bitcoin? For decades, bitcoin users have been obsessed about buying their morning coffee with Bitcoin and the possibility of huge retailers such as Starbucks accepting it. This is often viewed as “proof” that bitcoin has become a “real” currency, and this is still the way that most crypto news stories are covered. The problem with this dream is that it ignores the benefits that crypto can bring to both consumers and companies. Telling people that there is a new currency they can use to pay for Steam games is great, but in most cases, consumers just see this as arbitrary information. Why pay in bitcoin, when they can pay by credit card?

In short, Bitcoin is going to need a careful process of image management if adoption is going to rise. Instead of stressing that it is “just like other currencies”, journalists need to point out exactly where it DIFFERS from other forms of money. In short, and as we’ve previously pointed out, crypto newsmakers and journalists need to get on the same page, and take the dawning of a new decade as an opportunity to get back to basics. To remember why bitcoin is special, and stop trying to make it like other currencies.

Article Produced By
Samuel Bocetta

Sam Bocetta is a freelance journalist specializing in U.S. diplomacy and national security, with emphasis on technology trends in cyber warfare, cyber defense, and cryptography. Previously, Sam was a defense contractor. He worked in close partnership with architects and developers to identify mitigating controls for vulnerabilities identified across applications and performed security assessments to emulate the tactics, techniques, and procedures of a variety of threats.

https://cryptoslate.com/whats-holding-bitcoin-back-business-or-consumers/

 

Thomas ClaimCo.in

Binance Establishes a Blockchain Research Institute in China

Binance Establishes a Blockchain Research Institute in China

 Binance Academy, the non-profit educational arm of crypto exchange Binance,

which had its beta launch in August 2018, announced on Sunday (March 29) that it has established a blockchain research institute in Shanghai, China.Binance says that Lingang Blockchain Technology and Industry Research Institute (aka "Lingang Research Institute") will be "the hub for blockchain talent, shaping for breakthroughs in blockchain technology, and accelerating the application of blockchain technology through integrations with artificial intelligence (AI), big data, the Internet of Things (IoT), and other cutting-edge technologies."

Helen Hai, who is leading this initiative, had this to say:

"Blockchain revolution will fundamentally alter the way we live, work, and relate to one another. Nevertheless, technology should work for people and it should lift humanity into a new collective and moral consciousness based sense of common destiny. "Therefore, we must shape a future that works for all of us by putting people first and empowering them.

"In establishing the Lingang Research Institute with our local partners, Binance Academy endeavors to build a leading think tank and research hub that contributes to large-scale developments in blockchain technology to further the growth of the industry. "Leveraging Binance’s blockchain ecosystem and industry resources, we are committed to building the blockchain industry, driving blockchain research, and cultivating top blockchain talent.” Don Tapscott the Canadian business executive, author, and consultant, who is the CEO of the Tapscott Group and the Co-Founder and Executive Chairman of the Blockchain Research Institute (BRI), will have the title of "Honorary Dean" at Liang Research Institute.

Tapscott said:

"Blockchain represents the second era of the Internet – the Internet of Value — and can help us build more innovative and productive organizations. Research, education, and skill development are all critical to moving forward, and we look forward to collaborating with Lingang Blockchain Academy in helping achieve this transformation in China."

Article Produced By
Siamak Masnavi

Siamak received his PhD in Computer Science from University of London in 1992. He has worked as a research scientist, technical author, software developer, and journalist. Since 2014, he has been researching cryptocurrencies and other applications of blockchain technology.

https://www.cryptoglobe.com/latest/2020/03/binance-establishes-a-blockchain-research-institute-in-china/

Thomas ClaimCo.in

Bitcoin’s Bull Run May Now Immediately Follow Halving Jihan Wu Says

Bitcoin's Bull Run May Now Immediately Follow Halving, Jihan Wu Says

Bitmain co-founder Jihan Wu expects the bull run on bitcoin prices to be delayed following May's Halving.Wu is bullish on bitcoin's outlook, in light of government economic bailouts in response to the Coronavirus pandemic. 

Bitmain co-founder Jihan Wu says the bull run for bitcoin prices may not come immediately after the halving event in May.

Wu, who co-founded and served as CEO of mining rig manufacturing giant Bitmain before stepping down last year, told 8BTC the price run for bitcoin will likely be delayed following the halving. Wu said he was positive about the future of bitcoin, and explained that recent economic policies such as government “quantitative easing” packages could lead to crypto-assets becoming more valuable. Despite the potential, Wu cautioned that bitcoin has a price top like any other asset and would undergo periods of fluctuating growth. 

He said, 

As bitcoin’s market cap grows, its volatility decreases and becomes more stable. That means we may not see abrupt spikes in its price. No matter how high bitcoin goes, one day it will reach a top. Before that, it will see prices [with] flatline growth with some twists in the next few years.

He continued, 

I think the bull this time around may not come immediately after the halving. There likely will be a delay in time.

Wu also disputed the notion that bitcoin serves as a “safe haven” asset against traditional market volatility. Instead, he argued that bitcoin has become intertwined with the broader financial market and responds to similar impacts on global economic stability.

Article Produced By
Michael LaVere

Mike is a financial and cryptocurrency journalist for CryptoGlobe covering the industry since 2017. Mike is an alumnus of the University of North Carolina Chapel Hill.

https://www.cryptoglobe.com/latest/2020/03/jihan-wu-bull-run-may-not-come-immediately-after-bitcoin-halving/

Thomas ClaimCo.in

BitAngels Converts its Blockchain Events Into an Online Format

BitAngels Converts its Blockchain Events Into an Online Format

crypto conference

Most global events around the globe have now been canceled due to the novel coronavirus crisis.

BitAngels is shifting its attention to virtual events in an effort to engage the blockchain community as a whole. Now is the time to cancel all physical events and transition to an online-oriented solution.

A Smart Approach by BitAngels

Several companies and organizers have already made that decision in recent weeks. BitAngels is one of the more recent firms to explore this particular option. Its focus lies on connecting global blockchain enthusiasts in a meaningful manner. By organizing several virtual events, like-minded individuals can still come together to exchange ideas and promote projects. Considering how BitAngels’ network spans 15 chapters across different countries, this option can be very interesting to explore.

More and more countries are entering full lockdown mode due to the novel coronavirus crisis. Events are shifting to online versions, and a lot of employees now fully embrace teleworking as well. BitAngels Virtual Events will be hosted in the same way was regular events, but in an online environment. A maximum of 5 companies will present during each event, following by a panel or keynote speech. Anyone in the world can access these events, whereas investor members can benefit from on-demand recordings.

Article Produced By
JP Buntinx

https://nulltx.com/bitangels-converts-its-blockchain-events-into-an-online-format/

Thomas ClaimCo.in

TRON Users get TronLink Browser Extension for Bitcasino Deposits and Withdrawals

TRON Users get TronLink Browser Extension for Bitcasino Deposits and Withdrawals

NullTX Bitcasino

Expanding on an already bustling e-gaming ecosystem,

Bitcasino has integrated the TronLink browser extension to its platform, granting greater accessibility and security for TRON (TRX) users.

E-Gaming and Crypto

As Bitcoin and cryptocurrencies overall have risen in value and popularity over the past few years, the new digital economy has attracted swathes of users, spurring on the creation of innovative platforms, services, and solutions to this new exciting space. One of the most popular and earliest ways for people to interact with their cryptos has been e-gaming, with Bitcasino being a leader in this area.

Since 2014, Bitcasino has supplied players with a whopping variety of options boasting more than 2,000 traditional and modern games from slots to live dealer casinos. The latest addition to the already robust platform is a web browser extension designed for the TRON community. Being one of the more popular cryptocurrencies on the market, this extension broadens the potential scope of Bitcasino’s users as well as creating a smooth deposit and withdrawal system for TRON users. Commenting on the development, Tauri Tiitsaar,

Director of Bitcasino said: 

“Crucially TronLink offers our players both security and speed with deposits and withdrawals; it is the next innovative step in ensuring our players have the best possible experience with Bitcasino. Gone is the need to deposit or withdraw TRON to hardware wallets, open an app on your phone or any other website. Players can easily manage their instantaneous deposits and withdrawals without any extra hassle.”

According to a press release, the TronLink extension connects Bitcasino players to TRON blockchain network, enabling simple and secure deposits and withdrawals, with funds and private keys protected. 

The TRON Connection

While considered a novelty by many, cryptocurrencies and blockchain technology bring truly impactful changes to the way in which people interact with technology and their finances overall. Blockchain technology has enabled the creation of digital economies that thrive thanks to the privacy and sovereignty they give to users. Furthermore, there is a lot to be said about the trust it builds between players and the house.

Thanks to the immutable and transparent nature of blockchain technology, e-gaming platforms such as Bitcasino can easily prove that they aren’t scamming users out of their money. Furthermore, blockchain and cryptocurrencies offer players anonymity, financial sovereignty and a novel means to gamble online. With this latest development, following the partnership with the Tron Foundation in 2019 to allow for easy use of TRX on all Coingaming brands of casino and sportsbook, Bitcasino continues to set the standards in the crypto gaming industry for fast, secure and easy transactions.

Article Produced By
James Woods

Cryptophile, Tech Geek, and an avid developer.

https://nulltx.com/tron-users-get-tronlink-browser-extension-for-bitcasino-deposits-and-withdrawals/

Thomas ClaimCo.in

Biggest Bubble in the Economy Isn’t Bitcoin BTC It’s the Bond Market: Max Keiser

Biggest Bubble in the Economy Isn’t Bitcoin (BTC) – It’s the Bond Market: Max Keiser

Thomas ClaimCo.in

Santander and Ripple Launching Blockchain-Powered Payment Service in Mexico

Santander and Ripple Launching Blockchain-Powered Payment Service in Mexico

Santander, the 16th largest bank in the world with $1.74 trillion assets under management,

is planning to launch its Ripple-powered payments app One Pay FX in Mexico this year. The blockchain-based international payment solution, which went live in 2018, has already added six countries: Spain, the United Kingdom, Brazil, Poland, Portugal and Chile.

According to a filing submitted to the US Securities and Exchange Commission, Santander’s multi-corridor international blockchain app aims to offer customers increased transparency and predictability, and improve “the current sub-optimal customer experience and client stickiness through a best-in-class global payment system.” Traditional borderless payments can take up to five days to process. One Pay FX says its users can expect their payments to arrive on the same day while benefiting from competitive rates.

The app also provides a seamless digital experience with several details about each transaction including bank fees, exchange rates, estimated delivery time and a notification that the money has been received. One Pay FX uses Ripple’s payment messaging system, as opposed to Ripple’s native token XRP, to move money between currencies. The tech product, which is a competitor to the international financial network Swift, helps banks settle fiat-to-fiat transactions in real time by using messaging to clarify and verify transaction details.

Article Produced By
Daily Hodl Staff

https://dailyhodl.com/2020/03/28/santander-and-ripple-launching-blockchain-powered-payment-service-in-mexico/

Thomas ClaimCo.in

Bitcoin Stalls in the Mid-6000s as Stock Market Rally Continues

For over 48 hours, Bitcoin has flatlined — establishing a tight, less-than-10% range in the mid-$6,000s.

This comes after BTC embarked on a 25% rally from the $5,000s to a price as high as $7,100 that transpired this weekend and early this week, which coincided with a smaller but equally-as-notable increase in the value of gold. Bitcoin’s lack of direction comes as the stock market has rebounded hard. Really hard. Since the bottom near 18,000 points, the Dow Jones Index has rallied to 21,780 as of the time of writing this, marking a jaw-dropping recovery of 20%. Global indices have reflected this move, rallying almost as hard as the Dow.

This surge comes despite record-level unemployment claims around the world; in fact, numbers released Thursday morning revealed that 3.3 million Americans have filed for unemployment over the past week, which is four times higher than any previous record of this metric, and seemingly a sign that Great Depression-level unemployment is a possibility. So, it seems that Bitcoin seems to be mostly nonreactive to news regarding traditional markets or traditional markets themselves, leaving many wondering what’s next for the cryptocurrency.

Bearish Below $8,000

Despite the rally, most seem to be convinced that this is but a deviation from the $5,000s, where a majority of analysts expect Bitcoin to accumulate around prior to a bull market breakout. Indeed, in a recent analysis published to TradingView,  cryptocurrency analyst Filb Filb explained that as long as Bitcoin remains below $7,000 and $8,000, it is leaning bearish. He cited the fact that there exists likely the “worst cluster of resistance seen since the bear market of 2018” at $8,000:

  • The 200-day moving average.
  • The 100-day moving average.
  • The 50-day moving average.
  • The 20-month moving average.
  • Bitcoin’s 61.8% Fibonacci Retracement of the February high to the $3,800 bottom.
  • And the yearly pivot level.

Furthermore, Nunya Bizniz on March 26th noted that Bitcoin’s weekly candle is currently below the bottom band of the non-linear regression curve that has acted as support for Bitcoin for over eight years of price action, suggesting that the BTC’s secular growth trend may be coming to an end, at least for the time being.

Long-Term Outlook is Anything But Bearish

Some have ignored the short-term directionality entirely, arguing that whether it be $4,000 or $7,000, Bitcoin’s fundamental strength is only growing. Per previous reports from Blockonomi, Galaxy Digital founder Mike Novogratz told CNBC on Monday that he has been buying the dips in both gold and Bitcoin for one key reason: central banks have started to “run amok” with their policies amid these times of economic distress.

He explained further:

If there was ever a time — debasement of fiat currencies, monetization of trillions of dollars of debt, this is the time for Bitcoin.

This was echoed by Placeholder Capital’s Chris Burniske, the analyst who coined the term “crypto-assets.” He wrote on Twitter that this crisis “will pass, and crypto’s fundamentals will have strengthened through it.” Burniske highlighted how “new technologies rise as old systems break, and often it takes a crisis to reveal the flaws of the old system in full,” presumably referencing the issues fiat money and financial markets have seen as they’ve come under the record-level economic stress posed by the coronavirus outbreak.

Article Produced By
Nick Chong

Since 2013, Nick has shown interest in Bitcoin and cryptocurrencies. He has since become involved in the industry as a full-time content creator, working for NewsBTC, Bitcoinist, LongHash, among other outlets. Aside from covering the news, Nick is a Creative at Taiwanese technology company HTC.

https://blockonomi.com/bitcoin-stalls-in-the-mid-6000s/

 

Thomas ClaimCo.in

Coronavirus the Halving and a Price Drop: Bitcoin Mining Marches On

Coronavirus, the Halving and a Price Drop: Bitcoin Mining Marches On

mining and coronavirus

CoinShares, a Jersey-based asset management firm with offices in London and New York

that provides advice and other services for investors, released a statement on the state of Bitcoin mining during the global uncertainty caused by the coronavirus, ahead of a planned, more thorough June 2020 mining report. In it, CoinShares’ research director Christopher Bendiksen wrote that the current talk of a possible mining “death spiral” due to coronavirus-based lockdowns makes for dramatic reading, but is not at all based in reality.

“‘Mining death spirals’ do not actually happen in real life,” Bendiksen wrote in the statement. “They are highly theoretical edge cases without any historical real-world precedent … Mining is here to stay.” Confidence in the mining space and in bitcoin generally, despite economic uncertainty around the world, is high at the firm. “Bitcoin is arguably the only financial asset that can operate remotely — nobody needs to go to work to make bitcoin work,” Danny Masters, executive chairman of CoinShares, wrote in a supplementary statement sent to Bitcoin Magazine. “Nobody needs to fill an ATM machine. While things look bleak for everything, I can’t think of a better asset to buy than bitcoin.”

Difficulty, Block Frequency and Hashrate

The cost of Bitcoin mining is largely a function of the difficulty — a dynamic metric determined by the protocol itself that can adjust both up and down to keep block times at 10 minutes on average. The difficulty has reset downwards many times — sometimes dramatically as the result of a pullback in price, as in November and December of 2018 — but the network has never ground to a complete halt or even come anywhere close to doing so. “There is no price level that could cause Bitcoin’s emission rate to increase,” reads Benedickson’s statement. “When the dust settles on the current financial crisis, the Bitcoin monetary system will have created exactly as many bitcoins as originally intended.” In essence, the Bitcoin mining difficulty adjustment keeps Bitcoin block frequency steady, no matter the amount of total network hashrate.

What About the Halving?

“If prices do not recover, the hashrate will fall — and when the halving hits, it will fall again,” wrote Bendiksen. “This is not a problem for Bitcoin, nor is it unprecedented.”  And it’s not always the biggest bitcoin mining groups that will survive a major bitcoin price recession, contrary to what you may be hearing. It will be the groups that have the cheapest energy costs and the newest, most efficient hardware. “The halving is still a couple months away and many miners are already closing up shop,” Bendiksen said in a follow-up interview with Bitcoin Magazine. “So, at the time of the halving, we will likely be in a completely different difficulty environment than now. Recent estimates show that as much as 25 percent of the peak-level hashrate may already have been turned off.”

While CoinShares suggests that post-halving mining will be different than the current and near-future mining environment, Bendiksen does believe today’s status offers an insightful window. “For all of those who are worried about the halving, this is a perfect prelude because the end effect on miners is the exact same,” he wrote in his statement. “Hence, the hashrate dynamics we’re likely to see in the upcoming weeks will be an excellent parallel to those we might also see after the halving in May.” Bendiksen acknowledged that some of the higher-cost miners may drop out after the halving, but he also sees mining companies stabilizing and building for the foreseeable future.

Building the Mining Infrastructure of the Future

Meanwhile, Blockstream Mining is quietly building its mining business with facilities in Quebec, Canada and Georgia, USA, with over 300 MW of energy and a thriving colocation service offering equipment, space, bandwidth and power rental for miners who can benefit from inexpensive energy without needing to negotiate separately with local authorities. According to Blockstream CSO Samson Mow, the company has taken steps to be ready for the halving, come what may. Despite the current turmoil, it is focused on the long term. “For Blockstream’s mining operations, our electricity and operational costs are low enough that we can outlast most miners and be the last ones standing,” Mow told Bitcoin Magazine in an interview. “Also, we’ve mined bitcoins for quite some time and we HODL for the medium term, so a price drop during the halving would actually have no impact for us.” Mow noted that, while it’s hard to predict the price, he believes some inefficient miners may need to shut off, while most miners will be fine through the halving.

“I think the bitcoin price will recover to a point where, post-halving, it will still be profitable to mine BTC,” Mow said. “Even if that doesn’t happen, it’s not likely we will see a massive drop in hashrate. Many miners are already on the latest generation of equipment and have already recouped those costs, so they only have to deal with opex [operational expenditures].” CoinShares, a Jersey-based asset management firm with offices in London and New York that provides advice and other services for investors, released a statement on the state of Bitcoin mining during the global uncertainty caused by the coronavirus, ahead of a planned, more thorough June 2020 mining report. In it, CoinShares’ research director Christopher Bendiksen wrote that the current talk of a possible mining “death spiral” due to coronavirus-based lockdowns makes for dramatic reading, but is not at all based in reality.

“‘Mining death spirals’ do not actually happen in real life,” Bendiksen wrote in the statement. “They are highly theoretical edge cases without any historical real-world precedent … Mining is here to stay.” Confidence in the mining space and in bitcoin generally, despite economic uncertainty around the world, is high at the firm. “Bitcoin is arguably the only financial asset that can operate remotely — nobody needs to go to work to make bitcoin work,” Danny Masters, executive chairman of CoinShares, wrote in a supplementary statement sent to Bitcoin Magazine. “Nobody needs to fill an ATM machine. While things look bleak for everything, I can’t think of a better asset to buy than bitcoin.”

Difficulty, Block Frequency and Hashrate

The cost of Bitcoin mining is largely a function of the difficulty — a dynamic metric determined by the protocol itself that can adjust both up and down to keep block times at 10 minutes on average. The difficulty has reset downwards many times — sometimes dramatically as the result of a pullback in price, as in November and December of 2018 — but the network has never ground to a complete halt or even come anywhere close to doing so. “There is no price level that could cause Bitcoin’s emission rate to increase,” reads Benedickson’s statement. “When the dust settles on the current financial crisis, the Bitcoin monetary system will have created exactly as many bitcoins as originally intended.” In essence, the Bitcoin mining difficulty adjustment keeps Bitcoin block frequency steady, no matter the amount of total network hashrate.

What About the Halving?

“If prices do not recover, the hashrate will fall — and when the halving hits, it will fall again,” wrote Bendiksen. “This is not a problem for Bitcoin, nor is it unprecedented.” And it’s not always the biggest bitcoin mining groups that will survive a major bitcoin price recession, contrary to what you may be hearing. It will be the groups that have the cheapest energy costs and the newest, most efficient hardware. “The halving is still a couple months away and many miners are already closing up shop,” Bendiksen said in a follow-up interview with Bitcoin Magazine. “So, at the time of the halving, we will likely be in a completely different difficulty environment than now. Recent estimates show that as much as 25 percent of the peak-level hashrate may already have been turned off.”

While CoinShares suggests that post-halving mining will be different than the current and near-future mining environment, Bendiksen does believe today’s status offers an insightful window. “For all of those who are worried about the halving, this is a perfect prelude because the end effect on miners is the exact same,” he wrote in his statement. “Hence, the hashrate dynamics we’re likely to see in the upcoming weeks will be an excellent parallel to those we might also see after the halving in May.” Bendiksen acknowledged that some of the higher-cost miners may drop out after the halving, but he also sees mining companies stabilizing and building for the foreseeable future.

Building the Mining Infrastructure of the Future

Meanwhile, Blockstream Mining is quietly building its mining business with facilities in Quebec, Canada and Georgia, USA, with over 300 MW of energy and a thriving colocation service offering equipment, space, bandwidth and power rental for miners who can benefit from inexpensive energy without needing to negotiate separately with local authorities. According to Blockstream CSO Samson Mow, the company has taken steps to be ready for the halving, come what may. Despite the current turmoil, it is focused on the long term.

“For Blockstream’s mining operations, our electricity and operational costs are low enough that we can outlast most miners and be the last ones standing,” Mow told Bitcoin Magazine in an interview. “Also, we’ve mined bitcoins for quite some time and we HODL for the medium term, so a price drop during the halving would actually have no impact for us.” Mow noted that, while it’s hard to predict the price, he believes some inefficient miners may need to shut off, while most miners will be fine through the halving. “I think the bitcoin price will recover to a point where, post-halving, it will still be profitable to mine BTC,” Mow said. “Even if that doesn’t happen, it’s not likely we will see a massive drop in hashrate. Many miners are already on the latest generation of equipment and have already recouped those costs, so they only have to deal with opex [operational expenditures].” 

Investors Are More Cautious But Still Interested in Bitcoin Mining

Ryan Porter, head of business development for mining-focused financial services and brokerage firm BitOoda, was busy fielding inquiries about new North American mining opportunities in December 2019. Now, he said, he’s still getting inquiries but potential mining companies are more cautious and want to lock in competitive energy pricing. “Overall, what we’re seeing is the miners that were well positioned to be profitable after the halving are still well positioned now, where the miners that would have needed to shutter operations have had to fast track those plans,” Porter told Bitcoin Magazine in a phone interview. “We’ve seen hashrate fall precipitously as now unprofitable mining rigs are being taken offline, and conservative operators who were thoughtful about managing their bitcoin price risk are now looking to purchase hardware at distressed prices.”

Porter is confident that the best-managed mining operations that have inexpensive power sources and efficient computers will survive the halving. What he’s seeing is the next stage in the evolution and maturation of the mining industry. “Where we are starting to see a change in planning for miners is how they’re approaching risk management,” he added. “We had previously engaged with miners on implementing BTC price-hedging programs, and we’ve had quite a few of those firms reach out to us over the past week to start a meaningful risk management engagement.”

The CoinShares team is confident that bitcoin and its critical mining industry will ride out the coronavirus storm. In his interview with Bitcoin Magazine, Bendiksen noted that, unlike the fiat monetary system, the bitcoin system is “run coldly and unemotionally by a network of computers according to pre-set rules.” “These computers never need to work from home, never get sick, scared or panicked and can not be influenced to print money by charismatic or powerful politicians, even in the most challenging times,” he said. “They simply execute their code as prescribed, no matter what is happening in the world.”

Article Produced By
Jessie Willms

Jessie Willms is a planet earth based former government and political researcher and communications officer helping to document the FinTech revolution and its impact on traditional institutions and governments.

https://bitcoinmagazine.com/articles/coronavirus-the-halving-and-a-price-drop-bitcoin-mining-marches-on

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