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Bitcoin Hash Rate Remains Steady as Miners are Wiped Out by China Floods

Bitcoin network hash rate, an evaluation of the activity being undertaken by miners on a particular blockchain, has remained high despite the presence of floods in China. Nevertheless, some mining operatives have faced the wrath of being destroyed. On Twitter, several users have reported the disastrous effects of floods in Sichuan, a Chinese province. They have proclaimed that one of the Bitcoin mining institutions had been destroyed.

Officials from Pooling, a huge Bitcoin network pool, tweeted:

A local mining farm based in Sichuan, China was DEVASTATED by the recent heavy rainfall in the region.

Moreover, photographic evidence linked to the floods was availed by a co-founder of 8btc, a crypto media outlet, known as Red Li. He, however, asserted that the disastrous event had not compromised Bitcoin’s network conduct as the hash rate remained steady.

On the other hand, the Bitcoin network was not stable last year. Expressly, in July 2018, China suffered a similar fate, but the effects were catastrophic as Bitcoin’s performance dramatically diminished. This occurred after powerful floods destroyed the mining hardware.

Information availed by Bitinfocharts, a monitoring scheme, the hash rate averaged 79 quintillion hashes every second on August 21.

New York-Based Power Plant Greenidge Generation Mines $50,000 Worth of Bitcoin on a Daily Basis

According to a Bloomberg report, Greenidge Generation power plant in New York has learned to do things differently as it’s currently using electricity to mine about $50,000 worth of Bitcoin on a daily basis.

Atlas Holding, the private equity firm that owns the facility, installed some 7,000 crypto mining machines in its power plant in Dresden, New York.

Greenidge’s 65,000-square-foot facility was initially built in 1937 as a coal plant before eventually being closed down in 2011. The plant remained dormant for five years before Atlas Holdings, Connecticut-based private equity company, converted it into a natural gas plant in 2016 to generate clean energy.

Due to its revenue generated from crypto mining, Greenidge can now operate all year round. The plant was only able to operate in the summer and winter seasons when there is a high demand for electric power prior to generating revenue from crypto mining.

Because of the high power that crypto mining machines use in their operations, countries have initiated stricter measures to discourage miners from conducting their mining activities. Some of these measures involve increased electricity fees, which have compelled most miners to move to other cities with favorable electricity billing.

But Greenidge mining machines use “behind the meter” power that makes mining operation less expensive. The mining machines only consume about 15 megawatts of power of a day out of the 115 megawatts of capacity that the power plant generates. The machines incur the minimum cost of production that can be easily offset by other power-related services that Greenidge plant supplies to New York state.

Bitcoin Halving

Crypto miners are afraid that the Bitcoin mining will become unprofitable after the halving event in May when miners would see their rewards slashed in half. However, the plant’s owners believe that the mining facility will remain profitable due to its “unique position.” Tim Rainey, Greenidge’s CEO, said, “The company is in a favorable market position regardless of the outcome of the Bitcoin halving. Our cogeneration facility has a unique position, hence, making us having the capacity to generate money and make progress in down markets and enable us to handle downside volatile market swings.”

The halving that is expected to happen in May 2020 occurs every four years and slashes the rate at which the Bitcoin network issues new coins by half. The process of halving limits the number of new Bitcoins, which can be added in the network to ensure that the more scarce it becomes, the greater the demand it will be. The event will affect Bitcoin miners who will be required to have even more processing power in crypto mining equipment, which implies higher energy consumption. Miners will take a longer time to complete the transaction while getting half the reward for their efforts.

While Bitcoin miners are calculating the impact of May’s upcoming halving, the Greenidge Generation plant is not worried as it is well equipped to continue with its activities.

Image via Shutterstock

Why Energy Experts are Watching the Crypto Market Closely

The oil market is currently witnessing a tussle between Russia and Saudi Arabia on the issue of oil production to counter the slowdown of the US Market.

If the rumors are to be believed, the Iranian Government is making efforts to use cryptocurrency to bypass the sanctions which resulted from their involvement in the manipulation of the oil market. If one takes a closer look, China, Russia, and Iran have been some of the most active countries taking a keen interest in the cryptocurrency space. They are also some of the top oil-producing countries in the world.

Many cryptocurrencies, particularly Bitcoin operates on ‘Proof-of-Work’ algorithms which require energy for mining.

“Big crypto mining pools are rejecting Iranian miners because of sanctions We don’t give a damn about sanctions. If we get sanctioned we’d just shut down the company and open a new one.” as stated by Mikhael Jerlis, CEO of the Russian EMCD.IO mining pool

The three years of the proxy war between Saudi Arabia and Iran in Yemen has left the oil market in chaos. The catalyst appears to be the attacks executed by Houthi rebels at Red Sea’s Bab al-Mandeb Strait resulting in Saudi Arabia halting its oil supplies. This is why the crypto savy alliance of Russia, China and Iran are keeping a close watch on US sanctions and Saudi Arabia’s oil movement.

How Cryptocurrency Kicks In?

It is interesting to address that Bitcoin or for that matter, any other cryptocurrency can replace the ‘dollar’ in the oil market since Bitcoin is the least correlated asset in the glocal economy as compared to the oil market. Despite the havoc ‘Coronavirus’ is creating on the global GDP (reportedly $2.7 Trillion Loss), Bitcoin doesn’t seem to be shaken off from its steady route, having gained twice the market price of $7,900 as compared to last year’s market price.

“You could argue they [gold and the dollar] are inversely correlated. That could be an indication of how bitcoin will be impacted if it’s deemed to be a store-of-value asset class.” Aboualfa said.

However, he also mentioned that Bitcoin/cryptocurrency is looked upon as ‘sanction play’ and not any store-of-value asset class.

Apart from bypassing sanctions via playing with Bitcoins, another factor that makes the energy experts keep a close watch on the crypto market is their deep pockets in the crypto markets. Bitcoin, like any other asset, is currently without a doubt a ‘hot stock’ which is wanted by everyone. Whether or not it is going to make a big mark in the future, its potential to earn you big money in the current case scenario is very real.

On 7th March 2020, Bitcoin took a big hit as its price crumbled to $7,500 from a soaring $9,100. A total of $26 Billion was completely wiped off from the cryptocurrency market. Such a reaction came soon after the oil market plunged 24%, the worst day since 1991. The US West Texas Intermediate Crude posted their report on Monday with a drop as low as 24.59% settling for $31.13/Barrel. The drop in terms of absolute dollars was $10.15.

Apart from the drop on 7th March, Bitcoin again faced a nose crushing fall on 12th March where the price fell below $3,000 bouncing back to struggling $5,500. The reason for such a fall was again attributed to the poor stock market condition in US and fall in Oil Price, not to forget the COVID-19 outbreak.

Source: CoinMarketCap

Such kind of dips in the crypto markets (triggered by oil market) are huge opportunities for the big corporate giants and energy experts with a vested interest to buy crypto assets at low prices and make a profit out of it once the market is on the rise again.

Jehan Chu, co-founder of Kenetic Capital said,”For those who have long term investment horizons, bitcoin is absolutely a buy during these dips. We can expect more of this volatility sparked by macro health and financial shocks, but ultimately long term investments in the digital future and it’s key asset Bitcoin will be a winning strategy”

In order to maximize profits and take the full advantage (even when oil market is down), energy experts are keeping a close watch on the crypto market as part of their asset portfolio diversification.

Image via Shutterstock

Bitmain Launches Cheaper Mining Machines After Bitcoin Halving and Losing Market Share to MicroBT

Bitmain has launched a cheaper version of a Bitcoin mining machine, Antminer T19, compared to its more pricy predecessor Antminer S19.

Bitmain has been losing its market share to its rival, MicroBT, which launched its M30S++ Bitcoin miner in April this year.

The Antminer T19 has a hashrate/ mining power of 84 terahash per second (TH/s), and power efficiency of 37.5 joules per terahash (J/TH). The price of this new mining machine is around $1750, while the S19 costs around $1785.

According to F2Pool, the new mining model can generate a profit of around $3.14 per day, while the S19 could generate around $3.95 per day.

Manufacturing delays have been caused by the coronavirus outbreak, causing a reduction in growth in Bitcoin’s computing power. Bitmain has been dominating the cryptocurrency mining hardware industry since 2017, and has even tried to file an IPO with the Securities and Exchange Commission (SEC) in the United States.

Canaan Creative, another Bitcoin mining titan, as well as Bitmain have failed during the crypto winter in 2018 to conduct the offering. However, Bitmain has discreetly filed an application with the US SEC in late 2019, and anonymous informed sources according to a Tencent report has revealed that Deutsche Bank may have been sponsoring the application.

Bitcoin halving

The latest Bitcoin halving took place in May 2020. Each time Bitcoin halving takes place, the number of Bitcoins entering circulation every 10 minutes, also known as block rewards, will fall to half, to 6.25 from 12.5 in May.

As the amount of supply of the crypto is decreasing, the demand most likely will stay the same, but possibly lead to an increase in Bitcoin’s price. Experts believe that there will be less Bitcoin available in the market if the miners will be selling less of the cryptocurrency.

MicroBT CEO alleged dispute with Bitmain

The Chinese Police have just resumed its investigation of intellectual property infringement involving Yang Zuoxing, CEO of Shenzhen Bit Microelectronics Technology, and Bitmain.

In the course, Yang was being arrested to help in the investigation of the patent of Bitmain he allegedly infringed upon and if found guilty, would be sentenced to prison.

The news about his arrest was revealed by insiders who were around when the police took hold of him on the basis of intellectual disputes in Bitmain.

Yang was once staff in the company; working as the director of processor design, he developed the Antminer S7 and S9 models. However, Yang exited the company when the talk over equity stake was a debacle.

Following from this, Bitmain took MicroBT to court alleging that Yang has infringed upon their patent.

Image via Shutterstock

American Fugitive Wanted for $722 Million Crypto Scam Arrested in Indonesia for Child Sex Offenses

An American fraud fugitive wanted by the US Federal Bureau of Investigation (FBI) for a $722 million cryptocurrency scam has been nabbed in Jakarta, Indonesia, for child sex crimes. Russ Medlin has been on the wanted list of the FBI based on his involvement in a fraudulent Bitcoin scheme dubbed the Bitclub Network.

End of the road

It seems the proverbial forty days of a thief have dawned on Medlin as the US Justice Department found him answerable for a fake bitcoin mining that siphoned more than $700 million from investors in December 2019. Three of his accomplices were arrested, but he managed to flee from the long arm of the law.

US prosecutors allege that Medlin was the ringleader of the fraudulent Bitclub Network that emerged to be a high-tech Ponzi scheme. The scam was operational from April 2014 until December 2019, and unsuspecting investors were lured with earnings purported to be generated from Bitcoin mining.

Nevertheless, it is not clear whether the US authorities will ask for his extradition to face charges for the cryptocurrency scam.

Roma Hutajulu, Jakarta police special investigation director, noted:

We are still waiting for a request from the US Embassy.”

The cryptocurrency fraud headache

According to a report by Fortune Business Insights, the cryptocurrency market is expected to hit $1.75 billion by 2027 though it is becoming evident by the day that fraud in this sector is a considerable stumbling block.

However, the law is catching up with crypto fraudsters as witnessed in South Korea after a district court froze 15 cryptocurrency wallets belonging to Cho Ju-bin, the ringleader of the “Nth Rooms” scandal where underage girls were sexually exploited.

During the time of arrest, Medlin had $20,000, and if convicted under the Indonesian Child Protection Laws, he could be imprisoned for 15 years. Time will tell whether he will face the cryptocurrency fraudulent charges he is facing in the US.

Bitcoin Network Mining Difficulty Nears ATH as Institutional Investors Dismiss BTC Price Volatility

Bitcoin’s price has retraced slightly over the weekend, but has also managed to secure some gains as the cryptocurrency is currently trading at $18,544 at press time. Bitcoin’s price has risen by over 4 percent in the past 24 hours.

Bitcoin’s network mining difficulty has risen by 8.9 percent today. According to on-chain crypto analytics firm Glassnode, Bitcoin’s mining difficulty is now only 4.4 percent below its all-time high.

Historically, when Bitcoin’s mining difficulty rose in 2013 and 2016, it also marked the start of the bull cycle in those years. The increase in mining difficulty could also mean more fees needed from the users.

As Bitcoin managed to climb over 4 percent in the past 24 hours, some analysts suggest that it was due to institutional investors dismissing the world’s largest cryptocurrency’s volatility. Holger Zschäpitz explained:

“Bitcoin bounces back as institutional investors seem to dismiss volatility. Guggenheim fund reserves right to put up to 10% in #Bitcoin Trust.”

Zschäpitz noted in conjunction with the recent news of an institutional investor looking into investing in cryptocurrencies. Recently, Count Guggenhein Partners LLC has seeked to invest in Bitcoin as noted in a US Securities and Exchange Commission filing on Nov. 27. The filing read:

“The Guggenheim Macro Opportunities Fund may seek investment exposure to Bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust.”

Guggenheim’s potential investment in Bitcoin has been echoed by prominent investors including Paul Tudor Jones and Stanley Druckenmiller, who have announced that they have invested in the world’s largest cryptocurrency.

Crypto analytics firm Santiment noted that as positive comments about Bitcoin have been nearing its 6-month high levels, however, negative comments have also icnreased, but to a smaller degree. Market sentiment drives cryptocurrency markets, according to Santiment.

Bitcoin Mining Pools Negatively Impacted as Northwest China Undergoes a Complete Blackout

The hashrate of various Bitcoin (BTC) mining pools dropped due to the blackout impacting Northwest China.

Pseudonymous Chinese reporter tweeting under “Wu Blockchain” explained:

“The hashrate of Bitcoin mining pools plummeted in 24 hours. Antpools fell by 24.5%, BTC.com 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.”

These inspections have been prompted by security accidents in various coal mines in China triggered by flooding and gas explosions, according to Chinese state media Xinhua. Therefore, the seriousness of these incidents has necessitated the intervention of relevant authorities.

66% of global hash rates come from China

According to a study by UK-based company CoinShares, as much as 66% of global hashrates come from and are controlled by Chinese entities. Technological advancements and cheap electricity are some of the factors that favour Bitcoin mining in China compared to other nations.

The hashrate is used to measure the processing power of the BTC network. It, therefore, allows computers to process and solve problems that would enable transactions to be approved and confirmed across the network.

When more miners join the Bitcoin network, more computational guesses per second are needed in order to find the solution. As a result, the hash power will increase, and Bitcoin’s network difficulty will go up.

Bitcoin’s dominance and price

Crypto analyst Lark Davis has disclosed that Bitcoin’s dominance has been falling in the current period despite its price rising. He explained:

“Bitcoin dominance has fallen down to 53%, a critical area of support! Altcoin season in full swing! Crazy thing is that the price of BTC has kept rising during this time.”

BTC recently exploded and hit a new all-time high of above $64,000, even though it has retracted to $61,485 at the time of writing, according to CoinMarketCap.

New York Seeks to Stop Bitcoin Mining For 3 Years Until Environmental Impact Assessment Done

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Kevin Parker, New York senator, has introduced a bill in the New York state Senate to halt Bitcoin mining for three years until the state evaluates its impact on the environment.

The prominent legislator presented New York Senate Bill 6486 to The State Senate’s Environmental Conservation Committee on Monday.

The bill would particularly examine the greenhouse gas emissions caused by Bitcoin mining, including its impacts on wildlife, air and water. The assessment would establish a report, that would then be accompanied by a 120-day public comment period and at least one public hearing.

The bill mentioned that several mining centers in New York state are located in retired or converted fossil-fuel power stations, including dormant peaker plants.

If the assessment identified crypto mining centers as harmful, then they would be earmarked as things that derail the progress of the state towards meeting its emission targets highlighted in the Climate Leadership and Community Protection Act Of 2019. Therefore, such centers would not get the necessary permits to conduct their business operations.

If the senate passes the bill, then this would adversely affect a growing industry, particularly in upstate New York where the power for cryptocurrency mining is more affordable and assisted by cooler weather that keeps equipment from lots of overeating.

Greenidge Generation Holdings is one of the leading Bitcoin mining centers operating in upstate New York. The plant, which is based on Dresden, New York, can mine an average of 5.5 Bitcoin daily. In the past, the facility was a coal-fired power plant, but was transformed into a natural gas plant in 2017 and then converted into a Bitcoin mining center in January 2020.

Bitcoin Raises Climate Concerns

Bitcoin mining is a process of solving complex math problems (a complex series of algorithms) in order to create new Bitcoins. Miners are rewarded in Bitcoins. However, the process demands energy intensive consumption. The more Bitcoin that is mined, the more difficulty the algorithms that must be solved to get a Bitcoin.

Today, more than 18.5 million Bitcoins have been mined. An average computer nowadays can no longer mine Bitcoin. Instead, mining requires special computer equipment that can handle intense processing power needed to get Bitcoin. Such special computers require a lot of electricity to run.

Bitcoin mining has long been condemned because of its energy use and environmental impact.

The amount of electricity used daily to mine Bitcoin has been identified to be more than electricity used by entire nations like Ireland. However, several Bitcoin proponents maintain that mining is increasingly being conducted using electricity from renewable energy sources.

Environmentalists claim that mining is still a major concern because miners go wherever there is cheap electricity and that may mean places that use coal. China is the country with the greatest Bitcoin mining activities in the world. The nation has been slowly moving towards renewable energy, an estimate of two-thirds of its electricity originates from coal.

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Elon Musk’s Concerns Over Bitcoin's Energy Consumption Are Misguided, Says Ark Invest

Yassine Elmandjra, an analyst at Ark Investment Management company, said that Elon Musk’s concerns about Bitcoin’s energy usage were “misguided.”

Last week, Elon Musk, the founder and CEO of Tesla Inc., caused an uproar in the crypto space over his concern that Bitcoin mainly relies on fossil fuels for its energy needs. He further said that Tesla will no longer accept Bitcoin as a payment method. His comments cast doubt about his bullishness on crypto.

However, in his analysis note, Elmandjra stated that he believes Bitcoin will actually lead a greater share of the grid powered by renewables and therefore will become a “net positive for the environment,” and accelerate a green-energy revolution.

Bitcoin mining “could impact the amount of renewable energy provisioned to the grid by transforming intermittent power resources into baseload generation by way of energy storage… renewables would be able to satisfy only 40% of the grid’s needs in the absence of Bitcoin mining but 99% with the commercial ‘subsidies’ associated with Bitcoin mining,” Elmandjra wrote.

Elmandjra revealed that Musk’s decision to stop accepting Bitcoin as a method of payment seems to have been triggered by Greenidge’s plans to revive a coal power plant to mine Bitcoin. Musk referenced Greenidge’s announcement in a tweet.

Elmandjra further disclosed that as a result, Greenidge made a clarification that not only is its plant powered by natural gas and feeds the grid, but it also purchases carbon credits to offset the emissions.

Elmandjra’s analysis supports a whitepaper published by Square and ARK Invest last month that suggested that renewable energy adoption would rise due to Bitcoin mining.

Musk gave Elmandjra’s analysis a nod of approval by replying “True.”

Carbon Offsetting Taking Shape

On May 11, Elon Musk announced that Tesla halted purchases of its motor vehicles with Bitcoin because of concerns over “rapidly increasing use of fossil fuels for Bitcoin mining.”

Since then, Bitcoin price has dropped to a new low of $42,000, but the crypto bounced briefly after Musk clarified that Tesla had not sold its $1.5 billion worth of Bitcoins it purchased in January.

A few days ago, Greenidge Generation Bitcoin mining company announced that beginning June 1, the company would be “carbon neutral” for the rest of 2021 and beyond. The company’s announcement followed the recent statements from Tesla after the motor vehicle firm cited environmental concerns over Bitcoin mining.

Greenidge New-York based Bitcoin mining firm has joined what seems to be an increasing number of other cryptocurrency firms seeking to minimize their carbon footprint through carbon offsetting – funding ways to reabsorb excess CO2 from the atmosphere or reducing emissions.

In December 2020, Square Inc., announced plans to launch a clean energy investment initiative to help make the Bitcoin supply chain greener. The San Francisco-based company announced the launch of its Bitcoin clean energy investment initiative, where it committed $10 million to support firms that help drive efficiency and adoption of renewables within the Bitcoin ecosystem.

Square Says It Has No Plans of Purchasing More Bitcoin After $20 Million Loss

Square has revealed that it has no plans of adding more Bitcoin to its balance sheet for the time being – after losing $20 million on its $220 million Bitcoin investment in the first quarter of 2021.

Amrita Ahuja, the Chief Financial Officer at Square Inc., said that the California-based financial services and digital payment company did have any plans of purchasing more Bitcoin.

“We don’t have any plans at this point to make further purchases,” Ahuja stated.

“There’s no plans at this point to re-evaluate where we are from a treasury standpoint,” with regard to cryptos, she further said.

However, the CFO mentioned that there are still “lots of other opportunities” for Square to “learn with Bitcoin” and that the firm, was “always evaluating” possibilities in the space.

Square made Bitcoin purchase of $50 million for its balance sheet in October 2020 and made an additional purchase of $170 million in February this year.

Square released its last quarter earnings that ended March on May 6 and the firm stated that it had lost $20 million on its Bitcoin investment despite its fair value increasing to $472 million based on market prices.

Ahuja mentioned that Bitcoin purchase on its balance sheet amounted to about 5% of its cash on hand.

“We’re always evaluating and as ever, I think we’d be customer-led. As we see the evolution of the bitcoin product or crypto products in general, I think we’ll make further assessments at that point,” she said.

However, the CFO said that the company had not changed its stance on Bitcoin and would continue evaluating its Bitcoin investment on an ongoing basis.

Square’s first-quarter revenue increased 266% year-on-year in March to $5.06 billion and this was mainly thanks to Bitcoin revenue generated from its Cash App. Square’s Cash App brought in $3.51 billion in Bitcoin revenue during the first quarter of 2021, which is 11 times higher than what it generated last year.

Ahuja further remarked on Square’s stance regarding Bitcoin, saying that the crypto industry needs innovation in terms of renewable and clean energy.

“There’s a broader supply chain question around how renewables and clean energy become a greater part of the blockchain in general, and a greater part of the overall mining and transaction network…It’s the overall fixed footprint of the network that we need to address,” she added.

People Worry About Bitcoin Energy Usage

Square’s change of tone towards Bitcoin comes a few days after Tesla stopped accepting Bitcoin payments for its vehicles, citing the environmental impact of the crypto. On May 12, Tesla electric vehicle manufacturing company announced a complete reversal of its initial plans to accept Bitcoin payments for its vehicle products and services. The company cited the digital currency’s energy inefficiency as the reasons for stop accepting Bitcoin payments.

However, Elon Musk, Tesla founder and CEO and the big Bitcoin advocate, hinted that the company may not be done with cryptos altogether. The billionaire said that the auto manufacturing giant will still hold on to its Bitcoin investments, which consist of about $1.3 billion worth of Bitcoin.

Tesla and Square are not the only ones concerned with the environmental impact of Bitcoin.

In February this year, Janet Yellen, The US treasury secretary, warned that Bitcoin uses a “staggering” amount of power and is “extremely inefficient” for making transactions.

It is complicated to understand whether Bitcoin really harms the environment. But Bitcoin critics have long been wary of its impact on the environment. According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin uses more energy than certain countries, such as Malaysia and Sweden.