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Bitcoin Hash Rate Reaches Peak Amidst Price Fluctuations

The benchmark responsible for the level of confidence that miners have in the Bitcoin network has been seen to reach its all-time high on Thursday.

The hash rate which usually shows the processing power of the Bitcoin network hit a peak of almost 103 trillion ‘tera’ hashes per second. This simply implies that a lot more miners are putting their computers to work in order to create and “hash” a block of verified transactions before adding them to the continuous growing string of blocks, known as the blockchain. In simple terms, we could say that miners saw profits while verifying and validating transactions on the Bitcoin blockchain. This has made miners increase their cost of operation which is electrical input in majorly, on the network.

Bitcoin Hashrate. Source: Blockchain.info

Bitcoin miner’s rush

Currently, miners receive 12.5 BTC as the reward for completing a block. Meanwhile, the price of one Bitcoin has been fluctuating around the $10k zone. This is to say that for every confirmed block, miners are rewarded with about USD $125,000.

According to an explanation of the price hash of Bitcoin mining, Coinshare revealed that it took miners about $6,500 to mine one Bitcoin. Going by this calculation shows that miners could collectively make a profit of about $3500 per Bitcoin which prompts miners to join the network and join the pool to compete for rewards, this ultimately leads to having an increased hash rate.

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May 11: If You Can't Handle Me at My Worst, then You Don't Deserve Me at My Best…

Trading Crypto with Eugene is a series of daily commentary of market analysis and trading advice shared by Eugene Ng of Matrixport, a veteran trader with 10 years of experience in top-tier global investment banks. If you like the article, please follow us here on Blockchain.News so you won’t miss our future publications.

What a volatile Sunday for Bitcoin as it plunged from $9,800 to $8,100 in a single hour, a very large outsized move for a weekend trading session that even Coinbase suffered an outage. There was no news/catalyst, instead, I think it was a planned outsized sale that happened. A likely scenario is that coordinated selling or take-profit via OTC and exchanges. Despite $275 mln of BTC sell liquidations in the last 24 hours and around 10% of futures open interest declined across the board, open interest is still hovering $3bn and about 50% more than post-black Thursday’s crash in March. That says to me that there are just more longer-term investors sticking around. Predicting the price of Bitcoin post its halving isn’t going to be easy. If I have to make a guess, I would expect it to retrace some of its gains in the short-term. It depends on the momentum of Bitcoin’s price heading into halving. If the price continues to stay firm and head above 9,000, I would expect it to see a retracement albeit a less horrifying one compared to March 12. Even if BTC does continue to slide into $8k, I still think there is some likelihood of selling (i.e. miner captiluation) Why? Firstly, there have been quite a few funds, traders and market-makers who have positioned long, albeit less after yesterday. Secondly, miners selling into halving as the smaller players cant stay profitable.Trade strategy? I’ve been advocating to go Long Volatility in the last two weeks and that should play out quite well, I would start taking profit in 50% of them right now since implied volatility has now spiked higher. I also shared last Thursday to build put positions if BTC crosses 10k, that would have worked out quite nicely if you’ve bought some too. For spot, I am a buyer between $7,800 to $8,000, and if I own some BTC, seller between $9,300 to $9,500. Goodluck.

$9,300 level to watch today if we can breakthrough for us to continue the bullish momentum into halving, otherwise $7,900 may be tested… if that level breached, we may enter into another a lower range consolidation phrase…

If it does break $7,900, you can try buying at $7,200/$6,400/$5,400 to accumulate long term longs…

In the longer term, we are still in a healthy upward trending channel….

Implied volatility jumped on Sunday’s plunge! Time to sell some vol!

DisclaimerOpinions expressed are solely the analyst’s own and do not express the views of Matrixport the company.

The views and opinions expressed in this article are those of the contributor and do not necessarily reflect the view of Blockchain.News.

Filecoin Creator Dismisses Miners Strike and says the Allegations are “Nonsense”

Filecoin creator, Juan Benet recently took it to Twitter to deny the allegations against the protocol’s miners’ strike one day after its launch.

Five of Filecoin’s largest miners decided to go on strike to protest against Filecoin’s “unfair” economic model, which consisted of a significant amount of Filecoin needed to start mining operations.

Filecoin (FIL) miners have faced issues regarding the lack of FIL tokens, to begin with, and to earn more tokens would take time and potential risks. Nico Deva who was familiar with the Filecoin mining situation, said that some of the top miners in China were not happy about the amount of tokens needed for the mining operations.

Filecoin had its initial coin offering (ICO) three years ago, and the cryptocurrency was listed on major exchanges including Coinbase. The Filecoin project aims to provide its users with decentralized data storage and transmission services using its commodity hardware, through its miners. The miners are also required to stake a large amount of FIL tokens to start their mining operations, as part of its “Initial Pledge Collateral.”

According to Deva, mining Filecoin is very complex and requires high-end hardware and costs around $20,000 at least.

However, Filecoin creator Benet denied the event of the miner strike, saying that it was “nonsense.” He added:

“There is no strike. Miners are proving their storage just fine. There’s been no power loss out of the ordinary in the network. Miners are following the protocol, and making a TON of money doing so.”

Benet explained that miners are currently growing slower than before launch, due to the network no longer subsidizing their pledge and fee costs. Benet went further to add that the project recommended miners to slow down their growth rate to match their token flow and that they could also go on pause until they can grow more steadily. He said:

“Advice: in moments like these, You have to pause, slow down, and analyze well. Do the right thing for the long term. Get the mechanisms right, get the long-term ROI right, get the short-term gradients right. Discount noise.”

FIL token’s price surged to $100 on its first day of trading, then plunging to around $40 as investors argued that it was overpriced. The Filecoin token is currently trading at $33.65, up by 11.4 percent in the past 24 hours.

Ethereum Transaction Fees Record Lowest Price Since Beginning of DeFi Boom

Ethereum transaction fees recorded its lowest price since July when the decentralized finance (DeFi) boom began. Subsequently, market analysts are speculating on whether the DeFi craze is slowly coming to an end.

Low ETH Gas fees – is DeFi boom ending?

Data from cryptocurrency statistics firm BitInfoCharts indicated that Ethereum gas prices were recorded as low as $0,905. It then surged slightly to $1.029, but the transaction fees were nowhere near the hefty $16 single Ethereum transaction fee observed in early September.

Over the summer, Ethereum transaction fees, recorded in gwei, shot through the roof as DeFi boomed and miners strained to sustain the weight of DeFi protocols running on Ethereum blockchain. However, with Ethereum’s network recently recording lower fees, analysts have pondered the question of whether the decentralized finance craze is slowly coming to a halt.

Fees allocated to Ethereum transactions are awarded to Ethereum miners, who employ computational power to mine and finalize transaction blocks. The reward reaped by Ethereum miners through transaction fees has been reported to surpass that of Bitcoin miners this year, hitting $166 million in revenue.

A recent report released by eToro crypto asset trading platform suggested that the DeFi boom was “real”, and that it was here to stay. It commended the DeFi boom along with altcoin rallies and yield farming as being “the commanding narratives of Q3.” At the time of writing, the DeFi industry currently holds $11.17 billion in total value locked, as per data from DeFiPulse.

Ethereum 2.0’s first phase is coming

With Ethereum having the best run this year, one of its developers for Ethereum 2.0 mainnet, Ben Edgington has hinted that Ethereum 2.0’s first phase – Phase 0 – was only 6-8 weeks away from its official launch. Ethereum 2.0 mainnet is said to operate on a full Proof-of-Stake protocol, as opposed to Proof-of-Work.

Ethereum’s Phase 0 will feature a beacon chain, which is the first building block for the mainnet. On the new Proof-of-Stake blockchain, co-founder of Ethereum Vitalik Buterin also hopes to decrease Ethereum transaction fees with layer 2 solutions and sharding. In that manner, if transaction fees were to be lower on Ethereum, it may also serve to onboard the unbanked.

Bitcoin Miners Are Not Selling But Accumulating Their Crypto Funds

According to data from Glassnode crypto analytics firm, miners have stopped selling and have begun accumulating their Bitcoins.

Based on the chart from the analytic firm, the Miner Net Position change (MNP) indicates that the difference between miner sales and miner rewards turned positive (green) for the first time since December 27. This implies that the amount of Bitcoin sold is less than the quantities added to miner-owned wallets. The miners are not selling their Bitcoins but prefer accumulation – after selling the digital assets for about two months in a row.

The uptick in the MNP indicator comes at a time when Bitcoin price experienced a fall to the $44,000 level, the lowest point this week. This event corresponds to a period of time in December 28, 2017, when the MNP indicator pointed green for more than three weeks and corresponded with Bitcoin’s value soaring past the significant $20,000 level.

Bitcoin Seeing Trade Crowded

The Glassnode data shows that the cryptocurrency demand is currently at all-time highs. Institutions and institutional investors have been acquiring Bitcoin at a faster rate and holding the cryptocurrency this year more than ever before.

The massive uptake of Bitcoins by institutions can be better seen at Grayscale, the world’s largest cryptocurrency custody service for institutions, which currently holds more than $36 billion in Bitcoin. A few days ago, the worlds’ largest the crypto fund management firm announced plans that it is considering to introduce more digital asset offerings to better meet the increasing investor demands.

Meanwhile, MicroStrategy Inc. has been also making headlines with regards to its frequent Bitcoin purchases. The business intelligence software firm recently completed its offering of $1.05 billion in convertible senior notes that enabled the company to buy another $1 billion worth of Bitcoins. The firm is also considering issuing more debt to help finance the company’s purchase of more Bitcoins as part of its corporate strategy.

While institutions continue to hold Bitcoin and other crypto-assets with fierce appetite, such huge purchases are the cause of significant supply shortages. Both MicroStrategy and Grayscale combined are heading towards owning more than 10% of the total Bitcoin supply. If supply is less than demand, then the price rises. Indications from both the supply side and demand side suggest that the trend would continue to happen.

BTC Surges after Elon Musk Discussed With North American BTC Miners

The price of bitcoin (BTC) rose by about 4% after Elon Musk, the founder and CEO of Tesla Inc., tweeted that he held active conversations with North American Bitcoin miners discussing the sustainability of the cryptocurrency.

Bitcoin advanced its value to trade around $39,000 following the tweets on Monday, May 24. The largest cryptocurrency by capitalization once dropped its price to as low as $31,132 on Sunday.

Elon Musk and Michael Saylor tweeted on Monday, announcing that they held a call meeting event on Sunday, May 23, with major North America Bitcoin miners, including publicly traded companies, Hut 8 Mining Corp and Michael Novogratz’s Galaxy Digital, to discuss the transparency of Bitcoin energy consumption. The call event was part of an effort to educate the cryptocurrency market that sustainable mining is possible and a priority.

The meeting between the Tesla CEO and Bitcoin miners of North America led to the establishment of the Bitcoin Mining Council, which will promote sustainability and standardize energy reporting.

Although the formation of the mining industry council might standardize energy consumption reporting, it will take years for several major miners to recalibrate where they source their energy.

Two weeks ago, Musk made a shocking tweet about Bitcoin mining and these prompted miners to pledge their commitments towards making the industry greener. Inspired by the Paris Agreement, several miners have joined the “crypto Climate Accord”, a private-sector initiative to neutralize carbon footprints for the cryptocurrency industry by 2030.

Cryptocurrency Market hangs in the balance

Elon Musk has been a vocal advocate for Dogecoin and other cryptocurrencies in recent years, facilitating the surge of their prices several times over last year. The tech billionaire has been both blamed and thanked for his market-moving tweets in recent months and weeks.

In early February, Tesla purchased $1.5 billion worth of Bitcoin as part of its treasury reserve. In March, the car company accepted Bitcoin as a payment method for its motor vehicle sales and services. As a result, both announcements surged Bitcoin prices to climb above $50,000 per coin.

However, the price of Bitcoin drastically dropped to as low as $46,980 on May 13 after Elon Musk stated that the car manufacturing firm halted Bitcoin payments to purchase its vehicles, citing concerns over the increasing use of fossil fuels for crypto mining. The announcement came less than three months after Tesla started accepting Bitcoin as payment.

A further drop in Bitcoin price was seen as low as $31,132 per coin after China announced crackdowns on cryptocurrency mining and trading. China’s authority cited tighter cryptocurrency regulation is required to protect the financial system.

Bitcoin Mining Technology Luxor Completed $5M Series A Funding Led by NYDIG

Seattle-based cryptocurrency mining software technology company- Luxor announced Wednesday a Series A funding completed with a total value of $5 million.

It is reported that the financing was led by NYDIG, a company specialising in providing Bitcoin investment and technology solutions, and mining companies Blockware Solutions, Celsius Network, DPO, Navier, and others followed up.

According to the announcement, this financing expansion aims to open up crypto mining in North America. In addition to leading equity financing, NYDIG will also cooperate with Luxor on many mining-related companies and computing power-based products.

Luxor’s CEO and co-founder Nick Hansen believes that this strong cooperation will completely change the use, valuation, trading, and hedging methods of hashrate and provide miners with the best products and services. The function of hashrate generally measures the processing power of the Bitcoin network.

The co-founder and CEO of NYDIG, Robert Gutmann, stated that:

“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.”

The proprietary technology developed by Luxor has the potential to increase returns for miners. Luxor’s Switch software product is a profit-switching algorithm that maximises the rewards of computing power by switching between the blockchains and the venues.

Bitcoin miners are in pain due to the price crash cutting into their profit margins. Since the start of Elon’s tweets on May 12, the hash rate has dropped, and their miner wallet net flows have been increasingly turning negative.

To help miners increase their returns, Luxor provides a software solution called Switch that uses a profit conversion algorithm to maximise computing power rewards by converting blockchains and venues to obtain the highest revenue.

According to Cambridge Bitcoin Electricity Consumption Index, the rate of China’s dominance has dropped from 65% to 55% since April 2020, which indicates China’s dominance is weakening, while the United State’s dominance is increasing, accounting for 11% due to China’s authority strengthen and tighten legal restrictions on cryptocurrency mining activities.

As previously reported by Blockchain.News, Bitcoin miners from the Chinese regions of Inner Mongolia, Sichuan, and others are beginning to sell off their mining hardware to not step into the red line of the law.

Bitcoin Miners’ Wallet Net Flows Are Increasingly Turning Negative

Bitcoin (BTC) experienced a sharp correction that drove the price to lows of $30k after enjoying a remarkable bull run, which pushed the price to an all-time high (ATH) of $64,800 in mid-April.

Bitcoin miners have been on the receiving end because this market crash slashed their profit margins.

As a result, their miner wallet net flows have been increasingly turning negative, as acknowledged by Dilution-proof. The on-chain data firm explained:

“Bitcoin miners are in pain due to the price crash cutting into their profit margins. Since the start of Elon’s tweets on May 12, the hash rate has dropped; likely miners being turned off. That is now stabilizing, but miner wallet net flows are increasingly turning negative.”

The hashrate is used to measure the processing power of the BTC network. It 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 to find the solution. As a result, the hash power will increase, and Bitcoin’s network difficulty will go up.

Reportedly, Bitcoin miners liquidated their holdings by selling at least 5,000 BTC last week.

On-chain activity on the BTC network plunge

According to crypto data provider Glassnode:

“On-chain activity on the Bitcoin network has dropped off, as investors become uneasy around the market direction.”

Furthermore, crypto exchanges have experienced significant BTC outflows, as acknowledged by market analyst William Clemente III. He noted:

“Exchanges now down over 30,000 BTC in the last 3 days.”

Meanwhile, El Salvador became the first nation to accept Bitcoin as legal tender. This move is expected to boost the country’s economy by generating new jobs and availing financial inclusion, given that 70% of the populace does not have access to traditional financial services.

‘Millionaire’ Bitcoin Whales Accumulates Extra 90,000 BTC

According to Santiment, an encrypted market data aggregator, approximately 90,000 Bitcoins have been accumulated by Bitcoin whales in the past 25 days.

Bitcoin whales refer to holders who hold Bitcoin (BTC) with a value of more than 100 to 10K. During the intraday trading, Bitcoin was trading at $39,208.60. Therefore, for Bitcoin whales, their worth at the current price value at least $3,920,860. The total amount of Bitcoin held by these “millionaire-level” addresses accounted for 48.7% of the Bitcoin supply.

Source: Santiment

The data shows that Bitcoin whales have accumulated a large number of Bitcoin positions over 9.11 million BTC, worth $366.89 billion at press time, setting a high point in 7 weeks.

In addition, Bitcoin miner’s outflow volume reached a monthly low of 47.163 BTC, indicate miners might still accumulating coins before engaging a better price to sell, acknowledged by on-chain metrics provider Glassnode.

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At present, Bitcoin faces a headwind against strong selling pressure near the 200-Exponential Moving Average (200-EMA) level of around $40,876 and has not overturned this important level without any stable signal yet, turning these pressure into a support level.

200-day EMA is a critical indicator used for long-term trends. For example, when the Bitcoin price crosses its 200-day moving average, it is a technical signal that a reversal has occurred-meaning that it will usher in a new round of rising.

However, the increase in bitcoin giant whale holdings and miners are holding their tokens in anticipation of higher prices, proving that they are currently actively accumulating tokens and positive attitude towards the market outlook.

Topnotch Bitcoin Mining Machine Manufacturer Bitmain Suspends Sales due to Chinese Crackdown

The world’s top bitcoin mining machine manufacturer Bitmain Technology Co., Ltd. announced that it would suspend the sale of mining machines worldwide in response to the Chinese government’s recent crackdown on domestic mining targetting domestic miners.

The company stated that it aims to help miners who have exited the mining industry sell at a better price to stabilise local prices.

According to a Bloomberg report on Wednesday, the world’s largest Bitcoin machine manufacturer’s top rig prices have depreciated by nearly 75% since April.

To alleviate the decline in the price of mining machines, Bitmain has decided to stop the sales of its encrypted mining equipment under careful consideration and reduce the supply of mining machines on the market.

The company did not disclose when the business will resume.

The decline in the price of mining machines is closely related to the corresponding measures China has taken against cryptocurrencies. Earlier, China intensified law enforcement against domestic Bitcoin mining activities. Bitcoin mining sites in Sichuan Province were reportedly massively disconnected and lost their abilities for further mining operations,

On June 21, the People’s Bank of China ordered the country’s major financial institutions, including the Agricultural Bank of China, to stop conducting crypto transactions, causing the oscillation to the cryptocurrency market, which subjects to a massive sell-off of Bitcoin.