mining pools - Pwim.Net

May 13: ALT Coins Give You Wings

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.

BTC managed to snap out of its 4-day losing streak as it stayed well bid up close to 3% in the past 24 hours. This is likely the result that miners holding BTC are not selling their coins (see chart below that shows mining pools are holding BTC instead of selling ahead of halving) and are well-hedged post halving i.e. put-to-call ratio continues to stay elevated at ~1.70. In an interesting development, JPM has now onboarded Coinbase and Gemini as customers; paving the way of crypto being accepted as an asset class. ETH also sparked some headlines as Vitalik clarified that the July launch of ETH 2.0 isn’t set in stone yet. Last week, I highlighted that the Bitcoin dominance (i.e. % of the entire crypto market share) has hit a key trendline resistance at 69%, which is why a few alt tokens are now putting in some pretty outsized performance last evening. For example, Stellar was up more than 10%. If this XLM trend continues, expect Ripple to follow suit. Zcash was up more than 5% on the back that Electric Coin Company announced the launch of the Zcash developers alliance (ZDA). Cardano also did around 5% as its founder Charles Hoskinson tweeted yesterday “there is no delay of Shelley. Pioneer is set for launch today”.

Trade Strategy: Similar to yesterday. I’ve closed my long volatility trades, and will start to sell some volatility here and whenever it spikes. While implied volatility has sharply declined from 100% to 80% since Sunday, the longer-term average before the 12 March crash is around 55-60% so there’s still juice to be short vol. Short the 2-day $8,000 put or the 9-day $7,000 put for 20% annualized interest. Message me if you need to discuss trade ideas, good luck. Chainalysis did a blockchain analysis shows that mining pools have been holding more Bitcoin as the halving approaches… Suspect they are mostly well hedged with puts; hence they are holding (than selling them)…

Bitcoin Put/Call ratio continues to stay elevated; either the market wants to be hedged against a lower move in the short term or they are skeptical of the current bid… or the miners haven’t taken off their downside hedge…

Bitcoin dominance.. look at that beautiful resistance trendline capping BTC from outperforming the market.. Sometimes technicals work like a charm, and here’s one of those occasions..

Implied volatility pre the March 12 is averaging around 50 to 60%, which is why at 80% I am a seller…

Disclaimer

Opinions 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.

Russia Gives Tax Incentives to Crypto Miners

In the most recent months, the cryptocurrency mining business has been met with moratoriums in several regions of the United States and Canada. Those who wish to invest in cryptocurrency mining may now take advantage of tax benefits offered by Russia. The new crypto mining facility in east Siberia, which will cost $12 million and get direct backing from the government, will open soon.

Buryatia is a republic located in east Siberia and is a part of the Russian Federation. According to the local media, the Corporation for the Development of the Far East, which is controlled by the state, has announced the start of the cryptocurrency mining facility in Buryatia.

The plant will have 30,000 mining equipment, will employ one hundred people, and will use one hundred megawatts of electricity from the local power system. It is going to open in the first half of 2023 and will be owned and operated by BitRiver, which is the leading provider of cryptocurrency mining colocation services in Russia.

The mining center will be eligible for a wide range of benefits, including exemption from land and property taxes as well as a reduction in the income tax rate. For the mine operator, there will be a fifty percent decrease in the cost of the power.

The legal position of Buryatia, which is that of a “territory of advanced development” — a special economic zone that is encouraged to attract national and international investments — might provide an explanation for the help that the government is providing. It is the mission of the Corporation for the Development of the Far East, a wholly owned subsidiary of the Ministry for the Development of the Far East and Arctics, to provide financial backing for various investment endeavors.

Since the beginning of war in Ukraine and the financial sanctions that followed it, the Russian government has altered its anti-cryptocurrency posture, especially with regard to mining. This change came about as a result of the conflict in Ukraine. Gazprom Neft, a state-owned gas company, and BitRiver entered into a cooperation in July 2022 so that Gazprom Neft could provide BitRiver with power produced from petroleum gas. As part of the collaborative effort, BitRiver has begun creating a digital infrastructure in the oil fields where Gazprom supplies flare gas for cryptocurrency mining operations. These fields are located in Russia.

What Happens When the Bitcoin Blockchain Produces an Empty Block

Bitcoin (BTC) is a digital currency that is renowned for its durability, security, and dependability. A new block is added to the network on average every ten minutes, and the miner who successfully creates the block is rewarded with 6.25 Bitcoin, which is equivalent to almost $130,000.

On the other hand, the Bitcoin blockchain is known to sometimes spring a surprise on both watchers and players.

Nodes around the network confirmed the existence of a totally empty block at the height of 776,339 blocks. The fact that the block was uploaded to the Bitcoin network with no transactions included caused considerable consternation among those involved in the cryptocurrency industry. What precisely is meant by the term “empty block,” and how does this phenomenon occur?

To begin, while the presence of an empty block on the network may at first seem peculiar, this kind of thing is really rather common. Block 774486 was the location where it happened a little more than two weeks ago to the day.

Miners are encouraged to mine blocks as rapidly as possible, and as a result, they may mine a block even if they have not yet received any transactions that they may include in the block. When this occurs, the block will continue to be empty.

The following justification may be found in the Bitcoin mempool, which is the primary location for doing research on the Bitcoin blockchain: “When a new block is located, mining pools will give miners a block template that does not include any transactions. This will allow them to begin the search for the next block as quickly as possible. They immediately transmit a block template that is complete with transactions; but, a complete block template is a larger data transfer and reaches miners after a little longer period of time.

“During this interim period, which is often no more than one to two seconds, miners sometimes get fortunate and discover a new block utilizing the empty block template,”

In essence, mining a template was a case of “getting fortunate” for the miners. The Bitcoin block with the height of 776,389 was added to the chain just a few seconds after the block that came before it, which had the height of 776,488. However, Block 776,388 received an additional 0.086 BTC in fees, which is equivalent to around $1,854. This amount was added to the block reward of 6.25 BTC, which is approximately $135,247.

Even when there are no transactions in an empty block, the miner is still rewarded with freshly created bitcoins as part of the block reward. As a result, the reward for Block 776,389 was 6.25 Bitcoin and there were no transaction fees. The winning miner was Binance Pool, which contributed as much as 12% to the overall hash rate of the network.

It is essential to emphasize the fact that empty blocks do not provide a challenge for the network. Mining empty blocks still results in the production of the coin creation transaction, sometimes referred to as the coinbase transaction. This transaction ensures that Bitcoin is on track to meet its goal of having 21 million Bitcoins in circulation.

The proportion of vacant blocks on the network is often between between 1% and 2%, as seen by the statistics provided by BitInfoCharts. Given the proliferation of “ordinals” on Bitcoin, also known as the capacity to permanently carve photos, data, and marks into the blockchain, this statistic is even more shocking in light of its current state.

The increase in ordinals has led to various queries and even some anxiety among the Bitcoin community, and only lately the very first cases of pornography were documented.

As more and more image aficionados compete to have their work included in the Bitcoin blockchain, the mempool has become a more congested place, and block space has become a disputed resource.

Bitcoin Ordinals Create Stir Within Crypto Community

The introduction of Bitcoin Ordinals in January caused a commotion among the cryptocurrency community over the platform’s position within the Bitcoin ecosystem. Users are arguing whether or not these new use cases for Bitcoin give new use cases for Bitcoin or whether or not they take away from the idea of Bitcoin as a peer-to-peer currency system.

OrdinalHub is the leading platform for Bitcoin-based nonfungibale tokens (NFTs), and the Bitcoin (BTC) mining company Luxor Mining decided to acquire it. This decision was made notwithstanding the opinion of the Bitcoin community on the Bitcoin-based nonfungibale token (NFT) problem.

The announcement was made on February 20, and at that time there had already been 150,000 inscriptions (Ordinals) made. This represented a 1,500% increase from the beginning of the month.

Luxor brought attention to the issue that it is currently impossible for collectors and developers to keep track of all of the projects since Bitcoin Ordinals are being coined and “escrowed” over numerous Discord groups. It is said that the OrdinalHub would address this problem in its capacity as a “central hub” for the community.

Ordinals have opened the door for interesting new monetization techniques for Bitcoin miners, as noted by Nick Hansen, the CEO of Luxor, who lauded the unique aspects of Ordinals and how they may establish “synergies between the firm’s mining pool and the OridinalHub.”

On February 22nd, OrdinalHub made an announcement on Twitter about the purchase, to which people replied with good thoughts in general over the new development.

On the other hand, several users continued to express their skepticism over the purchase as well as the enthusiasm around Ordinal in general, stating that the “boom could be gone.”

Standard non-fungible tokens have seen hype cycles, with the most recent one reaching its nadir by the end of 2022. However, a recent analysis from DappRadar indicates that they are gradually making a return after seeing a 37% rise in transactions from the month of December 2022 to the month of January 2023.