BT Daily News—Bitcoin Mining: A Positive or Negative Indicator for the Future of Crypto?
1. A Positive or Negative Indicator for the Future of Crypto?Bitcoin’s hashrate rose steadily over the past 12 months even as the network’s token, bitcoin, lost over two-thirds of its value. For many, this is a sign of faith in the long-term success of the world’s largest cryptocurrency network.
Of course, there’s more to the story than a single statistic. The bitcoin mining industry took a series of beatings in 2022. The situations vary by firm, but the main causes of the issue stem from BTC’s depressed price and, often, poor treasury management. Over the last few years many mining companies pursued accelerated growth strategies financed by debt and other investments while often choosing to hold onto their mined coins.
Although the mining sector is in a precarious position – fueled in part by unprecedented deployment of state-of-the-art mining equipment order and deployed during the heady days of 2021, when bitcoin hit a high of $69,000 – the industry isn’t likely going to be wiped off the map. In addition to battle-tested firms deploying better treasury management, there are also a line of new financing options coming online – like derivatives options from Two Prime, which could allow miners to hedge their risk over mining bitcoin in a similar way as in other commodities markets like oil.
More capitulation and bankruptcies could come, and unprofitable miners may be taken offline. But considering the global sprawl of the mining industry, the sectors’ committed activist investors and supporters and the growing importance of mining within the hydrocarbon and wider energy sector mining will remain. And the business might be better for its recent troubles.
2. Exploring alternative mining options through IoT incentivized networks
In this episode of The Gathering of the Gigahash, Dave, Akiba, and Joe from NetworkBits Crypto discuss the state of mining within IoT (Internet of Things) and location services. Joe, who is passionate about the subject, explains how location services work using RF (radio frequency) broadcasts and triangulation by TDOA (time differentiation of arrival). He mentions the use of anchors, or antennas, that have line of sight to each other and can triangulate the location of a roaming device.
The group discusses the goal of creating a navigational system that could serve as an alternative to satellite-based systems in the event of a war or other disruption. They also mention the concept of proof of location, which allows users to timestamp their location on the blockchain.
The conversation then turns to the topic of mining, specifically the use of helium miners. Akiba mentions that he purchased a helium miner but has only mined about $20 worth of the cryptocurrency, leading him to question the profitability of the industry. Joe explains that while he is still interested in the technology behind helium, he has been selling his miners due to the challenges faced by the project, including failure to adapt and mismanagement.
The group discusses the importance of tokenomics and the need for a decentralized infrastructure that can be sustained in the long term. They also touch on the potential for technology to be used as a force for good, such as protecting against dictators and promoting freedom. However, they also note that technology is often overestimated in the short term and underestimated in the long term.
Overall, the conversation highlights the complexity and potential of IoT and location services, as well as the challenges faced by projects in the cryptocurrency space.
3. When will winter end?By late fall, the crypto market looked poised for a recovery after months of relentless battering: the stock market was coming up for air, inflation was slowing, and prognostications for 2023 were cautiously optimistic.
Then, one of crypto’s most prominent institutions exploded in real time.
The stunning collapse last month of crypto exchange FTX cratered crypto prices, sending Bitcoin to its worst low in two years. Ethereum plunged to almost $1,100 in late November, due to a combination of market-wide panic and the dumping of millions of dollars worth of ETH by an attacker who purportedly drained FTX wallets in the midst of the company’s unraveling.
Crypto prices have since marginally recovered, but the contagion sparked by FTX’s collapse only continues to spread. Digital asset lender BlockFi, which took a $250 million line of credit from FTX over the summer, declared bankruptcy late last month, weeks after freezing all withdrawals.
As 2023 unfolds, it's all-but-certain that even more firms will be forced to disclose potentially devastating relationships with once-dominant FTX, which seemed to have spread its tendrils across every corner of the crypto industry.
Until the full impact of FTX’s $32 billion collapse is accounted for, and its myriad connections are divulged and processed, it’s unlikely a crypto spring will be able to take hold. With crypto contagion looking unlikely to let up any time soon, color us surprised if the proverbial line goes up before actual spring.
4. Heatbit Is the First Space Heater That Mines Bitcoin, Founder Says‘Tis the season to be freezing, but in the cold, dark winter, Heatbit says its innovative space heaters can warm a room the size of a small studio apartment while mining enough bitcoin to offset at least a portion of a homeowner's monthly electric bill.
The two-year-old startup introduced its sleek, multi-colored heaters – about the size of an extra large PC computer tower – earlier this year. So far, it has sold nearly 1,000 units globally, but it has been encouraged enough to begin planning a wider roll-out.
Heatbit looks like other high-end heaters. But integrated circuits inside the device quietly process bitcoin transactions and perform trillions of calculations per second. That activity not only generates bitcoin rewards (courtesy of bitcoin mining pool, Nicehash), but also heat.
That heat, according to the official Heatbit site, is enough to warm 500 square feet of space. The kicker is, if you run the heater 24 hours a day at a bitcoin price of $20,000, the device will put $30 back into your pocket every month to help cover your electricity bill. Given the jump in energy costs last year, that capability may offer consumers some incentive.
5. Iran court orders the release of seized crypto mining equipmentIranian authorities seized numerous crypto mining equipment over the past two years, citing stress on energy grids during winter. Now, a court ordered the release of crypto-mining equipment that was previously seized as a measure to conserve energy.
Since 2021, Iran’s Organization for Collection and Sale of State-Owned Property (OCSSOP) has seized mining equipment — both authorized and unauthorized — due to looming power shortage concerns. However, the authorities had a change of heart amid winter as they ordered the release of the seizure. As explained by Abdolmajid Eshtehadi, the head of Iran's Ministry of Economic Affairs and Finance:
“Currently some 150,000 crypto mining equipment are held by the OCSSOP, a large part of which will be released following judicial rulings. Machines have already been returned.”
However, Eshtehadi believed the recently released mining equipment could add stress to the country’s energy grids. He suggested that the Generation and Transmission Company of Iran (TAVANIR) must propose plans for the use of the hardware to avoid undue stress on the nation's grid system.