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BT Daily News: Bitcoin mining fund soars as BTC powers into 2023 and more


1. Bitcoin mining fund soars as BTC powers into 2023

One of the greatest gifts Bitcoin gave the world was its underlying technology: blockchain. It has birthed a financial revolution, channeled capital to parts of the globe that need it, and untethered the power to transact from the few to the many. And now, as we see, in Bitcoin’s strong start to 2023, those long-awaited beams of sunlight have come out to shine on crypto’s firstborn. The question is: Why?

What makes tokens work at the most basic level is the technology that underpins them. Yet behind the impressive recent recovery in the value of the world’s original cryptocurrency lies tech that is decidedly old school.

The proof-of-work protocol that makes the Bitcoin network tick has long been surpassed on the energy use front by the proof-of-stake mechanisms that power other networks, and the network’s scalability remains limited.

Given the ever-higher premiums accorded to sustainable energy and the steady forward march of new technology in the digital asset industry, one might ask: Why still Bitcoin?

This is where birthright comes into play. BTC feels like an assuredly different bet — not just a pure play based on technological dominance, but one that also captures pent-up pressure for change in the wider macroeconomy and the crypto industry.

The value of digital assets will be redefined in the coming years, and tokens must prove their fundamental utility and merit beyond the speculative dynamics we’ve seen drive prices higher in the not-too-distant past. Some have proven worthy, but others will fail. Bitcoin’s resurgence is a demonstration that, for some, it is held in higher regard simply for being the coin that started the revolution — an expression of intrinsic value that combines technology with economic defiance amid the confines of the traditional financial universe.

2. Bitcoin: Will institutional interest be BTC’s savior?

According to a 31 January tweet by Arcane Research, Bitcoin’s [BTC] rally was slowing down. Despite this, institutional interest in Bitcoin continued to grow.

One indicator of high institutional interest in Bitcoin was the growing CME Open Interest in Bitcoin. According to Arcane Research, the proportion of Open Interest in Bitcoin that is not related to exchange-traded funds (ETFs) increased from 53% to 57%.

This surge, along with a strong presence of institutional investors in Bitcoin futures, is a positive sign. The CME played a key role in determining the price of Bitcoin and was a driving force behind significant shifts in the market in October 2020 and April 2021.

Along with the growing institutional interest, the implied volatility for BTC decreased. In the past seven days, Bitcoin remained relatively stable, fluctuating around $23,000, causing implied volatility to decrease.

At press time, implied volatility was in the low 50s, even for longer time frames. This was similar to the levels seen in early November, as the options market predicted a slower pace in the market.

Along with institutional interest increasing in the Bitcoin derivatives market, retail investors gained interest in Bitcoin as well. According to Glassnode, the number of addresses holding more than 0.01 coins in their addresses increased over the last month.

At press time, the number of Bitcoin addresses holding more than one coin reached an all-time-high of 4.21 million.

However, even though retail investors showed interest in Bitcoin, miners were not having a great time. Over the last week, the revenue generated by Bitcoin miners reduced materially. Along with that, the rising prices of electricity impacted miners negatively as well.

This could increase the selling pressure on miners, which could incentivize them to sell their holdings and impact the price of BTC negatively.

Another indicator of growing selling pressure on holders would be the increasing MVRV ratio, as evidenced by Santiment. This indicated that most of the addresses holding Bitcoin could profit if they sold their positions.

The long/short indicator was negative, which suggested that it would be short-term holders that would profit most from selling their positions. It remains to be seen whether these short-term holders decide to sell their holdings or continue to HODL.

3. Bitcoin Mining’s Properties Mean That It Goes Well With Solar Power Systems

There are many challenges that come with solar-based systems that arise out of the nature of the energy and the state of the current storage technology. As solar energy can fluctuate due to weather and other reasons, storage is necessary to establish some reliable output. However, large-scale storage can be very expensive.

This can make it difficult to scale solar to large systems without also losing profitability at the same time. There is also the problem that the energy demands of an area can sometimes wildly fluctuate, so the plant may produce large amounts of excess energy that can’t be easily stored.

One solution can be Bitcoin mining, as a report published by Ark Invest suggests. A BTC miner, if incorporated into a solar system, would simply be able to absorb any excess energy arising, and produce BTC tokens that can then be sold to break even on the costs, or even turn a profit.

In this way, any excess energy produced wouldn’t be wasted. According to the report, a solar power system with a BTC miner can help provide 99%+ of end-user demand without losing any profitability.

The below chart shows how the battery size for a solar installation can be scaled with the help of BTC mining while the costs still remain about the same:

As displayed in the above graph, without the use of Bitcoin mining, the battery size of the solar installation can only be increased by a small amount before the Levelized Cost of Electricity (LCOE) also goes up. The LCOE here is a measure of the average cost of energy production over the lifetime of the installation.

If a BTC miner is integrated into the system, however, the scalability considerably improves. From the chart, it’s apparent that the size of the solar battery can be increased 4.6 times under this setup and the LCOE will still remain.

This installation can also then reliably cover more than 99% of the end-user demand. Compared to this, the non-BTC miner system would have only met a maximum of 40% of the demand, before the profitability would have dropped.

The reason that Bitcoin mining is fit for this purpose lies in its several unique properties: modularity, flexibility, and movability. Bitcoin mining farms are made up of hundreds of mining rigs, each of which is functioning independently of the rest. This means that any one of them can be turned off without affecting the rest.

These rigs can also be easily transported due to their small size and compact nature. And finally, if need be, the energy input of these machines can also be increased or decreased in small increments. This means that no matter the amount of excess energy produced, these machines can still easily absorb it.
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