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BT Daily News: Is Mining Censorship a Serious Threat to Bitcoin?

BT Daily News: Is Mining Censorship a Serious Threat to Bitcoin?

1. Is Mining Censorship a Serious Threat to Bitcoin?

The Bitcoin protocol is designed to withstand censorship attacks from within its network and from without. The core ethos of the entire Bitcoin experiment is to create a permissionless, uncensorable financial tool for the world. But each piece of the network — nodes, developers, exchanges and even miners — represent various potential attack vectors whose exploits must be thwarted.

Mining attack vectors won’t simply fade away, especially as the mining sector continues to grow with tens of billions of dollars invested and hash rate continuing to set new record highs. Many of these potential weaknesses have been explained and discussed at length across many online forums, including the Bitcoin Wiki, the Braiins mining blog, the Bitcoin Talk archives and, of course, Twitter. And with the specter of miner extractable value (MEV) looming in Bitcoin’s horizon, the complexity of some attacks will surely increase as the landscape of mining revenue also changes.

Previous and potential mining attacks, however, have led to some misinformed thinking and analysis about the state of network censorship. Ari Paul, CIO at BlockTower Capital, correctly observed that most mining companies are regulated entities, not rogue, independent or more or less off-grid operations. But he later suggested that large-scale mining censorship is already happening, which is not the case, as members of the industry noted in response to Paul’s tweet and evidenced by the fact that the industry is small and vigilant enough to not overlook en masse censorship of the kind Paul suggested. And, as the previous section explained, many such attempts have publicly failed. Continued vigilance is important, but misrepresentations are counterproductive.

Individual censorship by one or a few mining entities, moreover, is far less of a concern than complete network censorship. The difference here is not trivial. A couple of governments or a couple of mining pools, for example, conspiring to censor bitcoin transactions inhibits their own ability to claim maximal mining rewards, it does not limit, slow or stop the flow of transaction verification and propagation.

2. CleanSpark ratchets up bitcoin mining hashrate 30% in less than a month

CleanSpark Inc’s bitcoin mining hashrate has climbed above 4 EH/s (quintillion hashes per second), the company announced.

Hasharate determines how much bitcoin a company mines. Essentially, it’s a measure of the computing power available for processing transactions and securing the bitcoin blockchain, which makes it a critical metric for evaluating bitcoin mining companies.

CleanSpark operates more than 41,000 bitcoin mining machines at three facilities, which have reached a daily production high of 16 bitcoins. The company has purchased a fourth facility from Mawson Infrastructure Group Inc, which is expected to add 1.4 EH/s to the company’s hashrate by the end of the year. That deal is expected to close in October.

CleanSpark also maintained its 2022 year-end guidance of 5 EH/s and 2023 year-end guidance of 22.4 EH/s, the latter of which would make it one of the largest publicly traded bitcoin miners in the world.

3. Solar-Powered Bitcoin Miner Aspen Creek Raises $8M Despite Bear Market

A new solar powered bitcoin miner, Aspen Creek Digital Corp. (ACDC), raised $8 million in a Series A funding, led by crypto financial services company Galaxy Digital and blockchain investment firm Polychain Capital.

The miner will use the proceeds for its second Texas mining facility,which will have 30 megawatts (MW) of mining capacity and be co-located with an 87MW solar farm, the company’s CEO Alexandra DaCosta told CoinDesk. The facility is on track to be operational later this fall.

The funding comes as bitcoin miners struggle to survive the bear market caused by macroeconomic uncertainty, which has led to narrowing profit margins and a spike in energy costs. Most recently one of the largest bitcoin mining data centers, Compute North, filed for bankruptcy, citing crypto winter, supply-chain issues and trouble dealing with its biggest lender.

Additionally, investors are shying away from capital intensive crypto businesses such as bitcoin miners, making capital raises difficult. However, ACDC was able to secure the funding by using the “power first” approach, in which the company secured power and infrastructure first for its mining operations before looking to raise money – a contrast from what some other miners have done.

4. Crypto Regulation Is Coming. Which Tokens Could Be Affected?

The White House's new crypto framework and other developments out of Washington DC show that regulation is coming to the digital assets space.

The Treasury Department recently sanctioned Tornado Cash and could extend its blacklisting to other privacy-focused projects.

The likes of XMR, DAI, and XMR could suffer amid increased regulatory pressure, but many other crypto tokens could also be affected.

5. On Portugal’s ‘Bitcoin Beach,’ Crypto Optimism Still Reigns

The bar and community of about 150 crypto supporters around the town of Lagos are a bubble of optimism amid what has become known as the “crypto winter.” This summer, cryptocurrencies such as Bitcoin and Ether melted down, and crypto companies like the experimental bank Celsius Network declared bankruptcy as fears over the global economy yanked down values of the risky assets. Thousands of investors were hurt by the crash. The price of Bitcoin, which peaked at more than $68,000 last year, remains off by more than 70 percent.

But in this Portuguese seaside idyll, confidence in cryptocurrencies is undimmed. Every Friday, 20 or so visitors from Europe and beyond gather at Bam Bam to share their unwavering faith in digital currencies. Their buoyancy and cheer endure across Portugal and in other crypto hubs around the world, such as Puerto Rico and Cyprus.

In Europe, Portugal has stood out as one of the largest hubs for crypto investors and enthusiasts. Many crypto supporters flocked to the country because the government does not tax profits made from the virtual currencies, unlike Italy and France. It helps that the weather is beautiful, the cost of living low and there is an easy path to residency. Vanguard Properties, a real estate company in Portugal, said it had sold at least 10 luxury homes to “crypto families” since last year.
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