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BT Daily News: It’s a battle of the fittest for Bitcoin miners in these difficult times


1. It’s a battle of the fittest for Bitcoin miners in these difficult times

Bitcoin is stuck in a relentless sideways channel, with the historically volatile asset proving considerably more stable than the global stock markets. BitMex’s Bitcoin Volatility Index, which tracks measures the 30-day historical volatility of Bitcoin against the US dollar, is hovering close to 18%. Only three months ago, it was as high as 85%. This, coupled with sluggish trading volumes, is proving a concerning combination for bitcoin’s future prospects.

As a manager of over one gigawatt of crypto computing power and 25,000 servers, Harvey is in touch with ongoing mining trends.

Growing bitcoin trade volume, or at least one sustained on a high level, decreases bitcoin price - establishing a negative feedback loop, where even more of the devalued bitcoin needs to be sold into the market. It is a perfect storm.

In Harvey’s view, publicly listed miners deploying capital and preparing machine deployment with comfortable lead times, while buying distressed assets, are doing this correctly. Alternatively, greedy market participants who failed to deploy machines and bought recklessly in better times, are struggling due to poor planning and execution.

2. Bitcoin’s Mining Difficulty Jumps 3.44% Higher Reaching Another Lifetime High

This weekend, Bitcoin’s (BTC) mining difficulty jumped 3.44% higher than the height miners dealt with during the past two weeks or the last 2,016 blocks. The network’s difficulty has reached a lifetime high at 36.84 trillion, following the 3.44% shift on Sunday evening (ET).

Currently, BTC’s hashrate is coasting along at 260 to 275 EH/s. The reason why the difficulty increased on Sunday is because the 2,016 blocks were mined faster than the two-week average.

Prior to the shift, BTC’s block time average on Sunday, October 23, 2022, at 5 p.m. (ET) was around 8:79 minutes. The October 21 mining update that highlights the network’s hashrate strength noted that block intervals were between 8:30 minutes to 9:35 minutes.

Satoshi’s difficulty retargets attempt to keep block intervals at an average rate of ten minutes per block. If the 2,016 blocks in between a difficulty retarget is less than the two-week average, then the difficulty will rise and a decrease will occur if it takes too long (more than two weeks) to mine the 2,016 blocks.

3. Bitcoin Miner Sphere3D Downsizes Deal for Machines with BitFuFu

Bitcoin miner Sphere 3D (ANY) has downsized its purchase of mining machines from BitFuFu, the latest in a series of moves in an industry where companies are struggling to keep their balance sheets healthy.

"The contract with BitFuFu was signed in late 2021 at the height of the bitcoin market as a fixed price contract with no allowances for market price adjustments," and it was "critical" that the firm was extricated from the contract, said Patricia Trompeter, Sphere 3D's CEO, in the press release.

The delivery of the machines has been "repeatedly delayed" due to BitFuFu's operational issues, Sphere 3D said on Thursday. The restructuring accelerates the delivery timeline, with machines now set to be delivered in November and installed in December.

Sphere 3D stock was up around 5% on the Nasdaq on Thursday following the news. Several large miners have recently renegotiated their contracts for mining rigs, including Marathon Digital Holdings (MARA) and Core Scientific (CORZ).

4. Kazakhstan among top 3 Bitcoin mining destinations after US and China

For over a year, the oil-rich Central Asian country of Kazakhstan has maintained its position as the third-biggest contributor to Bitcoin mining after surpassing Russia back in February 2021.

However, the top three countries contributing to the Bitcoin hash rate continue to eat away the share of other players, such as Malaysia, Germany and Iran. Kazakhstan was among the first to welcome the displaced Chinese miners when the Chinese government imposed a blanket ban on Bitcoin and crypto mining and trading.

China resumed mining operations in September 2022, but the temporary mining ban stripped the country’s position as the biggest Bitcoin mining hub, placing the United States at the top ever since.

Speaking at the international forum Digital Bridge 2022, President Kassym-Jomart Tokayev shared his vision to make Kazakhstan a leader in the field of digital technology, cryptocurrency ecosystem and regulated mining. We are ready to go further. If this financial instrument shows its further relevance and security, it will certainly receive full legal recognition,” Tokayev stated.

5. How ethereum’s merge made crypto mining more sustainable

After years of anticipation, the cryptocurrency ethereum finally implemented a major network upgrade that completely changes how the blockchain verifies transactions, mints new coins and secures its network. Called proof-of-stake, this system has reduced ethereum’s energy consumption by more than 99%.

Energy usage has been one of the cryptocurrency industry’s biggest targets for critique. But it’s not likely that bitcoin will follow suit.

Instead, the bitcoin network is sticking with a system called proof-of-work, in which highly specialized computers try to guess a winning number that serves to validate transactions and create new coins. This is what’s known as mining.

But now the network has swapped out miners for validators. Instead of playing a massive computational guessing game, validators are assigned to verify new transactions, and earn ether as a reward for doing so.
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