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BT Daily News: What does the Fed’s fight against inflation mean for crypto? Macro analyst explains


1. What does the Fed’s fight against inflation mean for crypto? Macro analyst explains

The Federal Reserve's efforts to battle inflation by rising interest rates and killing demand may have limited results as long as the supply side of the inflation problem won’t be fixed, according to macro analyst Lyn Alden.

Until they actually fix the supply side of certain things, like energy especially, but commodities broadly and logistics infrastructure, until that is improved, it's hard to have a more persistent fix to the inflationary problem,” said Alden.

"They're going to tighten until they break something or until they cause recessionary enough conditions. And at that point, they might pivot," Alden explained.

Until the Fed won't pivot its interest rates policy, the crypto markets are unlikely to recover, pointed out Alden. In the long run, the central banks will be unable to preserve positive interest rates, mainly because of the high level of public debt that is burdening the most developed economies.

2. Bitcoin projected to become first monetary system to hit net zero emissions by 2024

Bitcoin (BTC) continues to receive criticism regarding its carbon footprint impact as the asset records significant adoption in different jurisdictions. However, the situation might be changing, especially with mining operators increasingly opting for renewable sources of energy in a bid to reduce carbon emissions.

In particular, Bitcoin is reportedly set to achieve a net zero emission by December 2024, becoming the first monetary system to attain the feat.

According to the study, the Bitcoin network currently has 62.4% zero emissions by factoring in carbon-negative mining. By March 2023, the activity is expected to have 72.7% zero emissions based on newly announced carbon-negative projects.

The study’s conclusion is based on the use of flared gas to power Bitcoin mining which has been growing by 8.3 MW per month since May 2021.

3. Large Ethereum Miners Look to Cloud Computing, AI Ahead of The Merge

Some of the world's biggest Ethereum miners are looking to shift their computing power to cloud computing and artificial intelligence (AI) ahead of the network's move to a different type of consensus mechanism — an upgrade, known as the Merge.

The Merge is set to take place around Sept. 13-16, and it will switch from proof-of-work (PoW) in favor of proof-of-stake (PoS), which will do away with the need for large amounts of computing power and data centers, and is expected to reduce the network's energy consumption by at least 99.95%.

There has been plenty of speculation on what the Ethereum miners will do after the Merge. One theory is that miners will redirect their mining rigs to Ethereum Classic, which is the splinter network that emerged from the 2016 hard fork after a hack in which $60 million was stolen from one of the earliest decentralized autonomous organizations (DAO) on the Ethereum network.

Ethereum Classic has, in fact, emerged as a potential winner ahead of Ethereum’s Merge event scheduled for later this month, with network metrics surging to lifetime highs and ETC tokens gaining value in a mostly little-changed crypto market. The Ethereum Classic hashrate reached over 48.64 terahashes per second (TH/s) as of Tuesday morning, having surged more than 133% since July, while ETC tokens have gained some 28% in the past 24 hours.

4. Miners Hive Blockchain Technologies, Hut 8 Prep for Ethereum Merge

Hive Blockchain Technologies is plotting out ways to optimize its Ethereum mining capabilities as the blockchain’s transition from proof-of-work to proof-of-stake quickly approaches.

Josh Olszewicz, head of research at crypto fund manager Valkyrie Investments said that miners are likely considering shifting to Ethereum Classic (ETC), ETHPoW, or other proof-of-work chains. GPU miners have increased flexibility on what they can mine, however, compared to ASIC miners.

Meanwhile Hut 8 Mining said in a company statement Tuesday that it installed 180 Nvidia GPUs in its data center in British Columbia last month.

Currently mining ether, the machines will be designed to pivot to offer artificial intelligence, machine learning or visual effects rendering services to customers.

5. Nigeria to establish special economic zone for bitcoin, crypto

Nigeria is seeking to create the first economic free zone for bitcoin and cryptocurrency in West Africa through the Nigeria Export Processing Zones Authority (NEPZA). NEPZA is in discussions with Binance, one of the leading cryptocurrency exchanges, as well as Talent City which specializes in building special economic zones.

Indeed, just last year Africa as a whole became the largest country in P2P transactions in the world by volume. Around the same time, Chainalysis reported a global adoption index which showed Nigeria in the top 10 countries worldwide for its adoption of bitcoin.

Moreover, as Dubai and Nigeria look to establish special economic zones to benefit bitcoin and other cryptocurrencies, we can take a look at existing economic zones. For instance, the free city of Próspera is an example of a customizable economic framework.
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