BTC Miners Led in Crypto Fundraising For The Past Month

12/05/2023 0 Comments

1. Bitcoin Miners Led in Crypto Fundraising For The Past Month

Crypto fundraising in November saw a significant uptick compared to the amounts raised in prior months. Bitcoin miners took the lead this time, accounting for 90% of the deals ahead of exchanges and payments projects.

Research by market intelligence platform Messari found that Bitcoin miners Northern Data and Phoenix Group raised more than half of the total amount accumulated by the crypto venture capital market.

Bitcoin Miners Lead in Crypto Funding For November

During the last month, the crypto market inked 98 deals worth $1.75 billion, a major jump from October’s $750 million. The top ten deals were worth more than $1.4 billion and involved various crypto projects.

Northern Data led the list with more than $600 million in funds raised at a debt financing round, while Phoenix Group followed with $370 million at an initial public offering (IPO). Crypto exchange and wallet provider Blockchain.com came third with $110 million raised in a Series E funding round, and blockchain-based wholesale payments firm Fnality followed closely with $95 million in a Series B round.

Other major deals included strategic investments, post-IPO financing, and Series A rounds raking in tens of millions of dollars for firms like Bitcoin miner Bitfarms and decentralized artificial intelligence (AI) infrastructure startup Ritual. Last on the list was Blast, a controversial Ethereum-based layer-2 blockchain, which raised $20 million in an undisclosed round led by venture capital firm Paradigm.

Investors in Ramping-up Stage

It is worth noting that without the two huge funds raised by Northern Data and Phoenix Group, the total amount amassed in November would have stood at $750 million, the average monthly funding since August.

However, the average deal size increased by 50% from October’s $5 million to $7.5 million.

Messari researcher Kel said the heavy funding received by Bitcoin miners gives room for optimism and suggests that venture capitalists close to the sector expect higher Bitcoin (BTC) prices, especially with the upcoming halving event. The halving will slash miners’ block rewards by half and reduce the amount of BTC produced daily. Despite fears of the impact of reduced block rewards, venture capitalists seem to be focused on the bright side.

Meanwhile, the recent rally of cryptocurrencies has not extended to private market flows. Kel believes investors may be in a ramping-up stage that has not translated into announced deals.

2. Bitcoin miner Riot Platforms gears up for halving with strategic $290M hardware investment

Texas-based Bitcoin (BTC) miner Riot Platforms secured its largest-ever order of hash rate through the acquisition of 66,560 units of BTC miners, representing 18 EH/s, from MicroBT for $290.5 million, according to a Dec. 4 statement.

Riot furthered that it also obtained options to acquire 265,000 additional miners from MicroBT, which would add up to 75 EH/s to its hashrate. This move, the firm explained, aligns with its goal of achieving a 100 EH/s hash rate capacity. The miner had previously announced the purchase of 33,280 miners in June.

Per the statement, the deployment for the initially purchased 33,280 miners will take place during the first quarter of next year ahead of the highly anticipated BTC halving event, while the delivery and deployment for the new purchases will commence during the second half of the same year.

The Bitcoin miner added that it expects the deployments of all miners it purchased to be completed by the second half of 2025. According to Riot, by the second half of 2025, their self-mining capacity should exceed a hash rate of 38 EH/s.

CEO Jason Les described the order as the company’s largest hash-rate purchase. He expressed confidence in maintaining ownership and operation of one of the world’s most substantial and efficient Bitcoin mining fleets.

Earlier today, CryptoSlate Insight noted that Bitcoin is witnessing a significant surge in its hash rate, with the recent figures setting new single-day records. The update noted that the blockchain network’s next difficulty adjustment is poised to be the seventh consecutive positive adjustment.

Meanwhile, this purchase news, alongside BTC’s rally past $41,000, pushed Riot’s stocks up by nearly 6% in the last 24 hours, reaching approximately $14.52 as of press time, according to Nasdaq data.

3. The environmental impact of bitcoin mining explained

For those who chase innovation or who are looking for a new way to make money, cryptocurrencies such as bitcoin may seem like an exciting but innocuous new tech. For those assessing the environmental impact of cryptocurrencies, however, the technologies are far from benign.

Indeed, mining for bitcoin and other cryptocurrencies is antithetical to climate progress. This is due to the technologies’ massive energy needs and resulting pollution. Understanding these issues and why activists and legislators are pushing for change is important for anyone concerned with ensuring a livable planet.

The number of bitcoin owners is just 3.4% of the worldwide population, or 267 million people as of June 2023, according to Crypto.com, a cryptocurrency exchange company based in Singapore.

Yet the currency has an outsized impact on the environment.

How does bitcoin mining and cryptomining work?

To understand the environmental impact of cryptocurrency mining, particularly bitcoin mining, requires first understanding what cryptocurrency is and how the mining process works.

A cryptocurrency — such as bitcoin — is a type of decentralized digital currency that can support international transactions, micropayments and peer-to-peer transactions. Some businesses and individuals accept cryptocurrency as a form of payment for goods and services, among other benefits and challenges. The underlying technology relies on blockchain, which is a digital record-keeping system simultaneously available in multiple locations, called nodes, within the network.

Cryptocurrencies, like Bitcoin, don’t rely on a central authority to oversee or regulate transactions. Instead, they use complex encryption techniques called cryptomining to secure and verify transactions and control the creation of new units. The environmental impact of cryptocurrency mining — and Bitcoin mining, in particular — is largely due to the main cryptomining approach in use called proof of work (PoW). The process requires a massive amount of computing power, as miners use complex algorithms and energy-intensive hardware and software to confirm transactions.

To solve bitcoin’s PoW system, miners compete to solve an encrypted puzzle within each block. The miners use specialized software to solve for the mathematical puzzle via trial and error, guessing until they get it right. Bitcoin miners are awarded a certain number of bitcoin for solving these puzzles, essentially being paid to do the validation work that enables the whole system.

The PoW structure rewards miners who have the most powerful computers, since they can make more attempts in a shorter amount of time, making them more likely to solve the puzzle and earn bitcoin as a reward.

A less-frequently used cryptomining approach is also in use. Proof of stake (PoS) requires significantly less energy and computing power than the PoW approach, largely in its limitation of participants. PoS means that the miner must provide a minimum deposit, or stake, to confirm the transaction.

How does bitcoin mining and cryptomining affect the environment?

The cryptomining process has drawn criticism from sustainability advocates as well as some government officials and business leaders who fault the technology for its intense energy requirements, greenhouse gas emissions and significant hardware needs. Cryptocurrencies also generate emissions and have other environmental impacts along their production supply chain and during disposal, generating e-waste at their end of life.

“Proof of work is a huge competition across computers, and that race to find a solution takes a lot of power,” said Marc Lijour, a member of the IEEE and CEO at Creative Emergy. “It’s very inefficient.”

The Cambridge Bitcoin Electricity Consumption Index (CBECI) compares bitcoin’s energy needs to other activities, showing bitcoin requires nearly as much energy as powering all the lights and TVs in the U.S.

Bitcoin mining has a presence in 58 countries, with most miners operating in the U.S. At 37.84%, the U.S. has the most energy-intensive bitcoin mining activity in the world, according to data from the CBECI.

But the tech’s environmental impact goes far beyond U.S. borders.

Bitcoin’s global electricity consumption of 173.42 TWh from 2020 to 2021 exceeds that of some countries, according to a study published by the journal Earth’s Future. For example, that amount of power exceeds the combined electricity consumption of Argentina and the Philippines.

That intense energy translates to massive levels of greenhouse gases.

Bitcoin mining processes produced 85.89 MTCO2E, or metric tons of carbon dioxide equivalent, from 2020 to 2021, according to the study. This figure is comparable to 9,665 gallons of gasoline consumed by passenger vehicles, or 96,210 pounds of coal burned in one year, according to the U.S. Environmental Protection Agency’s Greenhouse Gas Equivalencies Calculator.

The environmental impact of bitcoin mining has environmental activists, governments and business leaders voicing concerns and questioning how to rein in its effects.

Although there are over 10,000 cryptocurrencies in circulation, bitcoin is the most well-known. Ninety-five percent of cryptocurrency owners and people curious about ownership have heard of bitcoin, according to a 2021 report from cryptocurrency exchange company Gemini.