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BT Daily News: Bitcoin hashrate hits new highs as price stays late – What it means for miners

BT Daily News: Bitcoin hashrate hits new highs as price stays late – What it means for miners

1. Bitcoin hashrate hits new highs as price stays late – What it means for miners

A broad miner capitulation started in the beginning of the summer as the bitcoin price took a deep plunge, erasing all gains made in the previous year. Pressured, most public miners who had previously committed to holding their BTC began selling their daily mined bitcoin to cover operating costs amid diminishing margins. Later, some would also start selling the BTC they had put in cold storage.

However, not all players in the industry are hit equally. “Those miners who are well positioned, well capitalized and can operate from a position of strength are going to benefit from this.”

Geopolitical tensions for the industry heat up as white house report hints at ban

The new high in Bitcoin’s hash rate comes 18 months after the Chinese government banned bitcoin mining altogether, a move that cut the network’s hash rate in half as local miners turned off their machines and began relocating their operations overseas. As a result, the U.S. share of global Bitcoin hash rate increased sharply as the country posed itself as one of the main destinations for the outcast businesses. Kazakhstan and Russia also welcomed the machines.

However, the U.S., which according to data from the Cambridge Centre for Alternative Finance currently houses about 37% of Bitcoin’s global hash rate, has itself begun to show some signs of hostility toward the industry.

Driven by energy consumption worries, the White House Office of Science and Technology Policy (OSTP) published a detailed report last week recommending that the Biden Administration ensure the development of Bitcoin and cryptocurrency at large in the country is accountable to concerns over climate change.

It does appear that an eventual ban on PoW is very unlikely in the U.S. given the nature of its government compared to China’s, as well as the extent to which bitcoin mining is integrated into power grids and communities in the country.

However, were such an event come to fruition, the network would still be prepared to withstand such an attack. The same way the network didn’t perish when mining was banned in China –– the country with the highest share of hash rate at the time –– it is well positioned to show a similar outcome in a potential U.S. ban. Notwithstanding, the network might even be able to keep thriving in the U.S. during a ban, which is evidenced by the fact that there are still many machines hashing in China; according to CCAF, the Asian country still houses over 20% of the global Bitcoin hash rate.

2. Crypto Tech Firm BlockFills to Offer ESG Credits to Miners

Crypto financial-services and technology firm BlockFills is working with Isla Verde Capital to offer crypto miners environmental credits to help them offset their carbon emissions.

"Miners are seeking sustainable solutions to their challenges in the energy industry, while also fighting public scrutiny over their consumption and carbon footprint,” Neil Van Huis, a partner and director at BlockFills, said in the press release.

Isla Verde co-Chief Investment Officer Ronnie Virissimo said that "it is becoming more imperative that all groups, particularly those on the blockchain, are proactive about reporting on and lowering their carbon footprint, with greater potential for regulation and rules to be put in place."

Elliot David, head of strategy and partnerships at Sustainable Bitcoin Protocol, a company that is developing an on-chain product for miners looking to certify their energy use, said that "unless a miner is holding the RECs attributed to their power consumption, they can't technically claim that they're using clean energy. As a result, we've seen miners take a wide range of existing approaches" from nothing at all to buying high-quality RECs.

3. Cryptoverse: Ether snaps at bitcoin's heels in race for crypto crown

For years, ether could barely dream of challenging its big brother bitcoin. Now, its ambitions may be becoming more realistic.

The second-biggest cryptocurrency is taking market share from bitcoin ahead of an all-important "Merge" software upgrade that could sharply reduce the energy usage of its Ethereum blockchain, should the developers pull it off in coming days.

Bitcoin is still by far the most well-known cryptocurrency. Mainstream investors who have dipped their toes in the crypto market since 2020 have tended to turn first to bitcoin, as the most liquid and widely-traded token.

Its market cap of $427 billion is still more than double Ether's $210 billion, and market participants firmly believe the original digital coin remains the gold standard in crypto due to its limited supply.

Some market players say bitcoin's grip on the crypto crown is still strong, even if it has to accept other contenders. For example, Hugo Xavier, CEO of K2 Trading Partners, said its dominance could improve to 50%-60% range if the crypto market turns bullish but it is unlikely to touch 70% again.

4. ETC Group to Retain Ethereum PoW Hard Fork For ETP

A report cited that ETC Group achieved growth of 34,259% from its launch on June 8, 2020, to June 1, 2021. In addition, the company reached its peak in assets of $1.7 billion and won the ETF Express Editors award in March 2022 European awards.

Then, it claimed to be the most liquid and 100% physically-backed Bitcoin ETP in the world.

According to the announcement, the newly launched Ethereum ETP of ETC Group will rely on the Ethereum POW hard fork. This is meant for a group of miners opposed to the transition to POS. The proof-of chain will have a new token called ETHW.

Apart from ETC Group, other organizations want to seize the opportunity to introduce new tokens. Recently, Hive Blockchain, a Canadian-based crypto miner, announced that it is planning to replace the mining of ETH with other mineable coins in the course of the ETH merge.

5. Crypto Lender Maker Turns to Staked Ether to Reduce USDC Influence

Crypto lending platform Maker, the world's largest decentralized-finance (DeFi) app, doubled the debt ceiling of its staked ether (stETH) vault this week as it looks to reduce its reliance on centralized stablecoins after Centre, the issuer of USD coin (USDC), blacklisted 38 addresses linked to sanctioned crypto tool Tornado Cash.

More than 34% of all assets locked on USDC are locked on Maker, and the tokens are the single-largest source of collateral that backs DAI, Maker’s native decentralized stablecoin pegged to the U.S. dollar. Approval of the proposal to raise the ceiling to $200 million allows more stETH to be deposited against DAI, reducing USDC’s influence.

This role of USDC in the system has led to criticism for DAI among market observers, with some even terming it “wrapped USDC” – or an alternative for USDC tokens. Erik Vorhees, the founder of crypto trading platform ShapeShift, has publicly appealed for Maker to start “unwinding its USDC collateral immediately.”

There’s a natural tension between centralized stablecoins and projects like DAI that want to be permissionless and uncensorable,” Maker founder Rune Christensen said in a CoinDesk TV interview in August. The decision to lean on USDC allowed Maker to grow and focus on an easy user experience, but that came with trade-offs that are now fully visible, he said.
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