01/10/2024 0 Comments

1. What are the next steps for the Bitcoin ETF?

The final steps for a spot Bitcoin

BTC exchange-traded fund (ETF) debut on Wall Street are in progress, with final revisions from asset managers expected by the morning of Jan. 8, according to Bloomberg analyst Eric Balchunas.

The revisions should be submitted through S-1 filings no later than 8:00 am Eastern Time, or 13:00 UTC, and should reveal applicants remaining fees and tickers. BlackRock, for example, has not yet disclosed the fees associated with its ETF.

Exchanges set to trade the crypto funds submitted their 19-b4 amendment forms after markets closed on Jan. 5. Together, 19-b4 and S-1 forms are the last steps before a verdict is expected from the United States Securities and Exchange Commission (SEC), Balchunas explained to Cointelegraph. Both S-1 and 19b-4 forms will undergo parallel approval, with 19b-4 forms being approved first.

The next stage in the decision-making process could be the vote by the SEC commissioners. On the commission’s public agenda, nothing is scheduled before Jan. 11, when markets forecast the ETFs’ debut. According to Balchunas, the SEC could make the decision using its delegated authority policy:

“We’re not even sure they’re going to vote. […] They could use something called delegated authority, but we don’t know. It looks like there are three options: whether they vote or use delegated authority, which means they must approve it because when they denied the past ones, they didn’t have a vote.”

Balchunas predicts that most applicants will be approved next week, or at least those who met the regulator’s requirements before Dec. 29. The analyst also noted that Grayscale — which seeks conversion of its over-the-counter Grayscale Bitcoin Trust into a listed BTC ETF — may receive its decision after the first applicant’s approval is granted. “It wouldn’t surprise me if there was something different with them.”

Commenting on Better Markets’ letter on Jan. 5 — which stated that approval of ETFs would be a “historic mistake” — Balchunas said it was the “last gasp of an angry crypto hater.”

“What they miss […] and if they did address this, I’d give them more respect, is the current ways that a person can buy crypto. Everybody can buy crypto now. It’s not like the ETF is making crypto available for the first time. […] I don’t think it really carries much weight. I think they just want to sort of be on the record that they hate it.”

For the past 10 years, the SEC has denied approval of a spot BTC ETF, citing concerns over potential market manipulation. However, the regulator appears to be “backed into a corner,” according to Bloomberg’s James Seyffart.

2. ETF Hopes and Ordinal Inscriptions Serve as Life Preserver for Bitcoin Miners

2 Key Trends Buoy Miners Ahead of 2024 Milestone

The Bitcoin halving event is approaching and is estimated to be just over 100 days away, assuming block times maintain their average of ten minutes. Current statistics, as of this writing, indicate that 14,981 blocks remain until the halving.

This upcoming event marks the fourth halving; the first occurred on Nov. 28, 2012, followed by the second on July 9, 2016, and the third on May 11, 2020. Before these halving epochs, especially preceding the 2016 and 2020 events, certain skeptics of bitcoin predicted a ‘mining death spiral’ accompanied by substantial miner capitulation.

In the past, bitcoin detractors have claimed that a mining death spiral could occur post-halving due to reduced block rewards. They argue that this decrease in profitability may lead to miners exiting the network en masse, resulting in a drop in hashing power, slower transaction times, and potential security vulnerabilities, thus destabilizing the entire Bitcoin network.

However, a 2020 research study by Coinshares dismissed these concerns as “highly theoretical edge cases without any historical real-world precedent.” As the 2024 halving nears, these once-prominent theoretical concerns have significantly diminished.

Up to this point, two key developments have enhanced the earnings of bitcoin miners: the anticipation of a U.S. spot bitcoin exchange-traded fund (ETF) approval and the burgeoning Ordinal inscription trend. Mining revenue saw a substantial rise throughout 2023 and this trend has persisted into the new year.

The positive sentiment surrounding the potential approval of a spot bitcoin ETF has boosted BTC’s value, consequently increasing the network’s hash price. The surge in activity, coupled with the popularity of Ordinal inscription minting, has significantly raised transaction fees. If these trends persist, miners might not experience a significant impact from these changes.

Although current fees are lower than last month, they remain notably higher than the same period last year. The potential approval of an ETF has led crypto enthusiasts to anticipate significant demand for bitcoin from these publicly traded funds, potentially maintaining BTC’s high price for an extended period.

As with previous halvings, the outcome remains uncertain, and bitcoin miners have historically operated under tight conditions. However, major mining operations with substantial capital are scaling up their hashrate significantly by acquiring thousands of advanced mining rigs.

With these more efficient miners and increased hashrate outputs, coupled with the potential price support from an ETF and higher fees due to inscriptions, bitcoin miners are expected to remain resilient, similar to their experience during the past three halving events.

3. Bitcoin Miner CleanSpark Announces Strategic Agreement for 160K Miners

United States-based Bitcoin (BTC) miner CleanSpark Inc. has announced a strategic agreement that could see it purchase up to 160,000 miners by the end of 2024, significantly expanding its mining operations.

According to the statement, CleanSpark has already purchased 60,000 Bitmain S21 units at a price of $16.10 per terahash for a total cost of $193.2 million. These miners are expected to be delivered between April and June 2024. In addition, CleanSpark has secured a strategic call option to purchase an additional 100,000 machines at a price of $16 per terahash before the end of 2024. If all 160,000 miners are installed, CleanSpark’s hash rate is expected to reach 50 exahashes per second (EH/s), marking a 400% increase from its current 10 EH/s.

CleanSpark’s CEO, Zachary Bradford, explained that the strategic call option serves as a “hedge” against rising machine prices during bull markets. He said:

“In the last bull market, machine prices increased by three to five times, and we expect the same to occur in future bull markets. This agreement allows us to manage our capital most efficiently by controlling as many variables as possible. It also provides us the flexibility to time our infrastructure growth with macro events, while providing certainty of cost on the miners.”

Bradford emphasized that the strategic agreement allows CleanSpark to manage its capital more efficiently and control as many variables as possible. It also provides the flexibility to time infrastructure growth with macro events while ensuring certainty of cost on the miners.

CleanSpark’s move to acquire more miners comes as several other major Bitcoin mining companies, including Marathon Digital Holdings, Riot Platforms, and Cipher Mining, have also been ramping up their operations in anticipation of the upcoming Bitcoin halving event expected to take place in April.

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Harvey CHEN

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