Let’s face it: Having only crypto will not make for a good life. And crypto now is high, very high. A correction is in the cards, so why not lock in the insane profits and convert it to something you can touch, see, feel and use? At a bargain?
A friend of mine is offering this one-of-a-kind real state in the Caribbean, a true mansion, your neighbors will be Schmid from Google, and other hi-flyers. Cabarete, one of the six important surf and kite surf locations in the world is just 5 minutes by car.
He is very motivated to sell as he needs to go back to Europe to take care of his elder parents.
Two of the major US miners are mining bitcoin at a considerable discount, according to research from Compass Point
One stakeholder in the North American mining industry told Blockworks that he’s yet to see inbound movement to the US from fleeing Chinese miners
The bitcoin price crash of 2021 won’t have the same impact on the mining industry as the crash of 2018 as two of the largest miners in North America are well-positioned to weather the storm.
According to a recent note by Compass Point’s Michael Del Grosso, the firm believes that Riot Blockchain (RIOT) is mining bitcoin at a cost equivalent to approximately $15,000 per bitcoin or a 62% discount to market pricing.
One of its competitors, Marathon Digital (MARA), is mining at a cost of approximately $12,000 per bitcoin, or a 70% discount.
“We believe North American miners are well-positioned to benefit both from the lower global hashrate and the potential for increased availability of mining equipment,” analyst McGlone wrote in the note. “In the case of Riot, the firm’s recent acquisition of Whinstone should provide the miner with significant hosting capacity ready to bring on Chinese miners looking to move their operations to North America.”
A buy rating for North American mining firms
The firm’s modelling that a prolonged decline in global hashrate — from operations in China packing up and moving abroad — as well as continued price compression is not an issue for either company given their scale. The longer that China’s collective hashrate declines means it’s easier for miners that are established and operating at full capacity to mine, and neither Riot nor Marathon are overly impacted by price sensitivity.
Compass Point gives both Riot and Marathon a buy rating. The firm also notes “should a Bitcoin ETF be approved, Bitcoin miner stocks may experience a decoupling from the movement in Bitcoin price and potentially see more fundamentally-driven performance.”
This is in contrast to the price crash of 2018, where bitcoin mining companies spent a considerable amount of capital upgrading their capacity to capitalize on the bull market of 2017, which ended with the price of bitcoin falling by about 65% from January 6, 2018, to February 6, 2018.
Although there are a number of reports of miners from China fleeing to the US to re-establish their hashing presence, there’s no indication that they’ve set up shop stateside — only shipped the gear there.
Steve Braverman, president and CEO of Massena, New York-based Dignity Mining Group, told Blockworks that if these firms are going to establish operations in the US, it’s been “very quiet.”
“There has been very little movement regarding Chinese mining firms. Our colocation facilities are already maxed out,” he said. “There has been very little supply [of ASICs computer chips used by miners], and as you may be aware, most of the rigs come from China. The cost of the rigs has not gone down significantly either. If China miners are moving in, it is not to the US. There are many other friendly countries with low green power costs and are crypto-friendly.”
According to Blockchain.com’s hashrate monitoring tool, the global hash rate has stopped its decline from the prolonged drop that began in early June, but it hasn’t yet increased. So wherever these miners are going, they’ve yet to turn on their machines.
Bitcoin fell to a months-low of $28,390.50 at 9:55 am ET.
Powell soothed investors’ concerns, maintaining price pressures are likely to be transitory.
As China’s clampdown on cryptos continued, the largest digital currency hit a new five-month low on Tuesday morning. Intensified regulations on bitcoin mining and forcing the country’s largest financial institutions to block all of the digital asset’s transactions may have paved the way to the coin’s fall below $30,000.
China’s central bank, The People’s Bank of China (PBOC) said the digital currency “spawns the risks of criminal activities such as illegal asset transfers and money laundering, and endangers people’s wealth” in a note on Monday morning. And over the weekend 90% of China’s bitcoin mining was estimated to be shut down, according to a report on Sunday from the Global Times.
Within the throes of a volatile morning, bitcoin fought its way back up to $33,000 at 2:44 pm ET.
Bitcoin fell to a months-low of $28,390.50 at 9:55 am ET. The cryptocurrency whipsawed to $32,863.94 as of 4:00 pm ET, up 0.71% over the past 24 hours.
Ether is trading at around $1,924.01 falling -1.14% in 24 hours respectively.
ETH:BTC is at 0.058, down -1.68% as of 4:00 pm ET.
VIX is down -7.04% to 16.63 as of 4:00 pm ET.
“China has formally banned cryptocurrency several times over the last few years so this news should be no surprise but this risk is not baked into the price. Far from it. Instead it’s ignored by industry vets whilst retail investors try and make sense of the news, often causing a sell off,” Ledgermatic CEO Luke Sully said in a note.
Stocks climbed after Federal Reserve chair Jerome Powell gave his testimony at a House Select Subcommittee hearing for Covid relief programs on Tuesday afternoon. Powell soothed investors’ concerns, maintaining price pressures are likely to be transitory.
Powell further reassured that 5% inflation would be unacceptable and said that he had “a level of confidence” that prices will come down…at some point.
The Dow was up 0.2% to 33,945.
The S&P 500 rose 0.5% to 4,246.
Nasdaq Composite hit a record closing high of 14,253 up 0.79%.
Amazon.com rocketed to $3,514.05 as the e-commerce company wrapped up its “Prime Day”. This was 0.5% away from Amazon’s last record high in September.
GameStop jumped 12.7% after the meme stock announced it sold around 5 million shares.
The US 10-year yields 1.47% as of 4:00 pm ET.
Crude Oil had an intraday high of $73.95 per barrel and downticked -0.79% to $73.08 as of 4:00 pm ET.
Gold is down – 0.27% at $1,778 as of 4:00 pm ET.
The US dollar is down -0.18%, according to Bloomberg Dollar Spot Index.
In other news…
Existing home sales hit a benchmark high last month up 23.6% year to date while previously owned homes hit a fourth consecutive month of declining sales, according to a report by the National Association of Realtors on Tuesday. With a larger demand and lower mortgage rates, there aren’t enough homes for would-be buyers. This comes at a time when investment firms like Blackstone Group Inc. have just acquired 17,000 single-family homes in a $6 billion-deal with Home Partners of America Inc., Wall Street Journal reported on Tuesday.
We’re watching out for …
The Fed will release stress tests results on key US banks on Thursday.
Bank of England interest rate decision will take place on Thursday.
PCE price index will be released on Friday.
That’s it for today’s markets wrap. I’ll see you back here tomorrow.
Nominees Nelson and Elizabeth Rosenberg call cryptocurrency regulation a priority during Tuesday hearing of the Senate Committee on Banking, Housing, and Urban Affairs.
Democratic and Republican senators imply different levels of personal concern around digital assets space
President Biden’s nominee for the Department of the Treasury’s under secretary for terrorism and financial intelligence labeled new regulations around cryptocurrency as a priority of his if confirmed.
Brian Nelson, nominated to lead the unit responsible for developing and implementing the National Money Laundering Strategy and other policies and programs to fight financial crimes, said that he would implement pieces of legislation within the Anti-Money Laundering Act of 2020, but noted the importance of not shutting down safe new technologies.
The law was passed on January 1 and made significant changes to the Bank Secrecy Act of 1970 by expanding the duties and powers of the Treasury’s Financial Crimes Enforcement Network, known as FinCEN.
“I think the other really powerful piece of that legislation is that it reflected a balancing of regulating to prevent virtual currency and other types of new technology from undermining our anti-money laundering system while also being respectful of the fact that we need to support responsible innovation and preserve that here in the United States and not see that market and opportunity leave the country,” Nelson said.
His comments came during a Tuesday hearing of the Senate Committee on Banking, Housing, and Urban Affairs. He was responding to a question by Sen. Catherine Cortez Masto, a Democrat from Nevada, who noted that “money laundering, tax evasion, terrorist financing and fraud follow privately created and managed currencies.”
Elizabeth Rosenberg, Biden’s nominee for assistant secretary of the Treasury’s terrorism financing division, added during the hearing that she would ensure the regulatory regime that applies to cryptocurrency is appropriate and consistent across areas of regulation. Assisting financial regulators in other countries to implement laws and controls will also be critical, she added.
“Without that kind of collaboration and without other countries having the appropriate regulatory framework, it’s all too easy for criminals to avoid US jurisdiction and conduct their illegitimate and criminal activity from other jurisdictions,” Rosenberg said.
US regulators have imposed $2.5 billion in penalties against people and firms related to crypto over the last decade, according to blockchain analytics provider Elliptic. The bulk of the fines related to unregistered securities offerings and fraud. While the SEC imposed $1.7 billion of the penalties, the Commodities Futures Trading Commission and FinCEN collected $624 million and $183 million, respectively.
Sen. Cynthia Lummis, a Republican from Wyoming, used a portion of her questioning time during the hearing to tout digital asset analytics providers, which she said helped law enforcement agencies recover 85% of the digital assets paid in a ransomware attack on Colonial Pipeline.
She also referenced a report by Chainalysis, which found that the criminal share of all cryptocurrency activity was 0.34% in 2020, down from 2.1% the year before.
“It seems to me like we would still be working on recovering this money if it was done by wire transfer or other traditional payment rails, so there are real advancements in the [cryptocurrency] space of which I think many people are unaware,” said Lummis.
Federal Reserve Chairman Jerome Powell testified Tuesday before the House Select Subcommittee on the Coronavirus Crisis
The Personal Consumption Expenditures, the Fed’s preferred tool to measure inflation, will be released on Friday and will provide insight into how soon Americans can expect the Fed to start tapering.
Federal Reserve Chairman Jerome Powell faced tough questions from lawmakers about the Fed’s current easy-money policies while testifying Tuesday before the House Select Subcommittee on the coronavirus crisis.
In his prepared opening remarks, Powell maintained that while inflation may be on the rise, it will be transitory. He has “a level of confidence” that the high prices consumers are worrying about will be fleeting.
Powell attributed many of the price hikes to supply chain issues and bottlenecks and admitted that it’s difficult to say when these will go away. A 5% inflation environment is not acceptable, Powell said, and requested that consumers and lawmakers exercise patience when evaluating data on prices.
“We will not raise interest rates preemptively, because we think employment is too high, because we fear the possible onset of inflation, instead we will wait for actual evidence of actual inflation or other imbalances,” Powell said during the testimony.
When faced with questions from lawmakers concerned about the current level of inflation, Powell stayed on message and maintained that supply chain and labor-related issues will be solved in the coming months and will help to keep prices in check.
“I strongly suspect that the labor supply and job creation will be moving up well over the rest of this year,” he said.
Powell declined to comment on current unemployment benefit policies but admitted that higher unemployment payments may be playing some role in the lack of laborers. He also noted job quits, retirements and the closure of schools and daycares as labor market stressors as well.
The Personal Consumption Expenditures, the Fed’s preferred tool to measure inflation, will be released on Friday and will provide insight into how soon Americans can expect the Fed to start tapering.
The message is largely on-par with Powell’s Federal Open Market Committee meeting statement last week where he maintained that stronger economic data will be needed before the Fed starts to taper bond purchases. The committee also updated their economic forecasts and suggested that interest rate hikes may come in 2023, according to the dot plot survey released Wednesday.
Fed officials seem to have mixed opinions on interest rates and tapering efforts. New York Fed President John Williams said on Wednesday that the Fed will not begin discussing lower rates until “way off in the future.” Conversely, Cleveland Fed President Loretta Mester said Wednesday that keeping rates near zero in the long run, coupled with unprecedented asset purchases, risks financial stability problems.
Following Powell’s remarks, stocks climbed late in the trading day Wednesday while the dollar fell.
Number of bitcoin has grown by 500,000 in last two years as more products hit market, but has seen slight dip in recent weeks
Majority of bitcoin outflows came from 3iQ closed-end fund as Canadian firm allowed conversion to its ETF
The amount of fund holdings in has shown a slight decline in the last few weeks after consistent growth in recent years, according to data tracked by ByteTree Asset Management, hitting its lowest level since early May.
European and Canadian ETFs, combined with closed-end funds in US and Canada, held just below 783,000 bitcoin as of Monday, the data shows. The latest figure is about 2,500 lower than a week ago as the bitcoin holdings in funds has fluctuated since hitting its peak of about 790,000 in mid-May.
While the demand for these bitcoin funds does not capture the demand for the cryptocurrency through exchanges and trading apps, ByteTree CIO Charlie Morris told Blockworks, the data is a consistent sample of buying and selling.
“You can’t track every group of investors, you can’t track retail, you can’t track institutional perfectly, but you can track these [funds],” he explained. “It’s a closed circuit with consistent behavior, and that’s why we like it.”
The majority of bitcoin is held in the Grayscale Bitcoin Trust, which accounts for about 654,000 bitcoin, the ByteTree data shows. The closed-end fund does not allow for redemptions or withdrawals, said Tom Lombardi, managing director at 3iQ, which had contributed to what he called the “lock step” rise of bitcoin under management without any meaningful declines.
“With the growth of ETFs on major global stock exchanges, this new fund structure allows for redemptions and withdrawals,” Lombardi told Blockworks. “Investors now have more options to come in and out of bitcoin investment funds.”
Investors could soon have even more bitcoin fund options, as nearly a dozen proposed crypto funds await approval by the Securities and Exchange Commission. The SEC last week delayed its decision on potentially greenlighting the VanEck Bitcoin Trust for the second time, pushing the deadline to July.
Overall, the total number of bitcoin in funds has steadily grown by about 500,000 — about $25 billion — in the last two years, according to the ByteTree data.
“Obviously when you launch new funds you make a sales effort, you go and raise $100 million and quite a few of those have been added to the list, and that’s shown growth,” Morris said. “But collectively those funds are no longer taking money in, and some of them are losing small amounts.”
The 3iQ CoinShares Bitcoin ETF (BTCQ), which holds about 21,000 bitcoin, has gained nearly 3,000 bitcoin this month, while the firm’s closed-end fund (QBTC) had outflows of 10,432 bitcoin in June.
Lombardi noted that those fund flows are mainly a result of 3iQ giving investors of the closed-end fund the option of converting all or part of their units into units of the 3iQ CoinShares Bitcoin ETF.
“Our unitholders of The Bitcoin Fund have asked for an easy option to diversify some of their investment into our 3iQ CoinShares Bitcoin ETF, and we are happy to provide them with this avenue,” Fred Pye, Chairman & CEO of 3iQ, said in a May statement.
In addition to QBTC, Ninepoint Bitcoin ETF (BITC) and the Bitcoin Tracker Euro ETP (XBTE) were the only other funds with outflows in June, losing 213 and 605 bitcoin, respectively, according to the ByteTree data. The statistics excluded the ETC Group Physical Bitcoin ETF (BTCE).
Digital asset investment products endured $79 million of outflows last week, according to a June 21 report published by CoinShares. It was the third consecutive week of outflows for the category, representing the longest bear run since 2018, during which there were seven straight weeks of outflows.
Bitcoin drove the outflows with $89 million last week, bringing its yearly total to $487 million, the CoinShares report noted. Ethereum had only about $2 million of outflows, while others like Ripple, Polkadot and Cardano had slight inflows.
Multi-asset investment products also bucked the outflow trend by posting $10 million of inflows last week, as year-to-date gains in the segment have reached about $351 million.
A new Bank of America (BOA) research study has found that both central bank digital currencies (CBDCs) and private digital currencies hold “a lot of potential” for increasing financial inclusion in developing countries. In the report, the bank also argues that such “digital currencies could reduce transaction costs and allow more economic activities in emerging market economies.”
Digital Currencies and Financial Inclusion
Still, the study findings show that while digital currencies are likely to “boost economic growth” in developing countries, their adoption will carry some risk. In addition, the study also finds that the rise of digital currencies “could lead to inflation and dollarization.”
Meanwhile, a separate report quotes David Hauner, the BOA’s head of emerging market cross-asset strategy and economics for EMEA, explaining why digital currencies could be pivotal in emerging market countries where more than 50% of adults lack a bank account.
“Digital currencies have the potential to address many practical constraints on financial services in poor countries,” said Hauner.
The report also lists the reduction of cross-border payment costs as well as the reduction of corruption and other illegal activities as some of the constraints that can be addressed by digital currencies.
Risks to Physical Currency
The BOA research study found that the rise of digital currencies could potentially “undermine a country’s physical currency,” however. Expanding on these findings, Hauner stated:
Easier access to alternative digital currencies is also likely to increase the volatility of domestic money supply and the exchange rate. Easier access to alternatives also raises the risks of rapid shifts of liquidity out of (or into) the currency and the banks which can magnify macro volatility in already less stable countries. Higher macro volatility would then reduce the effectiveness of policies and undermine the long-term rate of growth.
Despite these risks, Hauner suggests that more central banks are “likely to issue a general purpose CBDC in the next three years.” As previously reported by Bitcoin.com News, several countries — including a few in Africa — are currently at different stages of developing or piloting their digital currencies. Several more countries are likely to join the race as more studies show that digital currency benefits outweigh the risks.
What are your thoughts on the latest BOA research report on digital currencies? You can share your views in the comments section below.
On June 21, the wealth manager Vaneck filed a prospectus to launch what it calls a Bitcoin Strategy Fund. The prospectus filed with the U.S. Securities and Exchange Commission (SEC) explains the fund will procure bitcoin exchange-traded products and futures.
Vaneck’s Fund Will Invest in Bitcoin Futures and Pooled Investments Tied to the Leading Crypto Asset
While the fund manager Vaneck waits to hear a decision about its exchange-traded fund (ETF) registration, the company applied with the SEC to release a mutual fund for investors who want exposure to bitcoin. The registration filed on June 21, also notes that in addition to the Fund’s bitcoin-related investments, “the fund expects to have significant holdings of cash and fixed-income investments.”
Vaneck will invest in bitcoin futures contracts, leverage the CME CF Bitcoin Reference Rate (BRR), and also “invest in pooled investment vehicles that invest directly or indirectly in bitcoin.” The crypto mutual fund will be dubbed the “Bitcoin Strategy Fund” and the fund’s “share price and return will fluctuate with changes in the market value of the fund’s portfolio securities.”
The fund Vaneck discusses in its prospectus will not procure bitcoin (BTC) directly and of course, the prospectus filing mentions the risks involved with cryptocurrency markets. “The value of bitcoin and, therefore, of the fund’s bitcoin-related investments, could decline rapidly, including to zero. You should be prepared to lose your entire investment,” the Vaneck filing warns.
Vaneck’s Bitcoin ETF Delayed Twice and the Firm’s Ethereum ETF Prospectus Waits in the Background
Vaneck further details that the fund’s risks are not solely tied to the volatility of bitcoin prices as the fund comes with other risks as well. The wealth manager’s registration form with the SEC mentions the risks involved with pooled investment vehicles, target exposure and rebalancing, borrowing and leverage, tracking errors, credit issues, and interest rate discrepancies as well.
Meanwhile, Vaneck has been making moves in Europe with its exchange-traded products and the wealth manager is also looking to launch an ethereum-based ETF. Vaneck’s proposed ethereum ETF filing is aiming for a Cboe BZX listing. The company’s bitcoin (BTC)-based ETF filed back in December 2020, has so far been delayed twice by the SEC as far as the regulator’s decision is concerned.
What do you think about Vaneck applying with the SEC to launch a bitcoin mutual fund that invests in bitcoin futures and pooled investments? Let us know what you think about this subject in the comments section below.
Jaime Guevara, a Salvadoran representative, presented a lawsuit against the recently approved bitcoin tender law today. Guevara alleges the law is unconstitutional and brings a series of changes that will cause problems for Salvadorans. Some people suspect Bukele’s regime is behind the representative’s demand due to its inability to applying this novel law.
Salvadoran Representative Jaime Guevara Introduces Demand Against Bitcoin Law
Jaime Guevara, a Salvadoran opposition representant, introduced a demand to deem the recently approved bitcoin tender law as unconstitutional. Óscar Artero, a co-signer of the lawsuit, agrees with this interpretation and expects the court to repeal the law. According to him, the bitcoin law doesn’t have a legal base to stand on. Artero declared to local media that:
The bitcoin law is to loot people’s pockets, it is tax-exempt, they want to force us to trade.
The representative introduced this lawsuit before the presentation of the regulation that derives from the approbation of the law. Consequently, no one currently knows the fine print of the implementation of the exchanging systems.
According to a poll made by Camarasal, eight out of ten citizens would not receive payments in bitcoin. Therefore, for most Salvadorans, the bitcoin tender law is a source of concern these days. However, it is unlikely that the Supreme Court would revoke the law because Nayib Bukele appointed these judges after ousting the old ones last May. This was considered by some in the international community as a coup.
For Guevara, this will be a test of how independent from the government these judges are. The representative stated:
“We are going to put this chamber to the test to see what response they are going to give to the public.”
An Inside Job
According to other experts, this might be an inside job to free Bukele from the responsibilities of actually implementing this law. This is what Salvador Anaya, a Salvadoran lawyer, thinks. Anaya stated the government is clueless about how to implement this law, and they would be using Guevara and the new judges to save face.
But Guevara denied these claims, stating he has nothing to do with New Idea, the ruling party. He stressed:
It is widely rumored that this servant represents the interests of Nayib Bukele or the majority bank of New Ideas. At no time, categorically, are we representing the interests of this sector, we are simply representing the people.
What do you think about the lawsuit against the Bitcoin Law approved in el Salvador? Tell us in the comments section below.
The European Data Protection Board (EDPB) has issued a call for EU institutions to uphold privacy when designing a digital version of the euro. The agency is ready to provide advice on data protection matters surrounding the project. Meanwhile, an ECB executive has vowed that the digital euro will protect users’ privacy.
EDPB Insists Data Protection Should Be a Priority in Eurozone’s CBDC Project
The EDPB has shared its views on the privacy and data protection aspects of a possible digital euro in a letter addressed to European Union institutions. The independent body insists that ensuring privacy and data protection will be decisive for the success of a project to digitalize Europe’s common fiat currency. In an announcement published on its website, the board emphasized:
A very high standard of privacy and data protection is crucial to reinforce the trust of end users and should be considered a distinctive element in the offering of a digital euro, representing a key factor of success.
The agency added that its concerns should be taken into account during the design stage for the Eurozone’s central bank digital currency (CBDC). In the document, the EDPB recommends conducting a high-level data protection impact assessment as well. The body indicates its readiness to provide advice to the ECB and other EU institutions involved in the development of the digital euro.
The European Data Protection Board is tasked to facilitate the implementation of the General Data Protection Regulation (GDPR). It was established in 2018 to replace the Article 29 Working Party. The EDPB issues guidelines and recommendations on the application of the GDPR, which was enforced in May of the same year. It also advises the European Commission on related matters and resolves disputes between national authorities.
Digital Euro to Boost Privacy, ECB Official Vows
On the CBDC front, the Eurozone’s monetary policy regulator is lagging behind other major central banks, such as those of China, Russia, and the U.S. Earlier this month, the ECB said in a report that a digital euro could potentially boost the global appeal of the European fiat currency. A decision on whether to proceed with a digital euro project is expected in mid-2021, officials indicated earlier this year. The Governing Council will discuss the matter at a meeting in July, ECB Executive Board Member Fabio Panetta recently told the Financial Times.
Panetta believes that ECB’s involvement in digital payments would better protect privacy as the bank is not a private company. “We have no commercial interest in storing, managing or monetizing the data of users,” the official noted. A digital euro, he added, would also help the Eurozone to deal with the threat from other digital currencies. While Panetta called cryptos such as bitcoin “very dangerous animals,” he also warned about fiat-backed coins such as Facebook’s diem. He thinks there is “an inherent instability in the function of these coins” due to the potential volatility of their reserves.
The board member revealed that the ECB has already tested mechanisms to separate identities from payment details as well as offline payments for small amounts in which data is recorded only in the wallets of the sender and the receiver. Such transfers, of up to €100 for example, could be done using Bluetooth. “For very small amounts, we could permit really anonymous payments, but in general, confidentiality and privacy are different from anonymity,” Fabio Panetta emphasized. He elaborated that most transactions would be subject to checks to prevent money laundering, financing of terrorism, or tax evasion.
What are your expectations about the future of the digital euro project? Share your thoughts in the comments section below.
While on the surface it seems officials from five provinces in China have been cracking down on bitcoin miners, no one is quite sure how much hashrate is moving, which pools are affected, or where these miners will end up. A number of mining pools have seen hashpower percentages decline and Bitcoin’s overall hashrate has regressed as well. On the other hand, as several known pools have lost hashrate, processing power from “unknown” pools has increased a great deal.
Pool Percentages Decline, Overall Hashrate Dips Lower
There have been reports stemming from officials in provinces like Inner Mongolia, Xinjiang, Qinghai, Yunnan, and Sichuan instructing bitcoin miners to close down shop. The crypto community, in general, assumes that a great deal of hashrate comes from China, but exactly how much hashpower actually resides in the country is still a mystery. Reporting is scarce when it comes to bitcoin mining operations and the most recent studies are outdated.
Hashrate distribution shows known pools that have disclosed their identity have seen recent hashpower losses. On June 2, 2021, the Bitcoin (BTC) network hashrate was around 191 exahash per second (EH/s) and today, it’s hovering just above the 100 EH/s zone. The metric has dipped on a few occasions lower than 100 EH/s, but has remained fairly consistent at that level since June 19. Pools that have seen hashrates slide significantly include operations like Okex pool, Binance pool, and Huobi pool.
Interestingly, pools like Antpool, F2pool, Viabtc, Poolin, and Btc.com have seen wild fluctuations in terms of hashrate but remain the top five mining pools worldwide. Antpool and Viabtc, which are considered ‘Chinese pools,’ command the most SHA256 hashrate globally as well, of all the chains using the SHA256 consensus algorithm. On the BTC chain, the top five mining pools today have been the top miners for months on end in 2021, with a few pools changing positions every now and then.
The Return of Mystery Miners
Since the initial warnings coming first from Inner Mongolia during the first week of March 2021, stealth mining has increased a great deal. Mystery miners — engaged in stealth mining — have been prevalent since the Bitcoin network first launched. Basically, if one was to look at the BTC hashrate distribution today, they would notice 18 pools that disclose their identity.
But there’s another chunk of hashrate that is dubbed “unknown” on Btc.com’s hashrate distribution charts and other hashrate aggregation/distribution websites. Since China started cracking down on bitcoin miners, the mystery hashrate — which is the seventh-largest mining pool today — has increased a great deal. Statistics show that stealth mining pools are finding a lot more blocks since March 2021, and unknown hash has increased every month thereafter.
Unknown hashrate commands around 10 EH/s of BTC hashpower today and over 12% of the overall SHA256 hashrate processing blocks on BTC, BCH, and BSV chains. The crypto community understands that mining operations that want to remain unidentified leverage virtual private networks (VPNs) or proxy services to hide their IP addresses. Mystery hash was very prevalent in 2018 and 2019, but subsided a great deal in 2020. In January 2019, mystery hash commanded 22% of the BTC chain and 17% of the BCH chain. At the time, Coin Metrics published a study on the mystery hash phenomenon.
Coinmetrics detailed that between mid-2015 and mid-2017, most miners disclosed their identity through the coinbase parameter to identify themselves with the name of their pool. “However, through 2018, unknown miners picked up,” Coin Metrics said, and stressed stats had shown “a newly-found appreciation for privacy, or the emergence of miners who have something to hide.”
But toward the end of 2019 and throughout most of 2020, unknown hashrate was almost nonexistent. That trend has changed a great deal in 2021, and unknown hashrate has returned, coincidentally as Beijing wants to crack down on bitcoin mining and crypto trading in China. There’s likely a reason there’s a new emergence of bitcoin miners this year who have something to hide.
What do you think about the return of mystery hashrate after China started cracking down on bitcoin miners in the country? Let us know what you think about this subject in the comments section below.