Category: Bitcoin Mining

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Ripple Co-Founder Launches $5 Million Campaign to Change Bitcoin’s Code

Billionaire and Ripple (XRP) co-founder Chris Larsen has joined forces with Greenpeace in a US$5 million campaign dubbed “Cleanup Bitcoin” to persuade the protocol to shift from proof-of-work (POW) to a “greener” consensus mechanism such as proof-of-stake (POS):

‘Change the Code, Not the Climate’

In partnership with Greenpeace and other organisations, Larsen is funding a series of ads over the next month calling on Bitcoiners to transition away from power-intensive POW mining to a POS system that uses much less energy:

Excerpt from Cleanup Bitcoin manifesto. Source: Cleanupbitcoin.com

Needless to say, the reaction among the community was swift and brutal:

A common criticism emerging from the community was that Larsen’s efforts smacked of duplicity and were instead an opportunistic attempt to leverage the emotive topic of the environment to undermine a Ripple competitor. This appeared to be the sentiment of Bitcoin-friendly US Senator Cynthia Lummis, who described the move as a play for regulatory capture:

Matt Walsh, a partner at Castle Island Ventures, was seemingly in a state of disbelief, given Ripple’s ongoing battle with the Securities and Exchange Commission (SEC):

Walsh’s partner at Castle Island Ventures, Nic Carter, the de facto Bitcoin energy-FUD-buster-in-chief, took a more humorous angle mocking Larsen’s website:

Meme based on Cleanupbitcoin website. Source: Nic Carter

Go Ahead, Fork It

Aside from being misguided about how the protocol works, it was Noelle Acheson, head of Insights at Genesis Trading, who said it best:

Jerry Brito, executive director at Coin Center, challenged the notion that 50 miners could force the code to change and encouraged those who believed otherwise to read The Blocksize War – an episode in history that proved it was the nodes and users who controlled the protocol, not the miners:

The result of the ‘Blocksize War’ was a hard fork of Bitcoin and led to the creation of Bitcoin Cash (BCH) and Bitcoin Satoshi’s Vision (BSV). With BTC’s market capitalisation at over US$900 billion, compared to BCH’s US$6.9 billion and BSV’s US$1.8 billion, the market has clearly spoken.

Having already dealt with a hard fork in the past, Bitcoiners such as Preston Pysh egged Larson on:

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Expert Explains Why Bitcoin Won’t Have More Than 21 Million Coins

Bitcoin’s supply has long been a topic of discussion, with many wondering why a limit has been imposed and what will happen when it is eventually reached.

According to Andreas Antonopoulos – a teaching fellow for the M.Sc. Digital Currencies at the University of Nicosia, Cyprus – Bitcoin will never change its fixed supply of 21 million.

Firstly, if Bitcoin core developers and community ever decide to change the supply, it would require a hard fork. Simply put, implementing a hard fork would change the protocol permanently and it would no longer be Bitcoin.

By adding to the supply limit, bitcoins will not endlessly inflate like fiat currency. This ensures the scarcity of bitcoin and helps define it as a store of value. There are also those who believe the Bitcoin model will break down when the supply is reached and that miners will leave if only processing transactions for a few satoshis. Yet that scenario relies on a lot of assumptions about price, hash rate, and its consensus mechanism.

There is No Code Preventing 21 Million Hard Cap

Antonopoulos has also stated that when he went through the Bitcoin source code, he never found a defined limit of 21 million coins, adding that the main reason for implementing the cap was “as a safeguard to prevent bugs”. There’s no mechanism that actually stops the issuance of bitcoin after 21 million is reached.

At the time of writing, Bitcoin’s supply sits at 18.996 million. This means that in a few more blocks, Bitcoin will only be 2 million away from its maximum supply. At this stage institutional investors hold over 30 percent of BTC, with famed Bitcoin evangelist Michael Saylor stating that investing in bitcoin is the best property one can buy.

BTC current supply. Source: blockchain.com

The Evolution of Bitcoin

In December 2021 BTC reached 90 per cent of its total supply mined, though this doesn’t mean the cap has almost been reached. Every four years there is a “halving”, where the mining reward is cut in half. This also cuts in half Bitcoin’s inflation rate and the rate at which new bitcoins enter circulation.

The first 90 per cent took 12 years and it is estimated that the following five per cent will take another four years. By the last halving, Bitcoin could take more than 100 years to be completely issued, with some estimates pointing toward the year 2140.

The progressive reduction in the issuance of bitcoin is how the limit is ultimately reached. No one really knows what will happen to Bitcoin in 2140 when the last bitcoin is mined, however some believe that the consensus mechanism could change to something more advanced.

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US Energy Giant ExxonMobil is Mining Bitcoin With Natural Gas 

ExxonMobil is diverting some of the natural gas it has no use for to power cryptocurrency mining operations in North Dakota. The oil and gas behemoth has partnered with Crusoe Energy Systems to convert the gas into mobile generators used for mining operations onsite:

It’s a Win-Win Situation

Launched in January 2021, the joint company is already looking to set up similar operations in Alaska, Nigeria, Argentina, Guyana and Germany, according to Bloomberg. In October last year, Texas led the way in using natural gas flares for mining bitcoin.

The project uses excess natural gas that would have been burned off via the flaring process and is now being put to use to help energy-intensive crypto mining operations find a source of power that would otherwise be wasted. Flared gas will be provided to bitcoin miners at other sites across the globe:

Crusoe Energy Systems is the pioneer of using wasted gas to power bitcoin mining operations and is now taking gas from an oil well pad in the Bakken shale basin of the northern US to power mobile generators used for bitcoin mining operations.

Crusoe Energy is now globally recognised for its “innovative” solution to flaring, which has become standard industry practice due to a lack of transportation infrastructure.

Twitterverse Goes Off in Response

According to ExxonMobil spokeswoman Sarag Nordin, “[We] continuously evaluate emerging technologies aimed at reducing flaring volumes across our operations.” She added that the company’s emissions reduction plan was expected to achieve World Bank Zero Routine Flaring by 2030.

The Twitterverse went crazy when the news was published:

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BTC Holders Breathe Sighs of Relief as EU Parliament Votes Against Proof-of-Work Ban

In yet another unexpected twist in the ongoing European cryptocurrency regulation saga, the EU Parliament has officially removed all language banning proof-of-work (POW) cryptocurrencies from the newly passed Markets in Crypto Assets (MiCA) directive. 

EU Goes Back and Forth on POW

The crypto industry was initially concerned about a draft of the MiCA bill that included provisions banning POW cryptocurrencies such as Bitcoin. It then reversed course following a strong backlash, claiming it “wasn’t their intention to create a de facto Bitcoin ban”.  But then things changed, again.

In a classic last-minute insertion of dangerous far-reaching language, reminiscent of last year’s US$1.2 trillion infrastructure bill, provisions banning POW cryptocurrencies were once again inserted into draft bill.

Even though research shows that Bitcoin mining emissions are at “inconsequential levels”, policymakers nonetheless felt it necessary to highlight so-called “unsustainable” crypto mining practices, a clear attempt if ever there was one at appeasing ESG stakeholders.

Crypto lawyer Jake Chervinsky had his doubts about the true intentions of lawmakers and didn’t mince his words:

Nathaniel Whittemore, host of The Breakdown podcast, suggested in his latest episode that environmental concerns are likely more about Bitcoin using energy at all:

My point is that fundamentally, the key thing that any environmental consideration of Bitcoin or proof-of-work is going to rest on, is not whether other things consume more energy, it’s whether the energy that Bitcoin does consume in the first place, is worth it.

Nathaniel Whittemore, host of The Breakdown podcast

POW Provisions Rejected … For Now

After the surprise inclusion of the POW provisions, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) rejected versions of the legislative package that contained a “de facto” ban on POW cryptocurrency mining by a count of 32 to 23 – with six individuals abstaining.

While commentators breathed a sigh of relief, Patrick Hansen of Unstoppable DeFi was quick to pour cold water on the notion that the battle was over:

Any chances left for the POW-ban? The groups that lost the vote have one last option. They could veto a fast-track procedure of MiCA through the trilogues and bring the discussion to the plenary of the Parliament. They need 1/10 of the votes of the EP to do so, which they have. That would bring the discussion around POW into the high-level policy arena. As we can’t predict how that would play out, it should be prevented. Even if it doesn’t change the vote on POW, it would unnecessarily delay the regulation for at least a couple of months. And even outside of this MiCA regulation, the discussion around POW-regulation is far from over. It will come back in the context of the sustainability taxonomy or in the upcoming data centre regulation.

Patrick Hansen, head of strategy & business development, Unstoppable DeFi

Hansen concluded by saying there is still “loads of work left in the month and years ahead, but today is a big political success for crypto in the EU”.

Bitcoin holders, miners and other POW cryptocurrencies might have won the battle, but clearly the war is far from over.

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Investors Can Now Get Exposure to Crypto Mining With Newly Launched ETF

Global investment manager VanEck has launched a Digital Assets Mining (DAM) ETF, an exchange-traded fund customised to expose investors to firms within the DAM ecosystem. The fund will not directly invest in digital assets, rather it seeks to highlight the importance of miners.

VanEck’s DAM ETF is set to put a minimum of 80 percent of total assets into crypto mining securities, with the potential to earn at least 50 percent of their revenue from DAM activity. The ETF will be tracking the MVIS digital assets mining index closely, offering a net expense ratio of 0.5 percent.

Ed Lopez, head of product management for VanEck, has a lot of time for crypto miners:

https://www.linkedin.com/in/helopez/overlay/photo/

Blockchains introduce transparency, efficiency and lower costs compared to traditional centralised databases and processes, but without miners, blockchain transactions cannot be verified and audited, making their role absolutely essential.

Ed Lopez, head of product management, VanEck

The VanEck DAM ETF follows asset manager Valkyrie’s bitcoin miners’ ETF, WGMI, a fund focusing predominantly on crypto miners using renewable energy.

Crypto Mining in the Greater Industry

Since October 2020, Aussies have been able to get increased exposure to crypto through blockchain mining investments. With local crypto trading volume increasing during the pandemic, crypto mining has offered an alternative, lower-risk method of participating in the market without losing any savings.

The crypto mining process is linked to every transaction that takes place, and it is integral to ensure miners are properly compensated for their efforts. If you’d like to understand more about the mining procedure, check out our guide to bitcoin mining.

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EU Scraps Plans to Ban Proof-of-Work Following Backlash

In what has been heralded as a victory for Bitcoin, European lawmakers have backtracked on provisions in a crypto regulation bill that would have effectively banned proof-of-work (POW) tokens, most notably Bitcoin.

European Union Parliament’s U-Turn

Following outcry among miners and the broader investment community, German outlet BTC Echo first reported that the controversial provisions of the Markets in Crypto Assets (MiCA) bill had been struck.

Just days ago, Crypto News Australia highlighted the significant impact that may result from a ban which provided that by 2025, “no crypto assets could be created, sold, or traded within the EU if they used environmentally unsustainable consensus mechanisms”.

Most construed this as a de facto ban on Bitcoin, given that by 2025 it would likely be the only digital asset of value still using POW. This is, of course, assuming that Ethereum successfully transitions to proof-of-stake, a process that is apparently well under way.

Stefan Berger, a German EU member of parliament, was tasked with driving the legislative change and took to Twitter saying:

Correct is: The paragraph is no longer in the text. The report has yet to be voted on in committee. In this vote we will then see where the majorities lie. The decision has not yet been made.

Stefan Berger, Twitter (translated)

According to Berger, the vote on MiCA was originally scheduled for February 28, but since the deletion of the offending paragraphs, the vote has been postponed for an indeterminate period.

Bitcoin Battles ESG

With the risk of China nationalising miners well and truly behind us, it’s become evident that ESG (environment, social and governance) concerns are presently one of Bitcoin’s greatest hurdles to overcome.

Even though Bitcoin consumes less than 0.05 percent of global energy, of which more than 60 percent originates from sustainable sources, the bigger challenge seems to be persuading detractors that it has any value at all.

As long as one fails to see the value of Bitcoin and the importance of POW to security and decentralisation, from their perspective the appropriate amount of energy consumption is likely zero.

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EU Proposes Bill to Ban Proof-of-Work Mining by 2025

Given previous comments decrying Bitcoin’s energy use, it comes as no surprise that the European Union (EU) has proposed a regulatory package that includes provisions banning the use of proof-of-work (POW) consensus mechanisms across the union’s 27 member states.

Ban Forms Part of a Broader Crypto Regulation Discussion

POW has increasingly been under the microscope, with environmental harm being the most common concern cited. The favourite line of the corporate press is that Bitcoin consumes more energy than (insert country).

In the EU specifically, Swedish regulators began calling for a ban in November 2021, and this appears to have gained support from politicians across Germany, Spain and Norway.

The most radical proposal outlined in the package is one that prohibits “crypto services” that rely on “environmentally unsustainable consensus mechanisms”, starting January 2025. Put differently, the EU wishes to ban bitcoin mining, given Ethereum’s proposed transition to proof-of-stake.

Although environmental concerns have been frequently raised, its inclusion in the package came as a surprise to many, as one commentator noted:

Nobody expected it to become a dealbreaker and to make it into the final report.

Patrick Hansen, head of growth, Unstoppable Finance

EU parliamentarian Stefan Berger hinted that the MiCA (Regulation of Markets in Crypto-assets) package was as much a political debate as one about technology or facts:

The Greens and Socialists, as you can imagine, are criticising the proof-of-work concept and criticising the energy use, saying that bitcoin needs more energy than the Netherlands.

Stefan Berger, EU parliamentarian (Germany)

However, Berger did note that he felt that MiCA was an inappropriate forum for debating and settling “technological or energy-related rules”.

Discussions on finalising MiCA are set to begin at the end of February, and there is hope among some that the amendments relating to POW will be dropped:

Bitcoin Mining Levels ‘Inconsequential’

For ideologues looking to score political points, no amount of data is likely to change their mind. However, for those interested in facts, a recent study shows that Bitcoin consumes less than 0.05 percent of global energy. Moreover, close to 60 percent of its energy consumption is renewable.

And this does not even cover how Bitcoin naturally gravitates towards cheap, stranded energy and how its energy use is not in competition with any other uses. Neither does it touch on the most critical aspect, namely why POW is in fact critical for a global, decentralised store of value.

Lyn Alden said it best: ” … a lot of energy concerns directed at Bitcoin start with the presupposition that it’s useless. A trillion dollars in market cap disagrees. Little concern is given to worldwide washing machine energy usage, for example, because we understand the value.”

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Intel Unveils New Energy-Efficient Bitcoin Mining ASIC

Intel has shared tech details of its first-generation “Bonanza Mine” (BMZ1) blockchain accelerator chip, revealing it is already taking orders, while also unveiling a new 3,600-watt mining rig with 300 BMZ1 chips on board.

Both show-and-tells took place at this year’s International Solid-State Circuits Conference (ISSCC), which runs until February 26 in San Francisco, US.

BMZ1 Chip Enables System Hashrate of 40 TH/s

The BMZ1 chip is specifically designed for mining bitcoin, so stacking 300 of them into a 3,600-watt mining rig produces a machine with a system hashrate of up to 40 terahashes per second (TH/s).

Intel also claims its miner’s underlying BMZ1 chips are the cleanest and most powerful on the market, further fuel for a growing advocacy movement that professes bitcoin mining supports renewable energy. Incidentally, in 2018 Intel won a patent for an energy-efficient bitcoin mining process.

Intel’s BMZ1 has already received several high-profile preorders, notably from Jack Dorsey’s payments company Block (formerly known as Square) and cloud mining pool Argo Blockchain.

BMZ2 Chips Already On Order

There’s also evidence to suggest Intel is forging ahead with a second-generation model. Bitcoin mining startup Griid says it has already signed a deal with Intel that includes orders of its BMZ2 chips for later this year.

With a reported US$900 million worth of new bitcoin mining equipment heading to the US from China this year, Intel’s timing is exquisite.

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Bullish: 60% of BTC Hasn’t Moved in a Year, Mining Difficulty Hits All-Time High

For investors fixated on NGU (number go up) technology, the past year hasn’t been pretty, with bitcoin down 33 percent over the past 12 months. However, for long-term investors, there are several bullish indicators worth paying attention to.

BTC price over past 12 months. Source: Coinbase

Long-Term HODLers Have Conviction

When it comes to on-chain market intelligence, Glassnode’s “HODL Waves” chart provides invaluable insight as to bitcoin UTXO (unspent transaction output) age distribution. Put differently, it provides an illustration of when bitcoins were last spent, and how spending patterns change over time.

HODL waves. Source: Glassnode

According to the latest available data, 60 percent of bitcoins have not moved over the past 12 months, suggesting there is a cohort of long-term HODLers that have tremendous conviction, even when the price has collapsed 33 percent over the same period.

Mining Difficulty Hits All-Time High

In January, Bitcoin’s hashrate reached an all-time high, and as of last Friday, Bitcoin’s mining difficulty reached an all-time high of 27.97 trillion hashes.

This is the second time in three weeks that Bitcoin has reached a new all-time high, suggesting that mining is becoming increasingly competitive. To illustrate, Bitcoin’s difficulty was 13.67 in mid-July 2021, shortly after the China mining ban, and is now up 105 percent from its lows.

Bitcoin mining difficulty over past 12 months. Source: CoinWarz

In addition, Bitcoin’s hashrate continues to trend upwards:

These factors cumulatively speak to a network becoming increasingly secure and resilient – qualities integral to the success of a decentralised, unconfiscatable store of value.

Where To From Here?

On the price front, ongoing volatility should be expected, given the US Federal Reserve’s hawkish pronouncements and institutional perspective that Bitcoin is a “risk on” asset:

However, as Mark Yusko likes to remind us, “price is a liar”, and for those with a long-term horizon there are plenty of reasons to be optimistic.

If anything, current price levels are attractive and an excellent entry-point for dollar-cost averaging into the asset. If you’re ready to start stacking Sats, head over to HardBlock where you can set up your account once and then send bitcoin to your hardware wallet without lifting a finger.

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Queensland Sunshine Coast Energy Company ‘LPE’ Moves into Crypto Mining

Australian energy retailer LPE is dipping its toe into crypto mining after raising A$7.5 million to help fund its role in a sustainable-energy biohub near Bundaberg, in the Wide Bay region of Queensland.

Aerial view of the biohub near Bundaberg, Queensland. Source: LPE

The biohub, already generating electricity from biogas, hydrogen, solar and batteries, has crypto mining company Stak Mining as one of five tenants. Sunshine Coast-based LPE (Locality Planning Energy) plans to convert A$3 million of its A$5 million capital works funding into a 50 percent stake in Stak.

Should the conversion take place, LPE would receive a share of the proceeds in cash generated from crypto mining operations at the biohub, along with any additional mining operations Stak develops from its renewables-powered projects.

Deal Subject to ASX Regulatory Approvals

Before exercising its option on Stak, LPE requires regulatory approvals from the Australian Securities Exchange (ASX) relating to its change in business activities. For its part, Stak estimates that its mining operations will commence in Q3 of 2022, although it has yet to build any infrastructure on the site.

LPE chairman Justin Pettet says his company’s involvement in crypto mining is “potentially highly lucrative”, and attractive to both new and existing investors. “The ASX has already flagged that crypto mining listings on the exchange are coming this year, so our timing is perfect.”

LPE chairman Justin Pettet. Source: themercury.com.au

Just last month, a piggery near the Central Queensland town of Biloela revealed it was generating enough excess methane via its biogas plant to mine bitcoin. And in September last year, Australian multinational investment bank and financial services giant Macquarie announced a partnership with Blockstream to create a carbon-neutral bitcoin mine in the US.