Category: Bitcoin

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Bitcoin Blockchain Crypto News Markets

BTCS Launches ‘Bividend’, the First NASDAQ Company to Pay BTC Dividends

A little-known NASDAQ-listed blockchain company, BTCS, has made history by becoming the first to offer a Bitcoin dividend, dubbed quite appropriately, a “Bividend“.

Bividend Explained

BTCS, which describes itself as as “securing the next-generation blockchain infrastructure and providing data analytics tools for your crypto portfolio”, announced this week that it was proceeding with a so-called “bividend”, the first dividend payable in Bitcoin by a NASDAQ-listed company.

The company intends to pay a once-off dividend in either Bitcoin or cash, equivalent to US$0.05 per share, on March 16, 2022. To qualify, you must be a shareholder of record, meaning that the shares cannot be held by a brokerage firm such as Robinhood, where you are merely the beneficial owner. You also need to specifically opt in if you prefer Bitcoin over cash.

We want to reward our long-time shareholders for their continued support and encourage financial freedom by providing the means to enable direct ownership of Bitcoin and other digital assets.

Charles Allen, CEO of BTCS

Allen added that BTCS had a history of breaking new ground:

In the crypto space BTCS has a long history of firsts, including being the first pure-play US public company focused on cryptocurrencies and blockchains, the first US public company to mine Bitcoin, the first … to implement a digital asset treasury strategy, and the first … to secure next-generation proof-of-stake blockchains.

Charles Allen, CEO of BTCS

BTCS shares soared on the announcement, pushing the price as high as 43 percent on the day, taking its market capitalisation to around US$43 million.

BTCS share price. Source: Tradingview

Publicity Stunt?

While some have seen the news as bullish, others have adopted a more cynical view, suggesting it is merely a publicity stunt.

Matt Levine of Bloomberg describes BTCS as a “somewhat unloved micro-cap company” that pulled off an effective marketing trick, propping the shares up more than 40 percent on the day.

A bividend is a terrible name but an obviously good meme-y crypto stunt to increase attention … BTCS will pay about $500,000 in bividends, which bought it about $15 million of market cap. Just a good trade!

Matt Levine, writer, Bloomberg

Cynicism aside, he may not be wrong. BTCS is still almost 50 percent off its September high when it debuted on the NASDAQ.

Whatever your take, it’s clear that:

  • regardless of whether it was a publicity stunt or not, it worked; and
  • given its success, there are likely to be a host of copycats in the near future leveraging the Bitcoin brand to elevate their own.
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Bitcoin Bitcoin Mining Crypto News Mining

Bitcoin Hashrate Falls 12% Amid Kazakhstan Internet Shutdown

Earlier this week, Bitcoin’s hashrate hit a new all time high, however in a matter of days, it has dropped by 12 percent amid an ongoing political crisis in Kazakhstan where internet blackouts have reduced normalised network connectivity to just 2 percent.

Kazakhstan network connectivity rate. Source: Netblocks

Kazakhstan, the Bitcoin Mining Hub

Over the past decade, the former Soviet Union satellite state has enjoyed a reputation for stability, attracting billions of dollars in foreign investment, including the Bitcoin mining sector.

The country boasts some of the world’s lowest energy prices, which in part, has led to the Central Asian nation accounting for approximately 20 percent of the Bitcoin network’s hashrate. As neighbouring China banned Bitcoin mining in mid-2021, Kazakhstan proved to be one of the beneficiaries, increasing its hashrate even further.

An Ongoing Political Crisis

Initially sparked by anger at recent fuel price hikes, protests soon morphed to encompass a broad anti-government sentiment, leading the country’s presiding cabinet to resign.

Prior to their resignation, in what appears to be an obvious attempt to restrict protestor communications, state-owned Kazakhtelecom shut down the nation’s internet which in turn saw Bitcoin’s hashrate plummet.

Following widespread internet blackouts, some Bitcoin mining pools were hit harder than others:

BTC mining pool hashrate change. Source: Larry Cermak via Twitter

Bitcoin Hits Lowest Level in a Month

Independent of the hashrate drop, Bitcoin fell by over 4 percent to US$43,678, its lowest level since December 4.

Putting aside US$110 million in leveraged longs that were liquidated in an hour, this latest dip is largely attributable to a broader shift in market sentiment towards risk-off assets following the Federal Reserve’s signal that it intended to shrink its US$8.3 trillion balance sheet.

It’s not all bad news however. Looking at Bitcoin’s relative strength index (RSI), which indicates levels of over-bought/over-sold, it is currently lower than it was at the May-July 2021 correction. We know what happened afterwards.

Bitcoin relative strength index. Source: Buybitcoinworldwide.com

History doesn’t repeat itself, but it often rhymes.

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Bitcoin Crypto News Gold

Goldman Sachs Sees BTC Taking Further Market Share from Gold, $100k Possible This Year

Goldman Sachs Group Inc (GS), a multinational US$136 billion investment bank, has released a note to its investors saying that a US$100,000 price tag for Bitcoin in 2022 is possible if it continues to erode gold’s utility as a store of value.

Goldman Sachs and Bitcoin

Even though GS isn’t bullish on Bitcoin per se, Wall Street bankers inevitably follow the money, as reflected in the investment bank’s recent actions.

In June last year, it began trading Bitcoin futures, even though its investors were unsure whether Bitcoin was an investable asset. Later, an internal survey revealed that 60 percent of its wealth management clients were interested in purchasing Bitcoin.

Despite the natural tension between fiat-loving bankers and Bitcoiners, GS’s recent paper was met with delight by Bitcoiners who felt that, finally, a major investment bank saw Bitcoin for the “digital store of value” that it is. The report went on to add that Bitcoin’s userbase may well increase from 100 million to 4 billion within the next five years.

Comparison of crypto technologies. Source: Goldman Sachs

Goldman Sachs and the ‘Store of Value’ Thesis

In its report, GS commented that Bitcoin would continue to take market share from gold as part of a broader adoption of digital assets. By GS’s own estimates, Bitcoin accounted for 20 percent of the “store of value” market which it said comprised Bitcoin and gold. The value of gold that’s available for investment, in their opinion, is estimated at US$2.6 trillion.

Gold and Bitcoin on “store of value”. Source: Goldman Sachs
Macro and Bitcoin. Source: Goldman Sachs

The note went on to say:

If Bitcoin’s share of the store of value market were ‘hypothetically’ to rise to 50 percent over the next five years, its price would increase to just over US$100,000, for a compound annualised return of 17 or 18 percent.

Zach Pandl, co-head of global FX and EM strategy, Goldman Sachs

While one could debate whether GS’s figures are accurate, as well as its specific understanding of Bitcoin (for example, it doesn’t appear to know about the Lightning Network), it is clear it has become something it is taking seriously.

Whereas most financial products are created at the top and distributed downwards to retail (like mortgage-backed securities), Bitcoin is a retail-inspired monetary revolution that is slowly bringing in institutional capital. Raoul Pal spoke of an impending “wall of institutional money” in 2021. Perhaps 2022 will be the year.

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Bitcoin Bitcoin Mining Crypto News

As Bitcoin Turns 13, Its Hashrate Hits a New All-Time High

January 3 marked the 13th anniversary of Bitcoin’s genesis block. Coincidentally, and within days, Bitcoin’s hashrate reached an all-time high of 228.92 exahashes per second (EH/s) – this despite the fact that Bitcoin’s performance of late has significantly undershot expectations. What gives?

Bitcoin Hashrate: Source: Coinwarz

Hashrate – What is it and Why Does it Matter?

Simply put, “hashrate” refers to the total computational power used to mine and process transactions on Proof-of-Work (POW) blockchains, such as Bitcoin. It is the most widely used metric in evaluating the strength and security of a POW blockchain.

All things being equal, the greater the number of honest miners and associated computational power, the more difficult it becomes for dishonest actors to disrupt or engage in a 51 percent attack.

Accordingly, a drop in hashrate typically makes it easier to perform a 51 percent attack, whereas the opposite is true when the hashrate increases.

Hashrate Recovery Post-China Ban

As Bitcoin developer Jameson Lopp notes, Bitcoin’s hashrate increased by 10 percent in 2021, but that in itself is eclipsed by its recovery following China’s ban on mining:

Weathering and completely recovering from a 50 percent+ drop due to a mining ban by the country with the most hashpower was a major milestone for network resilience.

Jameson Lopp via Twitter

As Bitcoin miners fled China to more friendly regulatory regimes, the US has become the biggest beneficiary in what commentators have described as one of China’s most significant geopolitical blunders. For context, in this year alone an estimated US$900 million in mining equipment is expected to be shipped to the US from China.

What of Price Action?

Historically, the correlation between Bitcoin’s price and the hashrate is shaky, although drawing on historical data, some inferences can be made.

For example, Bitcoin OG Max Keiser suggests that “hashrate precedes price. New ATH hash means new ATH price incoming. $220k in 2022 [is] in play.” While he might have missed the mark in 2021, the chart below reflecting both hashrate and price does appear to indicate Bitcoin is trending lower than one would expect at the current hashrate.

Bitcoin Mean Hashrate. Source: Glassnode

Others in the Bitcoin community are more circumspect:

While some Bitcoiners bemoan recent price action, if you’re in it for the long haul, the fact that the Bitcoin network is stronger and more robust than ever ought to be sufficient cause for celebration.

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Bitcoin Bitcoin Mining Crypto News Institutions

$900 Million Worth of New Bitcoin Mining Equipment Heading from China to USA in 2022

Nearly US$900 million worth of Bitcoin mining equipment is heading towards Las Vegas-based Marathon Digital Holdings. The firm announced the purchase last week, but the purchase price was only disclosed on December 30.

Last week, Marathon announced a deal with Bitmain for 199,000 S19 XP models to be delivered through the latter half of 2022. The mining rigs will be shipped from Bitmain between July and December, according to the delivery schedules.

The S19 XP rigs produce approximately 23.3 EH/s (Exa hashes per second), a 600 percent increase on the firm’s current hash rate, and a 75 percent increase from its prior objective of 13.3 EH/s by mid-2022, according to Marathon CEO Fred Thiel. All the rigs are expected to be operational by early 2023.

US Now Aims to Lead in BTC Mining

On the strength of this recent purchase, Marathon has made the largest single order Bitmain has ever received for the S19 XP models, with its ultimate ambition to become not only the largest mining company in the US but worldwide.

With 23.3 EH/s of total capacity expected to be online in early 2023 and ample access to renewable power behind the meter with one of the largest renewable energy providers in North America, we believe we have established Marathon as one of the leading bitcoin miners in North America and potentially the largest known miner in the world. We would like to thank the team at Bitmain for helping us realise this objective.

Marathon press release

Now that China is no longer the concentration point for bitcoin miners following the its government crackdown on crypto, the US has overtaken the People’s Republic by becoming the number one country with the biggest BTC hashrate.

Green Issues Addressed

Discussions regarding the environmental impact of BTC mining have been assessed by several experts who have explained why and how mining can support renewable energy.

Bitcoin mining has even proven to be useful for insulating cities from the winter chill. As Crypto News Australia reported in October, the City of North Vancouver has announced a partnership with its local energy provider to use BTC mining to heat the city.

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Bitcoin Crypto News Cryptocurrencies Gold Institutions

Institutional Crypto Custodians Raised $3 Billion in 2021

Investments into institutional-focused crypto custody firms have skyrocketed in 2021 – over US$3 billion has been raised this year, a rate three times higher than 2020.

The amount of capital flowing to institutional-focused crypto custody companies is now worth a total of almost US$3.5 billion, 4.8 times the amount raised in 2018.

NYDIG Leads the Chart

In mid-December, bitcoin holding company NYDIG announced the closing of US$1 billion in investment funding, giving the company an estimated value of more than $7 billion.

A day later, Anchorage, a San Francisco-based crypto custody company for institutional investors, announced a US$350 million funding round.

The top companies leading investment rounds so far are:

  • NYDIG: $1 billion raised;
  • Ledger: $380 million raised;
  • Anchorage: $350 million;
  • Fireblock: $310 million; and
  • Copper: $50 million

More Institutions Replace Gold with Bitcoin

Institutions have been heavily hoarding some of the top cryptocurrencies in the market, and institutional interest in the crypto market has surged to the point that 84 percent of institutions are interested in a crypto ETF.

So far, the idea remains the same: institutions want to escape inflation, and gold was the preferred option by most industries. However, with the rise of Bitcoin and other decentralised currencies, more institutions – including investment firms and banks – are replacing gold with bitcoin.

Crypto News Australia has kept track of the latest Bitcoin purchases made by institutional players in the crypto market this year. You can check our list here.

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Bitcoin Crypto News Hackers Illegal Monero Scams

New Spider-Man Movie Torrent Contains Malicious XMR Mining Program

Cybercriminals have to keep up with the latest trends in order to continue running their scams, so it comes as no surprise they’re exploiting the popularity of blockbuster movie Spider-Man: No Way Home as a way to launch crypto-malware attacks.

Fans are urged to be careful when downloading pirated copies of the newest edition of the film as cybercriminals have uploaded a Monero miner code on a torrent download file.

Scammers Hiding Crypto Miner Malware in Torrent Files

Experts from ReasonLabs have reported details of a new malware attack in which scammers embed a Monero (XRM) miner code on a torrent download file for the Spider-Man film. The warning was first issued on December 23, along with details that the torrent file for the movie is named “spiderman_net_putidomoi.torrent.exe” in Russian.

The name translates to “spiderman_no_wayhome.torrent.exe” and the filename has led experts to believe that the malware did in fact originate from a Russian torrenting website.

Once the file is downloaded, the crypto-malware exploits the computer’s power to mine Monero, a privacy coin that operates with untraceable transactions. This type of attack is not as severe as others and does not affect computer performance, but will drive a victim’s power bill sky-high due to its massive energy consumption. Police agents have conceded that hackers are using legitimate names, so the program tends to go unnoticed by antivirus software.

Researchers at ReasonLabs have provided an example of the malware’s details:

What the malware file meta looks like. Source: ReasonLabs

In order to keep from downloading the malware, users are urged to look carefully at aspects such as the file type. A real film should end with the suffix “.mp4” while a crypto-malware file ends with “.exe”. Fans should be especially cautious when downloading content from the internet and are discouraged from downloading a file in Torrent and from other non-official sources.

News of the scam came soon after Bitcoin penny stock BitTorrent soared 80 percent ahead of its Mainnet Launch, which took place earlier this month.

Crypto Scams Continue on the Rise

As more crypto projects launch, more opportunities are created for scammers to take advantage of unwitting users. Late last month, Crypto News Australia published an article detailing a Threat Horizons report released which indicated that 86 percent of hacked accounts were being used to mine cryptocurrencies. Poor security measures were cited as the main reasons for malicious actors being able to infiltrate accounts.

Although the scam found in the Spider-Man torrent is not particularly dangerous, last month an insidious and highly sophisticated crypter was found in the crypto community. Named the “Babadeda” crypter, the malware is still targeting crypto enthusiasts on the popular community chat app Discord.

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Banking Bitcoin Crime Crypto News Crypto Wallets Ransomware

FBI Seizes $154 Million in Bitcoin Stolen from Sony by Rogue Employee

US law enforcement has taken legal action to seize and return over US$154 million embezzled from Sony Life Insurance Company Ltd by an employee in a textbook business email compromise (BEC) attack.

Rei Ishii, 32, a Tokyo-based employee of the Sony Corporation subsidiary, allegedly diverted the funds when Sony Life attempted to transfer them between its financial accounts.

Culprit Diverts Funds, Converts Them to Crypto

Ishii was alleged to have done this by falsifying transaction instructions, which caused the funds to be transferred to an account he controlled at a Californian bank. He later converted the stolen funds into more than 3879 bitcoins held in an offline cryptocurrency cold wallet.

In a crude attempt at blackmail, Ishii also tried to block his supervisor and several Sony Life executives from assisting in the investigation by emailing them a “ransom note” typed in English and Japanese:

If you accept the settlement, we will return the funds … [But] if you [file] criminal charges, it will be impossible to recover [them]. We might go down [for] this, but … you [will] be right there next to us. We strongly recommend to stop communicate (sic) with any third parties, including law enforcement.

Ransom note from Rei Ishii, accused embezzler and former employee of Sony Life Insurance Co Ltd

Earlier this month, following a joint investigation by the FBI and Japanese authorities, the 3879 bitcoins (worth more than US$150 million at the time) in Ishii’s cold wallet were seized after the FBI obtained the private key and transferred the ill-gotten crypto to its own bitcoin wallet.

Tokyo’s Metropolitan Police Department arrested Ishii on the same day and criminally charged him on suspicion of obtaining US$154 million dollars via fraudulent money transfers.

In a statement, Acting US Attorney Randy Grossman said:

This case is an example of amazing work by FBI agents and Japanese law enforcement, who teamed up to track this virtual cash. Criminals take note: You cannot rely on cryptocurrency to hide your ill-gotten gains from law enforcement.

Acting US Attorney Randy Grossman

Echoes of the REvil Ransomware Case

The case echoes charges filed by the US Department of Justice last month against a REvil ransomware affiliate responsible for the July attack against the Kaseya MSP platform. This case had ripple effects as far as Australia, with more than US$6 million seized from another REvil partner.

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Bitcoin Crypto News DeFi Metaverse NFTs

Jack Dorsey Causes Twitter Storm, Calls Web 3.0 a Centralised Venture Capital Playground

Following his recent departure from Twitter, many suspected Jack Dorsey would be spending his time on Bitcoin after saying earlier this year, “I don’t think there is anything more important in my lifetime to work on”. While his plans remain under wraps, Dorsey ignited a Twitter storm after criticising Web 3.0 as being centralised and for the benefit of venture capitalists.

The Promise of Web 3.0

Web 3.0 envisions a future state of the internet based on decentralised public blockchains where users own and govern sections of the internet, rather than requiring access through centralised entities such as Google or Facebook.

Unlike Web 2.0 where users are the product and unable to own a piece of the internet, Web 3.0 is “owned by the community” and “trustless” in the sense that an intermediary isn’t required for transactions.

Among other things, Web 3.0 includes decentralised finance (DeFi), a favourite among venture capital firms at the moment and a sector into which enormous sums of money have been ploughed.

Web 3.0 Decentralised?

Web 3.0 promises a decentralised version of the virtual world featuring public blockchains, metaverse technology, non-fungible tokens and DeFi free from the grasp of centralised power sources. But how much of this is true?

One place to start is with the data. Earlier this year, Messari published a report illustrating the initial token allocations for some of the most popular blockchains. Evidently, insiders such as venture capital firms, founders and foundations represent the bulk of initial allocations in most cases, suggesting that they may not offer the promise of decentralised governance purported.

Initial token allocation for public blockchains. Source: Messari

The crux of Dorsey’s criticism is simple. Venture capitalist firms (VCs) frequently fund Web 3.0 projects in direct competition with genuinely decentralised alternatives such as 100 percent initial coin offerings. By owning a controlling stake, they are able to pressure blockchain co-founders and influence the direction of the project. In addition, as insiders, VCs are well-placed to pump their bags and time their exit at the expense of retail investors.

Naturally, Twitter’s favourite billionaire troll couldn’t resist commenting too:

Taking a step back from the Twitter storm, it’s clear in the end that Dorsey feels as if Web 3.0 is decentralised in name only. While he quite obviously is not opposed to centralisation or venture capital – see Twitter and Square – he simply wants people to know what they are getting into.

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Banking Bitcoin Crypto News

Billionaire Hedge Fund Manager: Bitcoin Has Merit as ‘Younger Generation’s Gold’

Ray Dalio runs the largest hedge fund on Earth, with US$105 billion under management. After previously dismissing it, earlier this year he disclosed that he “had some Bitcoin“, and in a recent interview with MarketWatch, suggested it was a “younger generation’s alternative to gold”.

Using the Past as a Guide for the Future

Speaking to MarketWatch, Dalio suggested that most people are interested in the news of the day but not in history and lessons of the past.

My approach has always been like [that of] a doctor, that if I haven’t seen many cases of it before I want to go back and study all the cases in history so I can make decisions today.

Ray Dalio

Zooming out, Dalio identified three main themes that required study, largely driven by fiscal and monetary policies over the past two decades:

  1. Zero interest rate, high levels of debt and money printing to finance that debt.
  2. Growing conflict and division between different socio-economic and political groups.
  3. The rise of China challenging the American world order that has been in place since 1945.

Recognising that money printing has historically led to currency debasement and inflation, as reflected in the recent 39-year US CPI inflation numbers, he suggests that conditions may indeed worsen if stimulus cheques don’t come in at the same rate.

Dalio’s Investment Advice

Dalio noted that at present, “money is essentially free” so it doesn’t cost anything to borrow. He added: ” … with the cost of money negative and below the nominal growth rate, it’s very profitable to borrow and invest in anything that can grow at the inflation rate or more”.

The Federal Reserve was therefore “between a rock and a hard place” because it needs to restrain inflation, but if it raises rates, asset prices will collapse. In a country that is already divided, and with mid-term elections next year, it wouldn’t be politically palatable to raise rates. Dalio’s base case is therefore continued economic stimulus and currency devaluation.

While it may be tempting, he cautioned investors against cash:

People think the safest investment is cash, but they don’t look at the inflation-adjusted return. Don’t hold cash. It’s better to hold a liquid, diversified portfolio of assets – if it’s balanced. An “all-weather” portfolio has currency diversification, asset-class diversification, country diversification and industry diversification.

Ray Dalio

Dalio On Bitcoin

When asked, Dalio praised Bitcoin and saw merit in a small portfolio allocation:

It has been an amazing accomplishment for bitcoin to have achieved what it has done, from writing that program, not being hacked, having it work and having it adopted the way it has been. I believe in the blockchain technology; there’s going to be that revolution, so it [Bitcoin] has earned credibility.

Ray Dalio

He recognised that Bitcoin was the younger generation’s answer for gold and added “Bitcoin is like gold, though gold is the well-established blue-chip alternative to fiat money”.

Despite being positive about Bitcoin, Dalio did however stress that should it continue to represent a threat to government, it would likely be outlawed. Governments have banned alcohol, drugs, weapons and even gold, but none has served to undermine its value in the long run.

While Dalio is no doubt the expert on all things macro, he is perhaps overlooking the fact that if properly self-custodied, Bitcoin is unconfiscatable. Despite being banned in various countries around the world, Bitcoin has continued its path towards global adoption.

As Parker Lewis has said, “… if a government attempts to ban Bitcoin it is an endorsement that Bitcoin works and threatens their monopoly on money”.