Crypto News Updates

Mining, Institutional Adoption And Community Voice Defined Bitcoin’s 2020

2020 was unforgettable, especially for Bitcoin. To help memorialize this year for our readers, we asked our network of contributors to reflect on Bitcoin’s price action, technological development, community growth and more in 2020, and to reflect on what all of this might mean for 2021. These writers responded with a collection of thoughtful and thought-provoking articles. Click here to read all of the stories from our End Of Year 2020 Series.

It is likely that 2020 will be remembered by most as a year of hardship, lockdowns, masks and  lonesome holidays.

While the world has been chaotically dealing with pandemics and politics throughout this year, Bitcoiners have been building. The last 12 months have been big for Bitcoin, the entire ecosystem and bitcoin mining in particular. Let’s take a look at a few aspects of how bitcoin has  strengthened throughout 2020. 

The Hash Rate

Bitcoin’s hash rate has seen incredibly strong growth this year. The amount of hash rate  (computational work dedicated to finding the next bitcoin block) started off this year around 100 Eh/s — an immense amount of computational work. 

By the end of October, this number had risen by about 50 percent to 150 Eh/s. The hash rate has dipped since October, but it is still up about 35 percent on the year. 

This growth is very strong and serves as evidence that more bitcoin miners are entering the market, as well as evidence that current miners are investing to increase their hash rate. 

This is an especially bullish data point considering the bitcoin block reward was cut by 50 percent in May of this year, directly impacting the amount of  bitcoin that miners earn. Critics often refer to a “mining death spiral” — a situation in which the price drops in combination with the block-subsidy halving and causes bitcoin to fail indefinitely. 

Many said that this could happen in 2020, however we have seen the complete opposite. We have seen sovereign nations nationalize their mining pools and effectively sell their hydrocarbons to the bitcoin network. We have seen large oil and gas companies invest large amounts of capital in order to mitigate their waste energy by converting that energy to computational work and mining the bitcoin network. We have seen nothing but growth in the bitcoin mining sector and, in my opinion, this is the most important indicator of bitcoin’s overall health. Bullish. 

Institutional Interest

The impact that  companies like MicroStrategy, Square, Galaxy Digital and others have had on  legitimizing bitcoin in the minds of legacy investors cannot be understated. 

Michael Saylor, CEO of MicroStrategy, alone has made serious institutional investors question the legitimacy of bitcoin.  He forced intelligent people who had likely ignored or discounted bitcoin to take a second look and figure out what this magic internet money actually is.

Additionally, Square and MicroStrategy both released their “playbooks” as to why/how they decided to allocate a percentage of their cash on-hand to bitcoin. This kind of behavior causes every CTO on the Fortune 500 list to wonder if allocating a percentage of their company’s cash on-hand would  yield a similar benefit to the treasury’s risk portfolio. 

So far, MicroStrategy and Square have seen nothing but success from their decision to hold bitcoin as a corporate reserve  asset — with $MSTR coming back for seconds and offering convertible senior notes in order to buy another $650 million of bitcoin at a price of about $18,500. 

So, will this trend continue throughout 2021? Will we see other public corporations turn to bitcoin as a means to preserve excess cash on-hand? Likely yes. Bullish. 

The Core Bitcoin Community Found Its Voice

With the help of many intelligent people who have taken the time to help educate the world about a better money, the Bitcoin community as a whole has become more fluent and can better articulate/defend Bitcoin’s characteristics. 

I have noticed that, as central bankers and modern monetary theorists behave more and more erratically, the concepts surrounding sound money are more clearly highlighted. The Bitcoin community has done a great job at interacting with Keynesian ideas and challenging the debasement of fiat currencies this year. 

We’ve (yes, I am a Bitcoiner) honed our message and solidified our convictions — we’re not going anywhere, nor will we be silent. We’re advocating for a tool that helps to create a more honest and  fair world and we’re better at advocating than we ever have been before. Bullish. 

Looking To 2021

Due to these facts, when I’m looking ahead to 2021 I can hardly contain my excitement. I am  most excited to see how bitcoin mining impacts the energy production and power-generation  industries. It is also exciting to see governments get involved in mining due to the fact that  Bitcoin is an immutable energy-demand market. There is nothing to slow down this growth  throughout 2021. 

I fully expect more governments to announce some kind of oversight, nationalization and commitment to the process of mining bitcoin. I fully expect the network hash rate to grow above 275 Eh/s (about 100 percent growth from its current level) before the end of 2021. I fully expect the price to rise above $75,000 before the end of the year. 

Am I irrationally bullish? Recklessly long? Yes — but that doesn’t mean I’m wrong. 

What a time to be alive.

This is a guest post by Denver Bitcoin. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post Mining, Institutional Adoption And Community Voice Defined Bitcoin’s 2020 appeared first on Bitcoin Magazine.

Source: Bitcoin magazine

Crypto News Updates

How Bitcoin Shakes The Energy Industry

On August 28, 2020, oil and gas giant Equinor announced that it would be cutting its future flared gas volumes and bringing waste-gas to market by generating electricity and mining on the Bitcoin network. Equinor’s plans involve partnering with Denver-based firm Crusoe Energy Systems – Digital Flaring Technology.

Five months before Equinor’s announcement (on March 5, 2020), Greenidge Generation LLC,  a Dresden, New York-based natural gas power plant, announced that it could be making $50,000 per day with its excess energy if it were mining bitcoin. Greenidge Generation installed 7,000 bitcoin miners and upgraded facilities in order to maximize the amount of natural-gas energy that it could bring to market.  

Both of these stories were Bitcoin industry-rattling news upon their announcements, especially to those of us paying close attention to the energy industry. The fact that these massive and well-established energy firms are investing in mining bitcoin establishes a profound truth:  bitcoin mining is a serious and emerging energy-demand market that will shift the ways in which energy producers allocate resources in the future. Some of these producers are even sovereign nations — both Iran and Venezuela have announced the nationalization of mining the bitcoin network.

The Potential For Stranded Natural Gas In Bitcoin Mining

One key vertical within the energy industry is the power generation sector. These are commonly known as natural gas power plants, coal-fire power plants, etc. While these enormous facilities primarily exist to power cities and towns, there is another facet of this market that is not so commonly seen. They also serve rural industries and populations — also known as emerging and remote communities.

Due to the amount of stranded natural gas in North America (the U.S. and Canada, especially) there are companies looking to capitalize on the increasing demand for consistent and resilient power, even in remote areas.

This energy demand may come from manufacturers with automated production plants where the primary operating cost is electricity, or remote agricultural infrastructure demanding electrical power away from the grid. It is safe to say that there is no shortage of demand for resilient and economic electricity, however it has rarely been economic to supply remote power generation — until bitcoin mining came along.

Natural gas that cannot be accessed via conventional means due to lack of pipeline infrastructure can be compressed and used to generate electricity, mitigating the cost of power significantly. 

However, there are other factors to consider when generating rural power, especially with stranded natural gas as the source. One of the most significant being the need for modular infrastructure. It isn’t economic to invest in building permanent infrastructure — after all, if the natural gas source depletes, then permanent infrastructure is a sunk cost. Additionally, if generating power is purely a means to reduce cost (rather than increase revenue by selling that power at a discount relative to the grid), how long until the cost savings return a positive on the overall investment of building a modular power plant? Oftentimes, the discount isn’t worth the infrastructure cost unless it is compounded by a revenue stream — ultimately, it isn’t a very attractive investment. 

With bitcoin, there is a market where that electricity can be sold. No agreements need to be signed, no handshakes. By mining bitcoin, this natural gas can be brought to market by generating electricity, powering ASICs and contributing computational work to the Bitcoin network. 

So, the question is: Is it economic to build a modular natural-gas power plant? 

Yes, but profitability traditionally relies solely upon intricate financing and cheap debt, rather than the value of the electricity provided. But this equation shifts and any investment in building power-generation infrastructure becomes more economic because of the emerging energy-demand market known as the Bitcoin network.

Of course, due to the required modularization of the power generation, the amount of power produced is typically lower than an established power plant built into legacy energy infrastructure, likely supporting a large population. These “natural gas power plants on wheels” can still produce a hefty amount of electricity — upwards of 25 megawatts. Now, it is more economic for companies to build this modular infrastructure, use it to supply cheaper power for a multitude of purposes that all have the same cause — a lack of access to pipeline infrastructure, as well as reliable and economic electricity. 

So, how does bitcoin mining change anything?

Well, anytime there is excess electricity for those providing remote power (electricity beyond demand that cannot be stored) they might as well use that to fire up some Antminers, contribute computational work to the bitcoin network and get paid in bitcoin equivalent to the work contributed.

While stories about MicroStrategy, Square and PayPal may dominate most of the consumer “bitcoin headlines,” serious minds are also paying attention to energy. 

Sure, the fact that bitcoin may become a corporate treasury reserve asset is huge news — don’t misunderstand me. However, it is my opinion that the implications which are brought about from bitcoin (and bitcoin mining) entering the financial industry pale in comparison to the implications that arise from BTC entering the global energy production industry.

But, much like how PayPal’s industry-shaking announcement followed Square’s, which followed MicroStrategy’s, the same question exists in the energy production industry — when/who will be the next to announce an integration of bitcoin mining into their business model?

Over the last couple of years I have curated a network of serious and driven individuals in both the upstream energy industry, and the bitcoin mining industry. These things are happening. 

Keep your ears to the ground. Innovation is always just around the corner.

This is a guest post by Adam Ortlof. Opinions expressed are entirely his own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post How Bitcoin Shakes The Energy Industry appeared first on Bitcoin Magazine.

Source: Bitcoin magazine

Crypto News Updates

PayPal Brings Users To Bitcoin, But Not The Bitcoin Network

Article image created by cryptograffiti.

News broke on the morning of October 21 2020, that PayPal would grant its users the ability to purchase, sell and hold bitcoin within its app.

PayPal’s stock price rose 4.65 percent on the news, and the bitcoin price continued its rise from $11,400 to $12,700 by midday.

There is no denying that PayPal is a monster in the mobile and digital payment processing space. Since the lockdowns stemming from the spread of COVID-19, consumers and businesses are transacting with cash less often, and more often paying for goods with 1s and 0s from their mobile devices. It only makes sense that PayPal would allow its users the ability to buy and own the world’s first (to some enthusiasts, the world’s only) digital and decentralized global currency: bitcoin.

But what does PayPal bring to the table for Bitcoin that Jack Dorsey’s company — Square — hasn’t already with its rapidly-growing financial app Cash App? Cash App has offered customers bitcoin since the summer of 2019, and the platform has seen incredible growth. 

“Cash App delivered $1.2 billion in revenue alone and $281 million of gross profit during the second quarter, an increase of 361% and 167% year-over-year, respectively,” according to ZDNet. “In total, Cash App generated $54 million in transaction-based revenue over the quarter.”

Additionally, Cash App’s parent company, Square, announced on October 8, 2020, that it had allocated about 2 percent of the cash on its balance sheet to bitcoin — a total investment of $50 million or 4,708 bitcoin at an average price of roughly $10,620. This investment has grown by over 15 percent since October 8 and is worth more than $57 million at the time of this writing.

Still, Cash App pales in comparison to PayPal, as it has only 30 million active users, Roughly 10 percent of PayPal’s monthly customer base.

But this isn’t the only difference between Cash App and PayPal.

The most noticeable difference in the two companies’ Bitcoin offerings is in PayPal users’ inability to withdraw bitcoin from their PayPal account to another bitcoin wallet. CashApp, on the other hand, allows its users to withdraw their bitcoin, and Cash App even covers the network fees of the withdrawal by batching the transactions. Of course, in compliance with U.S financial law, Cash App is required to get information about its users (including your name, SSN, picture of your driver’s license, etc). But once Cash App has that information, it allows them to withdraw and transact their bitcoin freely. PayPal announcement didn’t include support for this “feature.” You can buy bitcoin, hold it  and sell it in their app — that’s it.

For many, this may not seem like a very significant difference. They may even prefer to just hold bitcoin in their PayPal account. Obviously, PayPal has a trusted consumer base: 300 million-plus people trust its services each month. So, it would be safe to assume that its customers will trust it to hold their bitcoin for them.

For many Bitcoiners, though,  this is an insufferable difference. The word “insufferable” may not even be strong enough — let me explain:

The core thesis of Bitcoin (as stated in Satoshi Nakamoto’s infamous white paper), and the whole reason for Bitcoin’s decentralized proof-of-work consensus mechanism, is to empower the bitcoin owner with sovereign control over their funds. The word “immutable” is attributed to Bitcoin for this reason — if you’d like to transact your bitcoin, nobody can stop or “mute” your transaction. This is an incredible characteristic, unique to Bitcoin. 

So, the fact that PayPal doesn’t allow its customers to withdraw their bitcoin is completely antithetical to the Bitcoin ethos. Bitcoiners will likely balk at and attack this fact — much like a swarm of hornets protects its queen from any and all bad actors potentially aiming to taint the purity of the hive’s bloodline.

Will PayPal follow Square’s lead and allocate a percentage of its $10 billion-plus of cash on hand into bitcoin? It only seems logical that it would hold a reserve of the global asset it now aims to hold for their customers. Time will tell, as all eyes remain set on consumer-access to bitcoin following the release of this news.

It can be safely concluded that PayPal offering its more than 300 million customers bitcoin is a bullish event. As is often stated, “There will only ever be 21 million bitcoin.” As mainstream exposure to bitcoin increases, so does mainstream demand for bitcoin.

This is a guest post by Adam Ortolf. Opinions expressed are entirely his own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post PayPal Brings Users To Bitcoin, But Not The Bitcoin Network appeared first on Bitcoin Magazine.

Source: Bitcoin magazine