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While Bitcoin’s Hashrate Grew by 22,900% in 6 Years, Discovering Block Rewards Is Far More Difficult

While Bitcoin’s Hashrate Grew by 22,900% in 6 Years, Discovering Block Rewards Is Far More DifficultOver the past 12 months, Bitcoin’s hashrate has increased by 85.77%, while 53,547 blocks were mined and 334,668.75 new bitcoin were minted into circulation. More than two dozen bitcoin mining pools have dedicated hashrate toward the Bitcoin blockchain during the last six years, and while the hashrate is 22,900% higher, the number of bitcoins found […]

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Critic of Bitcoin’s ‘one-percenters’ still positive about future of digital assets

A financial professor is skeptical about Bitcoin's design but is still very much involved in crypto research and is bullish about the future of digital assets.

A future without digital assets is hardly imaginable but Bitcoin (BTC) is far from being perfect by design, according to a finance professor at the London School of Economics (LSE).

LSE financial professor Igor Makarov believes that digital money and digital assets will undoubtedly be part of the future of finance and their efficiency will depend much on their design.

In an interview with Cointelegraph, Makarov said that there has not been much evidence that Bitcoin can become a store of value as it has been extremely volatile over the past 10 years.

Since Bitcoin’s volatility remains high despite its massive rise in value and increased liquidity, there is no guarantee that its price will become more stable one day, he said.

“Without any government backing Bitcoin, the cryptocurrency’s value depends on the willingness of the general public to hold it, which in turn depends on changing investor sentiment and its standing against other cryptocurrencies,” Makarov stated.

The professor also assumed that allowing United States public institutions to invest in BTC would almost certainly result in a “temporary price appreciation.” However, this appreciation will mean that early adopters benefit “at the expense of the general public” and other stores of value, especially fiat currencies, Makarov said, adding:

“Since Bitcoin is an unproductive asset — given its current design — its returns come entirely from price appreciation and in the long run we should not expect them to exceed the growth rate of aggregate output.”

Makarov is known for co-authoring a study claiming that 10,000 Bitcoin investors, or 0.01% of all BTC holders, own 5 million BTC, which accounts for 25% of all mined 19.1 million bitcoins currently in circulation. The analysts argued that top BTC holders control a bigger share of crypto than the richest Americans control dollars.

According to Makarov, the study is based on Bitcoin network data as well as public data from blogs, chat forums and others. “We also use Bitfury Crystal Blockchain information about identity of large public entities such as exchanges, online wallets,” he noted. Makarov also said that very few individuals in the U.S. hold large amounts in cash as the majority of wealth is held in real estate and securities, adding:

“Cash transactions might be difficult to trace, but, unlike Bitcoin transactions, the cost of cash transactions increases with the transacted amount. Also, storing large amounts of cash is costly.”

Despite being skeptical about Bitcoin’s design, Makarov is still positive about the future of digital assets. He has been involved in arbitrage and trading in crypto markets since 2016 and became excited about the financial applications of crypto and blockchain, working on many related projects, including the investigation of the Terra ecosystem crash.

Related: Hodlers and whales: Who owns the most Bitcoin in 2022?

“I find many developments in crypto space fascinating. They start with Bitcoin and its ingenious design and include many others, including smart contracts, oracles and others,” Makarov said. But in order to benefit from the industry, it is important to properly and timely address issues like governance, regulation and others, the expert emphasized, stating:

“There is little doubt that in the future we will have digital money and digital assets. Their efficiency will depend on their design. Therefore, it is important to get it right.”

Makarov said he doesn't hold any cryptocurrencies at the moment.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Georgia crypto mining’s potential: What’s driving growth in the industry?

A combination of laissez-faire factors has created a beneficial environment for cryptocurrency mining in Georgia.

Who would have thought that a small country in the Caucasus Mountains could become one of the world’s leaders in cryptocurrency mining?

Despite its small size and population, Georgia has become a popular spot for cryptocurrency mining thanks to its cheap electricity, the absence of legislative restrictions and attractive tax incentives. This combination of factors has engaged not only Georgian citizens but also foreigners who want to try their hand at cryptocurrency mining.

Oasis for miners 

Georgia’s economy is actively developing, but it has not yet grown up to the level of other developed countries. In 2015, in order to attract foreign investment and boost the economy, Georgian authorities established a Free Economic Zone (FEZ) in Tbilisi, the capital of the country.

This action turned out to be a boon for the cryptocurrency business. By 2018, the country ranked second in the profitability of Bitcoin (BTC) mining.

The low cost of electricity attracted foreign investors to the country, namely the Dutch company Bitfury, an industrial miner and one of the largest in the world. In June 2014, it opened its first data center with a capacity of 20 MW in Gori. In December of the following year, Bitfury launched a more powerful (40 MW) data center in the Gldani district of Tbilisi. Thus, the company increased its capacity in Georgia to 60 MW.

The citadel in Gori. Source: Petrshvili

The mining company became the administrator of the Free Industrial Zone in Tbilisi, where 18 hectares of land were allocated for just $1. In addition to cheap electricity, Bitfury registered the company in the zone in order to get a tax break, avoid currency regulations and get access to cheaper utilities and other services.

Bitfury also noted its role in applying blockchain technology in state registries. In 2017, Georgia became the first country in the world to start using blockchain in the state land cadastre. At the beginning of 2019, the government decided to use blockchain technology to issue education certificates.

The success of Bitfury turned the heads of many Georgians, who actively began to acquire powerful GPU cards and create their own small mining farms. According to the World Bank report, about 200,000 people were engaged in cryptocurrency mining in Georgia in 2018.

Related: Mining worldwide: Where should crypto miners go in a changing landscape?

Crypto legislation 

Until recently, Georgian state authorities didn’t influence the circulation of digital money in any way. Several times, representatives of the national bank of the country have stated that it is necessary to be careful with cryptocurrencies, as they are not legal tender.

By 2019, the great influence of this sphere on the country’s economy led the Ministry of Finance of Georgia to clarify the taxation of cryptocurrencies.

Individuals in Georgia are exempt from income tax on any profits received from the sale of cryptocurrencies, while the sale of cryptocurrencies or its exchange for lari (the national currency) or another currency is not subject to value-added tax (VAT), which is 18%.

Furthermore, the sale of computing power from Georgia abroad is not subject to VAT, while the sale of computing power within the territory of Georgia is.

Unlike individuals, corporate income is taxed on corporate profits derived from sources around the world. As a result, if a Georgian company receives income from crypto transactions, it will have to pay a 15% tax on the transaction. But, if a company doesn’t fix profits and doesn’t pay dividends and directs all the income received to its development, then it is exempt from paying corporate income tax.

Land plots in the Tbilisi Free Zone. Source: Tbilisi Free Zone 

In addition to the VAT, income from the purchasing or sale of hash to a non-resident is subject to an income tax rate of 10% if it is obtained from the source of Georgia.

Other than taxes, there is no clear regulatory framework for cryptocurrencies in the country at the moment.

Additionally, any business can obtain a cryptocurrency license in the FEZ. The license can be obtained in just 5-10 days and is issued in the form of a limited liability company or a joint-stock company, where founders may be residents of any country. In particular, the license gives the right to write off and enroll funds in accounts, produce digital money and provide payments and transfers using such money.

Nevertheless, some Georgian authorities have turned their attention to the cryptocurrency market. Natalia Ivanidze, manager of the financial innovation office of the National Bank, told Cointelegraph that the regulator will be more active in this sphere:

“At the moment, according to ‘The organic law of Georgia on the National Bank of Georgia,’ trading virtual currencies is not a supervisory area of ​​the National Bank of Georgia. However, we would like to inform you that it is planned to regulate this sector in the future.”

Earlier in 2021, the National Bank of Georgia announced that it was considering a central bank digital currency (CBDC) called the digital lari, for which the pilot program could launch this year. As is characteristic of bank-issued digital currencies, the digital lari would not be a cryptocurrency but only an evolution of cash. It could not be mined, and the sole issuer would be the National Bank.

At the initial stage, the digital lari is planned to be introduced for retail sales. The National Bank believes that national digital currency will help increase the efficiency of the payment system and financial integration.

Related: The race for semiconductors: Are crypto miners taking the lion's share?

Miners’ future

Any business has its complexities and crypto mining in Georgia is no exception. After the mining farms set up shop in the Free Economic Zone in Tbilisi, several questions arose in relation to both the business and the status of the zone itself.

Some residents of the country feel that crypto miners and enthusiasts don’t bring any benefit to the country and enjoy the tax advantages provided by the FEZ.

The unregulated production of digital currencies and non-controlled use of electricity leads to frequent power outages in some areas of Georgia, much to the dismay of the country’s citizens.

The Svaneti area suffers more than the others. This region is fully exempted from payment for electricity as an effort to support the more rural and remote towns and villages. Therefore, it is not surprising that nearly 1,000 miners quickly appeared there. Their powerful computers began to use almost all electricity in the region, which led to the disconnection of light in homes, hospitals and schools.

Such cases are not uncommon in all of Georgia, but it doesn’t stop miners since this field of activity is not explicitly prohibited by regulators. Furthermore, for many Georgians, cryptocurrency mining is a form of supplemental income that is relatively passive, as mining rigs can be set up in the basements, garages, hangers and apartments.

Mining in Georgia was and remains attractive thanks to the obvious benefits like cheap electricity, but the question still remains how long this will last.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Georgia punches well above its weight for Bitcoin mining: Report

The tiny population of Georgia is a dark horse for Bitcoin mining, contributing close to 1% of the industry’s total hash rate, according to a report by Arcane research.

At first glance, the pint-sized Republic of Georgia is an unlikely suspect for Bitcoin (BTC) mining activity. An underdog for mining, the country boasts abundant hydropower while ranked seventh worldwide for the World Bank’s ease-of-doing-business index — ahead of the United Kingdom and Germany.

Nestled on the Black Sea at the intersection of Europe and Asia, Georgia hosts Bitfury’s industrial mining operations as well as smaller, solo miners that tap into enormous amounts of hydroelectric power.

Dutch miner Bitfury's Bitcoin mining operation at the foot of the Tblisi National Park. Source: NPR

The country packs a punch for Bitcoin mining. While the Cambridge Bitcoin Electricity Consumption Index puts Georgia’s hash rate at 0.18%, a detailed and long-term report by Arcane Research suggests the number is closer to 0.71%.

Jaran Mellerud, an analyst at Arcane Research and author of the report, told Cointelegraph:

“Home mining is big in Georgia, especially in regions with subsidized electricity. As long as there are electricity subsidies in certain regions of the country, people will continue setting up small home mining operations.”

The report identifies at least 125 megawatts of crypto mining capacity, 62 MW of which derives from industrial-scale data centers. “The remaining 63 MW should then come from lots of small amateur setups scattered around the country in homes, garages, abandoned warehouses and factories.”

Mellerud concludes that the real number for Georgia’s total hash rate is in the region of 0.71% because “100 MW of Georgia’s 125 MW total crypto mining capacity is dedicated to Bitcoin and that Georgia’s hardware is as efficient as the network average.” It is multiples higher than CBECI’s 0.18% estimate, he added.

However, while the trend of Bitcoin miners moving to untapped energy resources, cheap energy, or merely cost-efficient places to do business is not new, it is a double-edged sword.

In nearby Kazakhstan, which recently hosted as much as 18% of the global hash rate due to cheap power and loose rules, regulators are already considering stepping in, proposing power price hikes and taxes.

Mellerud is aware that despite Georgia’s “business friendliness,” “rising electricity prices” could deter miners from setting up operations. He told Cointelegraph:

“I don’t believe the Georgian government wants more mining operations in the country, as miners are already using almost 10% of the country’s electricity, contributing to the country’s growing electricity deficit.”
Bitcoin and the flag of Georgia. Source: Georgiawealth.info

Nonetheless, in a boon for BTC miners in Georgia, lawmakers might grant crypto miners tax exemptions in a new bill, while Mellerud assured that “for industrial-scale mining, I believe there is no room for more capacity.”

Instead, home mining–miners with units under 1 MW may continue to flourish. Despite calls that residents of Svaneti in Georgia must swear a holy oath to Saint George to stop crypto mining, the country, on the whole, has a “positive attitude towards the emerging asset class.”

Small-time crypto enthusiasts can continue to use Bitcoin mining waste heat to warm their homes in the mountains, using Georgia’s abundance of “cheap and clean hydroelectric power.”

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Crypto in the House: Execs on the march, US partisan politics and Web3

A largely proclaimatory meetup generated a positive response, with the industry appearing ready for a busy new year on the Hill.

On Dec. 8, top executives from six major crypto companies faced the United States House of Representatives’ Financial Services Committee during a special hearing on digital assets. While the tone of the conversation was largely proclaimatory, the industry reacted with an optimistic buzz — it seems that crypto is bound to become a hot topic on the Hill for years to come.

The meeting that took place in Congress also garnered much attention from mainstream media. What’s notable is the fact that this hearing is the first time that the industry’s senior leaders (aka “crypto moguls”) directly expressed the fears and hopes of the $2.2-trillion sector to U.S. legislators.

The industry representatives who were summoned to testify at the hearing included Jeremy Allaire, CEO of Circle; Sam Bankman-Fried, CEO of FTX; Chad Cascarilla, CEO of Paxos; Denelle Dixon, CEO of the Stellar Development Foundation; Brian Brooks, CEO of Bitfury; and Alesia Haas, chief financial officer of Coinbase.

Some of the key legislators who actively engaged with the crypto industry captains were Representative Pete Sessions, a Republican from Texas; Rep. Maxine Waters, a Democrat from California; Rep. Gregory Meeks, a Democrat from New York; Rep. Brad Sherman, a Democrat from California; Rep. Patrick McHenry, a Republican from North Carolina; Rep. Blaine Luetkemeyer, a Republican from Missouri; and Senator Sherrod Brown, a Democrat from Ohio. 

So, here’s how it went down on the big day.

Key arguments

Allaire supported this point with an example from his firm’s operations: “Just in the past several weeks, Circle has signed on institutional customers who are using these services for small-business payments, international remittances and efficient payments for remote workers.” As he optimistically stated, soon “Dollars on the internet will be as efficient and widely available as text messages and email.”

Brooks took the message even closer to key political tensions of the day as he emphasized the opposition between tech behemoths such as Meta (formally Facebook) and the decentralizing impulse of crypto:

At the center of the CEOs’ narrative was the humanitarian significance of digital assets and their developmental potential. Cascarilla framed crypto as a “really powerful tool for democratization of access.” 

The point of crypto is to have true decentralization, and the projects that succeed will be the projects that achieve that. Bitcoin succeeded because there were literally millions of participants in the node network, and so there is no CEO of Twitter to deplatform you, there’s no CEO of JPMorgan to take away your credit card.

It was also Brooks who laid out the powerful promise of the blockchain-powered Web3 era. 

Aside from the fiery rhetoric, the message from the industry leaders was crisp and straightforward: It’s about time to bilaterally reconsider the rules of the game and put an end to the government’s suspicious paternalism. The industry is still being overseen by several federal agencies, state-by-state regulation is a mess, and the Securities and Exchange Commission is trying to hold its grip, characterizing digital assets as securities.

The last point was clearly emphasized as the main problem: Coinbase’s Haas proposed deeming blockchain-based tokens as digital property or a way to record ownership, which would put them outside of the SEC’s jurisdiction.

Brooks didn’t spare words when highlighting the dysfunctional patterns of the current situation: “What happens in the United States is you have a new crypto project, and you walk into the SEC, and you describe it in great detail, and you ask for guidance, and they say, ‘We can't tell you’ and ‘You list it at your own peril.’”

Political divisions

The Dec. 8 hearing once again brought out a division regarding crypto-related issues that exists along party lines. Democrats focused their attention on investor protection and volatility, framing the industry as a potential threat to both uninformed investors and the global economy (environmental concerns were also mentioned.)

“Currently, cryptocurrency markets have no overarching or centralized regulatory framework, leaving investments in the digital assets space vulnerable to fraud, manipulation and abuse,” as Waters, who chairs the Financial Services Committee, put it.

Related: Lines in the sand: US Congress is bringing partisan politics to crypto

Sherman, one of the industry’s most consistent critics, expressed this anxiety in a quite vague, if not cryptic, form: “The powers in our society on Wall Street and in Washington have spent millions, and are trying to make billions or trillions, in the crypto world.” 

Republican legislators, who — following a decades-old pattern of the American electoral system — are projected to win the majority in Congress in the next midterm elections, demonstrated a pragmatic approach.

In the words of McHenry, who is poised to chair the Financial Services Committee if the GOP wins back the House:

This technology is already regulated. Now, the regulations may be clunky, they may not be up to date. I ask my friends, my policymaker friends here on the Hill, this question: Do you know enough about this technology to have a serious debate?

Sessions went even further and gave an outright cheer to the industry, uttering a promise to support it: “I am tremendously impressed that from what I see, a lot of the ingenuity, a lot of entrepreneurial spirit, and lots of advice about the future, about where this can grow, is, I think, very important for us to listen to.”

Industry response

Despite certain disagreements between legislators, the hearing sparked a largely positive reaction from the crypto community, with Jake Chervinsky, head of policy at the Blockchain Association, calling it “the most positive, constructive, & bipartisan public event on crypto I’ve seen in Congress” and other experts largely projecting similar vibes.

Some representatives also projected an empathic epigraph in the aftermath of the hearing. Perhaps the most eloquent reaction belongs to Meeks, who demonstrated a moderate optimism toward the industry’s future:

The silence of crypto critic Sherman, normally an active Twitter user, was also notable.

What’s next

The overall optimistic mood of the hearing stands in contrast to some of the recent regulatory actions taken by the U.S. government. For one, the SEC denied WisdomTree’s application for a spot Bitcoin exchange-traded fund after seven months of consideration, keeping it impossible to invest in a regulated financial product providing direct exposure to the world’s oldest cryptocurrency.

Surely, the hearing will not be the last turn in the crypto-government conversation, even for 2021. Already, a hearing on stablecoins took place before the Senate Banking, Housing and Urban Affairs Committee on Dec. 14.

As Representative McHenry put it, “Congress must work to fully understand and embrace these innovative new technologies, like #crypto.” It looks like everyone should brace for a busy 2022 in crypto policy and regulation.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

House committee announces crypto CEOs will testify at Dec. 8 hearing on digital assets

The hearing, "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States," is the latest from Congress to explore the issues concerning crypto assets.

Maxine Waters, the chair of the House Committee on Financial Services, has announced several chief executive officers at major crypto firms in the United States will speak at a hearing to discuss digital assets and the future of finance.

According to a Wednesday announcement, Waters said Circle CEO Jeremy Allaire, FTX CEO Sam Bankman-Fried, Bitfury CEO Brian Brooks, Paxos CEO Chad Cascarilla, Stellar Development Foundation CEO Denelle Dixon, and Alesia Haas, the CEO of Coinbase Inc. and the chief financial officer of Coinbase Global, will be witnesses at a full House committee hearing held on Dec. 8. The hearing, named "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States," is the latest from Congress to explore the challenges of adopting crypto assets.

On the other side of the U.S. Capitol building, Senate Banking Committee chair Sherrod Brown called on several crypto firms to release information related to consumer and investor protection on stablecoins. The notices to Coinbase, Gemini, Paxos, TrustToken, Binance.US, Circle, Centre and Tether requesting information by Friday suggest the committee may be planning a hearing on stablecoins in the future.

Related: US Congress plans ‘demystifying crypto’ committee hearing for Nov. 17

Though committees from both the House and the Senate have previously discussed the issues surrounding cryptocurrencies, stablecoins, central bank digital currencies and blockchain, lawmakers seem to be giving the technology more attention as mainstream interest in the space grows. In November, the President’s Working Group on Financial Markets penned a report suggesting that stablecoin issuers in the United States should be subject to “appropriate federal oversight” akin to that of banks and that legislation was “urgently needed” to address risks.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Former Comptroller Brian Brooks gets a new gig as Bitfury CEO

Former Binance.US CEO Brian Brooks has become the new CEO of Bitfury and will oversee the firm’s rapid expansion plans.

Former Comptroller of the Currency and Binance.US CEO Brian Brooks has been announced as the new CEO of crypto (BTC) mining firm BitFury.

According to a Nov. 4 announcement from Bitfury, Brooks was appointed last Friday and he will lead the firm as it prepares for a new funding round. Bitfury founder and former CEO Valery Vavilov will serve as Chief Vision Officer and the Chairman of the Board of Directors.

“Mr. Brooks will lead the 10-year-old crypto unicorn as it launches a new funding round, increases the growth of its mining business with a revolutionary new microchip design and new global data center locations, and scales a portfolio of innovative businesses,” the breathless announcement read.

Bitfury’s last funding round occurred in 2018, when it raised $80 million at a valuation of $1 billion. Vavilov confirmed to Cointelegraph on Oct. 18 that the firm was considering a new fundraise via a potential initial public offering (IPO), but nothing is concrete at this stage.

Prior to this role, Brooks worked at Binance’s U.S. branch for a mere three months before resigning in August this year. Many onlookers speculated that the decision was due to prior knowledge about regulatory issues plaguing the firm.

Brooks also worked as Coinbase’s Chief Legal Officer between 2018 and 2020, and is well-liked amongst the crypto community due to his strongly pro-crypto stance while serving as the Acting Comptroller of the Currency.

During his time at the agency between May 2020 to January 2021, Brooks oversaw the enactment of the fintech banking charter that enabled fintech firms and crypto companies to offer lending and payment products without oversight from state banking regulators.

Related: Cipher Mining splashes $350M on next-gen Bitcoin mining rigs from Bitfury

“Brian is a respected executive and thought leader with deep regulatory, digital asset and capital markets expertise who shares Bitfury’s vision for a decentralized peer-to-peer economy,” Vavilov said.

Bitfury was established in 2011 and is one of the largest companies in the blockchain sector. It operates mobile data centers and provides a wide range of services such as crypto mining hardware design, software and artificial intelligence products.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Bitfury CEO confirms IPO considerations are part of expansion plans

In 2018, Bitfury raised $80 million from investors like Michael Novogratz’s Galaxy Digital at a $1 billion valuation.

Bitfury, one of the world’s largest companies in the blockchain industry, is mulling a potential initial public offering, or IPO, as part of the company’s global growth plans, the company’s CEO confirmed to Cointelegraph.

“As Bitfury and its portfolio of companies continue their global expansion in the digital assets space, Bitfury will be considering an IPO as part of its broader expansion and growth plans,” Bitfury co-founder and CEO Valery Vavilov said.

According to the executive, Bitfury has not yet determined when and on what exchange the company is willing to proceed with an IPO. The company’s last funding round took place in 2018, with Bitfury raising $80 million at a $1 billion valuation.

Bitfury’s investors include European venture capital fund Korelya Capital, South Korean internet giant Naver Group, Asian institutions Macquarie Capital and Dentsu Japan as well as Michael Novogratz’s crypto investment company Galaxy Digital.

British news agency The Telegraph originally reported on Bitfury’s potential IPO plans on Oct. 10, citing anonymous sources claiming that Bitfury tapped Big Four accounting firm Deloitte to review its readiness for going public. The publication noted that Bitfury operates its main headquarters in the Netherlands but it is legally based in the United Kingdom. Bitfury did not immediately comment on its legal headquarters to Cointelegraph.

Founded back in 2011, Bitfury is a major company in the industry, operating a wide number of services like crypto mining hardware design, software, semiconductor chips’ manufacturing as well as running mobile data centers. The company’s United States-based Bitcoin mining subsidiary, Cipher Mining, was valued at over $2 billion as of March 2021.

Related: Bitcoin miner Stronghold will list almost 6M shares in its $100M IPO

Apart from focusing on cryptocurrency mining, Bitfury has been actively working on cryptocurrency security, blockchain research and compliance, running platforms like Crystal Blockchain, LiquidStack and the most recent spin-off Axelera AI. The firm is also a software provider for some global applications through its Exonum private blockchain framework, which was trialed for Russia’s blockchain-based voting system in 2020

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Cipher Mining splashes $350M on next-gen Bitcoin mining rigs from Bitfury

The American Bitcoin mining outfit plans to acquire a total of 28,000 to 56,000 next-generation mining rigs.

According to a Form 8-K filing with the United States Securities and Exchange Commission (SEC) on Monday, Cipher Mining will purchase 28,000 to 56,000 next-generation Bitcoin mining hardware from Bitfury at a cost of $6,250 per rig.

At a maximum cost of $6,250 per machine, Cipher’s Bitcoin mining hardware outlay could go between $175 million and $350 million, depending on whether the company elects to receive all 56,000 rigs as stated in the purchase agreement.

The total inventory order will be delivered in seven batches on a monthly basis beginning in the summer of 2022 until December 2022.

As part of the SEC filing, Cipher Mining will pay an advanced fee of $10 million within three business days of executing the agreement to kickstart the massive order.

As previously reported by Cointelegraph, Cipher Mining has designs towards achieving a 745 megawatts Bitcoin mining capacity before the end of 2025.

In March, the company entered into a $2 billion merger with the Nasdaq listed Good Works Acquisition Corp — a special purpose acquisition company (SPAC).

Cipher Mining is also backed by investors like Fidelity Management and Research as well as the Morgan Stanley-affiliated Counterpoint Group.

Related: Northern Data to obtain 33K ASIC miners through Bitfield acquisition

The scale of the company’s planned expenditure for Bitcoin mining rigs is in keeping with the rapid expansion policies being pursued by crypto mining establishments in North America.

Crypto mining firms in the United States have been acquiring more rigs from major manufacturers like Bitmain and MicroBT.

According to data from the Cambridge Bitcoin Electricity Consumption Index, the United States now accounts for over a third of the global BTC hash rate distribution.

Cipher Mining Technologies Inc. has entered into Master Services and Supply Agreement with blockchain development giant Bitfury to purchase Bitcoin (BTC) mining rigs.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011