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Bitcoin miners raked up $184M in fees in Q2, surpassing all of 2022

It's been one of the most lucrative quarters for those that profit from Bitcoin transaction fees in nearly two years.

Bitcoin (BTC) miners made a lofty $184 million from transaction fees in the second quarter, far more than what they pocketed over the entire 2022 — as Bitcoin’s price surged and BRC-20 tokens flourished.

The $184 million payout is more than a 270% increase from the first quarter of 2023 and it is the first quarter to have surpassed the $100 million mark since Q2 2021, according to a July 5 report from cryptocurrency analytics platform Coin Metrics.

Bitcoin miners earned more from fees in Q2 than the previous five quarters combined. Source: Coin Metrics

Bitcoin miners receive transaction fees whenevea new block has been validated, the amount of which is determined by the data volume and the user demand for block space.

Coin Metrics said the jump in fees was due to Bitcoin’s recent price surge bolstered ‘top-line revenues” and the advent of BRC-20, a new token standard on Bitcoin introduced in March which uses Ordinals inscriptions to mint and transfer fungible tokens on the network, adding:

“The token standard does unlock experimental new use cases for Bitcoin’s core transaction types, and accelerates the push to scale Bitcoin with the Lightning Network.

However, it is worth noting that transaction fees represented only 7.7% of the total $2.4 billion made by miners over the quarter.

The remainder came in the form of Bitcoin block rewards, with miners currently being rewarded 6.25 BTC for solving each block. This is set to fall to 3.125 BTC after the network’s next halving cycle, expected to take place in May.

Related: Bitcoin miners send record $128M in revenue to exchanges

Bitcoin miners also had other reasons to celebrate in the second quarter, according to the firm.

In May, the Bitcoin mining industry “notched a win” with the Biden Administration’s proposed Digital Asset Mining Energy (DAME) tax being blocked.

Bitcoin miners also enjoyed easier macroeconomics conditions in the quarter too, with “receding inflation pressures” translating to lower electricity prices for United States-based miners, Coin Metrics noted.

However, with Bitcoin’s hashrate continuing to reach new all-time highs over the last 12 months, competition in the mining fee market is also tightening, Coin Metrics explained:

“Competition remains as fierce as ever, with Bitcoin’s hashrate breaking new highs during the quarter at 375 EH/s [...] We see that the overall network’s efficiency continues to increase with the adoption of modern ASICs such as the S19 XP.”

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‘Operation Choke Point 2.0’ may have contributed to SVB collapse: Mulvaney

While the existence of "Operation Choke Point 2.0" has not been confirmed, Mick Mulvaney spoke of “rumors” of its existence and the potential side effects of such a policy.

If the United States government really is implementing "Operation Choke Point 2.0" it will hurt financial stability and may have contributed to the collapse of Silicon Valley Bank (SVB) according to Donald Trump’s former Acting White House Chief of Staff, Mick Mulvaney.

“I don’t want to think that the government would actually do that,” Mulvaney said in a March 22 Bloomberg interview in reference to the rumored operation. He did however recall attending hearings on the original Operation Choke Point — a government initiative that aimed to limit certain industries’ access to U.S. banking services.

“You have to wonder if there’s not certain policies that the administration is putting in place that have — perhaps the intended, perhaps the unintended — consequences of raising the risk, and of increasing instability, and did we just see that at SVB?” he added.

“Were people at SVB because they were really good at it, or was there some factor in there that said we’re at SVB because no one else will take us.”

Mulvaney elaborated that he believes crypto played no role in the downfall of SVB and suggested poor risk management was to blame. He implied, however, the pressure being put on U.S. banks to avoid crypto may have contributed to SVB’s collapse.

"Operation Choke Point 2.0" is a term coined by Coin Metrics co-founder Nic Carter and refers to apparently coordinated efforts to discourage banks from holding crypto deposits or providing banking services to crypto firms on the basis of “safety and soundness” for the banking system.

While is it unclear whether "Operation Choke Point 2.0" is an official strategy, Carter has claimed there is evidence supporting its existence.

Related: Yellen defends government intervention to avoid another SVB

In a Feb. 9 blog post, Carter outlined some supposed evidence, highlighting a Jan. 3 joint statement on crypto assets from the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), which warned that decentralized blockchain networks are “highly likely to be inconsistent with safe and sound banking practices.”

More recently, critics pointed to the FDIC’s different treatment of crypto assets during the takeover of Signature Bank as further proof of the existence of "Operation Choke Point 2.0."

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Silvergate downfall sparks debate over whose fault it actually was

The demise of the crypto-friendly bank has prompted discussion about who tipped the first domino, and where crypto firms can turn for their banking needs.

The voluntary liquidation of Silvergate Bank has sparked many to share their thoughts about the source of its troubles and the broader impact of the crypto-friendly bank’s collapse on crypto. 

From lawmakers to crypto analysts, crypto firm executives to commentators — nearly everyone’s had something to say regarding the recent announcement from Silvergate.

Some United States lawmakers have used the moment to make a comment about the state of the crypto industry, labeling it a “risky, volatile sector,” which “spreads risk across the financial system.”

Senator Elizabeth Warren called Silvergate’s failure “disappointing, but predictable,” calling for regulators to “step up against crypto risk.”

Senator Sherrod Brown also chimed in, sharing his concern that banks that get involved with crypto are putting the financial system at risk and reaffirming his desire to “establish strong safeguards for our financial system from the risks of crypto.”

The senators’ remarks have sparked criticism from the community, some of whom argue it was not a crypto problem and that fractional-reserve banking was to blame — as Silvergate held far more in-demand deposits compared to cash on hand.

Several companies have instead used the recent announcement from Silvergate to reiterate their lack of or now-severed ties with the firm.

Binance CEO Changpeng Zhao assured customers on Twitter that the crypto exchange does not have assets stored with Silvergate, while peer exchange Coinbase has also assured its followers that no customer funds were held by the bank.

Meanwhile, Nic Carter, co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics, suggested that it was the government that “hastened the collapse” of Silvergate by launching investigations and legal attacks on it.

“They’re the arsonist and the firefighter in one,” he wrote.

The CEO of financial services firm Lumida — Ram Ahluwalia — had a similar take, arguing in a tweet that Silvergate faced a bank run after a senator’s letter had undermined public trust in the firm. He saidthat “Silvergate was denied due process.”

Related: Marathon Digital terminates credit facilities with Silvergate Bank

In an earlier blog post, Carter referred to “Operation Choke Point 2.0” as being underway, claiming that the U.S. government is using the banking sector to organize “a sophisticated, widespread crackdown against the crypto industry.”

Others believe the collapse of Silvergate won’t necessarily hurt the crypto industry, but along with proposed changes to tax laws, would exacerbate the exodus of crypto firms from the U.S.

With Silvergate winding down, some have also asked where crypto firms will turn to now.

Coinbase, which previously accepted payments via Silvergate, announced on March 3 that it would facilitate institutional client cash transactions for its prime customers with its other banking partner, Signature Bank.

Signature Bank, however, announced in December that it intended to reduce its exposure to the crypto sector by reducing deposits from clients holding digital assets.

To further reduce its crypto exposure, on Jan. 21 Signature imposed a minimum transaction limit of $100,000 on transactions it would process through the SWIFT payment system on behalf of crypto exchange Binance.

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Wall Street Giant Goldman Sachs Partners With Coin Metrics To Create New Crypto Classification System

Wall Street Giant Goldman Sachs Partners With Coin Metrics To Create New Crypto Classification System

Goldman Sachs is introducing a framework designed to set standards in the crypto assets market by classifying digital coins based on their primary use and underlying protocol. In a statement, the Wall Street titan says it is launching the new crypto classification system datonomy in partnership with crypto intelligence platform Coin Metrics and global index […]

The post Wall Street Giant Goldman Sachs Partners With Coin Metrics To Create New Crypto Classification System appeared first on The Daily Hodl.

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A stablecoin’s rise in market share has ignited the ‘Second Great Stablecoin War’

Since Binance announced it would auto-convert USDC, USDP and TUSD into BUSD on Sept. 6, BUSD’s share of the total stablecoin market has risen from 10.01% to 15.48%.

FTX CEO Sam Bankman-Fried (SBF) said the rise of Binance stablecoin BUSD could spark the “Second Great Stablecoin War,” given how fast its market cap has surged over recent months. 

Bankman-Fried's recent comments come a month after Binance pushed ahead with plans to auto-convert a host of stablecoins supported on its exchange into BUSD on Sept. 6, — which has seen BUSD's share of the total stablecoin market rise since. 

BUSD’s share of the total stablecoin market has risen from 10.01% on Sept. 7 to 15.48% on Oct. 22, according to crypto data aggregator Coin Metrics.

Meanwhile, BUSD’s market cap has risen 3.3% over the last 30 days to $21.7 billion, with the stablecoin only trailing Tether USD (USDT) at $68.4 billion and USD Coin (USDC) at $43.9 billion.

Commenting on the asset’s growth following the move, the FTX CEO noted via Twitter on Oct. 23 that “Binance converts USDC --> BUSD, and we see the change in supplies,” adding “thus begins the second great stablecoin war.”

Bankman-Fried noted that the first "Stablecoin War" was fought between five stablecoins in 2018, leading to USDT and USDC as the two leaders. 

Today, USDT still holds a considerable lead with a 48% share of the stablecoin market, though it has fallen from 88% since 2020, while USDC has grown in market share from 10% to 32% in the same period. 

Binance's stablecoin's rise is even more prominent, however, growing more than 30x from 0.5% to 15.48% in the same time frame. 

SBF added that as BUSD continues to edge its way into the market as the big centralized players fight for dominance, there will likely be more projects sprouting up in the “non-fiat-backed-stablecoin space” also.

“It'll be interesting to see what emerges from the post-Luna and post-DAI-holding-USDC. My guess is that it will be something interest bearing or otherwise with some upside,” he added.

Related: BUSD: A case study for stablecoin compliance and security

In September, Binance announced it would cease a long list of spot trading asset pairs for USDC, USDP Stablecoin (USDP) and TrueUSD (TUSD), with any users still holding the three stablecoins by Sept. 29 to have their holdings auto-converted to BUSD at a 1:1 ratio.

Binance stated that the move was a decision to enhance liquidity and capital efficiency for users. At the time, Binance said there were immediate plans to do the same to USDT, but noted that this "may change."

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Russia-Ukraine Conflict Demonstrating Advantages of Bitcoin over Gold: Nic Carter

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The post Russia-Ukraine Conflict Demonstrating Advantages of Bitcoin over Gold: Nic Carter appeared first on The Daily Hodl.

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Web3 Data Platform Dune Analytics Propels to Unicorn Status After $69.4 Million Fundraise

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Crypto Data Firm Dune Analytics Raises $8M — Series A Round Led by Union Square Ventures

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Developing Several Layer-2 Solutions: ‘The Real Solution’ to Ethereum’s Scalability Issue, Says Ken Timsit