Kazakhstan Police Shut Down Another Crypto Farm Amid Ongoing Crackdown on Mining

March 22, 2022 Bitcoin.com

Stranded no more? Bitcoin miners could help solve Big Oil’s gas problem

March 18, 2022 Coin Telegraph

Can Bitcoin mining be part of the solution for greenhouse emissions rather than part of the problem?

The energy usage and environmental impact of Bitcoin (BTC) mining have been frowned upon and been under the scanner by various international financial institutions. The International Monetary Fund (IMF) mentions how Bitcoin mining consumes “vast amounts of computing power and electricity.”

Bitcoin mining is an energy-consuming process, as it is a proof-of-work (PoW) blockchain network that involves providing cryptographic proof to the network that a quantified amount of a specific computational effort has been used. The information used to verify this is stored in a block to be accepted into the network by other participants.

Elon Musk, one of the richest men in the world and the co-founder and CEO of Tesla, in February 2021 announced that the car manufacturing company will accept Bitcoin as payment for its products and services.

But, in May of that same year, Tesla discontinued its support for the acceptance of Bitcoin payments, citing the company’s concerns about the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.” This also led Musk to hail Dogecoin (DOGE) as a better means of payment than Bitcoin due to the high environmental cost of BTC transactions.

Energy usage trend over past few months is insane https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe
— Elon Musk (@elonmusk) May 13, 2021

However, a new solution seems to be emerging that has the potential to address the narrative that has permeated the mainstream conscience.

Associated natural gas is a byproduct of oil drilling, the volume of which is often outweighed by the costs of getting it to a refiner, leaving it “stranded” at the well. Thus, it is often just burned off at the oil derrick, earning it the moniker “flare gas.”

On Feb. 17, CNBC reported that the oil giant ConocoPhillips is running a pilot program in Baken, North Dakota. Instead of burning associated gas, the company is selling it as fuel to third-party Bitcoin miners.

The idea of using associated gas to mine Bitcoin is not new. Back in 2019, Brent Whitehead and Matt Lohstroh started the company Giga Energy Solutions, which mines Bitcoin with electricity generated from such gas. The firm delivers a shipping container that is full of Bitcoin mining equipment to an oil well and then diverts the stranded natural gas into generators that convert the gas to electricity, using it to mine Bitcoin.

Crusoe Energy is another company that uses the energy from flare gas to mine Bitcoin. The firm has grown to become one of the biggest players in the space and has also received investment from one of the oldest cryptocurrency exchanges in the world, Coinbase and Winklevoss Capital, a company founded by the Winklevoss twins, the founders of crypto exchange Gemini.

A report from Crusoe Energy Systems claimed that using this gas to mine Bitcoin reduces CO2-equivalent emissions by about 63% compared to the continued flaring of the gas.

Cointelegraph spoke with Ethan Vera, chief financial officer and chief operations officer at Viridi Funds, a company that offers crypto investments to Bitcoin miners, about the impact of ConocoPhilips involvement in the innovation.

Ver said, “While ConocoPhillips is one of the major energy companies that have publicly announced their entry into Bitcoin mining, there are many other energy companies that have already started the process of setting up mini-test sites. If the economics of Bitcoin mining increase and total mining revenue on a USD basis grows, many of the large energy producers will look to enter the space in a bigger way.”

Energy impact of Bitcoin mining could be overrated

As per the University of Cambridge’s Cambridge Bitcoin Electricity Consumption Index metrics, the estimated power demand for the Bitcoin network is 15.57 GW (GigaWatts) which annualizes at 136.48 TerraWatt hours (TWh). The look at historical data of power demand for the network reveals that this demand is continuously increasing through the years as the network grows.

Despite this increase in demand for power, the environmental impact could be overrated. A report from CoinShares released in January this year attempted to gauge the carbon emissions caused by Bitcoin mining. Contrary to popular belief, the report’s findings suggest that Bitcoin mining only accounts for 0.08% of the world’s carbon dioxide, or CO2, production. The report found that the network emitted 42 megatons (Mt) (1Mt = 1 million tons) of CO2 in 2021 out of the world’s total emissions of 49,360 Mts of CO2.

Sam Tabar, chief security officer of Bit Digital, a publicly-traded Bitcoin mining company, told Cointelegraph:

“The environmental impact of Bitcoin mining is massively exaggerated by traditional financial authorities (IMF, etc.) because they know they can divide a new counterculture movement by using fake environmental arguments. They are trying to gaslight us against each other. They gaslight the world with fake green arguments, and I understand why: They don’t want to lose influence over the levers of power of a system that only works for the elite.”

In this regard, Vera mentioned that gauging the environmental impact of Bitcoin is a highly nuanced topic and is one that can’t simply be explained by the energy consumed metric. He said that “In many cases, Bitcoin mining incentivizes the development of renewable energy which will have profound impacts on long-term energy infrastructure and environmental impact.”

Oil giants could lead the change to make Bitcoin green

Considering that using stranded natural gas to mine Bitcoin could reduce the net carbon emissions of mining, as well as reduce emissions from flare gas, other major oil companies could soon jump on the opportunity, especially as governments and regulators have been cracking down on gas flaring.

In November 2020, Colorado regulators gave the initial okay to ban gas flaring in order to curb methane pollution.

Regulators in the state of New Mexico imposed a rule in March 2021 that requires oil operators to gradually eliminate gas flaring. The rule dictates that 98% of the nature-stranded gas should be captured by April 2022 instead of flaring.

However, such decisions are highly difficult to pass in a country where both sides of the government are heavily dependent on lobbying from big oil companies. In October 2021, Bloomberg reported that President Biden’s crackdown on methane emitters is set to stop short of imposing a ban on flaring.

An outright ban on gas flaring would be good news for the Bitcoin mining industry as that oil producers would have either of two options. First, to reduce the production output of oil which wouldn’t be economically viable. Or, second, utilize excess stranded natural gas on-site, which is where Bitcoin miners could step in to create synergies with big oil companies like ExxonMobil, British Petroleum (BP), Chevron or Valero Energy.

Vera stated that “With high oil prices, the majority of these producers are turning to utilize the stranded gas on-site such as Bitcoin mining, instead of burning it up. We expect the trend to continue in the future as more governments regulate the ability for oil companies to flare excess gas.”

The World Bank also has its own initiative to help reduce gas flaring around the world. The Global Gas Flaring Reduction Partnership (GGFR) is a multi-donor trust fund that comprises governments, oil companies and multinational companies that are committed to reducing gas flaring. Bitcoin mining pools and companies could enter collaborations with this trust fund to further this initiative.

However, oil companies could have a two-faced approach to the issue at hand, thus, raising questions on their intentions. For example, in 2020, BP urged regulators in Texas to ban the routine flaring of natural gas. But, in January 2021, the Texas Railroad Commission passed 121 of the company’s requests for flaring.

With regulators and governments around the world cracking down on gas flaring, the Bitcoin mining industry has an opportunity to reduce the CO2 emissions and methane pollution in the atmosphere. Vera concluded on this synergy, stating that “Bitcoin miners are a natural partner to all energy producers including renewable and oil and gas. Bitcoin mining improves the ability for these companies to manage and utilize their resources in the most profitable way.”

Miners that hodl the most Bitcoin are ‘relentlessly expanding’

March 18, 2022 Coin Telegraph

Bitcoin mining

According to a series of mining metrics, not only are miners holding hard but they’re also dramatically increasing their hash rate.

Bitcoin (BTC) miners are holding more and more Bitcoin while “relentlessly expanding” their operations in 2022.

A report by Arcane Research indicates that publicly listed Bitcoin miners are “constantly looking for expansion opportunities,” as they “plan to increase hashrate faster than the whole network in 2022.”

*Publicly listed Bitcoin miners projected hashrates. Source: Arcane Research*

44.95% of the global hash rate derives from North American miners, according to the latest figures from the Cambridge Bitcoin electricity consumption index. With the massive projected increases in target hash rate among the publicly traded Bitcoin miners, it‘s “likely to increase.”

Jaran Mellerud, an analyst for Arcane Research, told Cointelegraph that “most publicly listed miners pursue a hodl strategy, doing their best to keep as much they can of their mined Bitcoin.”

“This hodl strategy enables them to serve as Bitcoin investment vehicles for investors who want to own bitcoin indirectly through an investment structure.”

Whit Gibbs, the founder and CEO of Compass Mining, explained to Cointelegraph that “public mining companies definitely have an advantage when it comes to hodling Bitcoin because they have access to the capital markets.”

“They don‘t need to liquidate their Bitcoin in order to buy more machines, increase their rack space, etc. They‘re able to go to the capital markets and get that money to continue to expand. So, they‘re able to hold large positions in Bitcoin.”

Some of the largest miners hold huge amounts of Bitcoin, Gibbs adds, ”it‘s crazy how much some of them are holding.” As published on BitcoinTreasuries, Bitcoin mining company Marathon hold the third-largest amount of Bitcoin among businesses worldwide, right behind Tesla and MicroStrategy.

*Bitcoin holdings of publicly listed Bitcoin miners. Source: Arcane Research*

Since January 2021, miners’ reserves have been steadily increasing, reflective of their HODL strategy. Gibbs suggests that the publicly traded Bitcoin mining companies are “taking more of a bullish approach to Bitcoin.”

“The companies are looking at Bitcoin on their balance sheet as a way to drive up their market valuations.”

*Miners' reserves in blue are steadily increasing. Source: CryptoQuant*

Mellerud also understands that Bitcoin mining stocks are increasingly popular in legacy financial markets. “The demand for Bitcoin investment vehicles is high, particularly in the U.S. since the Bitcoin exchange-traded fund market is immature.” The Bitcoin exchange-traded fund (ETF) saga is an Achilles heel to the network, as successive Bitcoin ETF applications have been rejected.

While market interest for Bitcoin miners swells, Mellerud sums up why the mining business model is attractive and effective, echoing Gibbs‘ comments:

“Miners are some of the biggest Bitcoin bulls out there, and they utilize the highly developed equity and debt markets in the U.S. to raise money to pay for their expansions and operating expenses, allowing them to keep the Bitcoin they mine.”

Bitcoin Miner Hut 8, for example, recently posted record revenues, with its overall BTC holdings surging by 100%. 2022 may not be the year of the bull, but it‘s certainly a good time to publicly mine the orange coin.

Ethereum’s TVL dominance drops to 55% as Bloomberg analyst paints $1.7K bearish target

March 8, 2022 Coin Telegraph

<div>Ethereum's TVL dominance drops to 55% as Bloomberg analyst paints .7K bearish target</div>

Bitcoin

Ethereum price has been increasingly in lockstep with the Nasdaq, but there's a catch.

Another big drop in the U.S. stock market could leave Ethereum's native token Ether (ETH) in a similar downside spell, according to the latest Bloomberg report on digital assets.

Ethereum faces global recession risks

Mike McGlone, the senior commodity strategist at Bloomberg Intelligence, anticipates U.S. equities to face downside pressure against the prospects of the ongoing energy-price spikes and their ability to invoke a 2008-like global market recession

"The war in Ukraine and spiking crude make a potent combination for a global recession," wrote McGlone in the report, adding that top cryptocurrencies like Bitcoin and Ether could also face initial pressures.

*WTI crude oil weekly price chart. Source: TradingView*

Correlations between U.S. stock indexes and top cryptocurrencies have only increased during the ongoing global market rout and Ukraine-Russia conflict.

In particular, Ether's correlation efficiency with tech-heavy Nasdaq 100 rose to 0.93 four days after Russia invaded Ukraine but has since corrected to 0.67. An absolute value of 1 means the two assets move perfectly in tandem.

*ETH/USD daily price chart featuring its correlation with Nasdaq 100. Source: TradingView*

McGlone spotted Ether trading in the middle of a range defined by its 100-week exponential moving average (100-day EMA; the red wave in the chart below) near $6,000 and its 30-week EMA (the green wave) near $2,000. He also expects significant selling pressure at the interim resistance level of $4,000.

*ETH/USD weekly price chart. Source: Bloomberg Intelligence*

"Our graphic depicts Ethereum at about the middle of the range," the strategist wrote, asserting that "if the stock market takes another leg lower, Ethereum is more likely to revisit the lower end" near $2,000. He added:

"If equities drop fast, Ethereum could repeat last summer and revisit about $1,700."

Ethereum TVL share drops to record lows

The latest data shows that Ethereum's market dominance is also giving up ground to competitors like Cardano (ADA), Solana (SOL), Avalanche (AVAX), and Terra (LUNA).

The share of the total value locked (TVL) on the Ethereum network declined below 55%, its lowest level on record, from 97% at the start of 2021, according to data from DeFi Llama.

*Share of total value locked by chain. Source: Defi Llama, Galaxy Digital Research*

Tom Dunleavy, a researcher at Messari, notes that new layer-one blockchains are comparatively "faster, cheaper, or provide a more attractive reward structure" than Ethereum.

Nonetheless, he adds that completely overtaking Ethereum and Ethereum Virtual Machine (EVM), a software platform to create decentralized applications (DApps), would be hard due to first-mover advantage.

"The EVM’s advantage has been so great that major competitors use or bridge to the EVM, rather than try to compete head-to-head without this capability," Dunleavy wrote, adding:

"Even competitors that held out like Solana and Cardano have recently added or are adding EVM compatibility (Terra being the notable exception). In many cases, the EVM has already cemented itself through its network effects."

But most of the so-called "Ethereum killers," except Terra, have fared far worse so far in 2022 when faced with geopolitical conflicts, energy crises, and rate hike risks.

For instance, Solana and Cardano dropped by more than 50% year-to-date versus Ether's 30% price decline. Avalanche price dropped by 37% in the same period.

Can Ethereum regain market share?

Not everyone expects Ethereum's TVL market share downtrend to continue, however. Marcus Sotiriou, an analyst at GlobalBlock, anticipates Ethereum to regain its dominance as it switches to proof-of-stake later this year from its current proof-of-work protocol.

"This is because it should dramatically reduce the cost of transactions on the Ethereum network, which is currently Ethereum's main drawback," he told Business Insider earlier this month. As of now, Ethereum works on a surge-pricing model, leading to highly volatile transaction fees.

In August 2021, the network underwent a so-called "London hard fork" that employed a key EIP-1559 protocol. In particular, the EIP-1559 allows the Ethereum protocol to burn gas fees, meaning that a portion of Ether's supply goes out of circulation permanently.

"Bitcoin and Ethereum remain in early adoption days, with increasing demand vs. declining supply and related price implications," explained McGlone, adding:

"Our bias is why complicate it -- unless something unlikely reverses the proliferation of the nascent technology, prices should rise."

The strategist also anticipates that Ether's correlation with the U.S. stock market will also decrease due to to so-called "declining relative risk."

*Ethereum volatility vs. the Nasdaq. Source: Bloomberg Intelligence*

"Closer to 3x now, the relative risk of the nascent technology/asset is poised to keep falling, particularly if the war increases recession risks and stock market volatility," he asserted.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Analysts Debate Economic Fallout Odds From Russia’s Invasion, Historian Says World May Face Worst Energy Crisis Since the 1970s

March 4, 2022 Bitcoin.com

China Mining Ban Worsened Bitcoin’s Carbon Footprint, Study Claims

February 26, 2022 Bitcoin.com

European Parliament to Cancel Vote on Crypto Assets Framework

February 26, 2022 Bitcoin.com

Miners Have Moved 30% of Their Equipment Out of Kazakhstan, Industry Organization Claims

February 24, 2022 Bitcoin.com

Web2 Companies Are Facing Heat for Embracing Web3

February 21, 2022 The Crypto Briefing

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

February 19, 2022 Coin Telegraph

Bitcoin Price

Which nations are the new harbors of miners, and where can Ether and Bitcoin be successfully — and profitably — mined in 2022?

One of the main themes among the crypto community in 2021 was China’s aggressive policy toward mining, which led to a complete ban on such activities in September.

While mining as a type of financial activity has not gone away and is unlikely to disappear, Chinese cryptocurrency miners had to look for a new place to set up shop. Many of them moved to the United States — the world’s new mining mecca — while some left to Scandinavia and others to nearby Kazakhstan, with its cheap electricity.

Mining activities can’t stay under the radar forever, and governments around the world have begun to raise concerns over electricity capacity and power outages.

Erik Thedéen, vice-chair of the European Securities and Markets Authority — who also serves as director general of the Swedish Financial Supervisory Authority — has called for a ban on mining proof-of-work cryptocurrencies like Bitcoin (BTC) in Europe.

As jurisdictions around the world begin to crack down on mining-related activities, it begs the question: “Where is it still profitable, and legally favorable, to mine crypto?”

North America

It’s no secret that the U.S. is the main country for crypto mining, particularly in the Lone Star State, Texas. After the exodus from China, crypto miners and billions of dollars of capital flooded into the southern state. This is largely due to state policy, with Governor Greg Abbott having actively supported the Bitcoin industry.

Philip Salter, CEO of crypto mining firm Genesis Digital Assets, told Cointelegraph the reason the state became a popular destination for miners:

“The most prominent location for miners worldwide may be Texas right now. Its huge amounts of wind and solar power are causing a surplus of affordable energy. Privately owned power grids ensure a fast path for new projects, without being hindered by slow bureaucracy. The benefits of Texas aren’t so new though. Miners started building there already years ago, even if not as aggressively as now.”

Texas has experienced its own problems with electricity infrastructure, with massive blackouts affecting much of the state in 2021 amid unseasonable winter storms. But miners there have been relatively understanding about electricity consumption, and large companies have even periodically turned off equipment to give priority to residential consumers and critical infrastructure.

America’s northern neighbor, Canada, has also been actively attracting mining companies. Recently, authorities in Alberta invited cryptocurrency miners to the province, touting its cheap electricity prices thanks to an abundance of local natural gas.

Latin America

Latin American countries have been expending considerable effort to attract miners, with El Salvador, in particular, showing a favorable attitude toward mining. The country was the first in the world to recognize Bitcoin as legal tender. The Salvadoran government has not hesitated to directly invest in Bitcoin and even plans to build a city dedicated to the preeminent cryptocurrency where electricity to mine BTC will reportedly come from volcano-fired geothermal plants.

Costa Rica is also gradually becoming mining-friendly due to low electricity prices. Thanks to mining, a hydroelectric power plant that was closed during the COVID-19 pandemic has now reopened.

Large crypto companies have also begun to set up operations in Costa Rica. Chia Network, a blockchain network created by BitTorrent founder Bram Cohen, has agreed to provide technical services for Costa Rica’s national climate change initiatives.

Argentina was very popular among miners until the government decided recently to cut subsidies for miners and raise taxes on mining activities. So far, these financial policy changes for mining are limited to the province of Tierra del Fuego, which is known for its cold climate. Nevertheless, Argentina remains a good place for mining farms even after the electricity price increases, keeping in mind the energy crisis in competing regions like Europe.

Mining is still possible in Europe

Crypto mining operations in Europe remain relatively limited, as high electricity prices amid the energy crisis and a generally skeptical attitude toward cryptocurrencies from regulators make crypto firms think twice before locating to the continent.

Indeed, the Nordic nation of Iceland was previously a hotspot for Bitcoin mining, with its subarctic volcanic landscape providing cheap electricity and low cooling costs for mining farms.

*A mining farm of Genesis Mining in Iceland. Source: Marco Krohn.*

However, late last year, the country’s national electrical company, Landsvirkjun, cut the amount of power it would provide to energy-intensive industries like Bitcoin mining and aluminum smelting, citing capacity concerns.

Despite limitations on the continent, there are a few spots in Europe where miners have decided to set up shop where geography and climate play an important factor in attracting business.

In Georgia, located in the Caucasus region, the large number of hydroelectric power plants built during the country’s time as a Soviet republic — along with its relatively modest population — have provided a large amount of cheap electricity for miners.

Major crypto mining companies have already set up operations in the country. Back in 2014, Dutch mining company Bitfury opened its first data center, with a draw of 20 megawatts, in the eastern Georgian city of Gori.

The success of Bitfury opened the eyes of many Georgians who actively began to acquire powerful video cards and create their own small crypto mining farms. According to the World Bank, 5% of the Georgian population was engaged in crypto mining in 2018.

It should also be noted that Russia remains an epicenter for crypto mining thanks to low energy costs and a cold climate.

Andrei Loboda, public relations director of BitRiver — the largest cryptocurrency mining colocation services provider in Russia — shared with Cointelegraph some specific regions where it will be convenient for miners to work if the Russian government becomes more supportive of cryptocurrencies:

“According to BitRiver, today, about 300,000 individuals are engaged in mining Bitcoin alone in the Russian Federation. Our company performs energy-intensive, high-speed computing in data centers in a number of the Russian Federation regions, including the Irkutsk Region and the Krasnoyarsk Territory. The green and digital technologies that we implement in our work as part of the digital energy transition have already given an additional impetus to the development of the regions.”

Is mining worth it?

Geography is a critical element for miners to consider, be it for electricity and cooling costs or regulatory concerns. However, there are some expenses, like hardware, that miners will carry with them wherever they go.

With demand for mining equipment on the rise and a recent slump in the markets after 2021’s bull run, when is mining worth it with all the hardware costs?

*A homemade Bitcoin mining rig with GPUs. Source: Bitcoin Wiki.*

2021 was the most profitable year for mining Ether (ETH) with graphics processing units since 2016. This is not surprising, as Ether’s price more than quadrupled last year. But the main issue for miners is electricity and equipment expenses, and the price of the latter is growing rapidly.

Nevertheless, while the profitability of Ether mining remains high, the payoff period for equipment purchases is growing, partly due to the London hard fork in August 2021 that reduced the payout for each block mined from 8–20 ETH to 2 ETH. Another negative factor for miners will be the much-anticipated transition of the Ethereum blockchain to a proof-of-stake consensus, after which they will have to start mining altcoins or recertify as stakers on the network.

The Bitcoin network’s mining difficulty recently hit an all-time high despite the strong decrease in BTC’s price in January, which hit a monthly low of around $34,300.

It is surprising that, against this background, the cost of ASICs didn’t fall. At the same time, the ASIC payoff period this year is a little over 1,000 days, or almost three years. Not everyone can afford to carry those expenses for such a long time.

There are a multitude of changing factors that miners have to take into consideration, but one thing is clear: Cryptocurrency mining is a flexible, adaptive industry, and firms have proven they are willing to relocate to more beneficial locations should their current one prove less than ideal.

Energy