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Core Scientific shuts down 37K mining rigs it was hosting for Celsius

January 4, 2023 Coin Telegraph

Breach

Core Scientific estimates that canceling the agreement with Celsius will provide $2 million in revenue per month as long as Bitcoin stays around $16,700.

Bankrupt cryptocurrency lender Celsius Network has agreed to let Bitcoin (BTC) miner Core Scientific shut off more than 37,000 mining rigs it had been hosting for Celsius during the miner’s bankruptcy proceedings.

Core Scientific filed a revised proposed order on Jan. 3 that incorporated “revisions acceptable to Celsius” stating “all Celsius rigs will be powered down effective January 3, 2023 and will not be restarted during the transition period.”

On Oct. 19, Core Scientific accused Celsius of failing to pay its power bills, later citing the non-payment as a major factor in the liquidity issues that led to the Bitcoin miner filing for Chapter 11 bankruptcy on Dec. 21.

On Dec. 28, Core Scientific filed a motion seeking approval to reject Celsius’ contracts, claiming the firm’s failure to pay its power bills constituted a material breach of contract.

According to the court filings, the termination of the agreement would apparently allow Core Scientific to generate a revenue of $2 million per month from the space currently occupied by Celsius’ mining rigs.

The hosting deal’s terms allowed Core Scientific to pass on some of the power costs to Celsius, and those costs have considerably increased since Russia’s invasion of Ukraine.

According to the rejection motion, covering the increased power fees cost Core Scientific almost $7.8 million as of Dec. 28 and the miner noted it “cannot afford to continue shouldering the burden of Celsius’ unpaid power costs.”

The cost of production has increased for miners while the price of Bitcoin has decreased, which has eaten into miners’ bottom line and contributed to the “hash price” — the revenue Bitcoin miners can earn per unit of hash rate — falling over 75% over 2022.

*Bitcoin Hashprice Index. Source: Luxor Technologies*

Miner’s lack of profitability combined with the costs associated with expansion efforts caused many Bitcoin miners to struggle toward the end of 2022 and share prices plummeted as a result.

Core Scientific has seen their share price fall by 99.15% over the course of the year, while Iris Energy and Riot Blockchain saw falls of 91.79% and 85.09%, respectively.

*Bitcoin miners’ stock performance. Source: Luxor Technologies*

Marathon is now the 2nd-largest listed holder of Bitcoin, says CEO

November 9, 2022 Coin Telegraph

Coin Telegraph

The United States-listed Bitcoin miner has produced at least 1,231 Bitcoin since the start of July and has sold none of it to date.

Bitcoin (BTC) mining company Marathon Digital Holdings is now understood to be the second-largest holder of Bitcoin in the world among publicly-listed companies.

During the company’s third-quarter earnings call on Nov. 8, Marathon Digital CEO Fred Thiel revealed the company now holds 11,300 Bitcoin — worth around $205 million — “making Marathon the second largest holder of Bitcoin among publicly traded companies worldwide, ” referring to unnamed third-party data.

According to CoinGecko, the NASDAQ-listed crypto miner is ranked second only to MicroStrategy Inc., which holds nearly 130,000 total Bitcoin. It's followed by crypto exchange Coinbase and Jack Dorsey-founded payments company Block Inc.

The company reported its third-quarter earnings on Nov. 8, noting that it added 616 Bitcoin to its holdings in the quarter, while another 615 Bitcoin was added in the month of October alone — the most productive month in the company’s history.

.@fgthiel: "We have sequentially improved our bitcoin production, from 72 bitcoin in July, to 184 in August, then to 360 in September, and then to a record 615 in October. October was the most productive month in our Company’s history..." pic.twitter.com/wsfv0XOIuV
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) November 8, 2022

“The consistent improvement in our Bitcoin production is the direct result of increasing our hash rates by bringing more Bitcoin servers online and improving those servers,” said Thiel during the conference call.

The Marathon Digital CEO also confirmed that to date, the company still has not sold any of its Bitcoin, and will continue to take that position unless deemed “necessary to cover operating expenses or other expenses.”

This differs from other major miners such as Argo, Bitfarms, Core Scientific, and Riot Blockchain, all of whom had reported selling coins in order to pay the bills.

Thiel also used the call to make mention the “battle” between Binance CEO Changpeng Zhao and Sam Bankman-Fried — which he says is causing “turmoil” for the price of Bitcoin but said it would likely come back to a range of around $18,000 to $20,000, which they “feel very comfortable” in.

The Bitcoin miner’s earnings however took a beating in the third quarter, with its net loss nearly tripling compared to the prior year, reaching $75.4 million, while revenue fell 75.5% year-on-year to $12.7 billion.

$MARA's Q3 22 financial results are out:

- Consistent improvement in #BTC production

- Increased hash rate 84% from Sept. 30 to Nov. 1

- 69,000 active servers as of Nov. 1

- Increased YTD #BTC production 27% YoY as of Oct. 31https://t.co/2X1Yn6wnGv
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) November 8, 2022

Both metrics failed to meet analysts’ expectations as the miner’s exit from its Montana facility and falling Bitcoin prices led to lower BTC production in the quarter.

Thiel called the third quarter a period of “transition and rebuilding” after its exit from Hardin and it begins out capabilities in new locations, including the King Mountain wind farm in Texas.

On Nov. 7, rival Bitcoin mining firm Riot Blockchain also reported third-quarter earnings which had missed analyst expectations.

The firm’s total revenue declined 28.5% in the third quarter while its net loss widened 139.2% due to “significant curtailment activities” relating to its activities in Texas, and a significant decrease in the market price of Bitcoin compared to a year ago.

Both Riot Blockchain and Marathon Digital’s stock prices have declined over the past five days, with Riot Blockchain’s stocks down 17.62% and Marathon Digital's down 18.02% in the past five days, according to Google Finance.

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Coinbase eyes long-term growth of subscription revenue, NFTs still a focus

August 25, 2022 Coin Telegraph

Coin Telegraph

Coinbase CEO Brian Armstrong says the exchange has been building subscription revenue streams for three years and will continue to do so into the long term.

American cryptocurrency exchange Coinbase aims to grow revenue from subscriptions in the long term to combat potential profit margin compression.

The firm’s founder and CEO Brian Armstrong delved into the long-term prospects of the American cryptocurrency exchange in a wide-ranging interview with CNBC’s Crypto World on Aug. 23. A key talking point was the potential of lower revenues from fees in the future and how the company plans to preempt this possibility.

Armstrong highlighted his belief that profit margin compression was bound to occur in the future as more exchanges and competitors launch similar products and services which could compete for market share:

“This is why we’re investing today in so much subscription and services revenue and we’re realizing that trading fees will still be a major part of our business in 10 or 20 years from now. But I’d like to get to a place where more than 50% of our revenue is from subscriptions and services.”

Armstrong said that the company had been focused on this shift for the past three years which has resulted in subscriptions and services accounting for 18% of the company’s revenue stream. This was up from the 4% contribution to revenue in 2020, according to Armstrong.

The Coinbase CEO noted that its staking offerings and USDC custody services were primary drivers of subscription and services revenue, while the development of Coinbase Cloud and other projects in the pipeline would further add to the growth of these revenue streams.

The growth of Coinbase’s staking product is also dependent on the scalability of the underlying blockchains powering the service, with Ethereum’s upcoming transition to a proof-of-stake consensus algorithm poised to address this issue as Armstrong explained.

The burgeoning nonfungible token (NFT) space and Coinbase’s proprietary NFT marketplace was also a topic of discussion. Having launched a beta release of its NFT marketplace in April 2022, the CEO said that the company is still committed to NFTs and believes it will be a big business:

“It’s still super early in the NFT space. We saw a big run-up last year with people trading Bored Apes and all sorts of different things that got traction. But I think that’s just the first step in a long journey of what NFTs are going to become.”

Armstrong highlighted his belief that NFTs will change how people use social media, how the music industry operates and how creative talent interacts with audiences. Natively integrating Coinbase NFTs into various platforms people use daily was another avenue that Armstrong explored.

“We’re in the process of aggregating all the different places that people can bid and ask on NFTs in one place. If we can aggregate that there is really no downside to using it there instead of going anywhere else.”

The exchange is currently trialing a beta version for its Coinbase One subscription product that gives members access to zero-fee trading, $1 million account protection and automated tax services. The monthly subscription to the service is $29.99.

Crypto scams fall 65% after gullible noobs exit the market: Chainalysis

August 17, 2022 Coin Telegraph

chainalysis

Less gullible retail investors and falling asset prices have made scamming a less enticing endeavor, but the tsunami of new DeFi applications has hackers licking their lips.

Fewer people have fallen victim to cryptocurrency scams in 2022 so far due to falling asset prices and the exit of inexperienced crypto users from the market, a new crypto crime report reveals.

According to an Aug. 16 report from Chainalysis, total crypto scam revenue year-to-date is currently sitting at $1.6 billion, equating to a 65% decline from the prior year period, which appears linked to the declining prices of cryptocurrencies.

“Since January 2022, scam revenue has fallen more or less in line with Bitcoin pricing. [...] it’s not just scam revenue falling — the cumulative number of individual transfers to scams so far in 2022 is the lowest it’s been in the past four years.”

Chainalysis' Cybercrimes Research Lead Eric Jardine, the author of the report, explains that crypto investors are more likely to fall for scams during bull markets when the investment opportunities and outsized returns are most enticing to victims.

Jardine also hypothesized that bull markets also typically see a higher prevalence of new, inexperienced crypto users, who are more likely to fall victim to scams.

The researcher said the results are also skewed due to the comparatively large PlusToken and Finiko scams in 2021 which netted $3.5 billion in total scam revenue.

Conversely, Jardine notes the largest scam of 2022 so far has only netted $273 million, and is related to cannabis investing platform JuicyFields.io, which has reportedly locked investors out of their accounts on their cannabis-focused “e-growing” service.

Hacks and stolen funds

While scam revenue has fallen in the year, Jardine notes that crypto-based hacking has bucked the trend, increasing 58.3% through July 2022 to $1.9 billion, a figure that does not include the $190 million Nomad bridge hack that began on Aug. 1.

Jardine said that this increase is largely attributable to the rise of DeFi applications that skyrocketed in 2021:

“DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits.”

But Jardine added that it’s not all bad, as smart contract programming languages like Solidity are relatively new and these exploits can “be helpful for security as it allows for auditing of the code.”

The report also noted that a large concentration of these hackers came from North Korean elite hacking units such as Lazarus Group, with approximately half of crypto stolen in hacks coming from these groups alone.

Jardine also noted that darknet market revenue is down 43% so far in 2022, due mainly to German law enforcement shutting down Russian darknet Hydra Marketplace’s servers on Apr. 5.

Darknet markets are dark web black markets that offer illicit goods and services for sale, often using cryptocurrencies as a method of payment.

revenue

Hacks and stolen funds

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