Bitmain signs 500MW joint venture with sustainable BTC miner Merkle Standard

February 11, 2022 Coin Telegraph

Antminer

Sustainable Bitcoin mining gets a boost from the joint venture between mostly hydro-powered BTC miners Merkle Standard and infrastructure provider Bitmain.

Beijing-based Bitmain has partnered with a United States-based sustainable Bitcoin miner, Merkle Standard, which will contribute capital investment, expertise and parts.

As part of the joint venture, Bitmain will contribute to the development of up to 500 MW of clean digital mining infrastructure at Merkle Standard's hydro-powered facilities in Eastern Washington.

Bitmain is a household name in the Bitcoin (BTC) ecosystem, famed for the Antminer brand, the name behind popular Bitcoin ASIC miners the S9 and S19. Merkle Standard claims to be a carbon-conscious BTC miner, keen to become net carbon negative by year-end. Merkle Standard will install up to 150,000 Bitmain mining machines thanks to the venture.

Ruslan Zinurov, CEO of Merkle Standard, told Cointelegraph that the partnership with Bitmain will “catapult our growth plan of building one of North America’s largest sustainable digital asset mining platforms.”

In a further commentary, Josh Zappala, chief strategy officer at Merkle Standard, underlined the benefits BTC mining brings to the social fabric of local communities. With aspirations to become one of the area’s largest employers, the joint venture will introduce “35–50 full-time jobs to the site,” while “supporting local business.” He told Cointelegraph:

“Due to the flexible characteristics of the data center’s power load, we are suited to be the ideal power consumer for our power providers and look forward to providing additional support to the community.”

No strangers to scrutiny, Merkle Standard’s move reflects the trend of BTC miners worldwide upping their ESG credentials. The Bitcoin Mining Council boasted a sustainable energy mix of 58.5% in the fourth quarter of 2021, while miners in Norway are even using waste heat to dry out lumber.

According to the press release, data center development has entered the first phase of production at the Merkle Standard mothership in Eastern Washington. The 225MW site will expand to 500MW by the second quarter of 2022.

The new equipment, including Bitmain’s S19J Pro, S19 XP, and S19+ hydro miners will come online in Eastern Washington, although Merkle Standard nods towards “various expansion locations” in 2022. Ultimately, the joint venture is one part of CEO Zinurov’s vision to “achieve industry-leading power efficiency.”

US Still Dominates Bitcoin Mining Sector, 30-Day Stats Show Foundry USA Takes Top Pool Position

January 24, 2022 Bitcoin.com

Law Decoded: A different Congress hearing, Dec. 6–13

December 14, 2021 Coin Telegraph

BIS

Direct exchanges between U.S. lawmakers and the crypto industry could be finally taking a constructive turn.

The biggest regulatory story of the week was a United States House Committee on Financial Services hearing squarely focused on crypto. Even the event’s title — “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States” — conveyed a different vibe than countless previous Congressional meetings that had been first and foremost about investor protection or security risks or threats to financial stability.

Judging from reactions from many industry participants and experts, the exchange has been received as an overwhelming net positive, with legislators asking informed questions and otherwise acting like their goal was to understand this new thing rather than act on preconceived notions. Of course, there were tired questions about Bitcoin’s environmental footprint and Representative Brad Sherman’s anti-crypto rants, but the entire thing finally looked a lot like a constructive dialogue between the digital asset industry and lawmakers that we’ve been longing to see for a while.

Below is the concise version of the latest “Law Decoded” newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.

Hearing the industry

The hearing, called by the Financial Services Committee Chair Maxine Waters, centered on the role of crypto exchanges, the growth of the stablecoin sector, and general issues around overarching digital asset regulation. Several top crypto CEOs were summoned to represent the crypto space.

Some of the salient themes discussed on the House floor included the crypto-powered decentralization of the digital ecosystem — a politically advantageous angle at the time when many U.S. lawmakers are uneasy about Web 2.0-era tech giants’ power grab — as well as U.S. regulators’ reluctance to give way to certain crypto investment products that could be seen as a symptom of a fragmented approach to regulation. The relationship between the U.S. dollar’s global role and the growing demand for stablecoins also received much attention.

BIS: Terrified of DeFi?

Just not to get too carried away by what feels like a win on the Congress floor, a note on the Bank of International Settlements’ latest report on decentralized finance is in order. The “bank for central banks” took a deep dive into the sprawling DeFi space and came up with a handful of alarmist slogans such as “decentralization illusion” to describe it.

BIS analysts are concerned with some structural aspects of the DeFi landscape, such as liquidity mismatches and the lack of shock absorbers such as banks. The authors of the report maintain that the protocols governing DeFi activity carry risks of centralization, potentially leading to a concentration of power within these systems at the hands of the few. These assertions are sure to raise many eyebrows, especially among those closely familiar with the DeFi space.

CBDC watch

The BIS’ taste for a more controlled financial innovation can be seen in the news about its specialized department, BIS Innovation Hub, being actively engaged in trials of the digital euro-based cross-border settlement, along with the central banks of Switzerland and France. The experiment was deemed a success, but the parties involved made a point to state that it does not warrant the ultimate issuance of a European CBDC.

In other centralized digital currency news, a two-year-long investigation by the Reserve Bank of Australia concluded with a report that highlighted the potential for a wholesale central bank digital currency to improve the efficiency of financial market transactions.

Bitfarms expands to US, plans green crypto mining operation in Washington

November 12, 2021 Coin Telegraph

Bitcoin mining

The company estimates the completed U.S. facilities will be able to produce 3.7 Bitcoin daily at a cost of roughly $4,000 per BTC.

Canadian Bitcoin mining company Bitfarms is planning to build its first data center in the United States following the purchase of a land plot in Washington State.

In a Nov. 11 announcement, Bitfarms said it aimed to establish mining operations in the U.S. capable of 620 petahashes per second using 6,200 Bitmain rigs fully powered by hydroelectric energy. The firm has already purchased a 24 megawatt hydro power farm in Washington for $26 million, but plans to expand to 99 MW by developing additional farms in the area.

Bitfarms CEO Emiliano Grodzki said the firm had chosen Washington for its “cost-effective electricity” and production rates. With the addition of the 24 MW data center, the company currently has a total mining capacity of 106 MW, but estimates the completed facilities will be able to produce 3.7 Bitcoin (BTC) daily at a cost of roughly $4,000 per BTC — at the current BTC price of $65,000, this would mean roughly $183,000 in profit daily.

At a time when many are citing the potential environmental impact of crypto mining, Bitfarms claims its facilities in Canada are powered almost entirely by hydroelectric energy. Cointelegraph previously reported that Bitfarms had doubled its monthly crypto mining productivity between January and July, mining 199 BTC and 400 BTC, respectively, potentially as a result of the crackdown on miners in China.

According to the mining firm, it currently has 10 farms in operation or under development in countries including the United States, Argentina, and Canada. At the time of publication, Bitfarms claims a mining capacity of 82 MW at 1.8 exahashes per second.

a16z to Lobby Policymakers On Crypto, Web3 Regulation

October 13, 2021 The Crypto Briefing

SEC was the only regulator not willing to meet with Coinbase: Brian Armstrong

September 24, 2021 Coin Telegraph

Anthony Pompliano

Coinbase CEO Brian Armstrong has stated that SEC won’t meet with the firm, while asserting the 50% of Washington officials are concerned over the risks of crypto.

Coinbase CEO Brian Armstrong claims that the U.S. Securities and Exchange Commission (SEC) is the only government branch that is not willing to meet with the firm.

Speaking on Anthony Pompliano’s Best Business Show on Sept. 24, Armstrong said that during his visit to Washington after Coinbase went public in April, the SEC was the “only regulator” that refused to meet with him:

“I reached out to the SEC. I tried to get a meeting with them. They told me that they weren't meeting with any crypto companies.”

“I was kind of surprised by that because there are so many different regulators out there. Every single one has been willing to meet with us and every other branch of government,” he added.

Armstrong highlighted his firm’s issues with the SEC’s approach earlier this month, when he revealed the enforcement body had threatened to sue the firm if it launched a USD coin (USDC) lending program that offered 4% annual yields. Despite other firms already offering similar services, he said the SEC refused to give the green light as they deemed the program to be a security but provided no explanation on how it came to that conclusion.

During the interview with Pomp, the Coinbase CEO noted that the SEC has not changed its tune since then, and said they hadn’t even placed a phone call to the firm. Armstrong asked:

“How are they protecting consumers in this case? I think a lot of consumers demonstrably have wanted to earn higher yields on their savings accounts. They're not really getting those products from the existing financial services.”

“So that was one open question. And then the second one was how are they creating a level playing field?” he added.

Armstrong said Coinbase had considered taking the SEC to court but decided that it was not worth a lengthy legal battle, not least because “there's a lot of deference given to regulators in the court system.”

The firm has now walked back its plans to launch the program, and will instead sit on the sidelines until the regulatory landscape around crypto lending services become more transparent:

“We're going to wait and see what the SEC does in terms of the other products that are out there already in the market where it's not a level playing field today.”

“I think we want to also just focus our efforts on maybe even more important things happening in crypto, like the questions around which of these tokens are securities and how is DeFi going to be used?” he added.

Crypto goes to Washington

On the subject of how policy makers view crypto, Armstrong said there’s a 50/50 split in Washington between people who think it’s risky and people who see the opportunity the sector provides:

“You know, 50% of the people I talked to in DC, roughly, they're still thinking of crypto as a risk. They think this is scary. This is dangerous. They have all kinds of misconceptions in their head about the percentage of activity that's for illicit activity.”

“So that's probably half the people I meet in D.C. and the other half, they realize that this is actually a huge opportunity,” he added.

Armstrong also appeared at TechCrunch Disrupt conference on Sept. 22 and revealed that Coinbase is preparing a draft regulatory framework that it will put forward to U.S. lawmakers next month. The firm is hoping to be an “advisor” that can advocate for “sensible regulation”, with Armstrong noting that regulators have asked the firm multiple times for a crypto proposal.

Not Legal Advice… America: The world’s most creative junkie

September 1, 2021 Coin Telegraph

Coin Telegraph

What the United States needs is tens of billions of dollars, and the state is going to take it from the American crypto community.

Not Legal Advice... is a monthly column from Zachary Kelman, Cointelegraph’s general counsel. He is a New York-licensed attorney specializing in political, legal and regulatory issues surrounding Bitcoin, digital currencies and blockchain technology.

For two decades, United States presidents kept the American military in Afghanistan to back the fragile local government, tasked with keeping the Taliban at bay. Earlier this month, the U.S. military left, and the Afghan government that the U.S. armed forces supported collapsed like a pitched tent whose pole had been removed. It was obvious to all observers that fundamental change in Afghanistan was always impossible, and American military intelligence must have known this inevitable reality. What is unclear is why, at this particular moment, the U.S. finally pulled out.

The answer might lie in an increasingly powerful, yet often overlooked, force affecting decision-making in Washington, DC: U.S. sovereign debt risk. With $28 trillion of gross national debt, unparalleled money printing and quantitative easing, as well as decades of low interest rates, America has spent most of its monetary ammo in the past decade. This has caused policymakers to break the glass and let loose trillions in emergency spending, frightening America’s sovereign debtholders who suddenly have more reason to fear the once-unthinkable prospect of American sovereign debt collapse. Into this void steps President Joe Biden and the 117th U.S. Congress.

One would think the obvious method of allaying debtholder concerns lies in the balance sheet, by increasing tax rates or decreasing spending. However, tax hikes and budget slashing are tantamount to shutting down an open bar at a house party right when it’s getting fun. The winning political formula here is always the IOU — increasing taxes upsets voters and harms market optimism, while cutting spending causes politicians to fail to deliver on promises and reduces their access to the gravy train. However, much like a clever junkie, the U.S. can always find a way to reassure pesky Treasury holders and debtholders that America is still “good for it.”

Ending the war in Afghanistan may not directly result in a reduced military budget, but it does signal the end of the attitude that caused America’s unrelenting post-9/11 foreign interventionism. By ending the war, America is effectively telling the world that it has ended the codependent relationship contributing to its addiction, without having to outright quit cold turkey.

Likewise, budget hawks allege that the creation of the arguably impossible crypto tax reporting requirements outlined in the amendment to the recent U.S. infrastructure bill will result in the federal government gaining tens of billions of dollars in “lost” revenue without having to increase tax rates. Since raising taxes sends a negative market signal that harms economic stability, and since passing trillions of dollars in spending without so-called “pay-fors” sends a negative signal to wary U.S. debtholders, this affords an opportunity for policymakers to have their cake and eat it too. Threatening to hold the American crypto community upside down and shake them until tens of billions of dollars come out — even if their actual unpaid tax bills are a fraction of that — can provide temporary relief to worried debtholders, who are likely crypto neophytes themselves, without the loathsome burden of actual fiscal responsibility.

Anyone who has had close family or friends suffer from a drug or gambling addiction knows the difference between a real change in an addict’s habits and the superficial promises and decisions they use to disguise their continued addiction. We know how important our support and optimism can be and hold out hope until we are burned a few times as it becomes obvious no fundamental shift has occurred. As the old tools of monetary policy become rusted and worn out and America shifts to a policy of wild quantitative easing and unprecedented public spending, America’s debtholders have good reason to hope the nation has found a way to keep chugging along, especially given the dollar’s central position in the world monetary system. For America’s sake, let’s pray it can remain history’s most creative junkie for years to come — hopefully without having to throw the crypto industry under the bus again.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Zachary Kelman serves as general counsel of Cointelegraph. He is a lawyer focusing on the regulatory environment that surrounds digital currency and financial technology, whether that’s obtaining licenses and designing compliance policies to meet newly crafted laws in the Philippines or meeting and crafting policies with Caribbean regulators. Prior to co-founding Kelman PLLC, he managed the compliance program for Coins.ph. Zachary has represented and advised entrepreneurs on best legal practices for their business across the fintech space.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Senate infrastructure bill isn’t perfect, but could the intention be right?

August 13, 2021 Coin Telegraph

bitcoin regulation

The provisions of the U.S. infrastructure bill stirred up a heated debate, but many of the fears voiced by its critics are misguided.

United States Senators have cast their votes, and the contentious HR 3684 infrastructure bill cleared in the upper Congress chamber. Now, the gigantic document of over 2,700 pages and amounting to almost $1 trillion is heading to the House of Representatives, including the provisions expanding the definition of a cryptocurrency broker, designed to beef up crypto and decentralized finance (DeFi) tax compliance. The $1 trillion can’t come out of thin air, right?

While the bill in effect simply follows Financial Action Task Force (FATF) guidelines, doomsayers are already declaring the end is nigh, haunted by visions of the dreaded Internal Revenue Service (IRS) coming for their coins. As usual, they’re wrong.

No, not everybody is a ‘broker’

For critics, one of the key points of contention is that Section 80603 of the bill defines “brokers” as anyone who is “regularly providing any service effectuating transfers of digital assets on behalf of another person.” Even this incredibly unclear language comes from an amended version of the bill, with an earlier one featuring an even broader definition. And yes, it could still be clearer. The bill demands that brokers report client information to the IRS but critics fear that with a definition this wide, it would encompass everyone from miners to node operators and liquidity pool providers.

A compromise amendment was supposed to explicitly exclude blockchain validators from the definition, but it did not survive a vote, sunk by a defiant Senator. Even if House lawmakers do not amend this, it remains hard to see how the original language could be applied to the broader crypto ecosystem, as “effectuating transfers'' on someone else’s behalf is simply not what miners or holders do. In the cryptoverse, the entities that are transferring value between users are centralized exchanges (CEX) and decentralized exchanges (DEX). They are the market makers. Both kinds of brokers are capable of introducing compliance tools through software updates for their platforms.

In the legal debates on content piracy back in Aug. 2007, BitTorrent wasn't found liable for the enormous amount of copyrighted songs and videos shared freely via its peer-to-peer (P2P) protocol. Those leveraging the P2P protocol weren’t as lucky — Lime Group, with its LimeWire web service, was deemed liable for “contributory infringement” in 2010. The difference was in how they approached the searches. With BitTorrent, you create a tracker for any specific file and share it on a third-party website to move it bit by bit around a network of users. LimeWire’s network supported intrinsic search queries for audio and video files, thus facilitating the file transfers. LimeWire also had a recommendation system: If it saw you were downloading, for example, Spider-Man the movie, it would suggest you download Superman as well. In the same vein as BitTorrent, miners facilitate a generic transaction, not necessarily a value transfer. The value transfer is facilitated by the party that coordinated the transaction, which includes matching a buyer and seller with associated pricing information for a proposed transaction.

And another point, CEXs are already filing tax information to the IRS, while DEXs mostly are not. Why aren’t DEXs held to the same standard as CEXs and other services facilitating transfers of value, such as PayPal? Bringing them under this umbrella is not only morally fair and just, but it is a sound and uniform implementation of the law. And for those saying such entities have no central administration to enforce anything, consider the fact that DEXs most often still have an owner whose wallet is collecting the profits, and that most updates for open-source projects usually come from one and the same entity. Where there’s a will, there’s a way.

No, innovation is not packing up

Critics also warn that the bill, if approved, could drive the crypto community out of the U.S., which would dent the country’s potential for innovation. But fear not: There is nowhere to run anyway. As noted before, the crypto provisions of the infrastructure bill are based on the latest standards issued by FATF, a global body fighting money laundering. These standards are generally implemented around the world, albeit within different time frames.

FATF first put its sights on cryptocurrencies in 2019, urging nations to tighten up the regulations on crypto exchanges. Since then, dozens of exchanges have been shuttered around the world for failing to comply with the respective local regulations inspired by FATF standards. Its latest guidelines take aim at DeFi and nonfungible tokens, or NFTs, so it’s no surprise that decentralized finance is one of the targets on U.S. regulators’ minds. The process goes beyond the United States: Europe is also moving to tighten up crypto regulations, consistent with other laws controlling value transfer.

Sooner or later, the playbook will be the same everywhere. Most in the community understand that, and would hardly take off unless their businesses were outright banned.

No, there won’t be any private data honeypots

Another very vocal concern is that having to file customer data to the IRS will force the brokers to create databases with clients’ private information, creating a honeypot — a lucrative target for hackers. This idea does not account for the efficacy of the crypto and DeFi communities with secure cryptographic algorithms.

Consider the zero-knowledge proof: A cryptographic concept that zooms in on how to prove to a third party that you know the value of a specific variable without saying anything other than you know it. Zero-knowledge authentication sees users, who hold their authentication data to themselves, sign in without revealing sensitive data to the platform. Implemented for DeFi, this kind of algorithm can generate any necessary forms required and send them to the IRS automatically without the need for the DeFi service to store the data on its own servers. Similarly, suspicious transaction reports can also be generated automatically and sent right to the regulator, with no need to inform other entities.

Finally, the point about surveillance and privacy also calls for another parallel with the social contract and written rules for other value transfers, especially for disclosing financial services. You can be as anonymous as you want while spending $100 in cash at your local store. To transfer $3,000 to a friend, you will have to share more information about yourself with the bank. And if you want to send $100,000 abroad, the bank or the customs entity will ask you more questions and the money will leave more of a financial trail. So, why should DeFi be any different?

Win by adapting

As we can see, most of the outcry about these possible regulations is not rooted in any real legal or logical reasoning. Yes, more compliance poses a challenge for the crypto ecosystem, as it would take time and money to develop the algorithms and protocols that will make it work. And yes, some people will have to part with some of their income from others’ illicit dealings — not a significant chunk of the crypto ecosystem, anyway.

The truth, as offensive as it may seem for crypto-purists, is that more compliance means more mainstream adoption, and more mainstream adoption means more growth. Blockchain-based financial services and applications do hold the promise of a revolution in finance, bringing real value to billions of users. Basic compliance with the law is hardly too much of a price to pay for that.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bob Reid is the CEO and co-founder of Everest, a fintech company that leverages blockchain technologies for a more secure and inclusive multi-currency account, digital/biometric identity, payment platform and e-money platform. As a licensed and registered financial institution, Everest supplies end-to-end financial solutions, facilitating eKYC/AML, digital identity and regulatory compliance associated with money movement. He was an advisor to Kai Labs, the general manager of licensing at Bittorrent and VP of strategy and business development at Neulion and DivX.

Out of All the American States Study Shows Hawaii Expressed the Most Crypto Demand This Year

June 18, 2021 Bitcoin.com

Washington