Leading Bitcoin mining companies are emphasizing the importance of efficiency to stay profitable and operational following the upcoming halving in 2024.
Bitcoin’s protocol mandates a reduction in the BTC rewarded to miners for adding blocks to the blockchain every 210,000 blocks, occurring roughly every four years.
The next halving, the fourth of its kind, will cut mining rewards from 6.25 BTC to 3.125 BTC. This reduction in rewards has significant implications for miners’ profitability and return on investment in hardware and operational costs.
Efficiency will be a key factor during the halving, according to Jaime Leverton, CEO of Hut8. Miners will need to optimize their operations to continue mining, leading Hut8 to develop specialized software for their Canadian mining sites.
They also plan to purchase four power plants in Ontario to power their operations, totaling 310MW.
Hut8 recently completed a merger with US mining firm USBTC, significantly increasing their hash rate from 2.6 EH/s to 7.3 EH/s in November 2023.
Taras Kulyk, CEO of SunnySide Digital, highlights the direct connection between the 50% reduction in block rewards and the price of BTC and transaction fees.
Lower-efficiency miners may need to shut down if these economic incentives don’t compensate for their costs.
Colin Harper, head of research at Luxor, also emphasizes efficiency and suggests that smaller miners may need to power down their machines due to reduced BTC rewards, unless there is a surge in Bitcoin’s price to boost profitability.
Core Scientific CEO Adam Sullivan states that the halving’s impact will depend on Bitcoin’s price and will directly affect how many miners can remain operational.
Lower Bitcoin prices could lead to more machines coming offline, reducing the network’s difficulty.
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However, Sullivan believes that Bitcoin’s protocol inherently encourages mining, and the network will adjust as miners exit the industry.
This view is shared by others, with a consensus that as long as Bitcoin holds value, mining will continue.
Kulyk is optimistic about the influence of Bitcoin Ordinals and increased scarcity of new Bitcoin in 2024, which could sustain profitable mining.
Contrary to past concerns about a “Bitcoin death spiral,” Blockstream CEO Adam Back believes such a scenario is unlikely.
He points out that mining profitability has increased significantly, and sophisticated mining firms have prepared for the halving’s potential effects.
Back contends that the least efficient miners are likely to drop out, but Bitcoin’s price appreciation and increased hash rate may prevent a significant drop in hash rate during the halving.
2024’s outcome will hinge on Bitcoin’s price performance and mining efficiency.
In summary, the upcoming Bitcoin halving in 2024 is prompting miners to focus on efficiency to maintain profitability, with the hope that Bitcoin’s price will continue to rise and offset the reduction in mining rewards.
The mining industry remains adaptable, with experienced miners prepared for the challenges ahead.
Greeks.live, a cryptocurrency options trading platform, has cast doubt on the possibility of a significant price surge following the approval of a spot Bitcoin exchange-traded fund (ETF) by the U.S. regulator, the SEC.
The platform has analyzed data from its trading platform, revealing that despite widespread speculation about the SEC granting approval for the Bitcoin Spot ETF application in the near future, there has been minimal volatility in major term implied volatilities (IVs) and prices.
Term IV is a metric that measures the market’s expectations regarding future price movements in options contracts.
While the crypto market eagerly awaits the SEC’s decision, Greeks.live’s tweet pointed out the unexpectedly subdued market activity in response to the news.
Their options data showed that the implied volatility for Jan12 options, closely linked to the ETF, has actually decreased rather than rising.
Furthermore, the trading volume for these options accounted for only 2% of the day’s total turnover.
From these observations, Greeks.live has concluded that the market may have already factored in the potential approval of the spot Bitcoin ETF.
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Essentially, market participants might have anticipated this event and adjusted their positions accordingly, resulting in the actual approval having a limited impact on prices and volatility.
Several prominent asset managers, including BlackRock, Valkyrie, and Van Eck, submitted amended S-1 forms to the United States Securities and Exchange Commission on December 29, which was the final day for the SEC to consider such applications in January 2024.
Invesco Galaxy, Bitwise, WisdomTree, and Fidelity have also submitted their Form S-1 applications subsequently.
BlackRock’s updated filing has named Jane Street and JPMorgan Securities as “authorized participants” in their proposed spot Bitcoin ETF application.
BlackRock has already specified that it will utilize a cash-only model for the ETF.
Interestingly, BlackRock was the first entity to settle a trade on JPMorgan’s Tokenized Collateral Network service on October 11, highlighting the increasing collaboration and integration within the cryptocurrency ecosystem.
Artificial intelligence (AI) may play a pivotal role in the possible scenario where Bitcoin’s price surges to $100,000 in 2024, as suggested by GPT-4, the latest iteration of the AI chatbot ChatGPT.
Inquiries directed at ChatGPT on January 1, as reported by Cointelegraph, sought insights into the feasibility of Bitcoin reaching this milestone and the potential contributions of AI to this outcome.
ChatGPT cautiously deemed it “theoretically possible” for Bitcoin to achieve $100,000 in 2024, contingent on several favorable factors aligning.
Nonetheless, it emphasized that this remains within the realm of high speculation.
The AI chatbot went on to enumerate a series of general factors that could propel such a surge.
These factors encompassed positive regulatory developments, an upswing in retail and institutional adoption, as well as currency devaluation or inflation.
ChatGPT underscored the significance of a potential approval of a spot Bitcoin exchange-traded fund (ETF) in influencing the price.
It contended that the greenlighting of a spot BTC ETF could significantly bolster accessibility and liquidity for the asset, potentially luring institutional investors into the market, interpreting it as a sign of regulatory acceptance.
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Subsequently, Cointelegraph inquired about the role AI might play in propelling Bitcoin to $100,000 in 2024.
ChatGPT elucidated that AI could indeed be a catalyst in this hypothetical scenario.
AI’s contributions would be seen through its influence on market analysis, trading strategies, and broader technological innovations in blockchain technology.
The AI chatbot elaborated on the capabilities of AI algorithms, which are adept at processing extensive market data, discerning trends and patterns that might elude human analysts.
Furthermore, it underscored the potential of AI-driven trading bots to execute trades precisely at optimal moments, contingent on market conditions.
ChatGPT stressed that these bots could outpace human reactions in a fast-paced market environment.
Nonetheless, the implementation of AI in trading came with inherent risks, according to ChatGPT.
It highlighted the vulnerability to hacking and cyberattacks, citing a 2022 incident where a trading bot netted $1 million through an arbitrage trading opportunity.
Unfortunately, a hacker manipulated the bot into authorizing a malicious transaction, resulting in a complete drain of the funds.
In conclusion, while ChatGPT acknowledges the potential role of AI in Bitcoin’s ascent to $100,000 in 2024, it cautions against underestimating the risks associated with deploying AI in the cryptocurrency market.
The impending launch of Bitcoin exchange-traded funds (ETFs) is generating a buzz, but VanEck advisor Gabor Gurbacs suggests that their initial impact on Bitcoin might be more subdued than anticipated.
In a recent post on X (formerly Twitter), Gurbacs contended that the immediate influence of a Bitcoin ETF might be overestimated, projecting that it could attract around $100 million in net inflows, primarily from institutional investors reshuffling their existing investments.
Nonetheless, Gurbacs is more optimistic about the long-term implications of these ETFs on the Bitcoin market. He drew a parallel with the gold market, recalling how the introduction of gold ETFs in 2004 led to a remarkable surge in gold prices.
Over eight years, gold’s value surged from $400 to $1,800, while its overall market capitalization expanded from $2 trillion to an impressive $10 trillion.
Comparatively, Bitcoin’s current market cap stands at $834 billion, roughly 41% of gold’s market capitalization in 2004.
Gurbacs speculates that once a spot Bitcoin ETF is approved in the United States, it could potentially emulate gold’s growth trajectory but at a much faster pace due to Bitcoin’s fixed supply and periodic halving events.
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Furthermore, Gurbacs underscores the significance of a Bitcoin ETF in legitimizing and destigmatizing the cryptocurrency in the eyes of institutional investors and nation-states, which could pave the way for substantial investment and adoption.
Eric Balchunas and James Seyffart, ETF analysts at Bloomberg, share Gurbacs’ sentiment.
Seyffart emphasized that many observers are fixated on short-term data points, such as the immediate influx of funds into the ETF upon approval, without fully grasping the enduring impact such a financial product could have.
As for the current state of the Bitcoin market, it is trading at $42,525, having risen 1.1% in the last 24 hours, according to TradingView data.
While some believe that the anticipated ETF approval will trigger a substantial and sustained price increase, others argue that it might be a “sell the news” event, potentially leading to a different market response.
VanEck, a prominent asset manager known for its pending application for a Bitcoin exchange-traded fund (ETF) with the United States Securities and Exchange Commission (SEC), recently unveiled a pro-crypto advertising campaign.
On December 29th, the company shared its “Born to Bitcoin” video on X (formerly Twitter). Interestingly, the video did not explicitly endorse a BTC exchange-traded product.
This move came approximately two weeks after VanEck expressed a preference for “buying and holding” BTC due to the high costs associated with advertising.
In a trend seen among various asset managers seeking SEC approval for spot Bitcoin or Ether ETFs, VanEck’s advertising initiative aligns with an effort to increase public awareness and support ahead of potential approvals.
For instance, Bitwise enlisted actor Jonathan Goldsmith to reprise his iconic “Most Interesting Man in the World” persona in a December marketing campaign promoting Bitcoin.
Similarly, Hashdex introduced an ad spot highlighting the potential use cases of innovative technologies like cryptocurrencies.
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However, VanEck’s advertising campaign faced criticism online, primarily centered on the perceived low production quality of the ad, considering the firm’s substantial assets under management, exceeding $76 billion as of September.
The campaign mainly featured a silhouette of a figure walking in front of a city skyline, with a nod to the iconic “Buy Bitcoin” sign displayed behind Janet Yellen in 2017.
It’s worth noting that, as of the publication date, the SEC had not granted approval for a spot Bitcoin or Ether ETF to be listed on any U.S. exchange.
Nevertheless, the commission had taken steps to allow investment vehicles linked to crypto futures in 2021. Speculation abounded among experts that the SEC might begin approving multiple spot crypto ETFs as early as January 2024.
VanEck’s pro-crypto advertising effort, while not explicitly endorsing an ETF product, reflects the industry’s eagerness to engage with regulators and the public to secure approval for cryptocurrency-based exchange-traded funds, potentially opening up new avenues for investors in the crypto market.
In the midst of the mounting excitement surrounding the potential approval of a spot Bitcoin exchange-traded fund (ETF) in January 2024, certain industry analysts have raised concerns, particularly regarding the issue of backing.
Josef Tětek, a Bitcoin analyst at the hardware crypto wallet firm Trezor, voiced his apprehensions in December 2023, suggesting that spot Bitcoin ETFs might steer individuals away from self-custody, possibly leading to the creation of “millions of unbacked Bitcoin.”
He warned of a scenario where these ETFs could result in what is often termed “paper Bitcoin.”
Tětek’s remarks stirred a significant response within the crypto community, with some dismissing his claims as FUD (fear, uncertainty, doubt), while others pondered the means to ensure that ETF issuers truly hold Bitcoin on behalf of their clients.
Some observers even advocated for the publication of “actual on-chain addresses” in addition to reports on the issuers’ BTC holdings.
David Gerard, the author of “Attack of the 50 Foot Blockchain,” countered Tětek’s concerns, asserting that it was “unlikely” for ETF administrators to create unbacked BTC equivalents or misrepresent their assets.
He emphasized the regulatory oversight and credibility of well-established financial entities, dispelling the notion that unbacked ETF shares were a realistic threat.
However, he didn’t delve into whether clients could independently verify BTC holdings by issuers.
Drawing a comparison to gold ETFs, Bloomberg ETF analyst Eric Balchunas contended that spot Bitcoin ETFs would closely resemble them.
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He pointed out that gold ETFs, having been in existence for two decades, diligently disclose the quantity of gold held by the custodian.
Balchunas emphasized the meticulousness of asset managers, stating they neither desired legal trouble nor wanted the negative publicity that would accompany any failure to hold Bitcoin or any shorting of it.
He also noted that companies like BlackRock and Grayscale were exposed to Bitcoin’s volatility.
The key distinction with spot Bitcoin ETFs, as currently conceived, is that investors would receive cash instead of Bitcoin upon redemption.
Balchunas advised individuals seeking direct ownership of Bitcoin to do so through self-custody, which aligns with the original vision of Bitcoin’s anonymous creator, Satoshi Nakamoto.
He underscored that the vast collective assets in mutual funds and ETFs, amounting to approximately $30 trillion, meant that most investors preferred to avoid direct interaction with the underlying assets.
While many industry observers expressed confidence in the integrity of ETF providers in the cash-create model, others remained convinced that there was a fundamental issue.
According to Tětek, the only way to eliminate concerns of “paper Bitcoin” would be if ETF shares were redeemable for actual Bitcoin.
However, given that the proposed ETFs only allowed for cash in and cash out, investors would have to place trust without the ability to independently verify holdings.
On the final day of consideration by the United States Securities and Exchange Commission (SEC) in January 2024, prominent asset management firms BlackRock, Valkyrie, and Van Eck submitted amended S-1 forms.
These revised documents represent the next step in their quest to establish Bitcoin exchange-traded funds (ETFs) and align with the SEC’s preferences.
Van Eck’s updated application emphasizes that “Authorized Participants” (APs), the financial entities permitted to buy or redeem shares with the Trust, will exclusively transact in cash for both share creation and redemption. This approach mirrors the SEC’s preferred method.
In its updated filing, BlackRock identified Jane Street and JPMorgan Securities as its “authorized participants” for the proposed spot Bitcoin ETF.
BlackRock has consistently advocated for a cash-only model.
Furthermore, the asset manager made history by executing the first trade on JPMorgan’s Tokenized Collateral Network service on October 11.
BlackRock originally submitted its application for a spot Bitcoin ETF in June, followed by Valkyrie’s application a week later.
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Both firms have actively engaged with the SEC throughout December, attending meetings to discuss their proposals.
Commenting on BlackRock’s amendment, Bloomberg ETF analyst Eric Balchunas noted, “Looks [like] we have our first horse at the starting gate,” alluding to the asset manager’s potential for SEC approval.
Balchunas previously anticipated the SEC’s decision on the outstanding spot Bitcoin ETF filings to occur by January 10, 2024.
If approved, trading could commence shortly thereafter.
Valkyrie, in its updated S-1, also designated authorized participants, namely Jane Street Capital and Cantor Fitzgerald. Additionally, StoneX Financial will assume the role of its lead market maker.
It’s worth noting that a slew of financial heavyweights, including BlackRock, Van Eck, Grayscale, Bitwise, WisdomTree, Invesco, Galaxy, Fidelity, ARK Invest, Valkyrie, Franklin, Hashdex, Global X ETFs, and Pando Asset, have all submitted S-1 applications for spot Bitcoin ETFs.
The outcome of these applications will have significant implications for the cryptocurrency market and its integration into traditional financial systems.
Indonesian authorities have recently taken action against ten Bitcoin mining operations, accusing them of electricity theft amounting to nearly $1 million USD.
The North Sumatra Police Force initiated the crackdown, targeting a multi-site Bitcoin mining operation across various locations in Indonesia.
During the operation, they confiscated 1,134 Bitcoin mining machines, 11 meters of electrical cable, and assorted computer equipment.
The Chief of North Sumatra Police, Irjen Agung Setya Imam Effendi, asserted that the organizers of these mining operations had manipulated electrical circuits to power the extensive number of Bitcoin mining machines.
Effendi demonstrated the tampering, explaining that the electricity was being diverted from the upper part of the PLN box, bypassing the meter, which was improper and illegal.
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The total loss resulting from these ten cases of electricity theft was estimated to be 14.4 billion Indonesian Rupiahs (IDR), equivalent to approximately $935,666 USD.
This incident follows a high-profile case in China where a government official received a life sentence for facilitating access to electricity for Bitcoin miners.
Yi Xiao, a former vice chairman of the Jiangxi Provincial Political Consultative Conference Party Group, was convicted of abusing power in a Bitcoin mining enterprise.
Xiao had reportedly operated a massive $329 million Bitcoin mining venture under the corporate name Jiumu Group Genesis Technology from 2017 to 2021.
During this period, Xiao, along with other corporate executives, amassed a staggering 160,000 Bitcoin mining machines, which at one point accounted for 10% of the entire electricity consumption of the city of Fuzhou.
His sentence underscores the seriousness with which authorities are addressing illegal Bitcoin mining activities, particularly those involving electricity theft, as these operations can impose significant financial burdens on both governments and utility providers.
On December 29, the contenders in the race for a Bitcoin exchange-traded fund (ETF) spot waited until the eleventh hour to submit their final S-1 form applications.
Throughout the day, these applications trickled into the United States Securities and Exchange Commission (SEC), following earlier submissions by BlackRock, Van Eck, and Valkyrie.
Notable names in the crypto industry, including Invesco Galaxy, Bitwise, WisdomTree, and Fidelity, joined the fray.
In the latest filings, Fidelity, WisdomTree, and Invesco Galaxy revealed their authorized participants. Invesco Galaxy chose Virtu and JPMorgan, while WisdomTree and Fidelity opted for Jane Street Capital.
Interestingly, WisdomTree decided to stick with in-kind share creation and redemption, despite the SEC’s encouragement to switch to cash-based mechanisms.
Furthermore, it seems a price war has ignited among competitors. Invesco Galaxy, for instance, announced a waiver of fees for the first six months and the first $5 billion in assets.
Fidelity, on the other hand, set its fee at 0.39%.
Bitwise, though yet to disclose its authorized participants, mentioned in its S-1 filing that an undisclosed entity expressed interest in purchasing up to $200 million worth of the ETF shares.
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It’s worth noting that several major players in the industry have thrown their hats into the ring.
BlackRock, Van Eck, Grayscale, Bitwise, WisdomTree, Invesco Galaxy, Fidelity, ARK Invest, Valkyrie, Franklin, Hashdex, Global X ETFs, and Pando Asset have all submitted S-1 applications for spot Bitcoin ETFs.
The SEC had set December 29 as the deadline for amendments to spot BTC ETF S-1 filings.
Grayscale made a last-minute submission on December 27 with a new S-3 filing, following the resignation of Barry Silbert from the board of directors.
In this filing, Grayscale announced its intention to convert its Grayscale Bitcoin Trust into a cash-only spot ETF, mirroring similar moves by Van Eck and BlackRock in earlier revisions.
Barry Silbert and his company, the Digital Currency Group, are currently under investigation by the SEC, adding another layer of complexity to the evolving landscape of Bitcoin ETF applications.
JPMorgan CEO Jamie Dimon has found himself under scrutiny from the crypto community following his appointment as an authorized participant (AP) by BlackRock, a move revealed in BlackRock’s updated Form S-1 filing released on December 29.
In the world of exchange-traded funds (ETFs), an authorized participant is an organization granted the privilege to create and redeem shares of the ETF.
BlackRock, in its filing, formally designated Jane Street and JPMorgan Securities as “authorized participants” in its proposed spot Bitcoin ETF application.
Interestingly, this development comes despite Dimon’s public stance against Bitcoin.
Dimon had made his stance clear during a December 6 hearing of the United States Senate Banking Committee.
At that time, he asserted that if he held governmental authority, he would make efforts to shut down cryptocurrencies.
Dimon argued that Bitcoin and other cryptocurrencies primarily serve as tools to facilitate criminal activities. This statement drew sharp criticism from the crypto community.
Critics were quick to point out the apparent hypocrisy of JPMorgan’s involvement as an authorized participant in BlackRock’s Bitcoin ETF.
Silver Zimmermann, a crypto enthusiast, sarcastically suggested, “Perhaps money laundering, tax evasion, criminal participation, and drug trafficking are their business as well.”
Others, like user Sunny Po, questioned JPMorgan’s contradictory positions, asking, “How can JP Morgan do all that after telling Congress and Elizabeth Warren that this is what it’s used for?”
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Notably, John Deaton, a pro-XRP lawyer, expressed skepticism regarding Senator Elizabeth Warren’s stance on Bitcoin and raised concerns about JPMorgan’s willingness to associate with Bitcoin despite its negative characterization as a tool for criminals.
Deaton questioned whether this was an attempt to mislead the public or engage in gaslighting.
Despite Dimon’s publicly stated opposition to the digital asset sector, JPMorgan made surprising moves in the crypto space.
The bank recently introduced JPM Coin, its own cryptocurrency token, operating on a private version of the Ethereum blockchain, catering to its institutional clients.
Furthermore, JPMorgan launched a blockchain-based tokenization platform in October, with BlackRock counted among its clients.
The bank also participated in a $65 million funding round for Ethereum infrastructure firm Consensys in April 2021.
In summary, JPMorgan’s involvement as an authorized participant in BlackRock’s Bitcoin ETF has ignited controversy within the crypto community, given Jamie Dimon’s previous negative statements about cryptocurrency.
This development has raised questions about the bank’s stance on Bitcoin and its motivations for engaging in the crypto space.