This week in crypto. Oct 11-17: The state of crypto mining, NFT markeplacers and more...
Only last year one of the popular Bitcoin critiques was the centralization of its miners, and what’s more, in such authoritative country as China, which produced 65% of Bitcoin hashrate.
This summer China banned crypto mining, abruptly reducing Bitcoin hashrate in half. It made an impressive 100% recovery in just 2 months, uncovering a brand new world mining map.
USA doubled their hashrate to become world’s mining leader with over 35% of the hashrate, notably thanks to the crypto-friendly Texas: its governor Greg Abbot and senator Ted Cruz promote Bitcoin mining as a solution to bring stability to its deregulated energy grid, where customers can choose between providers (in its mix 28% windpower, and abundant natural gas, coming also as a byproduct of oil extraction). Pro-crypto Miami mayor Francis Suarez is promoting nuclear energy mining in his state, while not-so-crypto-friendly state of Washington has also noted a surge in the number of miners thanks to its cheap hydropower.
Kazakhstan, on the 2nd place with over 18% of the hashrate, took advantage of its vicinity with China and welcomed some of its biggest mining companies, like BIT Mining. Kazakhstani energy mix is 2/3 fossil fuel, which is not great for the carbon footprint, so the country’s intention to build a nuclear plant is much awaited.
Mining activity also increased in Russia (>11%), especially its Siberian region, where cold temperatures naturally cool down the equipment, requiring less energy. This did not come unnoticed: some of its regions, like Irkutsk in Siberia, registered an explosion in electricity consumption, and the Energy Minister is now considering introducing special tariffs for crypto mining.
Canada is the country that registered the most impressive rise in crypto mining. With its share below 1% in December, it now produces over 9% of the hashrate, thanks notably to numerous green mining projects that use its hydropower. However, some Canadians do not stop at “carbon neutral”, they go “carbon negative”: after selling the waste heat produced by the mining equipment to a local Whiskey brewery and salt distillery, a cleantech miner MintGreen is now providing heat to North Vancouver. Its “digital boilers”, which recover 96% of the electricity used for mining, are now connected to the district energy system and heat commercial and residential buildings.
Negative carbon mining projects also multiply all over the world. Miners like Easy Crypto Hunter from Manchester, UK, or Biomining from Mexico are settling mining farms on actual cow and pig farms and transform the manure (animal poop to be simple) into energy, capturing the methane – one of the greenhouse gases highly responsible for the climate change. Learn more about Bitcoin mining and ecology.
This mining map is not definitive though. Physical spaces and infrastructure are scarce and often have to be built from scratch, whatever the country the Chinese miners decided to settle in. As many industrial-scale miners build additional warehouse space, the complete mining picture won’t be known until the first half of next year.
For the moment, China appeared to have done a great favour to all miners outside of it, as their revenues in the Q3 exceeded most expectations. Hashprice in USD (market value assigned per unit of hashing power) almost doubled from Q2 to Q3, and it looks like the North American miners made the best of it.
Luxor mining pool compiled the Hashrate Index data in an informative report on mining in 2021 Q3, estimating that in the Q4 the hashrate will close in its all-time-high range (185 EH/s), as will ASIC prices and the hashprice.
The industry is as lucrative as ever, and Jack Dorsey, the CEO of Twitter and Square, announced considering building a specialized Bitcoin mining system “based on custom silicon and open source for individuals and businesses worldwide”, and which would make mining much easier and energyèefficient.
Art and NFT
NFT markeplaces have beaten all the records this year, with OpenSea monthly trading volumes holding in the $3Bn area. No wonder other crypto companies are willing to follow suit.
FTX launched a Solana-based NFT marketplace (Ethereum support is to come), and Coinbase announced the launch of an Ethereum-based one “that will make minting, purchasing, showcasing, and discovering NFTs easier than ever”. Coinbase NFT markeptlace is also expected to include social features, and over a million people have already signed up to the waitlist.
Markets
Bitcoin
Bitcoin gained 14% this week, traders expecting a soon crypto ETFs approval in the US. The ETFs in question are not physically based, but tracking crypto futures, and instead of approval there will rather be a non-objection by the SEC, but this did not curb the enthusiasm.
Bitcoin ETFs in such a big economy as the US can mean a lot for its price, for it will become easy to (indirectly) invest in BTC even for such conservative funds as retirement ones (over $20Tr assets managed by American pension funds is huge).
Russia’s Vladimir Putin saying that Bitcoin does have a value and exists as a means of payment (although not yet ready to be used for oil trade) also did not hurt the overall sentiment.
For the first time ever, Bitcoin closed the weekly candle above $60k and is now sitting over $62k.
Ethereum
More modestly, Ethereum gained 8%, ending the week over $3’860.
Quote of the week
“Fifty percent of the natural gas in this country that is flared is being flared in the Permian [Basin] right now in West Texas. I think that is an enormous opportunity for Bitcoin, because that’s right now energy that’s just being wasted.”
Ted Cruz, US Senator for Texas