Biggest Shift in Bitcoin Hashrate May Come in 2020

Bitcoin price is stuck around $9,100, but the hash rate of the network is continuing its ascent since crashing after the block reward halving.

The hashrate is yet again near the all-time high at around 130 Th/s after the jump in difficulty – the biggest since January 2018. Despite this, the bitcoin block mining time is back below 10 minutes since mid-June. Currently, a new BTC is being produced at an interval of 8 minutes 37 seconds, as per Bitinfocharts.

Amidst this, BEG reported that bitcoin mining giant Bitmain had received an order for 17,500 S19 mining machines from the US blockchain service provider, Core Scientific. The first batch of the agreement, which has a duration of four months, has already been delivered.

The latest flagship bitcoin mining machine of Bitmain currently costs 14,260 yuan, just over US$2,000.

A similar trend is seen by F2Pool, which reported receiving orders of large quantities of new-gen hardware from some of the biggest North American bitcoin mining operators.

On top of this, China’s rainy season is in full swing. The country is facing its worst flood in 70 years, with many plateaus in southwestern Sichuan Province experiencing heavy rain since mid-June. This was expected to continue in some parts of Sichuan.

Sichuan is of strategic importance for the Chinese mining ecosystem as such could play a part in the potential loss of mining hash power out of China, said Denis Vinokourov of Bequant.

All these bitcoin miner orders and “the hydro season in China coming to a close in October 2020 could see the biggest shift in hashrate,” said F2Pool.

Already capital controls in China have miners exporting their operations outside of China, and de-dollarisation of various financial systems, specifically in emerging economies are pushing them toward bitcoin mining.

These factors, combined with the institutionalization and financing of mining operations with the US, is why China has already started experiencing a sharp decline in Bitcoin mining dominance, which states the Amun Report.

Moreover, the US is seeing an increase in hashrate, now accounting for 7.2% of market share, making it the second-largest hash rate contributor after China.

Bitcoin Miners Expanding

Amidst this, Bitcoin miners are expanding their business, some even out of the mining sector.

Hut 8 has raised a total of $8.3 million from selling a 6% equity stake to investors, about $88k more than the original $7.5 million funding target. The Toronto-listed mining company is planning to invest this in new equipment that will enable them to increase their mining capacity to over a fifth.

“This financing is expected to strengthen Hut 8’s cash flows and balance sheet,” said company spokesperson Ryleigh Ebron.

Ebang International Holdings Inc. meanwhile is planning to launch an offshore cryptocurrency exchange this year, in an attempt to diversify beyond the mining sector. The company is considering applying for licenses in Singapore or the US or acquiring an existing exchange operator.

The Chinese crypto mining giant could see its total revenue grow about 40% in 2020, after expanding into the newer business of clients that manage data centers, said the company CFO, Chen Lei.

Revenue could double to $200 million this with the launch of digital asset exchange, otherwise, the mark should be hit in 2022, he said.

The Hangzhou-based maker of Bitcoin mining rigs that went live on Nasdaq under the ticker EBON last week has its shares currently trading at $4.50, down from the IPO price of $5.23 where it raised $100 million.

Ebang is planning to use the proceeds from the US share sale to develop new models of machines and expand overseas. Setting up regulatory-compliant crypto exchange outside China is part of the plan. Chen expects to initially attract 10% of the total transaction fees of digital asset trading.

Ebang is not the only one looking into expansion; its rivals Bitmain and Canaan are also betting on making chips in the field of artificial intelligence to reduce their reliance on BTC prices.

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Author: AnTy

Bitcoin Recording Third Best Quarterly Close; Strong Q2, But Q3 Paints A ‘Challenging’ Picture

Bitcoin is currently trading above $9,100 in green with just $1.1 billion in ‘real’ trading volume. The leading digital currency has recovered 140% since the March crash but is up only 27% YTD.

Despite the minimal yearly gains and ending the first quarter of 2020 on a red note of 10.58%, the second quarter has turned out to be surprisingly good despite the coronavirus pandemic triggering a sell-off in the global markets.

Today, on the last day of June and the second quarter, we are close to ending this month and quarter at about $9,150.

This makes the third-best quarterly close for bitcoin in its young history. The best quarter close was Q4 of 2017 at 13,660, followed by 2019’s quarter 2nd when bitcoin ended it at $10,590.

After Q2 of 2020, comes Q4 of 2019 when bitcoin was at $7,180.

Around the current price level, bitcoin would mark a gain of more than 42%, which also makes it the fourth-best second quarter since 2014.

After 157.5% gains in 2019, 125.3% in 2017, and 61.8% in 2016, 2020’s 42.2% gains is the best second quarter.

Interestingly, the second user has been a green quarter for bitcoin for the majority of the past seven years except for the 2018 bear market. And bitcoin continued this historical trend this year.

However, this positive development means bad news might be ahead. In contrast with Q2, Q3 heavily tilts towards losses, much like Q1. And we did end up in red in Q1 of 2020. Now, it needs to be seen if Bitcoin will continue ranging, or we will encounter a drop in price.

“Excluding the exceptional 2017 vintage, Q3 has been historically more challenging,” noted Skew Markets.

As we reported, analyst Rekt Capital has said it is nothing out of the ordinary because, after the reward halving of 2016, bitcoin recorded losses before going on a bull rally.

What about USDT?

Stablecoins have been seeing strong growth throughout the coronavirus pandemic only to slow down in the past few weeks. Amidst bitcoin’s lackluster performance, popular stablecoin (USDT) has surpassed $10 billion market cap, as per Messari. This has many expecting a run-up in BTC.

But this demand for USDT is not reflected in Bitcoin price.

This is because “Tether has historically printed USDT in large batches in anticipation of future demand and distributions,” said Coin Metrics in its latest report.

According to the report, on-chain supply doesn’t mean new supply in public markets, and USDT held by the Tether Treasury, which is currently at $9.79 billion, is a more accurate indicator of the supply in public markets.

The correlation between free float USDT and Bitcoin’s price was clearer in early 2019 when BTC rose from $4,000 to $12,000.

A bullish picture meanwhile was painted by Bitcoin hodlers as those holding BTC for a year or more made a new all-time high of 62%.

Pointing to this, Alistair Milne noted, “Similar levels of HODL last seen during a 3-month consolidation at around $400 before starting a two-year bull run,” and guesses the cycle peak to be around 70%.

Also, from the mining perspective, Matt D’Souza, CEO of Blockware Mining, says just like the bitcoin mining market bottomed in late Q4, 2018/early 2019, “we are in a similar environment today.”

They also believe the “Bitcoin spot market is starting a bull market,” which “will pull the mining market out of this winter.”

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Author: AnTy