Kazakhstan, one of the hottest places for bitcoin mining, is currently in talks to attract an investment worth 300 billion tenge, $714 million into the cryptocurrency sector, said Digital Development Minister Bagdat Mussin.
Thirteen mining farms are already operating while four are under contraction in the Central Asian nation, Mussin said in a government meeting,
“More than 80 billion tenge ($190 million) has been invested in the sector.”
“Today we have preliminary agreements on attracting investments worth 300 billion tenge.”
Kazakhstan claims to account for 6% of global crypto mining.
Back in June, the country passed legal amendments clarifying the regulation and taxation of crypto mining. Just last month, Kazakhstan proposed legislation for a 15% tax on bitcoin mining firms to boost its oil-dominated economy.
The country offers relatively cheap electric power that makes it attractive for bitcoin miner operators, especially post halving that has thinned the profit margins.
However, with bitcoin price above $11,000 and network activity strong, miners generated an estimated $368 million in revenue in August, a 23% increase from the previous month.
Interestingly, bitcoin miner Layer1 reaped returns of over 700% by selling its power supply back into the grid in Texas.
The latest study titled, “Retail Investors Steady in Physical Bitcoin Snatch-Up” talks about how the remaining 10% of bitcoin supply will take 120 years to come to market, reflecting just how scarce the leading digital asset is already and “looks to displace gold as the global store-of-value.”
Bitcoin’s limited supply is what makes this digital asset so attractive, especially during the current unprecedented money printing by governments around the world.
The Supply & Demand of it
When the first block of the digital asset was solved, the miner was rewarded with 50 Bitcoin, which in May 2020 was reduced to 6.25 BTC.
The creator of the cryptocurrency, pseudonymous Satoshi Nakamoto designed its inflation rate to “emulate the new supply of gold coming to the market,” as such every four years it goes through halving that decreases the miners’ rewards by half until 21 million BTC are created. At that point, there won’t be any new supply.
Currently, 900 BTC is generated per day, and before this decade is over, only 225 new BTC will enter the market as fresh supply. “This means a near 90% loss in new supply – within the next eight years alone.”
Now, if we look at the demand side, as Chainalysis data states, there’s a continuous growth in bitcoin investment regardless of its price.
Interestingly, even during the global market sell-off when BTC also crashed, addresses/entities with rounded bitcoins, 1, 2 up to 10, increased and have grown by 11% since the start of the year and have “yet to see a single month in decline” since April 2019.
In April 2020, addresses holding exactly 1, 2, 3 all the way to 10 BTC have surpassed 500,000 and have been growing every month since the start of the 2018 bear market except for a single month.
“The value of these on-chain holdings at the start of June 2020 breached the $5bn mark for the third time ever.”
Zubr extrapolates future demand at this pace which points to a “very dramatic shift in 2028” when these retail addresses begin to eat up all the new supply alone, which means in about 2024, they will be gobbling up more than 50% of the physical supply.
The traditional safe-haven asset gold is a valuable commodity because of one of its main attributes that is a limited supply – “an attribute that Bitcoin is designed to mimic in electronic format.”
But while technology helps bitcoin remains truly limited in supply, it has done the opposite to the bullion.
The new quantity of gold entering the market has been actually increasing, in 2019 gold production rose by 11% over 2010, as per the World Gold Council. On the other hand, there has been a decline in demand.
However during the coronavirus pandemic, both gold and bitcoin saw “strong demand.” But gold faced supply interruption due to lockdown which resulted in price dislocation so much so the spread between London’s spot market and COMEX gold futures rose by 700% which usually is just a few US Dollars.
Such production supply disruptions are unlikely to be a problem with bitcoin, an electronically transferable commodity but “physical Bitcoin supply-constraints could have the same effect regardless and in turn, as seen with gold, push prices further higher.”
But the critical difference is these supply constraints will be the result of the “permanent perpetual nature of the store-of-value cryptocurrency that is designed to cut off new supply,” which might come sooner if the demand from small investors remains as steady as it has been all these years.
A report from TheBlock reveals that top crypto exchange, Binance is in talks to acquire a majority of the stake in Swipe.io – a crypto payments startup.
While the agreement has yet to be made official, the exchange looks to push through the deal, intending to launch the main version of its Binance Card, a crypto payments debit card.
Back in April, Binance announced the launch of a Beta version of the Binance Card, which allowed users to spend crypto with over 46 million VISA accepted merchants across the world. The card costs $15 for pre-orders with no hidden or additional costs attached.
To begin, the card will start with support for Bitcoin (BTC) and Binance Coin (BNB), but the acquisition of Swipe.io, which allows multiple currencies, could open up the card to allowing more digital assets to be used.
Swipe.io, on its part, will produce the Binance Cards as a white-label product allowing Binance users to spend crypto instantly, with enhanced security features such as a card tracking feature. The official announcement on the acquisition may come later in the week.
The crypto payments platform recently announced a partnership with Samsung Pay to add its Visa debit card option. The addition of Samsung Pay saw the company become the inaugural company to provide this service to both Samsung Pay and Google Pay.
We have reached out to Binance, but as of press time, we have not heard back. We will update this article when they respond.
A lot of talks have emerged on the possibility of the Federal Reserve issuing a digital dollar as part of the $2.2 trillion dollar stimulus package to fight the COVID-19 pandemic being a key turning point in the discussions.
Now, an Ethereum-based project is accelerating its efforts in the development of a platform that will potentially allow the Fed to directly send cash to an individual.
eThaler Set To Create Central Bank Digital Currency (CBDC)
At a planned meeting at Hyperledger, a blockchain consortium, it was decided to accelerate its efforts in the development of eThaler, an Ethereum based project aiming to create a CBDC. While the need for a CBDC has only been a priority to a small number of governments, the current COVID-19 virus pandemic, is setting a new stage for governments to become more “blockchain-friendly,” the U.S becoming the latest superpower to join the race.
In February, a clear use of the CBDC started to show as California Congresswoman and chair of the House Financial Services Committee, Maxine Waters, introduced the concept of a digital dollar, firing up the accelerated development of Hyperledger’s, eThaler.
Vipin Bharathan, 59, chair of the Hyperledger identity working group said,
“The concept of the CBDC seems to have gotten an imprimatur from the house finance committee. That’s a significant step, and I argue that such crisis situations always produce new ideas, and acceptance of new ideas, which will live on long after the coronavirus has burned through the world.”
Development of the eThaler, CBDC project
Over the past six months, developers across the world have kept working on open-source projects – professionals from Accenture and InfoSys and the Itau Bank in Brazil – leading the charge. The token follows the ERC-1125 standard, which differs from the conventional ERC-20 token standards by providing a single standard designed to support multiple kinds of tokens.
The token is expected to be fungible, mintable and destroyable through a burning process similar to Binance Coin (BNB) structure. Notwithstanding the CBDC is expected to be highly divisible to allow micropayments across the system, a feature currently unavailable with fiat currency.
“Lastly, and perhaps most controversially, the asset must be “pausable” in case a bug in the software is discovered, or an update is being implemented.” – Forbes.
Criticisms of the CBDC
Despite the accelerated development of the platform, it may not be used for the current disbursement of the $2.2 trillion dollar relief fund with several critics coming forward to disclaim the formation of a CBDC.
First, the legacy finance argument is that most of the currency across the world is already on a digital platform. Doubling up, is the Bitcoin community who believe that the central banks interference still makes the blockchain centralized hence defeating the purpose.
Major crypto exchange Coinbase is presently in talks with the rental service company Omni that had raised $25M from San-Francisco primarily based – Ripple last year.
Omni is an online rental service firm founded by Thomas McLeod. It aims to provide access to the items that people may need through its rentals platform. Omni introduces a rental service wherein people in the same neighborhood and find items and rent it among themselves, from air mattresses to camping equipment, from bikes to air purifiers, various electronic devices and more. All the customers need to do is search with an appropriate keyword or explore the different categories according to their needs. Later, in exchange for the items that were rented, users may also earn cash whenever somebody rents out the item they offered.
Omni collaborated with XRP, due to which all earnings are often paid out to XRP wallet. This has made Omni the primary platform in the world that enables individuals to get XRP coins while not having to buy them via exchange.
Consultants believe that there are more potential investors and traders out there who are already acquainted with crypto, but they are unwilling to take the risks that come with it. But because Omni and XRP are operating along with each other, it eliminates the factor of risk for them and can easily invest. McLeod believes that will be a great way for curious people who wish to enter the crypto world, while not having to really invest in it.
However, Omni’s business didn’t perform well. To scale up the platform, Omni relied on local storefronts for pick up and drop off their items, however eventually, the firm caught with numerous complaints from its existing and new customers that have led the corporate to place Omni on an acquire-hire deal to Coinbase… Omni sold his storage business to Clutter, which bought users list a series of complaints like changes in the prices, items being misplaced, etc.
The company is in talks with Coinbase to hire a number of Omni’s engineering employees, who would have them work on Coinbase Earn, which rewards users with cryptocurrency for finishing online educational programs.
Omni had raised a total of $35M from investors such as Flybridge, Highland, Allen & Company, Founders Fund, Precursor, etc. As per TechCrunch, few employees who were interviewing at Coinbase said that there is no such deal on the table yet.