Trend of Global Crypto Mining: Despite the US-China Trade War, Activity Surges as Samsung and GMO Enter

Throughout 2018, the cryptocurrency market experienced the fourth worst correction in its nine-year history, as Bitcoin lost more than 69 percent of the value from its all-time high of $19,500.

Despite the substantial decline in the price of Bitcoin (BTC), which heavily affects the earnings of miners, the hash power of the Bitcoin network has continuously increased throughout the past 10 months, from 15 million TH/s to over 50 million TH/s from January to October.

As portrayed by the research of blockchain analyst Barclay James, the breakeven cost of mining Bitcoin at 35 million TH/s is around $6,900. The formula employed by James considers the hash power of the Bitcoin network, the hashing power of an ASIC Bitcoin miner, and the efficiency of each miner in producing BTC:

# units = global hashing power ÷ unit hashing power ÷ unit efficiency

Given the cost of Bitcoin mining, when its hash power is currently around 35 million TH/s and the value is $6,400, the breakeven cost of Bitcoin is in the $7,000 to $8,000 range. Which means, at $6,400, Bitcoin miners are losing money by generating BTC and are solely relying on their expectations of the price of BTC to eventually increase in the months to come.

For miners outside of China, specifically the mountainous region of Sichuan known to have the cheapest electricity in Asia and a cold climate that naturally cools down cryptocurrency mining equipment, it is even more expensive to mine BTC. The paper of Barclay James reads:

“China has some of the world’s cheapest electricity rates as well as average temperatures consistent with temperate regions. This is important as cooling is one of the largest overheads in mining. In addition, the country’s generally low operating costs also give it a competitive advantage. In fact, current estimates place 70 % of global hashing power in China, the majority of which is located in the Sichuan region.”

Since June, Bitcoin miners have been mining the dominant cryptocurrency at a significant loss. The fact that the hash power of BTC has continuously risen throughout the bear market of 2018 demonstrates large activity in the global cryptocurrency mining sector and the confidence of miners that the industry will recover as the year comes to an end.

Bitmain and its Antminer sold at a discount

BitMEX Research, a cryptocurrency firm that operates as a research subsidiary of major digital asset exchange BitMEX, disclosed in its paper in August that Bitmain, the dominant conglomerate in the cryptocurrency mining sector, has been deliberately selling its latest Bitcoin ASIC miner Antminer S9 at a lower price.

In 2017, Bitmain sold more than one million Antminer S9 miners and another 700,000 of them in the first quarter of 2018. According to the researchers, who calculated the disclosed gross profit margin of Bitmain in 2017 and the implied cost of each miner. Bitmain has set a negative profit margin of 11.6 percent for the Antminer S9, its main product.

The researchers stated that the distribution of Antminer S9 miners at such a low profit margin and the sudden increase in the sale of the miner in the first quarter of 2018 suggest the company employed a strategy to outsell its competition by underpricing its products.

“These low prices are likely to be a deliberate strategy by Bitmain, to squeeze out their competition by causing them to experience lower sales and therefore financial difficulties. In our view, herein lies the key to one of the main driving forces behind the decision to IPO. A successful IPO may increase the firepower available to continue this strategy and eliminate an advantage rivals could have by doing their IPOs first.”

The paper also proposed that the company may simply have too many Antminer S9 miners in its inventory.

In June 2018, Bitmain was criticized for shipping Antminer S9 miners caked with dust. Some miners alleged the firm of sending old or used ASIC miners. In response to this, Bitmain stated that all traders who received defective or affected Antminer S9 miners would be fully compensated.

“Any product can be imperfect, and there will be shortcomings in the process of enterprise development. We have also compensated the miners who have received mining equipment with inadequate computing power and the mining equipment are now being run properly.”

Whether the decision of the firm to sell its main ASIC miner with a low profit margin was to due to its competition or to clear its inventory, the end result was the distribution of an increased number of efficient and high performance ASIC miners to the global mining sector, which ultimately led to the increase in the hash power of the Bitcoin network.

Is Bitmain’s dominance in danger with the emergence of Samsung and GMO?

In the first quarter of 2018, Bitmain generated twice the profit of Nvidia, the world’s largest graphics card manufacturer. Nvidia generated $550 million in pure profit while Bitmain recorded $1.1 billion in profit from January to March.

The lucrative business model of Bitmain and its high profits led GMO and Samsung, two of the most influential technology conglomerates in Japan and South Korea, to enter the global cryptocurrency mining industry.

GMO introduced its own ASIC miner with competitive specifications in comparison to Bitmain’s Antminer S9. Samsung Electronics has allocated a portion of its foundry in Suwon, South Korea, to manufacture cryptocurrency ASIC miners, in partnership with emerging companies in the mining sector.

When Samsung Electronics first announced its decision to target the global cryptocurrency mining industry, it emphasized that it remains unsure whether it can improve the company’s revenues in general. But, the emphasis of the establishment on its mining venture was to engage in an emerging industry like crypto, given that it has successfully penetrated into insurance, fintech, electronics manufacturing, car making, and ship building in the past several decades. Samsung Securities analyst, Hwang Min-seong, said in January of this year:

“Samsung Electronics could increase its revenues through ASIC chip manufacturing but because the foundry only accounts for a small portion of the company’s semiconductor manufacturing plant, it is difficult to predict that the firm’s mining venture will have a significant impact on the company’s revenues.”

 Since then, Samsung has aggressively expanded its mining businesses, seeing an increased demand in the market. The uncertainty of Samsung towards cryptocurrency mining demonstrated the firm’s unwillingness to commit to the industry unless the company sees significant potential in both the short-term and long-term growth of the market.

Most recently, Samsung signed a deal with Squire, a Canada-based crypto mining corporation that raised $19.5 million in August to develop cryptocurrency mining equipment, to manufacture ASIC miners on behalf of the Canadian firm.

Around a similar period, Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest independent chipmaker, slashed the growth target of the cryptocurrency mining sector from 9 percent to 6.5 percent.

The conglomerate stated that the weakening of the demand for cryptocurrency mining led the firm to decrease the growth target of the industry. But, it remains unclear whether the report is exclusive to Bitmain, given that TSMC is the manufacturer of Bitmain’s ASIC miners, or to the rest of the industry.

“However, our business is also negatively impacted by further weakening of cryptocurrency mining demand. As a result, we estimate our 2018 growth rate will be about 6.5% in U.S. dollar term, which is close to the foundry industry’s growth but slightly below our 7% to 9% guidance given in the last conference.”

New multi-million dollar mining facilities open

Despite the conflicting viewpoints of Samsung and TSMC toward the demand for cryptocurrency mining, in the past several days, two multi-million dollar mining facilities have opened in Armenia and Colorado.

Local publications in Armenia reported that a new $50 million digital asset mining facility was opened on October 19 with 3,000 ASIC miners to mine Bitcoin and Ethereum. In the upcoming months, 120,000 ASIC miners are expected to be added to the facility.

It was local real estate firm Multi Group Concern (MGT) and Malta-based technology company Omnia Tech International Company which created the facility with the support of the government and local authorities.

The plan to build the facility was originally released in April, when Omnia Tech founder, Robert Velghe, said that the two companies intend to invest more than $2 billion in mining and crypto-related businesses in Armenia.

“We will also help Omnia Tech with the establishment of the Financial Technology Park and the data exchange center in Armenia. We intend to create here a blockchain-based center for the development of new information projects, which will turn Armenia into a high-tech platform.”

On October 25, MGT, the largest mining facility operator in the U.S., announced that it will establish another large-scale mining facility in Colorado equipped with 6,300 Bitmain S9 miners. Already, MGT operates 6,800 Bitmain S9 miners and 50 GPU Ethereum mining rigs in the country.

MGT COO Stephen Schaeffer emphasized that despite the decline in the price of Bitcoin, the company intends to “run into the burning building” to find opportunities, which in this case is to mine BTC.

Regulation and state of the mining sector

Many of the world’s largest economies are in the process of implementing practical regulatory frameworks to facilitate the growth of mining companies. Authorities in South Korea, Japan, and the U.S. have welcomed mining facilities to operate with low-cost energy. Countries with ambiguous cryptocurrency regulations such as China and Russia have also demonstrated a neutral stance towards mining.

Throughout the past 15 months, China has banned virtually every business and activity related to the cryptocurrency sector including trading, events, and over-the-counter (OTC) investment. However, it has opened two use cases of cryptocurrencies: processing transactions and mining digital assets.

Several regional governments in Russia have also opened up to cryptocurrency mining, leading various initiatives to convince major mining companies to launch mining farms in the country.

In August, Deputy Governor of the Leningrad Region, Dmitry Yalo, said at the opening of a new mining facility in Russia that the region intends to lure in more mining centers in the years to come with low electricity prices, qualified personnel, and a naturally cold climate to cool down ASIC miners with no additional costs.

US-China trade war

The conflict between the U.S. and China began to affect chip makers and mining equipment manufacturers based in China, including Bitmain. The 27.6 percent tariffs on the Antminer S9 has made it significantly more expensive for buyers outside Asia to purchase the miner.

Previously, Bitmain was able to ship Antminer S9 miners with no tariffs as the product was classified as a data processing machine. The sudden imposition of tariffs against electrical machinery apparatus, which includes data processing machines, has created an inefficient ecosystem for China’s ASIC manufacturers.

The imposition of tariffs by the US against China comes in a period in which U.S. President Donald Trump has expressed concerns about the lack of reciprocity between the two countries. For many years, China has been able to ship products to the U.S. with near-zero tax and fee, thus, Amazon’s Vice President of Global Policy Paul Misener said once:

“The cost to ship a one-pound package from South Carolina to New York City would run nearly $6; from Beijing to NYC: $3.66.”

South Korea and Japan remain unaffected by the tariffs, and with practical regulatory frameworks established by both countries, Samsung and GMO are expected to continue their successful run in the global mining sector.

As of current, despite the significant drop in the price of major cryptocurrencies, the demand for cryptocurrency mining remains relatively high as seen in the rise in the hash rate of the Bitcoin network and the expansion of Samsung, GMO, and Bitmain’s operations.

Major regions have established positive regulatory frameworks towards cryptocurrency miners and companies, which could lead to the increase in the establishment of mining facilities by investors that foresee a substantial surge in the valuation of the crypto market in the mid-term.

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Bitmain IPO: Trial by Fire for the Mining Equipment Giant

The views expressed here are the author’s own and do not necessarily represent the views of Cointelegraph.com

Bitmain, the world market leader for mining equipment, on the eve of an epic IPO — which could become the largest in the entire history of the IT market — is experiencing an equally epic publicity and information attack. Despite the fact that the upcoming IPO is getting closer, as demonstrated by a draft application for registration recently filed by the company on the Hong Kong Stock Exchange, its success may be questionable. 

The fact is that, since Aug. 21, official refutations have started to appear on the internet from companies that were previously listed in the Bitmain investor list. Beginning with SoftBank, the rumor about participation in the company’s IPO was also denied by DST Capital.

Without making unequivocal conclusions, let’s try to figure out whether there is any smoke when it comes to Bitmain’s IPO claims — to which its founder, Jihan Wu, prefers not to respond.

Reconnaissance

On June 6, media presented information that Bitmain’s IPO on the Hong Kong Stock Exchange was scheduled for September 2018 and, according to investment analysts, was expected to raise anywhere from $3 billion to $18 billion, thereby becoming the largest initial public offering in the IT market’s history, beating Facebook with its $16 billion.

However, on August 6, the company gave a more cautious outlook on the IPO date, taking the gap between the fourth quarter of 2018 and the first quarter of 2019. Nevertheless, a draft application for the listing on the Hong Kong Exchange indicates that the giant’s intention is getting stronger and the date for the launch of the initial offering is getting closer. Additionally, as part of the approval process, Bitmain has submitted a prospectus where it reported new financial data which was closed before.

According to the updated information, Bitmain earned $701 million in net profit in 2017, while various estimates show that the annual income for the same period ranged from $1 billion to $4 billion. A gross income claimed for the first half of 2018 exceeded the one received for the whole previous year and comprised $743 million, despite a significant fall in the crypto market.

However, according to the report published by BitMEX at the end of August, Bitmain could face “visible losses, which might be caused by “allegedly investing the majority of its operating cash in 2017 in acquiring Bitcoin Cash (BCH).” Experts believe the estimated potential losses could reach $328 million.  Additional calculations show that the ratio of the $2.5 billion revenue to the $701 million net profit in 2017 is more positive than that of 2018 ($2,5 billion and $743 million). Further analysis made by the BitMEX team implies “Bitmain are currently loss-making, with a negative profit margin of 11.6% for the main S9 product and a margin of over negative 100% on the L3 product.”

Given the continuing decline in Bitcoin’s price and the challenging situation in the mining hardware market, some experts suggest that the company’s IPO may become a challenging task. Although the corporation still remains the industry leader, with 60-70 percent share of the ASIC production market.

As of the beginning of October, the capitalization of Bitmain has reached $12 billion with its latest funding round in August 2018 reported to be $442.1 million. In total, Bitmain has raised $784.8 million to date and was rumored to have accumulated around 51 percent of the Bitcoin network hash — or that it was at least close.

One of the reasons the research group Sanford C Bernstein & Co. is given as an argument on why Bitmain may strongly need to start its IPO, is increased competition. Wall Street may also be occupied by the company Chinese Canaan Inc., whose value is estimated at about $500 million and Ebang International Holdings Inc., registered in the Cayman Islands. Both companies also announced an IPO with plans to begin before the year ends, which will also take place on the Hong Kong Stock Exchange. According to Reuters, Ebang is planning to raise up to $1 billion, while Canaan is targeting at least $400 million, which in total is 2 times smaller than the sum planned by Bitmain.

The challenges Bitmain is facing

In the middle of the summer, the media reported that Bitmain had held its first round of the pre-IPO and that among the investors there was a co-owner of Uber, Japanese SoftBank and Chinese IT giant Tencent, which developed the WeChat platform. WeChat itself is reported to be ahead of Facebook in terms of capitalization with the market valuation of $534,5 billion against $519,4 billion. Later, the insider information was released about DST Global participating in the pre-IPO.

Neither references to Bitmain’s publications disseminating information, nor the company’s comments on these data were provided. Information was distributed in Twitter with a reference to an investor deck screenshot.

By August, all three companies named originally as investors in Bitmain’s pre-ICO, have issued public denials. But this was only the beginning.

In late August — theoretically on the eve of September’s IPO, the analytical agency Sanford C. Bernstein & Co., which in 2000 merged with Alliance Capital, published a detailed report analyzing the challenges of Bitmain’s IPO.

The study is devoted to Bitmain and contains clear indications of the Chinese giant’s loss of technological advantage, connected with increased competition and the purchase of a large amount of Bitcoin Cash, which could pose a significant risk to the company if the digital token declines. Moreover, Bloomberg, which detailed the report of Sanford C. Bernstein & Co., pointed out that analysts directly called for Bitmain’s technological partner — Taiwan Semiconductor Manufacturing Co. — not to produce chips for ASIC-miners without a full prepayment.

Meanwhile at the Bitmain headquarters

The Chinese giant is consistently expanding its mining empire. In August, Cointelegraph reported that NVIDIA left the mining equipment market, unable to withstand the severe competition of Bitmain. Thus, it appears that 85 percent of the world’s mining equipment production market has come under the control of Bitmain, a figure with which the analysts of Sanford C. Bernstein & Co. agree.

More questions are raised by the above mentioned purchase of BCH, which according to some users, was either a risky investment, given the unstable market situation, or was made with the purpose of not disclosing Q2 income.

At the presentation for investors, Bitmain reported that, since the end of 2017, it consistently traded Bitcoin Cash for any available Bitcoin, despite the fact that the company lost about $500 million. A slide taken from an investor deck was published in Twitter, and caused a stormy reaction in the crypto community.

While information about the future IPO and the monopolized market was teeming with passion, Jihan Wu himself shared his opinion regarding the futility of ICOs and the prospects for Bitcoin Cash in an interview with Coingeek.

An imperturbable 32-year-old Chinese billionaire called ICOs “a bubble that will last for two years and then burst,” followed by the securities of crypto startups released on the blockchain. The Bitmain owner predicted a rate of $100,000 of Bitcoin’s fork — Bitcoin Cash (BCH) — and a dominant position in the market by 2023, as he believes only BCH corresponds to the real vision of Satoshi Nakamoto. Having intrigued Bitcoin evangelists in this way, Jihan Wu completed the interview without commenting on the prospects of his future IPO.

Possible scenarios

Bitmain has accumulated a lot of BCH, but there is no liquid market and there is no demand outside the market. A lot of ASIC-devices were released, but their profitability decreases as the complexity of BTC mining grows. So far the company has not developed any AI initiatives since the moment Jihan mentioned his plans to take on Nvidia.

The IPO process may be hindered by some of Bitmain’s mistakes, such as “producing too many units and buying too many speculative altcoins in a bull market,” BitMEX analysts say. Still they are not so catastrophic and “typical” of mining producers management teams.

The exchange specialists predict that in order to keep their industry dominance and achieve higher results, “the Bitmain management team may need to improve their management of company resources. Once the company goes public, capital allocation decisions in this volatile and unpredictable market will be difficult enough, letting emotions impact too many investment decisions may not be tolerated.”

Perhaps, the giant will reconsider their target sum for the IPO due to revealed losses, and increased competition.

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Chinese Energy Outfit to Support Spanish 300 MW Crypto Mining Farm

Chinese energy company Risen Energy has partnered with a Spanish cryptocurrency mining farm will to develop capacity of up to 300 megawatts (MW) of photovoltaic power. The news was reported by a Chinese media outlet PV Tech Thursday, October 4.

Several months after CryptoSolarTech confirmed it was building two farms near the city of Malaga using energy-efficient technology, Risen “will develop and take on engineering, procurement and construction (EPC) responsibilities for the projects,” according to the new report.

For comparison, Bitcoin network consumes an average of about 200 MW of energy for mining every day, according to the Bitcoin Energy Consumption Index.

In June, CryptoSolarTech released its own token via an ICO to assist in financing its operations, the token raising a reported $68.2 million.

“Funding for the project is secured against the launch and sale of the cryptocurrency tokens from the farms and based on a 15-year power purchase agreement (PPA),” PV Tech added.

A month previously, CryptoSolarTech reported it had raised 60 million euros ($69 million) from its first two months of existence, along with concluding a power supply contract with Barcelona-based Respira Energia.

Since the culmination of the ICO, the company’s token has lost the vast majority of its value, making it into the top ten ICO ‘losers’ in research released late September.

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5 Amazing Sources of Clean Energy the Blockchain Mining Industry Can (and Should) Use


When it comes mining Bitcoin or any other digital currency, the goal is to keep operational and energy costs to a minimum to ensure maximum profitability.

Up until recently, that need for optimal energy costs has sent a good deal of  mining to China, where electricity is subsidized and cheap. However, most of these facilities in China are powered by coal-fired stations which have been proven to be harmful to the environment.  

While some suggest that we should seek to slow the growth of the blockchain revolution, the industry is creating so many beneficial technologies, and therefore should be encouraged to grow, in sustainable ways. As a decentralized technology, blockchain has the potential to solve countless security issues, increase fairness in markets, and reduce corruption all around the world.

The solution, then, isn’t to curtail Bitcoin mining, but is to take advantage of green energy innovation.

The following five renewable energy technologies can (and should) be taken advantage of by the Blockchain mining industry to help drive sustainable growth:

  1. Geothermal

Geothermal energy is a completely renewable source of energy because it comes from heat stored within the Earth. One of the things that makes Earth an ideal planet for life is our molten iron core. It provides a magnetosphere that protects us from harmful radiation and other space-borne threats, and it produces heat that we can convert into electricity.

Places like Iceland, where volcanic activity pushes that heat closer to the surface, allow us to tap into this power at an affordable rate and with almost no environmental impact. Of all the renewable energy technologies, geothermal power provides some of the most consistent power output because it doesn’t rely on unpredictable aspects of mother nature,  like wind or sunlight. Additionally, geothermal energy is plentiful, with a total worldwide capacity of 12,894 MW.

A geothermal power plant in Iceland.

One major drawback of geothermal energy is that it has been limited to areas near tectonic plate boundaries. Consequently, drilling and exploration for geothermal energy is very expensive. However, recent advances in technology have expanded the range and size of viable geothermal resources. As a result, the cost of generating geothermal power has decreased by 25% in the past 20 years, with geothermal costs per kWh now ranging from 6 to 8 cents per kWh.

  1. Solar Power

Of all the renewable energy technologies, solar power is the most widely used. Photovoltaic panels use radiation from the sun to produce electricity, generating green energy wherever there is consistent sunlight.

The cost of solar power has decreased since 2013 by more than 60%, and has actually reached grid parity in many locations. Commercial solar costs are now $0.07 per kWh and utility grade solar is at $0.06 per kWh. In 2016, total global solar power installed capacity reached 302 GW, which is roughly 1.3–1.8% of total worldwide electricity demands. This figure is predicted to reach 500 GW by 2020. Experts predict that by 2050, solar power will be the largest source of electricity globally.

One reason solar power is so desirable is that it is easy to install and maintain. However, solar panel output is impacted by weather and pollution; if it’s cloudy outside, solar electricity output can decrease by 40% or more. Output also varies throughout the year as the sun’s path changes. Summer typically yields the most electricity.

Solar panel efficiency is measured by the portion of sunlight that Photovoltaic panels can convert into useful energy. In most cases, efficiency levels of solar power range from 14% to 23%.

Another drawback with solar power is that output stops at night. This challenge can be offset by feeding excess power into the grid during the day. Since this method offsets nighttime consumption, it has become known as a “virtual power station.” Solar providers and users who do this can receive financial incentives via a feed-in tariff, or they can be credited through net-metering.

Another solution is to store excess power generated during the day in energy storage systems that can then be used at night. Battery technology is still quite expensive, although major technological advances are being made in this space. It is likely that energy storage costs will start coming down in the next few years, as commercial production and competition increases.

  1. Waste Energy

Waste energy uses various waste outputs as sources for recycled energy. This approach can be divided into two technology streams: thermal and non-thermal.

Thermal waste energy plants incinerate organic waste to produce heat. That heat is used to drive a steam turbine to produce electricity. Although this technology produces some CO2 emissions and other toxic gases, it tends to emit fewer CO2 emissions than other outdated non-renewable approaches, thanks to strict emission controls enforced by Europe and other energy-conscious markets.

The second type of waste-to-energy plant, non-thermal, uses bacteria to break down organic waste into methane gas. Methane gas is highly flammable, and is burnt to drive a generator that produces electricity. The CO2 emissions originating from the burning of methane gas are much lower than other fossil fuels. However, methane gas itself has a high Global Warming Potential (GWP), so measures need to be put in place to prevent methane gas from escaping into the atmosphere.

A waste-to-energy plant

At the end of 2015, the U.S. had 71 waste-to-energy generating plants with 2.3 GWs of installed capacity in 20 states. Waste-to-energy plants typically have an efficiency of 14 to 28%. In colder climates, the waste heat is usually recovered to provide local heating. This approach improves the overall efficiency of the plant. The efficiency of a WtE plant is measured by the amount of useful energy that can be extracted from the organic waste and turned into electricity.

A major advantage of waste-to-energy plants is that they reduce the number of landfill sites required for municipal waste. Unfortunately, they also divert waste from being recycled.

A major drawback of waste-to-energy plants is the need for a steady supply of organic waste. When utilizing waste-to-energy methods, long-term agreements with waste suppliers need to be put in place to secure consistent organic waste resources. Waste-to-energy plants also need to be located as close as possible to the waste supply to limit transport costs and subsequent greenhouse gas emissions.

  1. Hydropower

Hydropower is one of the oldest types of renewable energy technologies; the first hydropower plant was installed in Niagara Falls in 1879. Hydropower takes mechanical energy from the flow of water and turns it into electrical energy.

hydro-quebec

It’s also one of the cheapest and most consistent forms of renewable energy, as its power output can be maintained, as long as water is flowing. The efficiency of hydropower is also the highest out of all the renewables, at 90%. Compared to the most efficient fossil fuel-based power plant, which has 50% efficiency, hydropower is an incredibly desirable source of renewable energy.

Hydropower may be a cleaner source of energy with a low carbon footprint, but it is not without environmental issues. Hydropower can be destructive to the local environment. This form of energy generation requires the damming of rivers, which can harm local wildlife if not done careful. It is often necessary to conduct an environmental impact assessment to help prevent unforeseen complications.

Small-scale hydropower can be a good option if a facility is located close to a fast-moving river that flows consistently throughout the year.

  1. Tidal Power

As a relatively new renewable energy technology, tidal power has not yet received widespread adoption. However, there is potential for growth. A form of hydropower, tidal power uses the kinetic energy of tidal movements in the sea to generate electrical energy.

The technology has traditionally suffered from high implementation costs, and there are a limited number of suitable sites with sufficient tidal ranges and velocities. However, recent advances have expanded the number of suitable sites. Implementation costs are also expected to come down as the technology scales.

A tidal power plant in France.

The largest tidal generator is in South Korea and consists of 10 tidal wave generators with a total installed capacity of 254 MW.

The technology can be split into 4 different subtypes:

Tidal stream generator: Similar to wind turbines, but these turbines sit underwater and use the kinetic energy of water flow to drive the turbines.

Tidal barrage: Tidal barrages use the potential energy found in the difference between low and high tides to generate electricity.

Dynamic tidal power: Dynamic tidal is a relatively new and untested technology, but holds potential promise. It proposes that long dams be built out to sea from the coast without enclosing the area. This will introduce tidal phase differences, leading to a significant water-level differential and strong coast-parallel oscillating tidal currents in shallow coastal seas.

Tidal lagoon: Another new approach to using tidal power as a renewable energy source, tidal lagoon power, consists of constructing circular retaining walls embedded with turbines that can capture the potential energy of tides. The created reservoirs are similar to tidal barrages, except that the location is artificially created.

Tidal power is still in its infancy, and there are still a limited number of suitable sites across the globe. A fair amount of time, money, and effort is required to conduct feasibility studies to identify suitable sites. Still, the technology holds a lot of potential and will continue to mature over time.

Conclusion

The total energy consumption of the Bitcoin mining network has increased in recent years and to help maintain the pace of innovation it will be essential for the industry to consider green energy alternatives. Energy forecast models show energy consumption of the network increasing even more in the next year so looking into these new sources of power will help keep the mining industry running with a minimal impact on the environment.

In some countries, like China, most of the energy used for Blockchain mining originates from dirty fossil fuel power stations, which goes against the international community’s efforts to promote clean energy. Other more responsible mining companies are building facilities based on purely renewable energy and are making infrastructure investments that will help developing markets adopt green energy practices.

It’s the responsibility of the Blockchain mining industry to support the uptake of sustainable energy, both for their facilities and also for larger infrastructures and markets. By seeking ways to increase energy efficiency and developing green energy infrastructure, mining companies will reduce their energy costs and decrease the impact that digital currency has on the environment. The result will be continued innovation in the blockchain sector and a more decentralized, environmentally-friendly future.

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Crypto Mining Giant Canaan Unveils First-Ever Bitcoin Mining Television


Canaan Creative has launched what it hopes will be the future of the blockchain and the first of a series of releases that will improve its position as it battles for increased market share in the bitcoin mining device market.

Dubbed the AvalonMiner Inside, the smart TV also doubles as a bitcoin mining device, and while some dismiss it as a marketing stunt, Canaan believes that this could be the future of bitcoin mining.

The ASIC Killer?

Canaan Creative is the world’s second-largest maker of bitcoin mining equipment behind Bitmain. While Bitmain controls an estimated 70 percent of the mining rig market in addition to its substantial bitcoin mining operations, Canaan controls about 17 percent.

Canaan’s ‘AvalonMiner Inside’, has the capacity to process 2.8 trillion hashes per second which might sound like a lot, until the capacity of existing ASIC rigs is taken into consideration. The most powerful mining rig in Canaan’s current inventory can process 11 trillion hashes per second, which means that the AvalonMiner Inside only has about a quarter of the power available to a regular mining rig.

Even including the added features like voice control, real-time bitcoin mining profitability display and a link to Canaan’s entertainment platform where users can pay for content and gifts using mined bitcoin, this still does not seem on the surface to be a device that is practical.

The catch however, is that Canaan has not built a device that is intended to directly compete with Bitmain’s Antminer or other comparable ASIC miners. What Canaan is trying to do is to build a new generation of blockchain-enabled IoT devices that blend into the background.

These devices will expand the blockchain and increase its hashrate while simultaneously reducing the centralization risk inherent to the dominant model of large bitcoin mining farms. Instead of taking on Bitmain in a potentially painful price war on a turf that has only one clear leader, Canaan hopes to democratize bitcoin mining by making people buy mining devices for reasons other than bitcoin mining.

A network of five million networked devices operating at 25 percent of an ASIC miner’s capacity will, in theory, produce better results than a network of 500,000 ASIC miners working at full capacity.

Criticisms and Upcoming IPO

Some, however, insist that the device is little more than a self-promotion gimmick, offering no real utility to users. Speaking to the South China Morning Post recently, Xiao Lei, a bitcoin analyst bsed in Beijing said:

“It looks more like hype. It will be more meaningful if these companies are able to embed the mining function into existing major TV brands.”

CCN reported in May that Canaan’s big rival Bitmain is set to go public in a record-breaking IPO. Canaan itself recently filed for its own upcoming IPO in Hong Kong estimated at $1 billion, and it no doubt has an eye on Bitmain’s existential threat with the launch of the new device.

An excerpt from its IPO filing reads:

“If we cannot maintain the scale and profitability of our single line of system products and, at the same time, offer new products, our ability to continue to grow will suffer.”

The Chinese government’s stance on cryptocurrency mining and exchange activities poses another significant risk to Canaan’s business. According to the South China Morning Post, this is a major motivation for Cannan’s proposed plan to list in Hong Kong instead of mainland China.

Featured image from Canaan.

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Russia Reports 15% Increase in Number of Crypto Mining Companies

Economics

The Russian crypto sector is expanding. The number of businesses operating mining facilities has increased this year, more Russians own cryptocurrency. Data confirming these trends has been presented by the country’s crypto and blockchain association, which also warned that delayed embrace of digital financial technology costs Russia a trillion rubles each year.

Also read: Swissquote Reports 44% Increase in Profit After Adding Cryptocurrency Services

75,000 Businesses Mine Cryptocurrencies in Russia

Russia Reports 15% Increase in Number of Crypto Mining CompaniesThe Russian Federation, a vast country rich in energy resources including cheap electricity, has what it takes to become a major crypto mining destination. Recently released statistics show that this modern sector of the economy is rapidly developing.

The number of crypto mining companies has increased by 15% in H1 2018 to a total of 75,000, according to the Russian Association of Cryptocurrencies and Blockchain (RACIB). Quoted by the Prime news agency, the association’s president, Yuri Pripachkin, summarized:

According to the results from the first half of this year, the number of mining enterprises in Russia has increased by 15%, to 75,000. The mining industry already employs 350,000 people. As of July 2018, Russia accounts for about 6% of the world’s mining market, which is 1% more than a year ago, while the US and Canada hold the leading positions.

Pripachkin shared the numbers with reporters on the sidelines of the first meeting of the Council on the Digital Economy of the Federation Council, the upper house of Russia’s parliament. Not everything in his comments, however, sounded optimistic. RACIB’s president warned that Russia actually risks missing the opportunity to become a digital financial leader. He stressed that “digital money is already a given” and Russia’s delay in accepting and adopting it “means a loss of investments of up to 1 trillion rubles a year” (>$15 million USD).

To prove his point, Yuri Pripachkin quoted a Morgan Stanley report, according to which the top five countries by trading volume of cryptocurrencies in H1 2018 are Malta, Belize, the Seychelles, the United States, and South Korea, and by number of crypto exchanges – the United Kingdom, Hong Kong, the US, Singapore, and Turkey. Russia is not in either of these groups, he noted. At the same time, RACIB claims the number of Russians owning cryptocurrency has increased this year from 2.5 to 3 million.

Russian Crypto Sector Expects Regulations This Fall

The newly released data confirms what is already obvious – the Russian crypto industry is developing at a fast pace, despite the lack of comprehensive regulations. The final adoption of three bills aimed at legalizing crypto transactions and activities has been postponed until the fall session of the State Duma, the lower house of the Russian parliament.

Russia Reports 15% Increase in Number of Crypto Mining CompaniesIn July, Russian crypto media published information about the employment and remuneration in the fintech sector. According to the statistics, the average salary in the industry has fallen by 40% from the 2017 record levels but, nevertheless, it remains relatively high for Russian standards, 10 times higher than the country’s average for certain professionals.

Earlier, RACIB announced that 70,000 Russians are employed in the crypto sector, a figure that obviously excludes those hired by mining companies. Meanwhile, Russian job search platforms have registered strong demand for crypto and blockchain experts, including PR specialists, software developers, and project managers. Responding to the need for qualified professionals, a number of Russian universities have started offering educational courses and postgraduate programs on cryptocurrencies and blockchain technologies.

What are your expectations for the future of the crypto industry in Russia? Tell us in the comments section below.


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Blockstream Buys Mining Equipment From Chinese Manufacturer Innosilicon

Mining

Blockstream, one of the largest Bitcoin Core funding contributors, has evidently bought a lot of cryptocurrency mining equipment from the Chinese electronics hardware manufacturer Innosilicon. Does this mean that the company is setting up its own mining center?

Also Read: Thomson Reuters Eikon to Display Data on 50 Cryptocurrencies From Cryptocompare

Blockstream Buys Mining Equipment

Blockstream Buys Mining Equipment From Chinese Manufacturer InnosiliconPublicly available international shipping data (a bill of lading) reveals that a large amount of Innosilicon mining rigs has been imported from China to the US by Blockstream, the Bitcoin Core company focused on developing sidechains. Four containers holding 62 pallets marked as “TI” were sent from Hong Kong and arrived on July 26, 2018 at the port of New York/Newark, New Jersey.

“TI” is very likely referring to Terminator by Innosilicon, the ASIC manufacturer’s SHA256 miner whose latest version units are sold for $1118 USD each. And with each pallet possibly holding up to 72 units, this would mean that Blockstream could have bought about 4650 Terminators for a total value of almost $5.2 million. The company has not announced it is opening a new mining center as of yet, but such a large order would definitely suggest that is an imminent possibility. The typical hash rate of a Terminator unit reaches 17.2TH/s, giving such a center almost 80PH/s.

Background Information

Blockstream Buys Mining Equipment From Chinese Manufacturer InnosiliconBlockstream was co-founded by Adam Back, Gregory Maxwell, Pieter Wuille and others back in 2014, and is still headed by Adam Back, the CEO. It is now mainly known for developing implementation prototypes for the lightning network. If you are not familiar with the company and want to get more background information about it, David Shares recently published an Op-Ed about why is Blockstream working with former spies.

Innosilicon is a design company offering low cost, high-performance, cross-foundry, fully customizable solutions. It produces devices in areas such as tablets, cell phones, TVs, cameras, networking equipment and more. When Halong Mining launched its Dragonmint rigs earlier this year there were speculations that the machines were just rebranded Innosilicon Terminators.

What could Blockstream be doing with this much Innosilicon equipment other than set up its own mining center? Share your thoughts in the comments section below.


Images courtesy of Shutterstock, Blockstream, Innosilicon.


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Crypto Mining Firm CEO Exit Scams with $35 Million in Investor Funds


The CEO of Sky Mining, a crypto mining company in Vietnam, has disappeared with investor funds totaling about $35 million, according to a local news outlet.

About 20 investors of Sky Mining reported the matter to the local police in the Phú Nhuận District after learning that “approximately 600 mining machines had been removed” by imposters who had claimed to be maintenance workers. The investors were also alarmed when they noticed the company’s central office was shut down and its branding removed. The investors believe the company’s CEO, Lê Minh Tâm — who had been unreachable for a week — had run off with the stolen funds.

Le Minh Hieu, deputy chairman of Sky Mining, shared the same sentiment. In an interview with the local media, he said it was possible Tâm stole the mining rigs along with the funds. While maintaining his innocence in the fraud, he said, “[The board] has reported this to the police and showed evidence that we are not guilty, he said. “We are victims, too.”

In a twist of events, Tâm, who had not been in contact with any of his colleagues since the incident was reported, posted a 44-second video on Telegram, where he claimed to be receiving medical treatment and promised to return investors funds.

“You will have your money, thank you for your cooperation, I did not run or go anywhere, I will come back soon,” he said.

The Sky Mining app store claims to have more than 1,000 machines operating around the clock, allowing investors to rent mining rigs to earn passive income over a period.

The company hosted events in Hanoi and HCMC to attract investors in which its officials claimed it was the biggest cryptocurrency mining company in Vietnam.

Investors were advised to invest a minimum of $100 to $5,000 in each of the rigs, which were kept at a storage center owned by Sky Mining. The company also promised investors a mouth-watering ROI plus commissions for inviting new members.

Cryptocurrency mining has been on the rise in Vietnam, as businesses lure investors with an attractive monthly interest in addition to capital invested. According to a Xinhua report, Vietnam imported over 6,300 mining devices from January to April in 2018 and over 9,300 in 2017.

Last month, Vietnam’s Central Bank agreed to enforce stricter restrictions on digital currencies by suspending the importation of crypto mining devices.

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Crypto Mining CEO Said to Disappear With $35 Million In Funds

The chief executive of a cryptocurrency mining startup has reportedly disappeared with $35 million in client investments, Newsweek reported Monday.

Le Minh Tam, head of Vietnam-based Sky Mining, has been missing since July 26, according to the report. The startup, which claimed it would rent crypto miners to investors for between $100 and $5,000, received funds from roughly 5,000 individuals prior to Tam’s disappearance last week. Each miner would promise a 300 percent return over a year, with investors keeping the machines for at least 15 and up to as many as 18 months.

However, when one group of investors went to pick up their miners last Friday, they found that the firm’s mining facility and office were empty, and that the mining machines had already been taken away. Tam later reportedly claimed he sold them to cover financial losses, and that his disappearance was aimed at protecting his life.

He sent a similar message on Sunday, claiming that he would return, but Sky Mining deputy chairman Le Minh Hieu claimed the CEO had stolen the funds and relocated to the U.S.

Some investors have already filed lawsuits against the firm, though it is unclear if they will receive their funds back.

Vietnamese news outlet VnExpress reported that Tam controlled every aspect of the company, overseeing all mining operations and controlling all the funds.

Hieu said he tried to set up a temporary board to run the company in Tam’s absence, but death threats against him and his family forced him to shut it down.

Thief image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Vietnam: Crypto Mining Firm CEO Allegedly Flees With $35 Mln in Investor, Company Funds

The CEO of Vietnamese cryptocurrency mining firm Sky Mining has reportedly disappeared with investor and company funds worth an alleged $35 million, local media outlet VNExpress reported July 29.

According to VNExpress, Sky Mining CEO Le Minh Tam disappeared a week ago, appearing to organize a cleanout of company assets.

VNExpress notes that Sky Mining CEO Tam — although he has not been found in person —

apologized for “everything” to investors in a Facebook post on Wednesday, explaining that the company’s profitability had fallen with the market’s volatility.

Tam told investors to go to the company office in order to regain their capital, after which he would declare bankruptcy. However, investors found that Sky Mining’s Ho Chi Minh City headquarters building is closed and all of the signage has been removed, VNExpress writes.

The firm’s 600 miners housed in a separate facility in a neighboring district were also discovered to have been taken away by people “claiming to be maintenance workers.”

Le Minh Hieu, deputy chairman of Sky Mining, has already formed a “board” dedicated to assisting investors who lost money, as well as assessing the extent of the losses and remaining asset value.

Hieu noted that he was not able to give details about the company’s assets, as Tam was directly in charge of the mining rigs, but investors estimate the loss to be around $35 million, VNExpress reports.

Hieu told VNExpress that he believes Tam left for the U.S., adding,

“[The board] has reported this to the police and showed evidence that we are not guilty. We are victims too.”

Of those affected, twenty investors have also filed a complaint with local police, the publication adds.

The debacle comes three months after the collapse of a major ponzi scheme engulfed Vietnamese consumers who invested in two pseudo-Initial Coin Offerings (ICO). A reported 32,000 people lost money after company officials absconded, allegedly stealing as much as $660 million.

Last week, authorities in Vietnam banned local companies from engaging in activities related to cryptocurrencies. Earlier in July, the country’s central bank also voiced support for a ban on imports associated with cryptocurrency mining.

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Mining Round-Up: Sky Mining CEO Flees with $35 Million, Texas Attracts Miners

Mining

In recent mining news, it has been alleged that the CEO of Vietnam-based Sky Mining has fled the country with $35 million USD in investor funds in his possession. Meanwhile, in the US, Tmgcore has acquired a 100-megawatt data center in Dallas, Texas, and local media have reported that Bitmain will open a mining facility in a former aluminium smelter in Rockdale, Texas.

Also Read: Market Caps for Privacy-Centric Currencies Have Dropped Significantly

Investors Allege CEO of Vietnamese Mining Company Fled to U.S. With $35 Million

Mining Round-Up: Sky Mining CEO Flees With $35 Million, Texas Attracts MinersInvestors and board members of Ho Chi Minh City-based Sky Mining have expressed fears that the company’s chief executive officer, Le Minh Tam, has fled the country and run away with approximately $35 million USD in investors funds.

According to local media, Mr. Tam has not been contactable since Monday, with the exception of an apology note posted to investors on Wednesday via Facebook. Investors reportedly visited the company’s main office in Phu Nhuan District to discover “the building closed and the company nameplate removed.” Additionally, “all 600 mining machines in the company’s factory in the neighboring Dong Nai Province’s Bien Hoa Town had been taken away by a group of people claiming to be maintenance workers.”

Le Minh Hieu, the deputy chairman of the company, is forming a temporary board to “support investors and calculate the remaining asset[s] of the company,” and has accused the CEO of fleeing to the United States. “[The board] has reported this to the police and showed evidence that we are not guilty,” said Mr. Hieu.

Bitmain to Open Mining Facility in Former Aluminum Smelter

According to local media, Bitmain will be opening a bitcoin mining facility in a former aluminum plant in Rockdale.

Jeff Mosier, an energy and environment reporter for Dallas News, states: “The new Bitcoin mining facility is going to be opening at the former Alcoa Aluminum smelter, and that’s next door to the coal plant that just closed. So now that that’s gone, they have a big industrial facility with lots of electricity infrastructure [capable of] Bitcoin mining, which is essentially a huge server farm.”

No indication has been made as to when the facility will launch operations, however Dallas News reports that a listing on job site Indeed.com indicates that Bitmain Technologies is seeking to employ a project manager for the Rockdale location. According to the publication, the facility is expected to create “300 to 500 jobs.”

Tmgcore Purchases $60 Million Data Center in Dallas

Mining Round-Up: Sky Mining CEO Flees With $35 Million, Texas Attracts MinersMining company Tmgcore has acquired a “$60 million USD, 150,000-square-foot data center” in Plano, Dallas, according to local media.

The facility is reportedly capable of a 100-megawatt power load, with the Tmgcore chief executive officer, JD Enright, stating: “One of the things you need is a lot of power, and there’s not a lot of places with 100 MW lying around.”

Mr. Enright claims that the company has “developed a two-phase liquid cooling Immersion technology to dramatically decrease cooling costs by up to 90 percent, allowing us to mine anywhere — even in Plano in the middle of the summer.”

Do you think that Texas will continue to see investment from cryptocurrency mining companies? Share your thoughts in the comments section below!


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New Crypto Mining Malware Targeting Corporate Networks, Says Kaspersky

Researchers at Kaspersky Lab have uncovered a new form of cryptojacking malware targeting corporations in multiple countries, the cybersecurity firm reported Thursday.

PowerGhost, a form of fileless malware – which uses a system’s native processes to hijack a computer – has reportedly been spreading on corporate networks in India, Brazil, Colombia and Turkey. The software mines an undisclosed cryptocurrency once installed on a computer.

The miner “is capable of stealthily establishing itself in a system and spreading across large corporate networks infecting both workstations and servers,” Kaspersky reported.

Illicit crypto miners have been rapidly rising in popularity among the web’s criminal fraternity, being hidden in apps and websites to quietly harness user devices to earn the hackers cryptocurrency. Now it seems the methods they use are evolving.

“It appears the growing popularity and rates of cryptocurrencies have convinced the bad guys of the need to invest in new mining techniques – as our data demonstrates, miners are gradually replacing ransomware Trojans,” said Kaspersky.

Principal security researcher David Emm agreed, telling ZDNet:

“PowerGhost raises new concerns about crypto-mining software. The miner we examined indicates that targeting consumers is not enough for cybercriminals anymore – threat actors are now turning their attention to enterprises too. Cryptocurrency mining is set to become a huge threat to the business community.”

The firm’s report echoes concerns shared by other cybersecurity firms. Earlier this month, Skybox Security also stated that cryptojacking had become more popular among bad actors than ransomware.

At the time, Skybox called cryptojacking malware “a money-making safe haven for cybercriminals.”

Infected network image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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HashFlare’s Exit and the Future of Cloud Mining

The views expressed here are the author’s own and do not necessarily represent the views of Cointelegraph.com.

Cloud mining — a service that enables individual users to lease hashing power from dedicated cryptocurrency mining operations — came forth as professionalization and cartelization of the mining business began to drive out smaller and insufficiently equipped players from the scene.

Since there is no way to verify that the share of the mining rig you are supposedly leasing actually exists — even if returns on your investment seem to be flowing regularly at first — the scheme is widely regarded as a happy hunting ground for scammers. Perhaps the only way to steer clear of fraud is to rely on the reputation of the established cloud mining brands. But with the outbreak of the recent scandal around the cloud mining platform HashFlare, this option might also soon be off the table.

HashFlare, one of the leading names in the business, announced on July 20 that it has dropped its mining service of active SHA-256 Bitcoin contracts, pursuant to a clause of the platform’s terms of service reading the following: “The Mining process will stop if the Maintenance and Electricity Fees will become larger than the Payout. If mining remains unprofitable for 21 consecutive days the Service is permanently terminated.”

Citing the ongoing “difficult time for the cryptocurrency market,” the firm claimed that by July 18, the payouts were lower than the maintenance fees for 28 days in a row, which activated the clause allowing for the the conclusion of the contracts. The statement implied that HashFlare would be open to resume Bitcoin mining, should more favorable market conditions arise. Apparently, the cease only concerned Bitcoin contracts, as operations with other crypto assets available in the firm’s portfolio — such as Litecoin and Ethereum — proceeded as usual.

While this July has not been the brightest month ever for the crypto market, especially in comparison to December 2017, many users have rightfully questioned HashFlare’s reasoning. After briefly touching the floor at just above $6000 in the first days of the month, Bitcoin prices entered a steady upward trend, coming close to $8000 by the day that the contract termination was announced.

Additionally, the first week of the month saw the Bitcoin network’s hashrate drop massively as a result of heavy floods in the Sichuan province of China, home to a dense conglomeration of mining rigs. This should have led to a corresponding decrease in difficulty for the rest of the nodes. Even before the disaster, around the time when the mining platform’s dry season allegedly started in mid-June, the network’s hashrate plummeted to around 30 TH/s. As the HashFlare’s account of things seemed to stand in contrast with a widely accepted version of reality, the allegations of fraud began to pour out.

Stranger things

The cost structure for participating in the HashFlare enterprise consists of two types of payments: a one-off investment in the processing power itself, and recurring maintenance fees — normally covered from mining profits. One of the several poignant circumstances accompanying the announcement is that the cloud mining operator decided to terminate the contracts without reimbursing users for the remainder of the annual contract fees, which they had paid upfront.

The current mishap appears to be at least the second time on record when HashFlare unilaterally altered its contractual commitments. 11 months ago, the platform switched all SHA-256 and Scrypt contracts from lifetime to one-year, on the grounds of global mining hardware scarcity. Obviously, many cloud miners did not appreciate this development and there was even a petition on Change.org with some 2,500 signatures.

Coincidentally, those who held lifetime contracts before September 2017 can derive some satisfaction from the fact that, in the wake of the recent debacle, their losses were modest. Since the yearly contracts that relaunched 11 months ago were set to expire late August, these customers are only losing a month’s worth of shares of their yearly investment in hashing power. Compared to them, people who jumped in during the year are suffering a greater degree of damage, with the most recent investors finding themselves in the worst-case scenario.

Granted, infuriated cloud miners took to Twitter and Reddit right away. A sizeable group of people who suspected HashFlare of being a scam finally had the chance to savor their ‘I told you so’ moment. The Twitter user who goes by the moniker ‘Madoff wasn’t on the blockchain’ and specializes in exposing crypto fraud, gloated over what he considered evidence that HashFlare never really had actual mining facilities — despite boasting a brand new data center just a few months earlier. He also brought up a February interview with the firm’s customer relations manager Edgar Bers, pointing to numerous ‘red flags’ — inconsistencies that allegedly indicated the operation’s fraudulent nature.

While some users reported they were able to initiate the chargeback process for HashFlare payments with their credit card issuers, the less lucky ones said they were considering a class action lawsuit. The operator is based in Estonia, so strict European consumer protection laws could be potentially applicable to the case. However, some observers surveyed by Blockonomi noted that, by the time the claim makes it to court, the defendant could cease to exist or fight back by exposing the users’ personal data.

Another odd detail that plays right into the ‘scam’ argument is the new withdrawal regulations that HashFlare put in place just days before dropping the Bitcoin contracts. All of a sudden, the mining operator urged users to comply with a set of KYC procedures, severely restricting the ability of those who failed to comply to move their funds out of the platform. Assuming malicious intent, this move could serve at least two purposes: hindering the flight of capital upon the release of the news and getting some leverage over the disgruntled users who will make it to the courtroom.

Cloud mining’s dim future

Albeit there are many considerations that could point to malice, none of them look indisputable. In terminating the contracts, HashFlare followed the clause of their own terms of service, which every user had to sign upon registration. These terms were found to be unaltered since at least last year. The clause in question does not specify a particular entity that is supposed to certify that maintenance and electricity fees indeed exceeded the mining payouts. And. even if the evidence that those data centers actually exist is scarce, robust evidence that they do not exist is even scarcer. Hopefully, a trusted third party will soon enter the scene to shed some light on the true state of affairs.

Meanwhile, HashFlare’s competitors are doing just fine. Users on another major cloud mining platform — Genesis Mining — reported getting payouts on their contracts as usual. So did the customers of Minergate. HashFlare’s fluke might well provide a short-term PR boost to other major players in the field, as well as an influx of new users who will want to switch to a presumably more reliable operator. But, in the long run, the fallout from the demise of one of the most prominent cloud mining operations could prove a massive blow to the whole industry.

Cloud mining already has a reputation of a risky endeavor: While contracts are usually long-term and initial payments fixed, fluctuations of crypto prices render such investments a roulette. Especially with Bitcoin, massive crowds of new miners constantly enter the market, driving the hashrate up. A recent report by CoinJournal highlights the tremendous rate of its growth over the last several months. This is good news for the crypto industry at large, meaning that — despite the relatively unimpressive price dynamics of 2018 — more and more resources are pouring into the network. Yet, for mining enterprises, this primarily signals more competition, spelling death for those who come up short in the arms race.

Against such a backdrop, the lack of trust in service providers might become a deal-breaker. Why engage in an increasingly precarious activity that promises fewer payoffs, especially when you cannot be entirely sure that the platform facilitating your engagement is trustworthy? If HashFlare’s case entrenches in mass consciousness as a poster for cloud mining services, the model is unlikely to survive the ongoing hashrate rush.

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Mining Round-Up: AMD GPU Sales Decline, Hut 8 Claims to be Largest Miner in Canada

Mining

In recent mining news, AMD has reported declining sales of mining hardware during the second quarter of 2018, Hut 8 has claimed to now comprise the largest bitcoin mining company in Canada by operating power following the construction of its second facility, and Chinese authorities have shut down what they have described as “illegal” mining operations taking place in the autonomous Xinjiang Uyghur region in the country’s north-west.

Also Read: Binance Prepares to Enter the South Korean Market

AMD Reports Declining GPU Sales During Q2

Mining Round-Up: AMD Reports Declining GPU Sales, Hut 8 Claims to be Largest Mining Company in CanadaMajor manufacturer of graphics cards (GPUs), Advanced Micro Devices (ADM), has become the latest mining chip maker to report declining sales during Q2, 2018.

It the company’s latest quarterly earnings report, AMD reports a 3% quarter-to-quarter decline in revenues generated by the company’s Computing and Graphics division. The chief executive officer of AMD, Lisa Su, also indicated that roughly 6% of the company’s revenue came from mining hardware sales during Q2 – down from 10% during Q1.

The report states: “Computing and Graphics segment revenue was $1.09 billion, up 64 percent year-over-year and down 3 percent quarter-over-quarter. Year-over-year revenue growth was driven by strong sales of Radeon products and continued growth of Ryzen products. The quarter-over-quarter decline was primarily related to lower revenue from GPU products in the blockchain market.”

Looking forward, the report anticipates further decline in GPU sales, stating: “For the third quarter of 2018, AMD expects revenue to be approximately $1.7 billion, plus or minus $50 million, an increase of approximately 7 percent year-over-year, and non-GAAP gross margin to increase to approximately 38 percent, driven by the sales growth of Ryzen and EPYC products, partially offset by lower sales of GPU products in the blockchain market.”

Hut 8 Completes Construction of Second Facility, Claims to be Largest Miner in Canada

Mining Round-Up: AMD Reports Declining GPU Sales, Hut 8 Claims to be Largest Mining Company in CanadaHut 8 Mining Corp. has announced the completion of the construction of its second bitcoin mining facility which is based in the city of Medicine Hat.

According to a press release issued by Hut 8, the new facility hosts 40 “BlockBox datacenters” at the site, representing “48 MW of operating power.” The company now claims to wield a total of “66.7 MW of fully-funded operating power.“

Andrew Kiguel, the president and chief executive officer of Hut 8, stated: “As a result of our employees’ hard work, our partners at the Bitfury Group and the cooperation from the City of Medicine Hat, our construction is complete – ahead of schedule and on budget. We are pleased to have surpassed our September 2018 completion target. With 66.7 MW of aggregate operating capacity, we believe we are the largest cryptocurrency miner in Canada and the largest publicly-traded cryptocurrency miner by operating capacity in the world. In addition, we are actively pursuing further opportunities to deliver value to our investors.”

Since beginning operation in December 2017, Hut 8 claims to have mined more than 1,900 BTC.

China Cracks Down on “Illegal” Mining in Autonomous Xinjiang Uygur Region

Mining Round-Up: AMD Reports Declining GPU Sales, Hut 8 Claims to be Largest Mining Company in CanadaChinese media have reported that the Xinjiang Uygur Autonomous Region Economic and Information Technology Commission has issued a “notice on the removal of illegal mining enterprises” which demands that mining companies in the region cease operations by the 30th of August.

The notice specifically targets “Unauthorized mining enterprises that fail to go through the formalities of industrial and commercial registration, tax registration, social security and other insurances in accordance with national laws and regulations” and “non-regulated electricity use.”

The notice adds that “the main body responsible for the […] illegal use of electricity shall be the power generation enterprise.”

When do you think that demand for mining hardware will again show growth? Share your thoughts in the comments section below!


Images courtesy of Shutterstock, hut8mining.com


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Swiss Crypto Mining Firm Faces Enforcement Action for Potentially Unauthorized ICO

The Swiss Financial Market Supervisory Authority (FINMA) has launched enforcement proceedings against crypto mining firm Envion AG over its potentially unauthorized token sale, according to a FINMA press release today, July 26.

Swiss-based Envion AG is an off-grid mining company that claims to use decentralized, clean energy to power its mobile mining units, and completed its month-long Initial Coin Offering (ICO) for the EVN token in mid-January this year.

FINMA’s investigation into the case to date suggests that in the context of its ICO, Envion AG accepted approximately 100 million francs (around $100.01 million at the time) from over 30,000 investors in return for issuing EVN tokens “in a bond-like form.”

The regulator clarifies that the proceedings are focused on “possible breaches of banking law resulting from the potentially unauthorized acceptance of public deposits” during the token sale.

While FINMA declines to comment any further on the case until it concludes its proceedings, the Swiss context provides a robust and differentiated framework for ICOs, the most recent version of which was released by FINMA in mid-February of this year –– a month after the conclusion of Envion’s fundraising.

Earlier guidance for domestic ICOs had been published by the regulator in September 2017, which set the precedent that token sale conduct would be considered “case-by-case” –– but notably already indicated that an ICO “generally necessitates” a banking license for accepting public deposits.

Earlier this month, Switzerland was ranked second “most favorable” country worldwide for ICOs, with the U.S. sealing the top spot and Singapore third. The research was based on publicly available data for the number of ICO projects per country which made it onto the ‘Top 100 ICOs’ global list by funds raised.

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Bitmain Discloses Shipping and Mining Policies for a ‘Fair and Transparent Ecosystem’

Chinese mining hardware giant Bitmain, one of the leading Bitcoin (BTC) mining firms worldwide, announced its policies for mining practices, according to an official blogpost July 25.

The recent list of policies intend to show Bitmain’s commitment to providing a “fair and transparent cryptocurrency ecosystem” in terms of policies for mining hardware shipping as well as those of mining practices.

Regarding shipping, Bitmain proposed four major measures including order quantity restriction, establishment of a “first-paid-first-ship” order of fulfillment, combatting “hoarding” practices, as well as publishing monthly reports on shipping updates.

Every 30 days, the company will disclose data advising the community on which algorithms Bitmain is mining for itself as well as the total hashrate of Bitmain hardware on those algorithms. The ASIC manufacturer will also provide regular shipping and volume information of new miners on the official Antminer Twitter account.

Bitmain reiterated its zero tolerance policy on “secret mining” practices. Secret mining is a process wherein ASIC manufacturers mine with new hardware before making that equipment available to the public. The company claimed that it has been always taken a negative stance towards the practice, emphasizing its “long-held zero-tolerance policy” on the matter. The company also clarified that it will not try to mine empty blocks:

“While often described as the result of sinister intent, empty blocks often occur because of issues in block propagation at the protocol level rather than active decision-making by mining pool operators.  We are actively working towards mitigating these issues.”

In August 2017, Antpool mining operator, managed by Bitmain, allegedly caused transaction delays and a surge of transaction fees by mining empty blocks.

Earlier this month, Chinese sources reported that Bitmain is now valued at $12 billion after a Series B funding round. Bitmain ostensibly raised between $300 million to $400 million from Sequoia Capital subsidiary Sequoia China, U.S. hedge fund Coatue, and Singapore-based governmental investment fund EDBI.

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Bitcoin Mining Giant Bitmain Eyes $1 Billion Pre-IPO Financing: Report


Already the world’s most valuable cryptocurrency company, Chinese bitcoin mining hardware manufacturer Bitmain is reportedly enticing investors toward a new $1 billion financing round ahead of its anticipated public listing in Hong Kong.

According to regional news resource Toutiao, Bitmain is looking at a new round of financing – its biggest yet – near the end of July that would see firm valued just a peg below semiconductor giant AMD, with a current market cap of $15.5 billion.

Notably, the funding round is valuing Bitmain at $14 billion pre-investment, a 16.5% increase from the company’s $12 billion valuation just last month after it closed a $400 million financing round. Altogether, Bitmain could be valued at $15 billion before the end of July if it completes its reported nine-figure funding round in the coming days.

Founded in 2013, Bitmain has become the dominant developer and manufacturer of application-specific integrated circuit (ASIC) chips that are commonly used to mine cryptocurrencies like bitcoin. According to the report, Bitmain sold $2.3 billion in ASIC chips, second only to Huawei as China’s leading IC developer in 2017. Bitmain also notched $2.5 billion in revenue with $1.25 billion in net profits last year.

Bitmain could be valued at $15 billion following its latest financing round.  Pictured: Bitmain’s Antminer ASIC chips. Source: Bitmain

Earlier this year, Bitmain CEO Jihan Wu revealed the company would strategize a marked foray into designing ASIC chips for applications in artificial intelligence (AI) technology. With an established product line under its AI chip brand ‘Sophon’, Wu estimates that Bitmain’s AI division could be responsible for up to 40 percent of the company’s revenues within five years.

Not content with raising finances, Bitmain has also been diversifying with a number of notable investments of its own. In May this year, Bitmain led a $3 billion financing round of Goldman Sachs-backed cryptocurrency exchange Circle, which announced plans to launch its own stable cryptocurrency pegged to the US dollar. The firm also gained a controlling stake in popular web browser Opera with a $50 million investment—— earlier this month. Opera has since launched an updated version of its browser – currently in beta – with a built-in Ethereum wallet that also supports ethereum-based tokens.

In a targeted expansion, Bitmain is also carving an entry into the traditional technology industry by rubbing shoulders among Silicon Valley’s elite with a new 20,000 square foot office in San Jose, California. The company is also expanding its research and development center in Israel, tripling its employee ranks in the country.

All of which sees a heightened and robust interest among venture capital giants and investors queuing up to get a piece of Bitmain before its anticipated initial public offering (IPO) in Hong Kong’s primary stock exchange later this year. Bitmain is expected to share its prospectus to the Hong Kong Stock Exchange and make a formal submission of its IPO in August ahead of its listing before the turn of the year. If successful, Bitmain could go public with a market cap of up to $40 billion, according to local Chinese media.

Featured image from Shutterstock.

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Quebec Approves Energy Rate Hikes for Bitcoin Mining Firms


Bitcoin mining firms looking to set up shop in Quebec will now have to pay more for electricity.

This is after the energy regulator of the Canadian province, Régie de l’énergie, gave the region’s utility firm, Hydro-Quebec, the go-ahead to impose a deterrent tariff that will see cryptocurrency miners paying double the rate that is levied on households and other utility customers. The rate for new cryptocurrency miners entering the province will now be 15 cents per kilowatt hour.

Ensuring Consistency in Supply

According to the Montreal Gazette, the new rates will be applicable until regulations for the sector are introduced. The rates will, however, not apply to existing agreements but will only affect deals that were inked after June 6 this year. The move is aimed at consistent supply, especially during peak demand.

“The Régie considers that the rates and conditions … will ensure the security of electricity supply in the particular context of massive, sudden, unexpected and simultaneous demands for the use of blockchain technology, including mining cryptocurrencies,” wrote Régie de l’énergie in a 45-page decision.

Regulatory Hearings

hydro-quebec
Source: Shutterstock

Hearings for the regulations aimed at the cryptocurrency mining sector are expected to begin next month. While Quebec enjoys huge quantities of surplus electricity, there is a danger of the province’s energy utility not being able to meet the needs of its regular customers during peak demand, especially in winter when the rate of consumption rises. Hydro-Quebec’s total electricity generating capacity is 37,000 megawatts.

The number of cryptocurrency miners in Quebec increased significantly last year following a 2016 campaign by the Canadian province to lure tech firms to build data centers in the region. At the time, the province, which possesses some of the lowest electricity costs in North America, touted its abundant hydro resources — which was compelling from an environmental point of view.

Bitcoin miners trooped to Quebec in even bigger numbers earlier this year after China started cracking down on bitcoin mining in the country, forcing some players in the sector to move overseas to hedge against a further clampdown.

Move Telegraphed by Officials Last Month

The decision to slap a deterrent tariff on cryptocurrency mining has, however, not come as a surprise since Quebec’s authorities had already hinted of such a move last month. While lifting a moratorium that had been placed on the sale of power to cryptocurrency miners, officials in the province indicated that the sector would be placed under a new tariff regime different from that of Hydro-Quebec’s residential clients.

Besides charging cryptocurrency miners higher prices, other solutions that had been put forward by the provincial government of Quebec included requiring miners to halt activity during times of peak electricity demand.

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The State Bank of Vietnam Suspends Import of Crypto Mining Hardware

The Vietnamese central bank, the State Bank of Vietnam (SBV) announced it will suspend the import of cryptocurrency mining hardware, according to local news agency Viet Nam News July 19.

The move followed an official request from the Ministry of Industry and Trade (MoIT), which suggested a temporary ban of imports of crypto mining machines, the volume of which reportedly amounted to 15,600 units from 2017 to April 2018. Most of the units were imported through Hanoi, Ho Chi Minh City, and Da Nang.

Deputy Prime Minister Trinh Dinh Dung had previously directed the MoIT, the SBV, and the Ministry of Finance (MoF), to study the import of cryptocurrency miners based on current regulations, and provide guidance on their management.

According to Viet Nam News, the suspension is supposed to improve the management of currency flows in Vietnam, since the use of crypto mining equipment in the country makes it more complicated. The temporary ban also intends to prevent the use of cryptocurrency as an alternative means of payment outside of the official currency, which was declared illegal in late 2017.

Vietnam’s Ministry of Finance (MoF) proposed a temporary temporary ban on crypto mining hardware imports in early June, citing the “very difficult” process of regulating newly mined digital currencies. By proposing so, the MoF aims to protect citizens from crypto scams, following an alleged $660 million scam in April. The scam involved two Initial Coin Offering (ICO) projects headed by a Vietnam-based outfit.

In May, the Hanoi Department of Industry and Trade prohibited institutions and retail entrepreneurs in the e-commerce field from using Bitcoin (BTC) and other cryptocurrencies to carry out online transactions.

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Bitcoin Mining Firms Make Chinese Unicorns List for First Time

Three bitcoin mining companies have joined a list of “unicorns” – private companies valued at over $1 billion – for the first time.

The Shanghai-based Hurun Research Institute published its Q2 Unicorn Index for the Greater China region on Wednesday, which notably included the names of several major bitcoin mining firms: Bitmain, Canaan Creative and Ebang. The third Hurun list of 130 Chinese unicorns has never before featured a fully cryptocurrency-focused firm.

Ranking highest of the three, Bitmain appears at 13th on the list with a valuation of around 70 billion yuan, or about $10.4 billion, close to other notable companies such as JD Logistics.

The ranking follows recent news indicating that Bitmain has completed a Series B round funding that could value the firm around $10 billion ahead of a potential initial public offering (IPO).

Meanwhile, Hurun values Canaan and Ebang at around $3 billion and $1.5 billion, respectively – figures that saw the firms placed at at 32nd and 53rd on the list, also respectively.

Recent reports have indicated that Canaan and Ebang too have both filed applications to go public on the Hong Kong Stock Exchange. However, since the IPO applications were in initial draft form, it is unclear how much the two were seeking to raise or what their valuations might be. According to a previous report from Reuters, in mid-2017, Canaan was estimated to be worth around $500 million.

While the three are the first fully devoted bitcoin firms to appear on the Greater China Unicorn Index, some of the companies already on the list have already made major moves in the blockchain industry.

For instance, Ant Financial – a payment affiliate of Alibaba that tops the list with a valuation of $149 billion – announced late last month that it has launched a blockchain-powered payment corridor between Hong Kong and the Philippines.

Further, OneConnect – a fintech development arm of Chinese insurance giant PingAn and valued at $7.4 billion – has helped the Hong Kong Monetary Authority engineer a blockchain trade finance platform that is set to go live by September.

Paper unicorns image via Shutterstock

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