Značka: mining

New BTC miner capitulation? 5 things to know in Bitcoin this week

Bitcoin (BTC) prepares to exit a grim November just above $16,000 — what could be on the menu for BTC price this week?In a time of what analyst Willy Woo has called “unprecedented deleveraging,” Bitcoin is far from out of the woods after losing over 20% this month.The impact of the FTX implosion remains unknown, and warning signs continue to flow in even after the first wave of crypto business bankruptcies.In particular this week, eyes are on miners, who are seeing profits squeezed by falling spot price and surging hash rate.Upheaval is in the air, and should another “capitulation” among miners occur, the entire ecosystem could be in for a further shock.As “max pain” looms for the average hodler, Cointelegraph takes a look at some of the main factors affecting BTC/USD in the short term.Bitcoin miners due “capitulation” — analystLike others, Bitcoin miners are seeing a major squeeze when it comes to selling accumulated BTC at a profit. It remains to be seen exactly how much financial pain the average miner is in, but one classic metric is preparing to call “capitulation” once more.Just months after the last such period, Hash Ribbons is warning that conditions are again becoming unsustainable.Hash Ribbons uses two moving averages of hash rate to infer conclusions about miner participation in the Bitcoin network. Crossovers of the trend lines denote capitulatory and recovery phases.For Kripto Mevismi, a contributor to on-chain analytics platform CryptoQuant, the time is approaching for the former to reappear.“So right now bitcoin difficulty is really high for miners so that means; costs are getting higher and doing business in this kind of environment is getting harder,” he wrote in a blog post. “That’s why miners do not work in full force. If they have efficient- new generation mining machines, they put them into work but that’s all. Inflation is high and people feels effect of living costs, bitcoin price is declining, mining cost and difficulty is getting higher. Tough environment for miners.”Bitcoin Hash Ribbons chart. Source: LookIntoBitcoinKripto Mevismi added that a significant change in mining difficulty could help the situation. Estimates from BTC.com for the next adjustment on Dec. 6 put the difficulty drop at 6.4% at the time of writing. Should it go to fruition, it will be the largest such drop since July 2021.BTC.com and others likewise estimate that hash rate is now declining from record levels as miners wind down operations.Bitcoin network fundamentals overview (screenshot). Source: BTC.comBTC/USD eyes volatility into monthly closeBTC/USD managed to stave off significant weekly losses at the latest candle close on Nov. 27.At around $16,400, the weekly close was a whisker higher than the previous week, with the pair still circling two-year lows, data from Cointelegraph Markets Pro and TradingView shows.BTC/USD 1-week candle chart (Bitstamp). Source: TradingViewWith a lack of volatility characterizing intraday price action, traders and analysts remain cautious on the next step.“It’s a long holiday weekend so expect things to get interesting as we move towards the Weekly and Monthly close,” on-chain analytics resource Material Indicators wrote in part of a tweet last week.A subsequent post reiterated that the Nov. 30 close would likely spark fresh instability, with BTC/USD currently 21.25% down versus the start of the month.This makes November 2022 Bitcoin’s worst November since its previous bear market year in 2018, data from Coinglass confirms.BTC/USD monthly returns chart (screenshot). Source: CoinglassOn shorter timeframes, popular trader Crypto Tony meanwhile highlighted $16,000 as a key zone to flip for higher levels to enter next, while keeping mindful of the longer-term trend.BTC/USD annotated chart. Source: Crypto Tony/ Twitter“Lower highs along with consolidating below a major resistance zone. If you want to enter safely, wait for a flip of the lows,” he summarized at the weekend.BTC/USD annotated chart. Source: Crypto Tony/ TwitterAs Cointelegraph extensively reported, Bitcoin’s next bear market bottom is the discussion point of the moment at present, and certain targets have become more popular than others.One vocal commentator calling for further downside, Il Capo of Crypto, thus reiterated his opinion that $12,000 could be next for BTC/USD.Highlighting the relationship between perpetual futures trading volume and spot price, he warned that current market structure was not supportive of further gains.“12000-14000 is likely. 40-50% drop for altcoins,” he stressed.Under the Bitcoin sea, hodlers accumulateBig or small, the population of the Bitcoin ecosystem is “aggressively” adding to its BTC exposure this month. In a positive sign for a future supply squeeze — where demand comes up against a larger portion of illiquid supply — accumulation appears to be gathering pace.According to on-chain analytics firm Glassnode, it is retail investors mostly responsible for the current trend.The smaller investors, referred to variously as “crabs” and “shrimps” depending on wallet balance, are increasing in numbers.“Bitcoin Shrimps (< 1$BTC) have added 96.2k $BTC to their holdings since FTX collapsed, an all-time high balance increase. This cohort now now hold over 1.21M $BTC, equivalent to 6.3% of the circulating supply,” Glassnode showed in a Twitter thread about the phenomenon.Bitcoin shrimp net position change chart. Source: Glassnode/ TwitterA further post noted:“Crabs (up to 10 $BTC) have also seen aggressive balance increase of 191.6k $BTC over the last 30-days. This is a convincing all-time-high, eclipsing the July 2022 peak of 126k $BTC/month.”Bitcoin "crab" net position change chart. Source: Glassnode/ TwitterAs Cointelegraph reported, part of the increase in smaller wallet numbers could be down to exchange users withdrawing funds to private storage.Woo flags inbound "max pain"For Willy Woo, the analyst behind popular statistics resource Woobull, on-chain metrics are pointing to Bitcoin’s next macro bottom being imminent.Highlighting three of them this weekend, Woo showed that to all intents and purposes, Bitcoin is behaving exactly as it did in the pit of previous bear markets.The portion of the BTC supply held at an unrealized loss, for example, is approaching macro lows, a phenomenon covered by the “Max Pain” model.“Bitcoin bottom is getting close under the Max Pain model. Historically BTC price reaches macro cycle bottoms when 58%-61% of coins are underwater (orange). Green shading adjusts for the coins locked up inside GBTC Trust,” Woo explained alongside a chart. Bitcoin Max Pain annotated chart. Source: Willy Woo/ TwitterContinuing, he noted that the MVRV Ratio value for BTC/USD is also targeting a “buy” zone, which has historically given investors maximum profit potential.MVRV is Bitcoin’s market cap divided by realized cap — the aggregate price at which each Bitcoin last moved. The resulting number has delivered buy and sell zones corresponding to price extremes.“MVRV ratio is deep inside the value zone,” Woo’s commentary stated. “Under this signal we were in already bottoming (1) until the latest FTX white swan debacle brought us back into a buy zone (2).”Bitcoin MVRV annotated chart. Source: Willy Woo/ TwitterWoo’s third chart, Cumulative Value Days Destroyed (CVDD), was recently covered by Cointelegraph.“Use these charts at your own discretion, we are in an unprecedented time of deleveraging,” he added, cautioning that “Past cycles do not necessarily reflect future ones.”Macro mood rocked by China protestsSome key economic data from the United States is due this week, but crypto analysts are more focused on China. With an already fragile status quo hanging on inflation trends, unrest in the world’s factory could unsettle market performance, some warn.China is in the grip of a wave of protests against the government’s policy on COVID-19, with multiple cities defying lockdowns to demand an end to “COVID zero.”With this in mind, risk assets could be in for a rough ride if the situation spirals out of control.“Crucial area of Bitcoin couldn't break, so we're still consolidating within that range. On support now,” Michaël van de Poppe, founder and CEO of trading firm Eight, explained. “If this is lost, I'd expect new lows to be seen on the markets, probably depending on China & FTX contagion this week.”Even mainstream media were warning of potential repercussions on the day, with John Toro, head of trading at exchange Independent Reserve, telling Bloomberg that “elevated contagion risk is being profiled into the cryptocurrency complex.”Asian stock markets were modestly down on the day, with Hong Kong’s Hang Seng and the Shanghai Composite Index down 1.6% and 0.75%, respectively at the time of writing.Hang Seng Index 1-day candle chart. Source: TradingViewBitcoin bottoms in crude oilOn a related macro note, Bitcoin is now in line for “outperformance” in U.S. dollar terms, one well-known analyst has said.Related: Bitcoin may need $1B more on-chain losses before new BTC price bottomIn WTI crude oil terms, BTC price action is already at a macro low — and history calls for a resurgence, which includes a significant appreciation trend against USD.“We're finally at channel bottom,” TechDev confirmed at the weekend. “Bitcoin's crude oil (energy) purchasing power topped in April 2021. Now looks poised for another leg of outperformance (and rise in USD value).”BTC/WTI annotated chart. Source: TechDev/ TwitterAn accompanying chart drew specific parallels to Bitcoin’s performance at the pit of the last bear market in late 2018.As Cointelegraph reported, meanwhile, TechDev is far from the only voice calling for upside to characterize BTC price action going into the new year.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Bitcoin mining revenue lowest in two years, hash rate on the decline

The revenue earned by Bitcoin (BTC) miners fell to two-year lows owing to poor market performance and a heavier computational demand amid rising network difficulty. However, an ongoing downturn in the Bitcoin hash rate over the past month has allowed miners to recoup losses.The total Bitcoin mining revenue — block rewards and transaction fees — in U.S. dollars fell down to $11.67 million, a number last seen on Nov. 2, 2020, when Bitcoin’s trading price was around $13,500.While the current market price of around $16,500 suggests an obvious increase in mining revenue, factors including greater mining difficulty and rising energy prices contribute to lower income in dollar terms.Adding to the above, the difficulty of mining a Bitcoin block has skyrocketed to an all-time high of almost 37 trillion — forcing Bitcoin miners to spend more energy and computational power to stay competitive. However, over the past three months, the hash rate of the Bitcoin network witnessed a steady decline. The hash rate stands at 225.9 exahash per second (EH/s), which fell 28.6% from its all-time of 316,7 EH/s on Oct. 31, 2022.The hash rate is a security metric that helps protect the Bitcoin network from double-spending attacks. However, considering the grand scheme of things, temporary measures taken by the community include acquiring cheaper mining hardware and resettling in jurisdictions with low energy prices.Related: Bitcoin miners look to software to help balance the Texas gridNew York City mayor Eric Adams believes that goal to make New York a crypto hub can be combined with statewide efforts to curb environmental costs related to crypto mining.“I’m going to work with the legislators who are in support and those who have concerns, and I believe we are going to come to a great meeting place,” said Adams while revealing that the city will work with legislators to find a balance between the crypto industry development and legislative needs.

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Iris Energy to cut mining hardware after defaulting on $108M loan

Australian Bitcoin mining firm Iris Energy is the latest to suffer from the squeeze of the crypto bear market, losing a significant chunk of its mining power after defaulting on a loan.A filing by the firm to the U.S. Securities and Exchange Commission on Nov. 21 revealed that it has unplugged its hardware used as collateral in a $107.8 million loan as of Nov. 18.The units “produce insufficient cash flow to service their respective debt financing obligations,” the firm noted. The operation generates around $2 million in Bitcoin gross profit per month but cannot cover the $7 million in debt obligations.Iris has now reduced its capacity by around 3.6 EH/s (exahashes per second) of mining power. It stated that capacity remains at around 2.4 EH/s which includes 1.1 EH/s of hardware in operation and 1.4 EH/s of rigs in transit or pending deployment.The company stated that its “data center capacity and development pipeline are unaffected by the recent events,” and it will continue to explore opportunities to utilize its capacity. Iris is also looking at the prospect of “utilizing $75 million of prepayments already made to Bitmain in respect of an additional 7.5 EH/s of contracted miners for further self-mining.”Earlier this month, the firm was served with a default notice for $103 million. Iris Energy primarily operates Canadian BTC mining centers that run on fully renewable energy. In early August, the firm doubled its hash rate after energizing facilities in Canada.Iris Energy stock (IREN) slumped 18% on the day to trade at $1.65 in after-hours trading. It hit an all-time low on Nov. 21, down 94% from its all-time high of $24.8 when it first traded in November 2021. Related: Bitcoin miners rethink business strategies to survive long-termBitcoin miners are currently suffering a triple whammy of high hash rates and difficulty, high energy prices, and low Bitcoin prices. This is causing a lot of them to either power down their hardware or start selling the asset. On Nov. 21, Capriole Fund founder Charles Edwards observed that the current rates of miner selling had been the most aggressive in almost seven years.“If price doesn’t go up soon, we are going to see a lot of Bitcoin miners out of business,” he added.It’s a Bitcoin miner bloodbath.Most aggressive miner selling in almost 7 years now.Up 400% in just 3 weeks!If price doesn’t go up soon, we are going to see a lot of Bitcoin miners out of business. pic.twitter.com/4ePh0TIPmZ— Charles Edwards (@caprioleio) November 21, 2022That price increase is unlikely to come anytime soon. Bitcoin slumped to a new bear cycle low of $15,649 during the early hours of Asian trading on Tuesday, Nov. 22, according to CoinGecko.

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Russian bill would legalize crypto mining, sales under ‘experimental legal regime’

A bill was introduced into the Russian State Duma, the lower house of parliament, on Nov. 17 that would legalize cryptocurrency mining and the sale of the cryptocurrency mined. Cryptocurrency cannot currently be used for settlements in Russia. The proposed law reads, “Digital currency obtained as a result of mining can be disposed of by the person who carried out the mining of this digital currency on the condition that Russian information infrastructure is not used in conducting transactions with it, with the exception of cases of transactions carried out in accordance with the established experimental legal regime,” as quoted by Interfax.Chairman of the Duma Financial Markets Committee Anatoly Aksakov told the local press that he expected the bill to pass all three parliamentary readings in December to come into force on Feb. 1. Other sources said the bill would become law on Jan. 1. Aksakov said:“Passage of the law will bring this activity into the legal field, and make it possible to form a law enforcement practice on issues related to the issuance and circulation of digital currencies.” The experimental sales regime is made possible by the law on digital innovation passed in 2020. The bill provides definitions of cryptocurrency mining and mining pools. It also bans the advertising of cryptocurrency in Russia.A Russian platform for cryptocurrency sales will be set up if the law is passed, and Russian miners will be able to use foreign platforms. In the latter case, Russian currency controls and regulations would not apply to the transactions, but they would have to be reported to the Russian tax service. There is currently no legislation on the taxation of mining activities, although crypto mining is widespread in Russia. Related: What the Russia-Ukraine war has revealed about cryptoA report issued by the Central Bank of Russia on Nov. 7 indicated that the country was preparing for the introduction of digital assets onto its markets. The Moscow Exchange drafted a bill on behalf of the Central Bank to allow trading in digital financial assets in September. Izvestia newspaper reported Nov. 18 that major Russian brokerages and the exchange were preparing for the entry of retail investors onto the market. A Russian policy on the use of crypto in cross-border payments was formulated in September. In addition to national legislation, Russian crypto miners and other users also have to navigate international sanctions.

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Australian firm raises $28M to expand Bitcoin mining capabilities

The turbulent climate of the crypto industry is not putting a full stop to builders in the space. Arkon Energy, an Australian renewable data center infrastructure company, recently raised millions to expand its Bitcoin (BTC) mining operations and acquired another European-based data center. The funding round was completed with $28 million raised by the data center infrastructure company, which uses 100% renewable electricity to mine BTC. Arkon extracts renewable power trapped in electricity markets to sustainably lowers its costs. Arkon CEO Josh Payne said this type of market creates the perfect storm for growth due to many factors: “The current market climate, with low prices for Bitcoin and mining equipment, offers a compelling opportunity to take advantage of our unique profitability and access to growth capital.”In addition, Arkon acquired one of Norway’s leading renewable energy-based data centers Hydrokraft AS, as a part of a larger plan to create a “vertically integrated green Bitcoin mining platform.”However, on Oct. 6, the Norwegian government recently proposed to eliminate the reduced electricity tax which is available for BTC miners in the country. The country’s finance minister said the power market is in a completely different situation now compared to when it first initiated the tax break in 2016. Similarly, in the Canadian province of Quebec, the energy manager for the region asked the local government to cut power from crypto miners due to high energy demands. Related: Bitcoin miners rethink business strategies to survive long-termThe current market downturn and industry turmoil has created a rough environment for many companies in the space to thrive. One recent example is that the BTC miner Iris Energy, is now facing a default claim worth $103 million from creditors in the United States. A filing with the U.S. Securities and Exchange Commission on Nov. 7 alleged that the company failed in restructuring to meet payment deadlines. The Hashrate Index recently released its Q3 mining report which revealed low hash prices, along with soaring energy costs made the quarter particularly rough for the mining industry. After BTC dropped below $20,000 this past September, hash rates climbed to a new all time high on Oct. 3.Amid the doom and gloom, some companies are pushing forward. The Chinese BTC miner Canaan, recently announced plans to scale its operations globally and include new research and development projects.

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