Category: Bitcoin

Bitcoin is a decentralized cryptocurrency – a form of value transfer that is unstoppable, uncensorable and cannot be confiscation. Bitcoin transactions can be sent around the world freely, unhindered by arbitrary currency controls.

Bitcoin Mining firm reporting strong profits, despite “Bitcoin halving”

Bitmain, the world’s leading cryptocurrency mining company, has seen a huge $300 million profit in its first four months of 2020. This greatly alleviates fears of a “collapse” in the Bitcoin mining industry caused by the Bitcoin Halving – which effectively reduced miner’s revenue by half. Bitcoin mining is a multi-billion dollar industry and is set to be one of the most profitable sectors in the cryptocurrency space. Find out more about Bitcoin mining in our guide.

In an Industry blog, Wu Said Blockchain, first reported the news after Bitmain told their staff internally of the around $300 million profit. As a reward for their hard work, Bitmain employees received big Labour Day bonuses totaling 7,000 Yuan (around $9,900).

Bitcoin Mining is a Billion dollar industry

Quite what prompted these gains was not revealed but the reports suggested that a large part came from ventures not pertaining to cryptocurrency mining. The main area is in Artificial Intelligence (AI), a field they entered in 2018.

Since then, Bitmain’s AIs growth has been fast and they have launched chip designs that companies can use to power their AI systems and software. The blog post mentioned a large order of their AI chip BM1684 which was said to be worth “millions” and seemed to suggest it could account for the large profit windfall.

That is not to say that Bitcoin mining has taken a back seat. Bitmain has also opened four new mining farms and has seen a hash rate increase in its other pools. However, the headlines following Bitmain in recent times had painted a vastly different picture of life inside the company and its economic health.

Bitmain’s Losses and Internal Disputes

Earlier this year, reports came out claiming Bitmain was in serious strife and were set to lay off 50% of their staff amid concerns about Bitcoin’s May halving. The company had already cut staff in 2018 and with market share decline evident in 2019 many felt Bitmain would become a tragedy of the “crypto winter”. Performance problems from their mining rigs, like the Bitmain S17/T17 Antminer, only seemed to compound their issues.

The most notable problem though was Bitmain’s internal conflicts between the top tier staff. The two founders and CEOs of the company, Jihan Wu and Micree Ketuan Zhan have been at loggerheads for months.

Leaks in early 2019 had suggested Jihan Wu was set to give up his CEO position and take a limited role in the company. Yet, in October 2019 Wu made the shocking decision of ousting his longtime partner Zhan, who was Chairman of Bitmain at the time. In an email to staff, Wu told his employees to cease all contact with Zhan and that he was back to save the company.

Zhan has filed two lawsuits against Bitmain and the AI subsidiary, which is called Fujian Zhanhua Intelligence Technologies. The disgruntled former senior executive is looking for a way back into Bitmain and released a statement saying: “I will fight for her [Bitmain] till the end with legal weapons. I won’t allow those who want to plot against Bitmain to succeed. If someone wants a war, we will give them one.”

The case continues but for now it would seem that Wu has the upper hand, especially with business doing so well at Bitmain.

May 21, 2020

Bitcoin Halving Explained

Bitcoin Halving is expected to happen at 12 May 2020 07:07:39 UTC

What is the Bitcoin Halving Event?

The Bitcoin Halving event which marks the point where Bitcoin mining rewards will be cut precisely in half. Many view this as a turning point for the price of Bitcoin because it will drastically reduce the new supply of Bitcoin, creating scarcity. Currently the Bitcoin Halving is expected to happen at 12 May 2020 11:04:30 UTC – the exact time and date may vary due to fluctuations in Bitcoin block creation time. Once the halving takes place, the amount of Bitcoin mined per day will decrease from 1,800 BTC to 900 BTC. It is important to remember this event is permanent and will affect all the Bitcoin mined in the future as well (until the next halving event). From an economics standpoint, the less Bitcoin there is being produced the more scare and less accessible Bitcoin will become.

Check out my video on what the Bitcoin halving is, and what opportunities it can mean for Bitcoin.

Reduced Sell Pressure on Bitcoin

There will be substantially less sell pressure from Bitcoin miners as they’re income of Bitcoin will half. Currently, miners will mint $13 million USD worth of Bitcoin per day. This is no small figure – and one of the reasons why mining is such a trillion dollar industry (Check out our Bitcoin mining guide for how to be part of it).

Will Miners shut down / got bankrupt?

After the Halving, miners will receive half of their regular income. This will drastically alter the dynamics and profitability of Bitcoin Mining. For miners who are using older machines (ASICs), the drop in income might spell certain doom. Some miners will yield negative profits and be forced to retire the older less efficient units. This is a common practice in mining – renewing hardware is part of the profitability cycle for miners. This is similar to other tech hardware businesses like server farms which require annual upgrades to hardware.

There is no risk that Bitcoin be without miners – till is still 900 BTC to be mined each day (~$7.5 Million USD). Miners will be looking to be more competitive and source cheaper and cheaper electricity. In addition, Bitcoin difficulty can drop if there is less hashrate on the network, meaning it will be easier to mine Bitcoin.

Hype and Expectations

The Bitcoin Halving comes with a lot of hype and optimism for the future of Bitcoin. Several memes have emerged with charts pointing to “pump” in the price of Bitcoin. The chart above shows the LOG price of Bitcoin over time, with a ascending trend indicating potential prices of $250,000 and even $2,000,000 for the price of Bitcoin. It is important to remember that with cryptocurrencies prices are high volatile and past trends don’t always indicate future trends.

Stats

Total Bitcoins in circulation:	18,367,900
Total Bitcoins to ever be produced:	21,000,000
Percentage of total Bitcoins mined:	87.47%
Total Bitcoins left to mine:	2,632,100
Total Bitcoins left to mine until next blockhalf:	7,100
Bitcoin price (USD):	$9,987.70
Market capitalization (USD):	$183,453,074,830.00
Bitcoins generated per day:	1,800
Bitcoin inflation rate per annum:	3.64%
Bitcoin inflation rate per annum at next block halving event:	1.80%
Bitcoin inflation per day (USD):	$17,977,860
Bitcoin inflation until next blockhalf event based on current price (USD):	$70,912,670
Bitcoin block reward (USD):	$124,846.25
Total blocks:	629,432
Blocks until mining reward is halved:	568
Total number of block reward halvings:	2
Approximate block generation time:	10.00 minutes
Approximate blocks generated per day:	144
Difficulty:	16,104,807,485,529
Hash rate:	117.64 Exahashes/s
Current activated soft forks	bip34,bip66,bip65,csv,segwit
Current pending soft forks
Next retarget period block height	631008
Blocks to mine until next difficulty retarget	1576
Next difficulty retarget ETA	10 days, 22 hours, 40 minutes

May 9, 2020

Bitcoin Mining will make a HUGE comeback in 2020
2020 is a huge year for Bitcoin mining. Huge changes to the mining ecosystem – changes that will spark another “gold rush” for mining. This will be spearheaded by two factors – the release of new more efficient mining hardware known as ASICs and Bitcoin halvening. The release of new hardware will give new players a bigger advantage in mining due to the efficiency factor – new ASICs generate more hashpower with less power. (https://www.sliderrevolution.com) We’re already seeing large funds like Fidelity Investments building large mega-watt mining facilities in North America and other continents. You can hare about the North America mining explosion in this podcast. This marks the return of mining as a major investment opportunity this year.
Table of Contents

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Cryptocurrency Mining is a $6 Billion+ USD per year industry

New
Hardware (ASICs) is game changing

Hashr8 – New MiningOS

Sources
Cryptocurrency Mining is a $6 Billion+ USD per year industry

Sizes of Exchange, Mining, DeFi and ICO industries respectively

One well-kept secret of the mining industry is the huge profits being generated by cryptocurrency miners (Bitcoin, Ethereum, DASH and Monero mining). Let’s start off with an industry Fact – every day $19,000,000+ USD dollars worth of cryptocurrencies are being produced by miners across the world. This means a total of $6.8 Billion dollars will be mined in 2020 alone. The biggest currency being mined is Bitcoin – with a 1,800 bitcoin being produced per day totalling to a value of $15,833,340 USD. To put everything into perspective, the ICOs only raised a total of $371 Million in 2019 according to icodata.io. Mining is currently the second largest industry behind exchanges (source: Bloomberg).

Miners upgrading and replacing older hardware (often confused with “miner capitulation”)

Ironically the miners have perpetuated myths such
as “mining is not profitable” or “the bitcoin mining death spiral” to deter
new players coming into this profitable space. Many reports in 2019 have
featured erroneous calculations that Bitcoin mining is not profitable. This is
because researchers have incorrectly assumed that miners are getting
expensive commercial electricity costs of $0.07-12 cents per kilo-watt
hour. This is far from the truth – mining operations receive considerable
discounts as they purchase low priority power (meaning they will get cut off
grid in the event of a surge in power usage). The actual figure is in the range
of $0.01 – $0.03 per kw/h. This means miners are generating large amounts of
profit. It is the biggest industry in the blockchain space, and yet it is
surrounded by both mystery and false information.

New
Hardware (ASICs) is game changing

New high efficiency Bitcoin mining hardware is coming in 2020 will be a huge game changer. Bitmain will be releasing the new Antminer s19 based on the 7nm manufacturing process. Competing ASIC manufactures are also making new chips, with Innosilicon and Canaan hot on the heels. This die shrink increase the hashpower of chips whilst reducing power consumption at the same time. These two factors mean these new units will be more efficient – the biggest factor contributing to Bitcoin mining profitability.

Hashr8 – New MiningOS

New operating systems dedicated for mining cryptocurrencies such as Hashr8 are also being launched this year. These OSes will make it easier for commercial, enthusiast and retail miners to improve mining efficiency and management. This is a huge positive trend for the industry as a whole as it makes professional tools mainstream and accessible to the general public. This will level the playing field and reduce the gap between large-scale miners.

Sources

Size of Defi Industry: https://defirate.com/defi-growth/
Cryptocurrency Exchanges: https://hackernoon.com/where-the-multi-billion-dollar-cryptocurrency-exchange-industry-is-headed-f697af6fd7c0
MinerUpdate: https://minerupdate.com
January 18, 2020
Cryptocurrency 101 – the Basics
One way to describe cryptocurrency is that it is simply a digital cash system without a central entity. To realize digital cash you need a payment system with accounts, balances, and transactions. One major problem payment networks have to prevent is double spending: to prevent that one individual who spends the same amount twice. This is usually done by a central authority or body who keeps a record about the balances.

In a decentralized system, there is no one person that is responsible for this. Every single part of the network has to fulfill this function. Every part needs to have a list with all transactions to check if future transactions are valid.

Cryptocurrency and the blockchain

Cryptocurrencies are also simply just limited entries in a database no one can change without fulfilling specific conditions. If you think about it, that can also be used to describe our current monetary system. Money in your bank account is basically entries in a database that can only be changed under specific conditions.

Confirmation of transactions is a critical concept in cryptocurrencies. As long as something is unconfirmed, it leaves it open to forgery or falsification. When a transaction is recorded onto the blockchain, it can no longer be changed and it can’t be reversed.

Peers in the network, or as they have come to be known, miners, can confirm transactions. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to its database. It has become part of the blockchain.

Cryptocurrency has derived its namesake from the strong cryptography process used to secure its consensus-keeping system. Cryptocurrencies are built on cryptography. They are not secured by people or by trust, but by math.

Properties of Cryptocurrency

Most cryptocurrencies share a common set of properties, but not all rules are set in stone. Some may focus more on privacy, while others boast faster transaction speeds of lower costs. Below are some of the more common characteristics you will find cryptocurrencies.
- Transactions cannot be reversed – when your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever. This makes it difficult to commit the kind of fraud that we often see with credit cards, in which people make a purchase and then contact the credit card company to make a chargeback, effectively reversing the transaction.
- Decentralized – there is no central authority controlling it and that means goverments cant take it away from you.
- Low cost – compared to bank transfers or international transfers, the fees are a lot lower.
- Speedy – you can send money anywhere and it will arrive minutes later, as soon as the network processes the payment.
- Secure and transparent – because all the transaction information is stored on the blockchain, people cannot trick or deceive you about what funds they have. Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency.
- Pseudonymous – Neither transactions nor accounts are connected to real world identities.While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real world identity of users with those addresses.
- Store of value – Most cryptocurrencies have a limit to the supply of tokens that can be mined or created. Because of this controlled supply, there are no risks of inflation unlike fiat currencies where new money can suddenly be printed.
October 13, 2018
Lightning network explained – is it Bitcoin 2.0?

The Lightning Network promises free transactions on the Bitcoin network that can be confirmed instantly. This is exactly what is needed for Bitcoin to gain mass-adoption and move away from fear of major congestion (transaction cost exceeded more than $100 USD the network peak in January 2018).

It’s hard to understand because it breaks what we normally understand of the Bitcoin network. Bitcoin network is limited to 10-minute blocks – that is transactions take up to 10 minutes to confirm, and a high fee is required to guarantee a confirmation on the next block.

Regular Bitcoin Transactions

When we send Bitcoin and broadcast a transaction we need to wait for confirmations that only come every 10 minutes. The block groups all the transactions that are announced and puts it into a ledger called the blockchain. You get one confirmation for each block that forms after the transaction, so if you want to wait for 3 confirmations, you must wait for 30 minutes. In contrast, the Lightning Network promises instant transactions.

How the Lightning Network Works

The Lightning Network works by creating payment channels off the blockchain. This means that you don’t need to wait for the 10 minutes to confirm each block. However you do have to deposit a certain number of bitcoins so now you’re proving ownership of these bitcoins. You’re effectively handing over these bitcoins to the network a little bit like that and it works with multi-signature wallets. There are failsafe protocols in place, so if something happens and the transaction fall through, you are still protected.

The concept works kind of like a tab at a bar. You can maybe put down a few thousand dollars and create a tab and every time you buy a drink, instead of paying directly with visa or cash every time, you can use your tab. This cuts down a lot on the fees with using visa for each transaction and this likewise can be applied to bitcoin and the blockchain transaction fees.

Current State of the Lightning Network

Lightning Network right now it mostly commands prompt based so it’s like we’re still quite far from a good wallet and good user-friendly graphical interface. Right now it’s mostly kind of the text command based and there have been tests of the Lightning Network over international regions. We’re at a stage where we know that the concept works but we’re still developing the software and making sure that it works very well and securely. Recent hacks of the Party Wallet has shown us that software stability and robustness is absolutely vital. As a result, development on lightning has been quite slow because it’s highly complicated and any bug in the code would maybe be quite catastrophic. On top of that, a good user-friendly interface is also vital.

September 4, 2018
Why is Bitcoin Valuable

Why does this have any value? It’s not backed by any goverment, and it’s not a physical commodity like gold where you can touch and feel it.

It is Decentralized

That means it is not backed by any government or central authority. For currencies like USD or the Euro they are backed by their respective government and groups of governments and with those goverments, there may be times of hardships. Hardships such as, but not limited to, war, famine, financial crisis, and natural disasters.

It is a Store of Value

When these difficulties hit, governments are usually tempted to just print out money. They might be needing that money because they are in debt or they need to fund a war. Printing more money increases it’s supply and this could ultimately lead to inflation.

With bitcoin, there is a set maximum that can be created, and that is controlled by mathematics and computer code. Because there is a limit, it makes it a great store of value. You may have even heard of the term “digital gold” being used to refer to bitcoin.

First movers advantage

It is Secure

Bitcoin can only be transferred by mathematics. It has to adhere to the programming code rather than people. We do know that people can sometimes be controlled or influenced by politics or other external pressures.

As long as you are the only one in control of your private key, then your funds are safe. Someone cannot decide to suddenly lock up your account or freeze your funds.

Transactions cannot be reversed

when your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever. This makes it difficult to commit the kind of fraud that we often see with credit cards, in which people make a purchase and then contact the credit card company to make a chargeback, effectively reversing the transaction.

It is Convenient

Earlier, when we talked about bitcoin being named as “digital gold”, we forgot to mention another advantage that is has. Since bitcoin is a digital currency, it has the benefits of gold without the drawbacks.

Gold can be heavy and bulky, and thus hard to transport. You also need a secure place to physical store it. Since bitcoin is all digital, the cost of sending it doesn’t change no matter where you are. The amount of time it takes and how much it costs is the same whether you’re sending it to someone next to you or halfway across the world.

It’s cheaper compared to bank transfers or international money transfers. The fees are a lot lower. Also, if you’ve ever tried to transfer money overseas, you know that it can take days. With bitcoin it is much faster – you can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment.

September 30, 2017