Today, Bitcoin and other cryptocurrencies are settling after a weekend
sell off.
Asset managers in Hong Kong say they've been approved to
launch spot Bitcoin and Ether ETFs.
And the Bitcoin having is just days away,
we take a deep dive into how the big miners
have been preparing.
Welcome to CB CS Crypto world.
I'm Jordan Smith. Crypto prices stabilizing this morning after tumbling
through the weekend thanks to rising tensions in the Middle
East.
As of noon, Eastern Bitcoin hovered around the
$64,000 level while ether actually rose more than
3 1/2% in the past 24 hours.
That's after those crypto currencies fell
6.8 and 8% respectively since Friday.
Digital coins were some of the only risk assets trading
over the weekend,
which meant the crypto market suffered heavy selling on Saturday
amid the unprecedented Iranian drone and missile attack on Israel.
Bitcoin hit a low of
$60,985 yesterday, according to Coin Metrics,
but later rebounded to as high as the
$65,000 level. OK, let's talk about the top stories.
Bitcoin and ether are getting at least a little boost
this morning thanks to Hong Kong regulators who approved the
launch of spot Bitcoin and ether ETFs in the region.
That's according to asset managers including China,
AMC, Harvest Global and Bocera International,
which were among those that got the green light to
issue the crypto ETFs.
Hong Kong is one of the first places in the
world to give approval for spot ether ETFs here in
the US.
The SEC hasn't made a decision yet on those products,
even though spot Bitcoin ETF started trading here in the
US back in January.
Some asset managers told CNBC last week they don't expect
their regulator will green light ether ETFs.
Hong Kong has been trying to transform into a regulated
crypto hub,
while digital asset trading has been banned in mainland China
following a massive crackdown on the sector in
2021. Next, Solana rolled out a new software update to
tackle congestion on the network.
In an ex post early this morning,
Solana developers said the update is now recommended for general
use by mainnet validators.
Now, this is the first in a series of planned
updates to address network congestion,
with more on the way,
according to the Solana Foundation.
In a statement sent to us,
the Foundation explained the reasoning for the upgrades,
saying that the network recently experienced congestion and failed transaction
challenges due to a dramatic increase in transactions associated with
mean coins and an influx of spam transactions with bots
attempting to prioritize their activities over those of regular users.
This congestion resulted in delays in transaction processing and transactions
being dropped.
According to Defy Lama, on March 14th of this year
the Solana network handled
$3.8 billion of transactions compared to
63,000,000 on the same day one year ago.
Last is the SE CS case against Coinbase marches on.
The Crypto Exchange filed an appeal asking a higher federal
court to help with clarity on the agency stance on
digital assets.
Join Base filed what's called an interlocutory appeal in Federal
Court on Friday to challenge a single point at the
center of its dispute with the regulator.
The requested appeal asks a higher court to review whether
a crypto transaction that poses no obligation to the original
issuer of the asset would be deemed an investment contract
that could be regulated by the SEC.
In the filing, Coinbase doubled down on its stance that
the crypto industry laborers under an intolerable cloud of uncertainty.
Last month, the SEC scored a big win in its
lawsuit against Coinbase when a judge rejected the crypto exchange's
bid to dismiss the agency's claim that Coinbase engaged in
unregistered sales of securities.
All right for our main story,
the Bitcoin having is just days away,
but miners have been preparing for months.
Crypto World's Talia Kaplan explores what steps the publicly traded
companies have been taking to make sure they can handle
what's to come.
After the key technical event slashes minor rewards in half,
Bitcoin miners are preparing for the
network's biggest event in four years.
We have a halving coming up here,
and Riot has a number of ambitious growth plans that
we're scaling up our business with.
So as the price of Bitcoin appreciates,
we should appreciate from that in an outsized way.
The rally in Bitcoin really is what's keeping miners in
Business Today.
When you think about post halving,
the average cost of mine in Bitcoin is somewhere around
between twenty $25,000. A Bitcoin currently post the halving,
that'll go to somewhere between
30, seven,
$45,000 of Bitcoin, maybe $50,000 of Bitcoin in some cases
for some miners.
And with the Bitcoin price being at
676870 thousand, it means that miners are still mining profitably.
Though what it really means is the miners with large
scale will be able to mine profitably.
The smaller miners will be put under more pressure.
I think that we will see failures in the space.
You know, we already saw in the last market there
were a couple bankruptcies both in the public and the
private space.
I think we're going to see that again.
So I think that there's going to be great opportunity
on an M and a basis we're thinking about the
facilities or the data centers that
miners are operating in. If there's a data centre full
of old equipment that is no longer efficient,
we'd love to buy the facility and move in.
So what exactly is the Bitcoin having?
Miners on the network had paid in Bitcoin for verifying
transactions,
and every four years the supply of new Bitcoin created
to reward minors gets cut in half.
This process is hard coded into the Bitcoin protocol itself,
meaning no one can change it.
This process takes place every
210,000 blocks. A block is a collection of verified transactions
grouped together with blocks being validated roughly every 10 minutes.
That works out to about every four years.
Now, the halving affects the rate at which new bitcoins
are brought into circulation.
The supply of Bitcoin is finite.
Only 21 million will ever exist.
Cutting mining rewards means fewer Bitcoin will enter the market
every day.
That makes Bitcoin more scarce after each halving.
Bitcoin prices have historically risen after past having events.
So for investors it could mean big returns.
For miners, it could mean big losses if they don't
find ways to become more efficient.
Some miners could even go out of business.
If you think about the Bitcoin rewards,
as you know the pie got smaller and all the
miners that exist,
it's about the size of that pie.
We think that there will be miners that are less
efficient and can't handle that revenue shock.
So we think as many as
30% or you know 15 to 30%
of miners will actually have to turn off,
shut down. I think if you look globally,
potentially about 15% of the capacity may come under pressure.
And by that I mean that those operations may be
unprofitable.
And so those miners that have machines that are above
the global average in energy consumption will likely come under
pressure.
So we'll have to see.
But I think most of the publicly traded miners are
fairly well positioned at this point.
The first having event took place in 2012,
four years after the first block was mined on the
network,
jump to the most recent having
12 1/2 new bitcoins were added to the network at
the beginning of 2020.
In May, that number was cut in half,
to six and 1/4. This latest halving will drop rewards
to around
3.125, and that process will continue until all
21 million coins have in mind.
The expectation is that should happen in about
116 years from now. Riot is positioned to exit
2024, mining more Bitcoin per day than it is right
now.
Despite the halving occurring, we are scaling up our operations
by almost a factor of 3 and we are implementing
an ongoing power strategy that helps decrease our energy costs
and gives us an industry leading of cost of production.
Our direct cost per Bitcoin
in 2023 was just about
7500 a coin now that increases with the halving,
but with the price appreciating at a faster rate,
we think we are in a very good spot.
Alongside everything we're executing on this year,
miners are expanding their footprint to boost their capacity in
an effort to limit their losses post halving,
Riot acquired more than 31,000 mining machines in February.
That's a month Cleanspark announced it completed the acquisition of
three Bitcoin mining data centers in Mississippi,
which boosted the company's operating hash rate.
Earlier this month, Marathon Digital closed a previously announced acquisition
of a 200 MW Bitcoin mining data center in Texas.
The benefit of owning and operating these sites is that
it essentially lowers our cost to operate.
It lowers our cost to mine Bitcoin
because we're now taking out the middleman if you would.
The other thing that's been a very positive impact of
this is we've been able to acquire these sites at
lower than replacement cost,
meaning cost below what it would have cost us to
build them in the 1st place.
So this is a great way of kind of being
able to expand quickly,
leverage other people's capital. They build the sites and then
we come in when the market gets a little weaker
for sites and acquire the sites and it's been a
very good strategy for us so far.
But we'll continue to acquire sites and our objective is
to be predominantly owned and operated going forward.
You need to be efficient in order to survive and
Bitcoin and Bitcoin mining is no different to any other
industry.
Phil Harvey is the founder and CEO of Sabre
56A hosting provider and crypto mining consultant.
He expects to see consolidation among miners following the upcoming
halving.
Now we're seeing in the in the space a lot
of mergers and acquisitions taking place because
the power just isn't there for for people to grow
into.
So those underlying assets, the power purchase agreements Ppas are
becoming extremely lucrative.
So yes, there will be miners that don't have the
capital in order to reinvest
and therefore you know provided they have lucrative underlying power
asset will become an M and a target.
All right, that's all for Crypto World today.
We'll be back again tomorrow and we'll see you then.