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Bitmain Subsidiary BTC.Com To Launch Ethereum (ETH) Mining Pool

While prices may be down in the gutter, the mining industry is still growing at a rapid pace, with firms like Bitmain, Canaan, EBang, and others doing their best to excel in the face of an overall market downtrend.

Bitmain, the world’s most valuable cryptocurrency firm, has forged ahead, recently revealing that its BTC.com subsidiary will open an Ethereum (and Ethereum Classic) mining pool in the coming days.

You may know BTC.com for its relative dominance over the Bitcoin network, hosting a hefty 16% of the hashrate outputted by BTC miners. The Bitmain-backed pool also holds a similar level of dominance over Bitcoin Cash, which the ASIC manufacturer is a proponent of, with a relatively substantial 14%. But now, BTC.com has unexpectedly set its eyes on the Ethereum blockchain, down just one rung from Bitcoin in terms of market capitalization.

As per statements gathered by The Next Web, Zhuang Zhong, the director of BTC.com’s mining pool operations, expects his firm’s operations to “grow to 12 percent of ETH total hashrate in the next 12 months.” Although this goal sounds rather ambitious, some believe that the Bitmain subsidiary can reach and surpass their ambitions, as BTC.com has become an integral part and a trusted name of the crypto ecosystem.

For now, this new pool will support Ethereum and Ethereum Classic, with users being given the opportunity to automatically switch between the two assets to maximize mining profitability. Zhong then elaborated on how exactly the pool is going to work, writing:

Because contracts are charged per line of executed code and miners are rewarded for dedicated hashes using GHOST, Ethereum provides multiple different reward incentives to contribute hash power to the network. We hope to expand Ethereum’s network by relaying those rewards through our FPPS system.

Oddly enough, the BTC.com executive noted that the new pool will likely be able to support Ethereum’s long-awaited Casper protocol integration, which will see the consensus of the Ethereum network switch from solely Proof-of-Work to a Proof-of-Stake (POS) focused model. Zhong added that a pooled POS design “is still possible,” but will likely “increase the complexity to design such a pool since miners need to deposit Ether to the mining pool, but we have a lot of hands-on experience with wallets and Ethereum smart contracts to make a PoS mining pool possible.”

For those who are unaware, Ethereum’s Casper protocol will allow users to ‘stake’ their Ether, with a reported ~500-1000 ETH being a minimum for a solo ‘staker’. So if BTC.com successfully transitions to a PoS model, it is likely that its service will garner lots of support and staked Ether.

Earlier this year, Bitmain, who has plans to go public in the near future, released the first-ever Ethereum ASIC mining machine, which threw many for a loop. The ASIC, named E3, was capable of outhashing a graphics card by many magnitudes, leaving some to believe that Ethereum’s time as a GPU-mineable coin was up.

Following the announcement of even more EthHash ASICs, some claimed that it was time for Ethereum to fork away from ASIC support. But as it stands, no moves towards ASIC resistance have been made as of yet.

Title Image Courtesy of David Mcbee/Pexels
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Rising Hashrates Amidst Shaky Crypto Market — “They’re Happy To Accumulate”

Since the start of 2018, Bitcoin has fallen by over 65%, leading some to guess that mining activity fell in correlation with declining prices. However, it has become apparent that this hasn’t been the case, with hashrates across multiple networks consistently seeing higher lows (and higher highs) amidst an overall market downtrend. Where’s the proof? You may ask.

Well, as seen by the following chart from Blockchain’s information and statistics service, the seven-day hashrate average has nearly quadrupled since the start of the year, even as Bitcoin underwent serious ‘dives’ downwards. This was also seen across other networks, albeit not as bad, with Ethereum seeing a doubling in hashrate, and Litecoin’s hashrate nearly tripling.

Taking hashrate statistics into account, one would assume that mining is still profitable for all parties involved. But according to a recent Bloomberg article, it may not be that simple. Over the past months, the likes of Fundstrat’s Tom Lee and Brian Kelly have claimed that the break-even cost of mining has been well above today’s prices. But hashrates continue to rise, up and up, with miners seemingly giving zero regards to the total fees of mining (electricity, maintenance, hardware etc.) postulated by market analysts.

According to Marco Streng, the CEO of Genesis Mining, larger corporate miners are edging out the in-home, consumer miners, with firms like his still making “major expansions.” He elaborated, stating:

“There are still major expansions happening, especially from more efficient miners. The expansion is so big that it compensated for the drop-out of not-so-efficient miners.”

The previous statement alludes to the fact that operations like his — data centers that span tens of thousands of square feet and consume many megawatts of electricity — have grown so much that they have forced retail users out of the market, while also driving up hashrates near-exponentially.

In theory, as continually noted by Tom Lee, an increasing hashrate (and a subsequent increase in mining cost), should lead to higher cryptocurrency prices, as the break-even level has been seen as an unofficial bottom by some analysts. Therefore, many believe that the opposite is true, but as computational power and operational costs move downwards, it becomes evident that there are other factors behind networks undertaking a growing miner population.

David Sapper, the chief operating officer (COO) at the Blockbid crypto exchange, noted:

“The increased hash rate means people are here for the long-term because they’re happy to just accumulate what they have, potentially even run at a loss. At the same time, At the same time, they do sometimes have to clear house and dump (though).”

This brings up a very interesting point, where miners, who are operating at equilibrium or a slight/medium-loss are only keeping their machines on to accumulate crypto for the long-haul. This move suggests that while some firms may need to sell some crypto to cover costs, that this longer-term ‘HODL’ approach may indicate a sentiment of the success of the market for years to come.

While some data centers may be operating at a loss, as the aforementioned Genesis Mining CEO points out, it varies from firm to firm as specific farms are subject to an array of factors that drive costs up or down. Genesis Mining, while recently making a move to shut down unprofitable mining contracts, has still expanded its centers, buying new hardware that can keep up with the rising hashrates. Additionally, there are firms like Bitmain, which manufacture ASICs and uses these machines to mine itself, making the Chinese firm relatively profitable in the process.

Although ASICs may continue to ramp up in power, power efficiency, and manufacturability, it still remains to be seen whether hashrates will rise exponentially into the future.

Image Courtesy of Marco Verch

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Bitmain’s New Transparency Policy Met With Community Skepticism

Bitmain, one of the world’s most valuable cryptocurrency-related companies, has just introduced new policies and practices that hope to show that the firm is committing to full transparency and higher levels of communication with the cryptocurrency community.

A statement released by the firm highlighted the importance of transparency, stating:

As many of you have no doubt noticed, Bitmain has started to explore policies and behaviors that aim to increase transparency and foster greater dialogue between us and the cryptocurrency communities at large. To put it plainly, we believe that communities served by Bitmain and its products should be supported and served as transparently as possible.

While some thought that this statement was “all talk, no action,” Bitmain went on to highlight a few measures that it has been taking to increase the levels of transparency it has with the public.

The New Shipping Practices Enlisted By Bitmain 

To ensure that all users have a fair chance at receiving a Bitmain-manufactured ASIC machine, the firm will be introducing new policies, which include “restricting order quantities, ensuring a first-paid-first-ship order of fulfillment, blocking IPs that we suspect to be hoarding, and publishing detailed shipping updates openly.”

Additionally, when Bitmain releases a new ASIC machine, tweets will be issued through the official Antminer Twitter account regarding the volume and shipping information for the first batch of a new model.  The firm reasoned that due to the fact that ASICs often change the mining situation of a blockchain, that it would be good to let the community know ahead of time of what impact could occur.

All these measures that the firm will be enacting will help create a cleaner and fair ecosystem for the mining community, along with lower levels of mining centralization as we move into the future.

Bitmain Releases Internal Hashrate Stats, Users Skeptical

As a part of the measures taken to show transparency, Bitmain also released a disclosure report of the hashrate contributed to assorted blockchains by company-owned hardware (ASICs).

The statistics, current as of July 22nd, show that Bitmain is currently running machines on three algorithms, SHA-256, Ethash, and Scrypt. The exact numbers are as follows:

  • SHA256: 1692.05 PH/s
  • ETHASH: 339.69 GH/s
  • SCRYPT: 44.19 GH/s

It is currently unclear what exact blockchains the mining machines are operating on, as the three algorithms span a wide range of cryptocurrencies, but at least the exact hashrate figures were brought to light.

Moving forward, Bitmain will update these figures once every 30 days to ensure up-to-date information is posted about the internal operations of the mining giant.

However, many users think that these hashrates don’t tell the whole story. Many skeptics took to Twitter to express their distrust in the aforementioned figures. CobraBitcoin, a long-time Bitcoin community member and co-owner of Bitcoin.org and BitcoinTalk, issued a tweet regarding the figures which he sees as false.

Other users speculated that Bitmain was still engaging in the so-called “secret mining” practice, which is when a firm anonymously mines using pre-released ASICs to rake in cryptocurrencies. These suspicions were brought to light after a series of developments that were not directed linked to Bitmain occurred, leading some to extrapolate that Bitmain was engaging in this form of malpractice.

However, with these new policies, Bitmain has stated that it has a “zero tolerance policy against secret mining,” noting that it has been unfairly accused of this practice.

It is unclear whether the statements released by the hardware manufacturer have had any effect on public sentiment, but nonetheless, Bitmain has remained steady in its goal to portray itself as a transparent firm, writing:

We present these efforts as our contribution to assuring both new and veteran participants of our commitment to a fair and transparent cryptocurrency ecosystem. Our intent is to both reflect and reinforce the philosophies that brought all of us here in the first place. We look forward to continuing the dialogue.

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