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Egypt’s Central Bank Conducting ‘Feasibility Studies’ Around Digital Currency Issuance

A sub-governor from the central bank of Egypt has said the entity is looking into issuing a blockchain-based digital currency.

The central bank of Egypt wants to introduce a digital version of the Egyptian pound to reduce costs, local English language news outlet Amwal Al Ghad reported Dec. 16.

Ayman Hussein, sub-governor of the Central Bank of Egypt (CBE), told an Abu Dhabi conference on Sunday that “feasibility studies” were currently ongoing.

In line with various authorities in the vicinity, Egypt believes a blockchain-based digital version of its fiat currency can help keep issuance and transaction costs to a minimum compared to coins and banknotes, Amwal Al Ghad notes.

The move is one step in the journey to a cashless society.

“A number of international institutions” are involved in the studies, Amwal Al Ghad reported Hussein as saying, “without disclosing names or specifying whether the anticipated currency would be traded for banks only or between banks and clients.”

Egypt has traditionally taken a highly risk-averse stance to decentralized cryptocurrencies such as Bitcoin (BTC), stepping up its public rhetoric since the country’s first crypto exchange launched in August 2017.

At the time, CBE reacted saying there was no “legislation or law” in force “allowing” such activities to take place, the Egypt Independent reported. The exchange, Bitcoin Egypt, was not able to be found online today at press time.

In January this year, the country’s top cleric meanwhile added to the anti-crypto stance, declaring Bitcoin trading forbidden in Islam, while an advisor subsequently told local daily Egypt Today that Bitcoin is “used directly to fund terrorists.”

The Turkish government has also warned over the incompatibility of Bitcoin trading and Islam, while a report in April from an Indonesian-based fintech startup concluded that the coin is “generally permissible” under Sharia law.

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Canadian City of Calgary Launches Local Digital Currency for Intracity Transactions

Calgary, a city in the Canadian province of Alberta, allows citizens to pay for local goods and services via its new digital Calgary dollar.

Calgary, a city in the Canadian province of Alberta, has launched its own digital currency. The Calgary Dollar will allow holders to pay for services and goods at local shops, Canadian major media outlet Global News reports Friday, Dec. 7.

According to HuffPost Canada, the Calgary dollar was initially launched in 1996, with citizens and businesses offering goods and services in exchange for the local currency alongside the Canadian dollar. This new move in 2018 allows citizens to download an app and store the digital currency on their devices.

Calgary is reportedly the first city in Canada to launch its own coin. According to Global News, Alberta’s government supports the initiative. The officials expect that the Calgary dollar could support small businesses and nonprofits by keeping funds within the city.

Calgary dollars work through a smartphone app that lists shops and restaurants that participate in the program. Citizens can spend their Canadian dollars to pay for lunch, make a donation to some of Calgary’s nonprofits or buy inner transport tickets.

One way to obtain the currency is by posting ads for goods and services that users want to sell in the app or on project’s website for Calgary dollars, receiving a small amount of the digital currency in exchange for posting the ad.

Recommending Calgary dollars to a friend also brings profit. Moreover, the Victoria Park, an events and culture district of Calgary, is reportedly offering cash back to shoppers who use the local digital currency.

Local entrepreneurs, in their turn, can pay up to half of their business licenses with Calgary dollars.

As Cointelegraph has often reported, many countries are considering launching local digital currencies.

In Mongolia, the country’s largest mobile telecoms operator plans to issue an e-currency, dubbed “Candy.” Meanwhile, in Dubai, consumers will soon be able to use digital currency to pay for goods, services and utilities following a new government partnership with a blockchain payment provider.

As well, the Bank of Thailand has plans to develop a wholesale central bank digital currency that will use blockchain consortium R3’s Corda platform.

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As Central Banks Go Digital, Crypto Competition Looms

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

With blockchain platforms being tested for various business processes, prospective enterprise users that are unwilling to accept a volatile cryptocurrency will often complain that a key piece is missing from the platform: a stable, digital medium of exchange.

Hence the race, currently underway, to create a viable “stablecoin.”

Many tech teams, such those at Basecoin, are developing decentralized algorithms intended to peg the value of a crypto-asset to an external reference price such as a fiat currency like the dollar. Others, such as Saga, are building collateralized reserve models, offering guaranteed, fixed-price convertibility into an alternative store of value – also, such as the dollar. Based on the controversy surrounding Tether, the biggest stablecoin, it’s fair to say that a widely trusted system does not yet exist.

Here’s an alternative vision: What if the race is won by a central bank? Digitizing fiat is arguably easier than pegging to fiat. What it needs is buy-in from officialdom.

The Bank of Thailand moved the world a small step closer to that solution last week. It announced that, in partnership with eight financial institutions, it is developing a digital currency based on R3’s Corda distributed ledger protocol.

We’ll see how the Thai project evolves, but the purpose for now appears quite narrowly focused on a specific use case: facilitating interbank transfers among institutions operating within the country’s capital markets. Although limited to Thailand, it would add in the monetary piece that’s been missing from other distributed ledger initiatives to streamline securities settlement, such as that at the U.S. settlement and clearing agency, the DTCC.

However, it’s not hard to imagine that if Thailand’s or another country’s “wholesale” central-bank digital currency experiment shows signs of success there will be pressure to expand these so-called CBDC models to a wider community of users.

Expanding access to CBDC

With blockchain-based solutions for supply chains now moving from proofs of concept to implementation, with a lot of that activity in Thailand’s neighborhood, businesses could start to seek digital fiat solutions to these new models of automated trade. This will, of course, be limited to in-country transactions, but if prospective decentralized, smart contract tools such as atomic swaps , currently being explored for blockchain assets, can also be applied to digital fiat currencies, instantaneous cross-border CBDC exchanges might become a reality.

And despite concerns about financial instability expressed by the Bank of International Settlements, a central bank-owned body that coordinates activity among its members, I think it’s fair to assume a fully retail CBDC will one day exist somewhere.

The BIS’ concerns primarily lie with the potential threat to the banking system from money fleeing short-term deposits into CBDC wallets. But that position presupposes banks should continue to play a central role in our payments systems. Many central bankers, who were blindsided by the problems caused by too-big-to-fail banks during the financial crisis, take a different view: that our dependence on for-profit private institutions to manage our monetary system is the very cause of the systemic risks to which our society has long been subject.

No lesser figure than former Bank of England Governor Mervyn King has argued forcefully about the need to reform the bank-centric financial system. And although his successor, Mark Carney, has soured on the idea of a digital pound, it’s noteworthy that BOE researchers, among the first to explore CBDC ideas, initially explored the potential benefits of removing banks from payments by ending their privileged access to central bank reserves.

A world of competing currencies

If this future does come to pass, it will be a long way from that envisaged by crypto developers who want to remove central banks from the equation. It’s even further from the vision of bitcoin enthusiasts, who see the need for a fully censorship-resistant currency with a monetary policy that cannot be altered by policymakers.

But all will not be lost for monetary innovators. The act of digitizing currencies – whether by central banks or by crypto developers – is likely to lead to increased global competition across currencies, as access and the cost of trading them becomes more efficient. That will put central banks themselves under pressure to develop currencies that people want to use.

The competition won’t only be among different countries’ currencies. With the help of Lightning and/or other Layer 2 solutions, cryptocurrencies will become more scalable and can present themselves as one of a number of options.

I see the scenario eventually evolving into something like the vision of Austrian economist Friedrich Hayek, a favorite of libertarians, who foresaw a world of competing private currencies emerging. It’s just that this one would entail competition between crypto- and government-run digital currencies.

Hopefully out of that competitive soup something that best serves humanity will arise.

Of course, this isn’t happening tomorrow. It’s premature to place all-out bets on any kind of currency solution becoming the standard.

But to assume that the world of money won’t change at all is also foolhardy. These forces will come to bear in ways that will be difficult for any actors, public or private, to control.

Protecting people’s interests

When that change starts to happen, it’s critical that we, the people, provide input into how these systems evolve. A world of competing digital currencies isn’t necessarily a utopia.

As I argued in a previous column, crypto tokens have in some cases worsened society’s problems with truth in social media, prompting tribes of specific token holders to fiercely defend their coin against valid criticism. Imagine the same thing happening with fiat digital currencies promoted as investments by dictatorships.

We might just be getting a test of that with Venezuela’s move to peg the bolivar to its new digital currency, the Petro. The government of President Nicolas Maduro has long employed an aggressive propaganda campaign in favor its tragically failed policies. Imagine if he gets a team of Petro-holding trolls to amp up that campaign.

Digital fiat currency could also become an alarming surveillance tool. Already, the concept of China’s “social score” system is raising concerns in that country. Add traceable digital payments to that kind of model and something even more invasive emerges.

Still, competitive pressures might also help us here. As I’ve previously argued, privacy is vital to good, functioning, fungible currency systems. So too, naturally, is broad adoption.

If we can create a world of genuine choices across currencies, it’s reasonable to assume that people will gravitate toward those that don’t entail surveillance and aren’t used as propaganda tools.

Will cryptocurrencies do a better job of achieving these standards? Possibly. But it depends on their design. There are plenty of bad altcoins out there.

Still, if a cryptocurrency, whether bitcoin or an alternative with a different monetary policy, attains scalability and includes robust privacy protections, there’s still a very decent chance it could eventually outcompete government currencies.

Either way, let’s bring on the competition. May the best coin win.

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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Bank of Thailand Announces “Milestone” Digital Currency Project Using R3 Corda Platform

The Bank of Thailand (BoT) has revealed plans to develop a wholesale Central Bank Digital Currency (CBDC) that will use R3’s Corda platform, in a press release published August 21.

A CBDC is a digital currency issued by a central bank whose legal tender status depends on government regulation or law. The “wholesale” variant of CBDC limits its use to financial institutions and markets, as opposed to a “retail CBDC” for the general public.

R3’s Corda, for its part, is a distributed ledger technology (DLT) platform that has been designed to work within the financial service sector and uses a permissioned system to restrict data access to the required participants only.

According to the announcement, the BoT is partnering with eight financial institutions on the CBDC project – including Bangkok Bank Public, Krung Thai, Siam Commercial Bank, Standard Chartered Bank and HSBC.

In what BoT describes as a “collaborative milestone,” the participating banks will jointly design and develop the proof-of-concept wholesale CBDC prototype, the first phase of which is expected to be completed by the first quarter of 2019. The effort, dubbed Project Inthanon, reportedly aims to “enhance efficiency of the Thai financial market infrastructure” and contribute to the design of its future evolution.

The announcement further reveals that in addition to Project Inthanon, the BoT is “conducting a DLT (distributed ledger technology) proof of concept for scripless government savings bond sale to improve operational efficiency.”

CBDCs continue to draw interest and divide opinions within the banking sector across the world. At the Deconomy conference in South Korea this April, R3’s research director Anthony Lewis predicted that efforts to develop wholesale CBDCs would accelerate in 2018, due to an increasing number of institutions recognizing the potential benefits that could be reaped through their issuance.

Retail CBDCs, meanwhile, have drawn a more circumspect response. This March, the Bank for International Settlements (BIS) stated that “a general purpose [retail] CBDC could give rise to higher instability of commercial bank deposit funding” and potentially fuel faster bank runs, an opinion that was echoed by the Bank of England in May.

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HTC Exodus Blockchain-Centric Smartphone Is Set To Release Later This Year

HTC, a Taiwan-based electronics hardware manufacturer, announced their Exodus phone earlier this year. As per previous reports, the Exodus was touted as the “world’s first major blockchain phone.”

The media went into a frenzy over this announcement, with many speculating about how this would change the blockchain and cryptocurrency scene.

But at the time of the original announcement, no one knew exactly what the device would entail, and what blockchains it would support. Phil Chen, an HTC executive, gave an ambitious statement in May, stating: 

We envision a phone where you hold your own keys, you own your own identity and data, and your phone is the hub.

In this most recent announcement, HTC gave more details in regard to the Exodus Blockchain smartphone, clearing the air around this hot topic.

Unfortunately, Chen noted that HTC’s plan for an “own your own identity and data” smartphone will not come to fruition in the form of the Exodus, but rather in a later release.

Yesterday, the HTC executive told The Verge that Exodus’s blockchain support will come in the form of an in-house crypto wallet and a CryptoKitties service integration. These features being a far cry from the ambitious plans HTC held preceding this announcement.

However, the HTC team still has high hopes for these two features. More specifically, Chen claims that the built-in wallet will be “the most secure hardware wallet out there,” possibly surpassing the security of cold wallet solutions like the Ledger and Trezor.

In terms of the unexpected CryptoKitty support, the executive hopes that the gamification of the blockchain will entice ‘no-coiners’ to give the Exodus a shot. He elaborated, noting:

Gaming is the most approachable thing on mobile, for the non-crypto crowd.

Despite these features disappointing some, Chen mentioned that there are plans in place to implement mobile cryptocurrency mining. He later added that there is already “famous” experts looking into a variety of different consensus protocols that might make Exodus mobile mining a reality. The HTC employee noted that the Taiwan-based firm might even release a white paper later this year, giving more details about this mining system.

However, these features do not come at a cheap price, as Chen implied that preliminary estimates will put the retail cost of the Exodus at approximately $1000. One must assume that top of the line hardware will be an integral part of this blockchain smartphone, or HTC would have no chance at selling this device at all.

HTC Exodus: An All Or Nothing Play For The Hardware Manufacturer?

When taking a look at HTC’s recently released financial statements, it becomes easy to tell that prospects are looking rather grim for the company. According to CNET, HTC’s sale figures dropped a staggering 68%, while compared with last year’s financials.

The manufacturer has been having a rough time trying to compete with smartphone giants, Apple and Samsung. The Verge pointed out that sales for the company have taken a tumble, from two million products in 2017 Q1 to just 630,000 at the start of this year. As a result, the Taiwan-based firm intends to lay off 1,500 employees in an attempt to bring its bottom line to a more sustainable level.

In short, HTC is in a precarious financial situation and has troubled to stay afloat in the unforgiving smartphone market. But many speculate that the company is riding on the success of the Q3 Exodus release, as a successful launch of this phone could see HTC move to clearer waters.


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Germany's Finance Ministry: State-Issued Digital Currency Has ‘Not Well Understood’ Risks

The German Federal Ministry of Finance considers the concept of a central bank-issued digital currency (CBDC) to be too risky to implement, Cointelegraph auf Deutsch reported July 5.

The finance ministry expressed its position in response to an inquiry by Green Party MP Gerhard Schick published business newspaper Handelsblatt Wednesday, July 4.

“So far there are no convincing reasons for issuing digital central bank money for a wide range of users in Germany and the Eurozone,” Handelsblatt quoted the Ministry as saying.

The potential benefits of a central bank-issued digital currency –– including high-speed bank transfers –– could also be realized in other ways, the Ministry argues, saying that a CBDC contains “a number of risks that are not well understood.”

The Ministry wrote that a central bank would also obtain a stronger position in the financial system if it were to issue a cryptocurrency, which could jeopardize its independence. According to the Handelsblatt, the Finance Ministry also feared that in a crisis, bankruptcy with digital central bank money could happen faster and on a larger scale due to lower transaction costs. The officials also argued a digital currency would make it more difficult to combat money laundering and terrorist financing.

Globally, governments have expressed varied sentiments towards state-issued digital currency.  In May, the Bank of England concluded in a working paper that the introduction of a CBDC would not have a negative impact on private lending or on providing liquidity to the economy as a whole. The same month, the Norwegian central bank, Norges Bank, went so far as to recommend the idea of ​​a CBDC as a supplement to cash in a study.

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Crypto Exchange Gemini Hires Former NYSE Tech Chief

Cryptocurrency exchange Gemini has hired former New York Stock Exchange (NYSE) chief information officer Robert Cornish to serve as its first chief technology officer.

The exchange, founded by investor-brothers Cameron and Tyler Winklevoss, announced Friday that Cornish would be in charge of Gemini’s technology team and strategy, according to a press release. Further, Cornish will be overseeing the deployment of Nasdaq’s SMARTS Market Surveillance, a benchmark for “real-time and T1” solutions for market surveillance.

The market surveillance project will “enable Gemini to monitor across all of its order books as well as Gemini Auctions, which are used to determine the settlement price for the Bitcoin (USD) Futures Contracts that trade on Cboe Futures Exchange, LLC,” Gemini explained.

Gemini CEO Tyler Winklevoss said in a statement:

“Rob is a tremendous addition to our team. He will ensure that Gemini continues to deliver the best platform experience to our customers as possible and set the standards of excellence for the cryptocurrency industry as a whole.”

The news comes two months after Gemini received approval to expand its cryptocurrency offerings from the state of New York, adding zcash to its list of tradeable coins.

Gemini currently operates under a banking charter in the state, though it has not received the state’s landmark BitLicense, as previously reported by CoinDesk.

Taxi 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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Controversy Continues: Was Tether Really Double-Spent?

Was USDT Double-Spent?

SlowMist, a Chinese cybersecurity company focused on the blockchain and cryptocurrency sector, recently released a tweet regarding the investigation of a double-spent USDT transaction.

The tweet, shown below, was posted in Chinese, leaving many westerners confused at what the tweet meant. But as Mandarin speakers translated the message, it became clear that the SlowMist team had identified a potentially dubious Tether transaction.

The rough translation is as follows:

The exchange in the USDT recharge transactions to confirm the success of a logical flaw in the transaction details on the block chain valid field value is true, resulting in “pretend value”, the user has not lost any USDT but successfully recharge the exchange USDT, and these USDT can be normal transactions. We have confirmed that the real attack happened! The relevant exchange should suspend USDT recharge function as soon as possible, and self-examination code whether there is this logic flaw.

When reading in between the lines of the translation, it becomes clear what the tweet originally meant. It was directed at pointing out that an anonymous user, or the SlowMist team themselves, were able to “recharge” the 694 USDT twice, essentially doubling the value of the aforementioned Tether.

It is important to note that new USDT tokens were not created, this transaction only allowed for the user to potentially withdraw 694 USDT out of the exchange’s Tether wallet without holding the authority to do so.

SlowMist later clarified that the vulnerability was not part of the Tether codebase, but rather, a vulnerability of a specific exchange, which remains unnamed at this time. OkEX, popular Asian-based exchange, quickly addressed the issue to ease the minds of consumers.

Reassuring that it was the fault of the unnamed exchange, OkEX wrote:

We are aware of the vulnerability with USDT deposit. And we confirm that OKEx is NOT exposed to the vulnerability. Please rest assured that your assets are safe and secure with us.

A Reddit user, stating that he/she was the founder of Omni, the protocol which Tether is built upon, also gave a statement regarding the issue. ‘Dacoinminster’ said:

If I’m translating this correctly, it appears that what happened here is that an exchange wasn’t checking the valid flag on transactions. They accepted a transaction with valid=false (which they should not have), and then the second “double spend” transaction had valid=true, which they also accepted. 

Unless I am missing something, this is just poor exchange integration. One of our devs already replied pointing to our best practices for integration

It is likely that only smaller exchanges, with less experienced developer teams, are vulnerable to this issue.

Tether Controversy Continues

This story has added to the Tether controversy, which still continues to this day. Despite a recent audit confirming that Tether does, in fact, have the U.S. reserves to match the 2.7 Billion USDT tokens, debate still rages about Tether’s effect on the cryptocurrency market as a whole.

A research paper released by the University of Texas indicates that USDT has been used in the manipulation of cryptocurrency prices over 2017. The paper states that over 50% of all Bitcoin’s upwards price movements were caused by the trading and transfer of Tether. 

Many critics of the often notorious stablecoin have long held this opinion, believing that the Tether organization utilizes questionable business practices. However, it has become clear that stablecoins will become a promising sub-industry as the cryptocurrency market develops.

Although questionable at times, it is important that Tether holds a place in the market, as the collapse of Tether could mean a widespread decline in the collective value of all cryptocurrencies.

Title Image Courtesy of MaxPixel


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Swiss-Based Company Offers Secure Cryptocurrency Storage In The Alps

In Comes Swiss Crypto Vault, Amidst The Growing Need For Cold Storage

Niklas Nikolajsen, the founder of the cryptocurrency infrastructure firm Bitcoin Suisse, has announced the creation of Swiss Crypto Vault. Nikolajsen, along with Phillip Vonmoos, his business partner, hopes to attract the cryptocurrency holdings of institutional investors and wealthy individuals.

SCV plans on securing crypto assets through the use of encryption, multi-sig authorization, and most importantly, the use of a ‘military-grade’ bunker that can stand the worst of conditions. It is reported that PricewaterhouseCoopers will review the security of the vault, ensuring that the most effective practices are set in place. 

The fact that Bitcoin Suisse has access to such a secure site is its biggest claim to fame, sporting the extreme levels of security a Swiss Alps bunker, established in the Cold War, accommodates.

This startup fills a growing gap in the industry, with institutional investors piling into the space looking for secure ways to store millions of dollars worth of cryptocurrencies.

Nikolajsen’s business partner, Vonmoos acknowledged the need for such a service, stating:

The next level for the crypto community is for additional institutions to enter the space. They will only do so if there is a super secure way of storing the assets or the private key.

The founder of Bitcoin Suisse, Niklas Nikolajsen also said:

It’s not millions anymore we’ve been moving to the bunker — it’s the next level.

Institutional investors, like banks or high net worth individuals, often lack the capability and knowledge to secure cryptocurrencies. However, SCV offers the expertise to institutional investors, charging fees for its indispensable service.

Nikolajsen has so much faith in the startup, that he moved all assets from Bitcoin Suisse to the bunker, attesting to his belief in the security of the service. SCV opens to the public today, offering a variety of secure storage services for a multitude of cryptocurrencies, like Ethereum and Bitcoin.

It is likely that SCV, along with Swiss-based Xapo, will become mainstays in this growing sub-industry, as cryptocurrency fortunes look to settle down for decades to come.

Cold Wallets V.S. Hot Wallets, The Debate Continues

Last week saw BitHumb, popular Asian-based exchange, get hacked for over $30 million worth of cryptocurrencies. It became clear the hack occurred on some of the hot wallets Bithumb has held. Although it is a common practice for exchanges to keep cryptocurrencies on hand, in hot wallets, it still doesn’t take away from the extreme levels of security cold storage offers.

Cold storage, A.K.A cold wallets, is a method of keeping cryptocurrencies away from an online environment, often generating and assessing your funds through offline services. The use of cold wallet storage mitigates most of the risk associated with online wallets, removing the fears of hackers remotely accessing your wallet.

Many cryptocurrency experts, along with cryptocurrency companies, advise users to keep all personal funds in cold wallets. Pieces of hardware, like the Ledger Nano S, offer affordable and easy-to-use cold storage options for normal consumers.

As the cryptocurrency space expands, it will make sense for consumers, along with established firms coming from outside the industry, to keep their cryptocurrency funds secure in cold storage.  

Title Image Courtesy of Artur Staszewski


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Nvidia Racks Up 300,000 Overstock GPUs As Mining Interest Dwindles

Nvidia-According to an article from Gadgets360, a popular technology media source, an over 300,000 GPU return was the result of a ‘top 3’ Taiwan OEM realizing the lack of demand in the computer hardware market.

Some have suggested that the recent influx of overstock GPUs will lead to a delay in the release of a new lineup of Nvidia cards, originally expected to arrive in Q2/Q3 2018. This would make sense, as Nvidia would want to sell all of the cards in their 10 series before making any large moves towards new hardware. If the aforementioned reports are accurate, Nvidia’s overstock can be worth over one hundred million dollars at MSRP prices.

The rumored 11 (Ex. 1180) series cards have become an important topic of discussion in the technology and cryptocurrency communities. Both groups believe that the performance of these new cards will easily overpower any of the GPUs from the previous series.

Nvidia Refocuses on Gaming As GPU Mining Slows

However, Nvidia has begun to quash the hopes of GPU miners, by announcing that they will begin to refocus on gaming, instead of the immense profits produced by the GPU mining sub-sector.

Jensen Huang, Nvidia’s CEO, said:

We’re working really hard to get GPU down to the marketplace for the gamers and we’re doing everything to advise retailers and system builders to serve the gamers. And so, we’re doing everything we can, but I think the most important thing is we just got to catching for supply.

Nvidia revealed that revenues from the cryptocurrency industry amounted to $289 Million, nearly 10% of all reported revenue streams. Although this figure represented a substantial amount of sales, Jensen expects a ⅔ decrease in cryptocurrency demand over Q2.

With Q2 coming to a close shortly, it is clear to see that GPU demand has gone down, but exact numbers are still unclear. Many have attributed the mining demand slow-down to decreasing cryptocurrency prices, along with the rise in prominence of ASIC miners.

Firstly, cryptocurrency prices have declined over 70% since the start of the year, with mining difficulty still rising. This has led to an unsustainable market for GPU miners, with many users reporting a large loss in mining profitability. A select few, who live in areas where power costs exceed average levels, have begun to shut down their mining farms entirely, as profitability goes out the window.

GPUs Lack Efficiency When Compared To New ASICs

Secondly, Bitmain has recently announced their expansion into new mining algorithms, unexpectedly releasing ASICs for ETHhash and Equihash. Coins mined on the two aforementioned algorithms have historically been mined on GPUs, with Ethereum and ZCash being the most popular cryptocurrencies on these algorithms.

The new ASICs, titled the E3 and Z9 Mini, produce an exponential increase in the hashrate/$ performance metric. Ethereum and ZCash were originally expected to hard-fork away from any ASIC miners, however, developers have been slow to make any moves towards ASIC resistance. As the aforementioned ASICs arrive at the homes of miners, mining difficulty will begin to rise to new heights, heights where GPU miners will be unable to reach.

The GPU mining market is in a precarious situation, as profits slow. Nvidia has begun to acknowledge this, with analysts expecting a similar situation to occur with another hardware manufacturer, AMD.