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Bitcoin by Design; Falling Difficulty and Hashrate Makes Mining Easier

With all the doom and gloom being published about Bitcoin at the moment it is often hard to overlook how it has been designed. When prices plummet, hashrate and mining difficulty follow suit as the blockchain operates exactly as it has been designed.

The mainstream merchants of doom are almost rubbing their grubby hands together with glee as Bitcoin falls to new yearly lows and drops over 80% from its all-time high. Stories of mining farms closing down due to non-profitability have added fuel to the fire. Even established finance websites such as Marketwatch are running headlines of despair and crypto worthlessness.

According to that opinion piece, Bitcoin is getting close to the point where it becomes worthless claiming that a fall in price to below the cost to mine will render the digital currency redundant. However, with the falling price comes a decline in difficulty as highlighted by charts on Blockchain.info.

The 15% fall in difficulty shows the ease at which miners can find a new block. Hashrate, which has fallen by the same amount, shows the amount of computing power required to make the calculations.

At the time of writing the hashrate has fallen to just below 32 million TH/s.

As powerful mining machines such as Bitmain’s Antminer S9 shut down due to power consumption costs there is less computing power in the mining pool which will reduce the difficulty.

Some observers have noted that this has been the biggest fall in Bitcoin history.

This fall has come a year after the biggest rise in Bitcoin history so things are ironing themselves out in the ecosystem and the blockchain is behaving as it was designed to. The fall makes it more profitable to mine Bitcoin than some of the other cryptocurrencies. This may open the doors to new miners and reduce the power of the conglomerates such as Bitmain.

As previously reported by ETW Bitcoin miners are now switching to alternatives such as BCH or BSV. The recent ‘hash war’ between the rival groups and attempts to entice BTC miners over to their camp no doubt had some influence over the recent market rout which dropped prices by almost 40%.

Things will eventually balance themselves out in the Bitcoin network, it will find a bottom, probably stay there for quite a while then, according to many industry observers, rally again sometime around the middle of next year.

The post Bitcoin by Design; Falling Difficulty and Hashrate Makes Mining Easier appeared first on Ethereum World News.

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Bitcoin Price Will Hold at $6,000 Before Reaching $15,000 by Christmas, Says CoinCorner Co-founder

Despite the recent price struggles of Bitcoin and the rest of the cryptocurrency market, some enthusiasts still hold hope of a significant rally before the end of the year. Elsewhere, the rising BTC hashrate is beginning to force sweeping reactions in the mining ecosystem.

Bitcoin Will Hit $15,000 by the End of 2018

Danny Scott, a co-founder of CoinCorner, an Isle of Man-based Bitcoin exchange platform, believes that the top-ranked cryptocurrency will end the year on a strong note. Speaking to Express.co.uk, Scott said:

For the last few months, the price of Bitcoin has been at $6,000 which we believe will continue for a while, but we predict the price will reach $15,000 by the end of the year. We take this view because the retail market is continuing to expand at a very healthy rate based on both our own data and industry trends.

According to Scott, his prediction is based on the fact that institutional investors are becoming more active in the market. These big-money traders are reportedly buying BTC in high volumes, thus helping to initiate another significant bull run in 2018.

Despite the recent tumultuous price movements, BTC has managed to recover above the $6,000 mark. Some experts believe that BTC will still test $5,000 before any meaningful rally that will take the price to higher levels. This reasoning assumes that the base mining cost is approximately $5,000.

At press time, Bitcoin was holding steadily above the $6,400 mark. The top-ranked cryptocurrency has also managed to attain its first seven-day positive price variance since the start of August 2018.

Bitcoin Hashrate Continues to Increase

In another development, the Bitcoin network hashrate continues to increase despite the significant price drops experienced in the past few weeks. Already, Hashflare, a cloud mining service platform was forced to terminate its Bitcoin mining contract.

On Thursday, Genesis Mining, another cloud mining platform issued a statement saying that it would terminate open-ended BTC mining contracts. The company advised its customers to migrate to a premium five-year BTC mining contract.

According to Genesis Mining, the reason for the decision was based on the fact that several clients have been unable to earn enough to cover the maintenance fees thus rendering the enterprise unprofitable. However, despite the move, the company remains bullish on the long-term prospects of BTC mining, saying:

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.

Do agree with Danny Scott’s prediction? What is your end of year Bitcoin price forecast? Keep the conversation going in the comment section below.

Image courtesy of Coinmarketcap.

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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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Bitcoin Mining Behemoth, Bitmain, Reaches Stratospheric Valuation After Latest Funding Round

Bitmain, the largest cryptocurrency mining company in the world continues to attain even greater heights. The number one manufacturer of application specific integrated circuit (ASIC) bitcoin miners is now valued at $12 billion. This new valuation follows the recently concluded series B funding round which realized $400 million for the company. There are also reports that Bitmain plans to buy a majority stake in the upcoming Opera Ltd. IPO.

Worth $12 Billion

Local Chinese media outlet, Caixin, reported that a conglomerate of investors was able to raise $400 million in a new funding round for the mining giant. China-based Sequoia Capital, U.S.-based Coatue hedge fund, and Singapore government-owned EDBI were the primary investors in the funding drive. Sequoia Capital was also involved in Bitmain’s series A funding back in July 2017 which raised $50 million.

According to reports from the company, Bitmain might be conducting an IPO soon. Inside sources reveal that Hong Kong would likely be the location for the offering. If the company does go through with such a plan, it will join fellow mining company Canaan Creative which announced its IPO earlier in the year.

Bitmain is also gearing up to invest in the upcoming Opera Ltd. IPO. Opera is the company behind the eponymous web browser – Opera internet browser for desktop and smartphones. According to reports, Bitmain wishes to invest $50 million in buying the company’s shares during its $115 million IPO.

In a matter of four years, Bitmain has made itself become one of the most successful companies in the blockchain industry. The company reportedly made profits of about $3 billion to $4 billion in 2017. Bitmain controls the market for Bitcoin mining as the largest manufacturer of mining rig hardware.

Approaching 51 Percent Control of the Bitcoin Hashrate

Bitmain’s monopoly of the Bitcoin mining scene isn’t restricted to the manufacture of ASICs alone. The company also owns AntPool and BTC.com, the two largest BTC mining pools as well as a controlling stake in ViaBTC, the third largest mining pool. Together all three allow Bitmain to approach nearly 51 percent control of the Bitcoin mining hashrate. With such a level of control, the company could theoretically manipulate the BTC network. Bitmain has, however, maintained that it has no incentive to carry out such an attack, considering the sweeping financial ramifications.

The company also recently became a member of the 21 EOS block producers (BPs). EOS had faced a multitude of issues since its mainnet launch last month. There are widespread concerns about a lack of decentralization in the project. Reports emerged recently that stakeholders were trying to create a new constitution for the project.

Will Bitmain be able to control 51 percent of the Bitcoin network hashrate? Do you think Bitmain will be able to dominate the EOS mainnet? Keep the conversation going in the comment section below

Image courtesy of Blockchain.com.

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Bitmain Dominates Bitcoin Mining Hashrate – Almost at 51 Percent

Bitmain has attained approximately 42 percent control of the Bitcoin network hashrate. This figure brings the company tantalizingly close to 51 percent mark where things could get interesting. Bitmain is the biggest manufacturer of BTC mining hardware, and they also own the largest Bitcoin mining pools in the market.

Bitmain Almost at 51 Percent Control

According to the figures released by BTC.com, Bitmain’s mining pools continue to dominate the network hashrate. The company owns the BTC.com and AntPool mining pools. During this past week, BTC.com and AntPool found 27.2 percent and 14.6 percent of all Bitcoin blocks. Thus, Bitmain effectively controlled 42 percent of the network hashrate in the last week.

Perhaps even more profound is the fact that Bitmain doesn’t utilize all of its hashpower BTC mining. The company also mines Bitcoin Cash, the most popular BTC fork. Both BTC and BCH use the same proof of work (PoW) algorithm. Thus, the same mining hardware can be used to mine both. However, one miner cannot mine both cryptocurrencies simultaneously. As a result, Bitmain shares its hashpower between both networks.

In the previous seven days, BTC.com and AntPool controlled 10.4 percent and 10.6 percent respectively, of the BCH hashrate. This means that Bitmain found approximately 21 percent of all Bitcoin Cash blocks discovered in the last one week.

Implications of Bitmain Gaining More Control

Assuming the company decided to apply all of its mining resources to the BTC network, its control of the blockchain’s hashrate would increase. This increase, however, wouldn’t be linear since the mining difficulty in BTC exceeds that of BCH by over 70 percent. Thus, only an additional three percent would be added to Bitmain’s control if it stopped sharing its hashpower between BTC and BCH, focusing only on Bitcoin. By so doing, Bitmain would control 45 percent of BTC’s network hashrate.

Bitmain controlling 51 percent of the BTC network hashrate has profound implications for the immutability of the cryptocurrency’s ledger. 51 percent control of a blockchain network, in theory, would enable the company to carry out double-spend attacks thus compromising the integrity of BTC transactions. Bitmain is unlikely to have any incentive to engage in such activities, but cybercriminals could hack the company and commandeer their operations.

To forestall such an occurrence, the company has always operated in small divisions with some pools having a semblance of independence from the company. For example, BTC.com is somewhat independent of Bitmain even though the company owns the BTC.com platform.

The Increasing Bitcoin Hashrate

Despite the steady decline in BTC prices since the start of the year, the network hashrate has moved in the other direction. In fact, BTC mining hash rate has tripled since December 2017, while the price of Bitcoin has dropped to approximately a third of its value within the same period.

With the drop in prices and the increasing hashrate, it is currently more difficult to mine Bitcoin than it was in December 2017. For smaller mining operations, the price drop is a significant problem that could render them unable to continue the business. If they close up shop and new miners don’t enter the market, there is the possibility of Bitmain grabbing control of a much larger share of the hashrate. Since Bitmain manufactures its hardware, it can most likely survive for much longer even in the face of increasing mining difficulty and reducing prices.

Bitcoin is currently down to its lowest level since the start of 2018. BTC prices fell below $6,000 for the first time in 2018 as the top-ranked crypto continues to struggle.

Should Bitcoin enthusiasts be concerned about a possible 51 percent control of the blockchain’s hashrate by Bitmain? Will the increasing hashrate and declining price levels force miners to quit? Let us know your views in the comment section below.

Image courtesy of BTC.com, Blockchain.info, and CoinMarketCap.

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