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Bitcoin Hash Rate Goes On Death Spiral Post China’s Crackdown On Miners

The great Bitcoin miners migration is well underway. And the network’s total hash rate is showing it in a big way. Currently, the number of terahashes per second is at its lowest level in the last twelve months. That means that mining Bitcoin has not been easier in a whole year. Also, there’s less competition. So, it’s good news for all the other miners that are spread around the world. However, don’t expect it to last long.

Related Reading | How China Bitcoin FUD Is Lowering The Cost To Produce BTC

Tons and tons of mining equipment are currently traveling to their new homes. There are reports of a huge operation in Kazhakstan, a neighboring nation of China. There are also rumors of equipment and personnel already settling down in Texas. The US state is making a push to become a Bitcoin mining capital, and apparently, the efforts already bore fruit. 

Back in China, the crackdown is no longer a rumor. It’s a reality. CNBC reports:

China’s crackdown intensified over the weekend, with authorities in the hydropower-rich Chinese province of Sichuan ordering crypto miners to shut down operations.

According to reports, more than 90% of China’s bitcoin mining capacity is estimated to be closed. 

Some experts see this as a good thing. It’s estimated that China controlled between 60 and 70% of Bitcoin mining, and the future looks clearer with them out of the picture. The hash rate will suffer for a while, but there’ll be more decentralization. Also, the carbon-powered-energy consumption FUD will decrease. Even though China’s miners were mostly located in areas rich in renewable energy, Bitcoin critics had a hard time believing reports from that side of the world. 

Total Hash Rate (TH/s) of the Bitcoin network | Source: Blockchain.com

Another China Ban, A Reflection Of 2017

This is not the first time that the Chinese government’s cryptocurrency policy caused havoc on the market. In September 2017, they banned crypto exchanges altogether. Just before that, Bitcoinist reported:

While Chinese exchanges used to represent over 90% of Bitcoin’s trading volume, this changed completely with the intervention of the PBoC which led to the end of margin trading and zero-fee policies and to the temporary halt on withdrawals.

All of these changes contributed to China’s trading volume reduction, which saw its market share fall to 3-5% of the global trading volume.

So, historically, the Chinese government has shown no mercy in closing billion-dollar businesses by decree. It’s also worth noting that most of the banned cryptocurrency exchanges just closed their China offices and moved their operation to other countries. They continue working to this day and, for users not in China, the traumatic move didn’t affect their experience in the slightest. Bitcoinist reports again:

The clampdown led to a staggering drop in CNY trading — which comprised over 90 percent at its peak — as traders made an exodus to over-the-counter, peer-to-peer, and foreign exchanges. As a result, jurisdictions with friendlier laws experienced a boom in trading volume as the market flipped on its head

The current situation with the miners is a reflection of that. The mining business is in the process of flipping on its head. The hash rate will recover.

BTCUSD price chart for 06/25/2021 - TradingView

BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com

The Hash Rate Will Rise Again

In retrospect, we should’ve seen it coming. Only two months ago, following a suspicious blackout, NewsBTC reported:

According to the Beijing Economic and Information Bureau, there were concerns about the energy consumption related to these activities. PengPai quotes Yu Jianing, rotating Chairman of the Blockchain Special Committee of China, to claim that the country’s environmental requirements could lead to crypto mining being more “strictly regulated”. Jianing said this will be “inevitable”.

Related Reading | Bitcoin Mining In China To Usher Historic Moment, Will BTC Be Affected?

As for the possible reasons, Bitcoin Magazine’s Lucas Nuzzi cites the upcoming Digital Yuan CBDC. He also defuses the FUD by informing us, “Daily Hash Rate is, by its very design, a volatile metric that is not suitable to track lasting changes in the mining landscape.”

We should also take into consideration Nic Carter’s assertion that all of these things are happening while, “Bitcoin continues to maintain 100% uptime, is nothing short of a modern marvel.”

In Bitcoin, everything’s changing while everything stays the same. The hash rate will rise again.

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John McAfee’s Wildest Quotes About Bitcoin And Cryptocurrencies

The highly controversial and highly entertaining John McAfee is dead. As our sister site Bitcoinist informed, “According to a spokeswoman for the Superior Court of Catalonia, former crypto promoter John McAfee was discovered dead in his prison cell near Barcelona, Spain at the age of 75.” A cybersecurity pioneer and an eccentric millionaire, McAfee became obsessed with cryptocurrencies in the latter part of his life.

He went from giving Bitcoin the highest praise to bashing it every time he could. Launched a failed hardware wallet. Pioneered DEXes and briefly operated a trading platform. McAfee ended up promoting every altcoin that had a cheque for him, and virtually none of those succeeded. Quite a colorful crypto career. 

Related Reading | After Trashing Bitcoin, McAfee Is Promoting These Three Altcoins

Of course, you all know what his wildest quote about Bitcoin was. But, what did he think about the big subjects in the crypto space? Let’s pass the mic to the fallen king, and let him rip everything apart using his own words.

John McAfee On Bitcoin

As we already told you, he started with the highest praise possible. To our very own newsdesk, he said:

Bitcoin will become the gold standard. Bitcoin will always be that standard, that you can keep in a wallet offline somewhere and think, this is my retirement income. It is the grandfather; it will always be the best. When people were taught about cryptocurrencies, they were made to say Bitcoin instead of currencies. That’s how prominent it is.

And a few years later ended up bashing it, while showing a fundamental misunderstanding of the technology and its value to the world:

 I am not a Bitcoin maximalist. I don’t know what the maximalists are thinking. I mean, there’s zero privacy in Bitcoin. Bitcoin doesn’t have smart contracts, and Jesus, there’s nothing. It’s an ancient, arcane technology and yet it’s still going to be worth a fortune.”

“As a store of value and cryptocurrency, it’s the standard. However, it does not do much that the world needs from blockchain today. It’s simply a cryptocurrency.

So yeah, even though he saw the store of value aspect, he missed the point entirely about what Bitcoin means for humanity. However, he always maintained the $1M price target for BTC’s price: 

“It can’t be otherwise. Look at the Bitcoin supply and its usage. It is so artificially compressed in value right now. It will simply get out of the artificial constraints to where it should be. I mean, there will only be 21 million coins ever, and seven million of them are lost.”

About Blockchain Technology

He was on point with this one:

Well, in 2014 I decided that the blockchain was probably the most revolutionary software technology that I had seen in my 50 years of doing computer science.

No argument there. And to think, it’s only a little part of what makes Bitcoin special.

He Was All-In On Altcoins

The man, the myth, the legend was convinced that Altcoins were the next step.

The altcoins are obviously where the real action is, and there are some super brilliant people there. Things like DAI, the only real stablecoin. It never varies more than 1% up or down from the US dollar. And I dabbled in it, I’ve been watching it, and it’s astonishingly based on smart contracts.

And he was especially interested in stablecoins and privacy coins:

I think there are two things that will survive no matter what is coming in the cryptoworld. Those are privacy coins, true privacy coins where no one can know anything about a transaction. And stable coins, like DAI, that do not vary in value. From a stable item, or an unstable item like the US dollar. DAI has never varied more than one penny from the US dollar. 

XMRUSD price chart for 06/24/2021 - TradingView

Monero price chart on Bitfinex | Source: XMR/USD on TradingView.com

John McAfee On DEXes

One of McAfee’s last projects was a Decentralized Exchange. He was convinced that the world needed it:

We have to have distributed exchanges as users of cryptocurrencies created by the people like Bitcoin and Monero-based or otherwise that’s going to die. Because as China proved two years ago, in 24 hours, they shut down every exchange in China. Overnight. It’s a piece of cake. We have an address where the office is, we go in and we turn off the electricity, or arrest everybody, or you know, just whatever. Easy. So without distributed exchanges we’re lost, because without an exchange what are all these disparate currencies if we have no way to trade between.

Related Reading | Why The Dark Net’s Most Active Market Ditched Bitcoin For Monero

And about governance and decentralization in general, he thought:

I think developers make whatever decision they want with open source code. So problem is open-source. I mean if you wanna change it and put your name on it, and change the wallet addresses to some wallet belonging to you, please god, do so! That’s your fundamental right, all right?!

If you make it open source, you can’t complain about what people do with than after.

So, do we need governance? No!

And, to close this off and finish his thoughts on governance, McAfee had this beautiful insight:

No, we don’t need that to, we trying to get away from it, we trying to develop a system of mathematics that eliminates the need for trust and the need for control.

Rest in peace, John McAfee.

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Are These The 6 Richest People In The Crypto Industry ?

There’s a lot of money in the crypto industry, that much is for sure. And we’re at a stage in which there are projects that are advanced enough for their creators to have already reaped the benefits. And then, there’s Bitcoin. Early adopters and believers, extremely long-term hodlers, are sitting on a fortune. Who’s made the most money, though?

An extremely difficult question to answer. The pseudonymous nature of blockchain technology makes inquiries like this a tall order. There are wallets that nobody knows who they belong to and hold thousands of coins. There are billionaires that have announced investments, but nobody knows which wallets belong to them. Not everyone in the crypto industry is a public figure. Not everyone in the space wants attention.

Related Reading | Ethereum Foundation Vitalik Buterin Talks ETH Inflation Rate

Taking that into account, the Coin Bureau YouTube channel launched an investigation and reached credible conclusions. If we agree that the list is for entertainment purposes and heavily western-focused, we can have fun with it. So, let’s do that.

Who Are The Six Richest Persons In The Crypto Industry?

To make this fair, the Coin Bureau focused on people who hold most of their assets in cryptocurrencies. That makes people like Coinbase’s Brian Armstrong and MicroStrategy’s Michael Saylor ineligible, because most of their fortunes are tied to their companies. It also discards all the billionaires that have a small percentage of their fortunes in crypto.

So, now that the rules are clear, let’s get into it.

6.- Tim Draper and Max Keiser

Tied at number five, two very different Bitcoin believers. 

Tim Draper: This venture capital investor made the purchase of a lifetime when he acquired all of the Bitcoin confiscated from the Silk Road dark web marketplace. “The US Marshall service auctioned off 30000 BTC which landed in Tim’s wallet for 19 million Dollars.” Those are now worth close to $1B. Draper is not part of the crypto industry, but, practicing diversification he also holds Bitcoin Cash, XRP, and Tezos. 

Max Keiser: This broadcaster and filmmaker is the reason many people around the world know about Bitcoin. An early believer, “In a 2013 episode of The Keyser Report, Max announced that he had become a Bitcoin millionaire.” As per Coin Bureau calculations, that means he held 25K BTC. Assuming he continued to buy, and bought a modest 5K more, his holdings are now worth $1B.

5.- Vitalik Buterin:

Ethereum’s co-founder starred in a Twitter public fight previously covered by NewsBTC. “Vitalik’s Ethereum wallet address has been known since late 2018 when he shared it over Twitter in response to criticism over Ethereum’s pre-mine.” This key figure in the crypto industry now holds 334K ETH, which at today’s prices is approximately $1.5 B.

4.- The Winklevoss Broders

It’s public knowledge, the Winklevoss twins invested part of their Facebook settlement in a then-new idea. The story goes as follows, “While on Holyday in Ibiza in 2013, Tyler and Cameron learned about Bitcoin and subsequently decided to buy 1% of all the BTC in circulation.” With that, they founded the Gemini exchange, a key component of the crypto industry. Coin Bureau estimated that each twin holds “between 2-3 billion dollars in cryptocurrency, mostly Bitcoin.”

3.- Chris Larsen

One of the biggest criticism that the crypto industry wields against Ripple is the incredible amounts of XRP that its founders and the organization hold. Well, “the third biggest crypto billionaire is Ripple co-founder Chris Larsen who holds anywhere between 5.2 and 7.8 billion XRP.” 

It’s worth noting that, “All XRP allocated to Ripple’s founders is subject to a vesting schedulle that will last untill 2026, assuming the SEC doesnt succed in its case against Ripple, in which case Chis’s XRP  will be unsellable by law.” It looks the other way so far, though. And the market seems to be supporting this turn of events.

2.- Sam Bankman-Fried

Did you know that FTX’s Sam Bankman-Fried was in talks with Binance’s CZ to fund an exchange together before any of the two made it big? True story. Well, Bankman-Fried is the “founder of Alameda Research and the FTX cryptocurrency exchange.”

Alameda Research made more money than god in an arbitrage trade. They figured out there was a premium hidden in Bitcoin’s prices in Japan. They bought in the U.S., sold in Japan, and made history. And a fortune. After that, “The FTX derivatives exchange is Sam’s second endevour, and it’s become one of the most popular crypto exchanges since it was founded in 2019.”

A key part of the crypto industry, through FTX he’s helped launch very successful crypto projects. Plus, they have their own coin that has appreciated over time. Coin Bureau says, “Sam’s exact cryptocurrency holdings are not known, I estimate them to total anywhere between 5 and 10 billion dollars.”

BNBUSDT price chart for 06/17/2021 - TradingView

BNB price chart on FTX | Source: BNB/USDT on TradingView.com

1.-  Changpeng Zhao

Even though CZ’s net worth is “listed at around 2 billion dollars,” Coin Bureau investigated and made some controversial assumptions. First of all, after attending a crypto conference, “CZ subsequently decided to sell his apartment in Shanghai and go all-in on Bitcoin. If my calculations are correct this banked him anywhere between 50 to 100 thousand BTC.”

The Bureau uncovered some articles in which CZ said that he likes to hold his fortune in crypto-assets, so they assume that he’s still holding to that. Years later, when Binance launched their own coin, 40% of BNBs initial minting of 100 million was allocated to the founding team. Again, the Bureau assumes he still has them, “CZ’s BNB holdings alone could easy be over 10 Billion Dollars at today’s prices.”

Related Reading | Changpeng Zhao Makes Super Bullish Case for Binance Coin

And that’s it, that’s their list. Do you think they forgot anyone in the crypto industry? Aren’t there even bigger whales in China? Are all of these people small potatoes compared to Satoshi Nakamoto himself? Let’s just take the list as a starting point and build on it.

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Michael Saylor Clarifies His Company’s Bitcoin Strategy On US’s National TV

The dedication MicroStrategy’s CEO puts into Bitcoin raises questions even in the crypto sphere. Imagine how people in the traditional financial world feel. Michael Saylor joined CNBC’s “Fast Money” talk show to discuss his controversial game plan. The hosts asked though questions and the CEO answered them with ease.

What follows is a play-by-play narration of the game.

 

Of course, Saylor started by defining the intangible asset, “The world is waking up to the fact that Bitcoin is digital property on an open monetary network. And that’s pretty profound because it’s going to spread to billions of people around the planet. It’s digital gold on a big tech network.”

Related Reading | Saylor Reacts To Taunts That Bitcoin Has Become The MySpace of Crypto

Some people wonder if MicroStrategy abandoned its software business. If the company is now it’s some kind of Bitcoin ETF. According to the CEO, they have two strategies and one of those is to buy Bitcoin. “MicroStrategy is the first company to do a dutch auction or share repurchase to buy Bitcoin. We’re the first company to do a convertible debt offering to buy Bitcoin. Last week, we became the first company to do a senior secured debt offering to buy Bitcoin.” 

NewsBTC already covered their latest play, and Saylor clarified that they will use the new funds, “either to buy Bitcoin, or to retire debt, or for general corporate purposes.” MicroStrategy wants to have all of its options open.

What Do MicroStrategy’s Shareholders Think?

When asked about his investor’s opinions on his obsession with Bitcoin, Saylor once again clarified the situation. Before this new chapter, MicroStrategy’s stock was trading at about $120 a share. They were a profitable company, but cash was a liability on their balance sheet. They shapeshifted, rotated their shareholders base, “and transformed ourselves into a company that’s able to sell enterprise software and to aquire and hold Bitcoin.” 

As for the results of this move, he estimates that the power of their brand increased by a factor of 100. The last quarter was the best that the software side of the company’s had in the last 10 years. The core business is up 10%. Employees and shareholders are happy.

What Does Michael Saylor Think About Inflation?

“Over the past 12 months we’ve all been waiting for inflation” According to Saylor, investors say that Bitcoin is up 330% and gold is up 7% in that period. Bitcoin is outperforming gold by a factor of 50. Early Bitcoin believes like Paul Tudor Jones are doubling or tripling their allocation, “I’m surprised they’re not increasing their allocation by a factor of ten, because Bitcoin is fifty times better.”

Is Michael Saylor a Bitcoin Maximalist?

When asked about Bitcoin Maximalism and diversification, Saylor gave them a masterclass in crypto assets:

“Bitcoin is the highest and most dominant digital property network. Think of it like giant blocks in cyber-Manhattan. Then you have digital currency, that’s like Tether, and stablecoins, they want to be money markets in cyberspace. They’ll be like the CBDC Dollars. Then you have digital applications, like Ethereum. Ethereum wants to dematerialize the JP Morgan buildings, and the banking stablishments, and all of the exchanges. There’s a place for all of these things if properly understood.”

Even though there’s a place for every asset, “Bitcoin is made to last forever. High integrity. Very durable.” And that’s a quality you want if you’re building over it.

Microstrategy price chart for 06/16/2021 - TradingView

MicroStrategy price chart on Cboe BZX | Source: MSTR on TradingView.com

Why Buy A Share Of MicroStrategy And Not Just Buy Bitcoin?

Did anyone notice that MicroStrategy’s stock is now following Bitcoin’s rhythm on the charts? According to Saylor, his company offers two advantages. One, Microstrategy has the ability to sweep its software cash flow into Bitcoin. Two, they have the ability to raise debt financing. They can borrow a billion Dollars with zero percent interest. Your ETF will not be able to do that. 

Related Reading | Can Bears Force Michael Saylor To Sell His Bitcoin? Analyst Shared Bullish Theory

So yeah, he compared his stock to an ETF because they’re roughly in the same category. Some investors and funds just can’t buy Bitcoin. They’re able to buy MSTR and the highly anticipated Bitcoin ETF, though. 

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