Tag: Etherium

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China’s Cryptocurrency Mining: Capital, Costs, Earnings

China's Cryptocurrency Mining - Capital, Costs, Earnings

China’s Cryptocurrency Mining: Capital, Costs, Earnings

Most Bitcoin mining operations are in China. As of July 2017, it is estimated that almost 70 percent of all Bitcoin mining is located in China.

Cryptocurrency mining, like other forms of businesses, needs capital to start and runs at an operation cost. Briefly, the startup cost includes the building, facilities and mining equipment.

On the other hand, the operation cost primarily includes electricity consumption, Internet bandwidth, manpower, equipment wear and tear and facilities maintenance.

Cheap electricity and mining machines are the two most critical factors for why mining operations are now thriving in China.

Cheap coal and massive hydroelectric power

It is not surprising that China is leading the world in cryptocurrency mining as its electricity tariff is one of the lowest in the world. Electricity in China is mainly generated by coal, which accounted for 57 percent of the total production and secondly by hydroelectric power — 20 percent.

With China being the world’s third largest coal reserve and coal being the cheapest source of power among the fossil fuels, electricity production costs a lot less than other parts of the world.

However, coal power is not the main source of power that is fuelling cryptocurrency mining, hydroelectric power is.

The largest concentration of miners are located in Sichuan China, estimated to be about 30 percent of the total. In Sichuan, hydroelectric makes up 79.5 percent of the total electricity capacity while fossil fuel makes 19.5 percent and it runs only during dry seasons. In wet seasons, Sichuan energy production exceeds consumption.

As of today, electricity in Sichuan costs around $0.08 to $0.09/kWh for commercial and industrial consumption.

Running a mining plant

A reporter from National Business Daily visited a mining operation and reported:

“The mining operation owned by a company called TianJia WangLuo located inside BaJiaoQi hydroelectric power plant has over 5,800 mining machines totaling more than 40 petahashes of processing power. The mining yields around 27 coins daily. This plant uses 7,000 units of energy an hour, amounting to 168,000 units of energy (kWh) a day, as the national average cost of electricity is about RMB 0.40 ($0.06) a unit, the cost of electricity for the plant is around RMB 6,720 ($1,000) a day.”

The cost of setting up the mining operation is by no means small. According to the plant supervisor, Mr. Lei, the company spent more than RMB five mln ($750,000) to build the plant.

The costs of the mining equipment aren’t small either. Each mining machine costs around RMB 10,000 ($1,500). In total, the capital investment was more than RMB 60 mln ($9 mln).

“This huge investment isn’t borne solely by the company as that is impossible. In fact, some of these machines don’t belong to the company; we operate them on behalf of others. For example, you buy a few machines and give them to me, I operate them for you, and in return, I receive a fixed service charge. In this way, the capital cost can be reduced and so is the risk,” Mr. Lei explained to the reporters.

How much can be earned?

The reporter estimated that this operation has a revenue of over RMB two mln a year. However, the net profit should take into consideration factors such as market price fluctuation, future halving of a number of coins and the changing of difficulty in mining.

The coin that is mined will eventually be traded in the market and cashed at certain time. Thus, the market price will determine how much the net profit is.

Mr. Lei also explained that for his operation, they sell only enough coin to cover their expenses. The surplus is kept for future as this is the long term strategy for his company. He also mentioned that not all mining companies follow this practice.

“In 2013, electricity tariff was high at RMB 0.70 ($0.10) to RMB 0.80 ($0.12) per unit, but at the same time, Bitcoin price was also high, around RMB 8,000 ($1,196). Many mining operations survived the high electricity cost but in 2015, the price fell to RMB 900 ($135), many mining operations closed down. It was a very bad time for the business,” Mr. Lei recalled.

Investment returns

Mr. Lei further told the reporter that the profit usually depends on changing factors but if things were stable and stayed the way they are as of now and you buy a machine, it takes about eight to nine months of continuously running to get the return back.

As a matter of fact, any businesses that have a return on investment of less than a year is considered very good.

“Like ore miners, our jobs are tough, but the people who make big profits are definitely not the miners. In our field, the logic is as the same (as ore mining). The ones who earn the most are the machine sellers and ore traders,” said Mr Lei.

 

By Willie Tan

 

Posted by David Ogden
Entrepreneur

 

Alan Zibluk Markethive Founding Member

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EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

We’ve come a long way in the eight years since Bitcoin’s original release. Back in 2009, when the pseudonymous Satoshi Nakamoto launched the cryptographically verified digital asset, it was just a curiosity. With time, though, new uses have been found for it, from buying drugs, to transferring money near-instantaneously across the globe. Its value has peaked and troughed to reach considerable worth today — right now, a single Bitcoin is worth almost $2,800, close to its record high of $2,964.
 

The success of Bitcoin has inspired many imitators. That includes the classics, like Litecoin and Dogecoin, along with more contemporary and serious alternatives, like Ethereum and Zcash. They’re all subtly different, and often more volatile, than their Bitcoin foundation.

 

There’s now more than 900 cryptocurrencies in the wild. While many of them hog attention with their potential for larger earnings on less upfront investment, differing features, or philosophy, their futures still rest in the hands of that cryptocurrency created way back in 2009.
 

They are all built off the same core technology as Bitcoin, and susceptible to the same whims of human nature.
 

Bitcoin: The foundation and face of cryptocurrency empires

 

“Bitcoin underpins and backs up the entire crypto economy. When Bitcoin falls, the rest fall, when Bitcoin rises, the rest rise,” the host of the Bitcoin News Show, Vortex, told Digital Trends. “The alt coins are simply an extension of Bitcoin, most of them are even based on its source code.”
 

“Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique.”

There’s many “alt coins,” most with a unique spin. Some use different cryptographic hash functions, others build in smart contracting functionality, while others look to be more centralized. Yet at their core, they are all built around similar technology to Bitcoin, which is partly why their pasts and futures have been, and are, so dependent on the first mainstream cryptocurrency.
 

“Bitcoin will remain the digital gold that backs up the entire crypto-economy,” Vortex told us. “Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique. It was created anonymously with no pre-mine, no intent for profit, no attachment to any corporation, and essentially donated to the community by its founder.”
 

Although there have been some stumbling blocks over the years, with minor changes required to keep Bitcoin functioning as it should, it’s organic growth, and the lack of a desire to drive profit for its creators, that make Bitcoin so unique.

A quick look at the value charts shows that Bitcoin is leaps and bounds ahead of the competition. Its value was, at the time this article was published, four times greater than the nearest competition. That suggests a confidence in the long-standing currency that is far grander than its contemporaries.

Part of that comes from its very value, which makes large fluctuations in its worth less likely. It’s a sturdier investment than many other currencies — though that doesn’t mean it isn’t susceptible to fluctuation. Its price today is close to double what it was at the start of the year.

Bitcoin also acts as the face of the industry. It’s the original, most publicized, and close to a household name. That means first time investors are likely to consider it over other, more obscure investments. In turn, this popularity gives Bitcoin influence over its competitors. When the world sees Bitcoin doing well, other currencies usually benefits, too.

 

“The entire cryptocurrency market often moves up or down based on what’s happening with Bitcoin,” said Stewart Dennis, CEO of cryptocurrency email system Bitbounce. “If Bitcoin’s value continues to appreciate, that bodes well for the future of other currencies.”

A fork in the road?

 

Predicting the future appreciation of Bitcoin is difficult. As we have seen over the past couple of years, it can tumble back down following major world events. China’s decision to ban financial institutions from using Bitcoin in 2013 saw the currency nearly halve in value over a few weeks. Hacks of major Bitcoin exchange services, and speculative bubbles, have led to other temporary downturns in its fortunes.

Of course, there’s always the competition looking to use one of these disruptions to make an attempt on the crown. The latest is Bitcoin Cash, a “hard-fork” from Bitcoin, designed to offer larger capacity than its predecessor to reduce transaction fees. Does it stand to find success as an alternative top-tier currency where others have failed?

“Anyone at any time can fork Bitcoin as it is open source,” Vortex told us, dismissively. “This is what Litecoin and many other coins did. They forked Bitcoin, tweaked a few things, and called it something else.”

The only difference with Bitcoin Cash, he claims, is that it’s the first currency to attempt to use the original Bitcoin name. Although Bitcoin Cash has quickly become one of the more valuable cryptocurrencies ($400 at the time of writing), Vortex points out that it does not have much support.

“It only has two developers [and] is highly centralized and controlled. The core [Bitcoin] developers want nothing to do with it,” he said.

For the sake of argument, though, let’s assume Bitcoin Cash is successful, or some major calamity caused Bitcoin to fail and fall from grace. What would happen to the market then?

“If Bitcoin were to fall, faith in crypto itself would be lost for many years, at least as a store of value,” Vortex told us. “As a currency however, it would still flourish. Gold is what made and broke nations for thousands of years. Digital gold, or Bitcoin, is what will make or break nations for the next thousand years.”
 

Others, like BitBounce’s CEO, believe that the market itself would recover much more quickly, and that some other coin that would pick up the reins where Bitcoin left off.

“A [Bitcoin] calamity would cause other cryptocurrencies to lose significant value in the short-term,” he said. “But in the medium to long term, it could create an opening for currencies such as Ether to become the most valuable cryptocurrency.”
 

Predicting the future with Bitcoin’s past

Although Bitcoin’s future remains a little uncertain, we can draw something from its past. As the cryptocurrency with the greatest longevity and the most proven track record, we use it to get an idea of what may happen to its younger competitors as they grow and mature.

At the time of writing, Ethereum is one of the more popular, vogue currencies, and in terms of its market capital, is second only to Bitcoin, even if it does trail it by a significant margin. Though it has suffered a recent downturn in value, it reached a new high less than a month ago, peaking just shy of $400 per Ether.

If we look at a graph of its growth and fall and compare that to Bitcoin’s earliest peaks in 2013, the similarities are hard to ignore. The only difference is that Ether has yet to recover in quite the same manner as Bitcoin. While there are no guarantees of such a thing happening, Bitbounce’s Dennis believes it will soon.

“Bitcoin has repeatedly appreciated to an all-time high and then corrected to a lower price for a while, before eventually reaching an even greater high. I see similar trends with other younger currencies,” he told DigitalTrends.
 

Indeed, Dennis sees those currencies one day even eclipsing that of Bitcoin.

“Bitcoin is still important because it started everything and has the widest adoption. However, Bitcoin’s dominance has been fading. Before too long, I expect other currencies to become even more valuable, and have greater adoption than Bitcoin.”

Vortex, however, disagrees. While he believes that Bitcoin will continue to underpin cryptocurrencies and even worldwide economies in the forseeable future, the outcome of other currencies is far less certain.
 

“Nothing is predictable,” he said, but reiterated that Bitcoin’s fortunes will be reflected in those of others currencies.

While he does see that any sort of success in Bitcoin cash would be a potential indicator for more hard-fork currencies being created in the future, “that trick only works a few times” and will ultimately just bring more attention to the original currency that started it all. Bitcoin.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Jon Martindale

Alan Zibluk Markethive Founding Member

Markethive

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum might revolutionize business and technology, or it may be merely a transitional platform displaced by other blockchain technologies.

The world of Ethereum, to be sure, has an element of the eccentric.

Ethereum is a technology started 24 months ago by a 21-year-old college dropout, Vitalik Buterin. Among the facts listed on his slender bio: in 2011 he won third place in a high school programing competition. Yet Ethereum is now supported by JP Morgan Chase and a bevy of tech titans. The market cap of its currency, Ether, hovers around $20 billion — down from its $37 billion cap a month ago.

There are Ethereum cryptocurrency miners who rent Boeing 747s to rush delivery of the super-charged graphic cards they need for their rigs. Ethereum is promoted by the Ethereum Enterprise Alliance, which sounds like a group Spock himself would have enjoyed.

Ethereum advocates herald it a “world computer.” This decentralized peer-to-peer platform — serving finance, retail, even the arts — will partner with cloud computing to launch technology’s next era. They claim the platform’s smart contracts (self-executing code that needs no human assistance) provides rocket fuel for business transactions.

The word Ethereum drives from the Latin root ether, meaning “the upper pure, bright air.” In olden times one inhaled ether before surgery to enter a painless dreamscape.

Funny, but Ethereum may fade like a burst of ether. The challenges it faces are wildly complex, from technical to legal to competitive. And those are just the known problems; no telling what unknown obstacles will arise.

Yet deep pockets don’t seem worried: the pile of money pouring into Ethereum is considerably larger than the Swiss Alps. (And the Swiss city of Zug is adopting an Ethereum-based ID verification system.)

So is Ethereum enabling a new era in tech, or is it a flight of fancy no stronger than a whiff of ether?

 

Ethereum and Blockchain

Ethereum is built on blockchain, a technology that reputable tech experts claim could become “bigger than cloud computing.”

A blockchain is a shared digital ledger that, in theory, cannot be hacked. Using an open source peer-to-peer network that connects countless servers worldwide, a blockchain enables cryptographically secure exchanges between network members. In a radical step forward, these secure transactions don’t require a central authority or third party verification.

Blockchain allows secure transactions for Bitcoin, the cybercurrency launched in 2009. Bitcoin is itself revolutionary: it’s a currency not backed by a nation state.

America backs the dollar; the European Union supports the Euro. But Bitcoin is supported solely by investor demand. Its value is driven by speculation, as reflected in this year’s wild price gyrations.

Yet while Bitcoin’s value shifts with the wind, the buy-sell transactions are secure — a blockchain network ensures this. (Digital wallets are hackable; but this is separate technology from blockchain).

Ethereum leverages blockchain with advanced tools like smart contracts, as mentioned above. This autonomous code collects payment in Ether, the platform’s currency.

Offering vast potential, Ethereum runs decentralized applications. Known as DApps, these programs are hosted across a broad blockchain network. When huge corporations’ servers go down — even the mighty Amazon has outages — customers suffer. But DApps are hosted on so many nodes that an outage is highly unlikely.
 

With the combined tools of smart contracts and DApps, the Ethereum platform allows a next-gen business structure: the decentralized autonomous organization (DAO). A DAO is self-running “company” or organization that can conduct business with minimal human involvement. Or a DAO extends the capability of human staffers.

Looking ahead, certainly Ethereum will enhanced by artificial intelligence, though AI is not part of Ethereum itself. So think of it: a securely-networked platform, conducting business on its own, powered by AI that allows it to adapt independently.

The Ethereum (Virtual) Goldrush

Ethereum’s ginormous potential is largely untapped. So, like the Internet in 1994, a mixed crowd of small time dreamers and big corporations is hustling to grab real estate.

In February 2017 a group of companies formed the Enterprise Ethereum Alliance. Members include Intel, Samsung, Toyota, Merck, Deloitte, and Mitsubishi. The Alliance has working groups delving into insurance, healthcare, supply chains, advertising and the legal industry.

Microsoft, an Alliance founding member, includes Ethereum in its Azure cloud platform — and Microsoft’s cloud is its most important business thrust. Azure offers Ethereum Blockchain as a Service.

These large companies will have plenty of start-ups to fuel the ecosystem.

LO3, an energy startup, uses Ethereum smart contracts to enable a market for locally generated solar energy. Golem has built a platform to rent the computing power of connected users’ machines. Basic Attention Token, created by Brendan Eich, co-founder of Mozilla, aims to disrupt online advertising.

In the arts, the DJ who scored the 2016 Grammy for Best Remixed Recording has released the first album distributed on the Ethereum platform. He released it in partnership with Ujo Music, which uses Ethereum to create what it calls a “modern music supply chain.” Ujo Music is owned by Consensys, which bills itself as a “venture production studio,” primarily based on Ethereum.

Fintech startup BAAB is constructing a banking operation. Ethlance is an employment-listing site that pays participants in Ether. Swarm City offers an ecommerce operation developed on Ethereum.

Ethereum is a perfect fit for the red hot Internet of Things sector. All those zillions of blinking devices out on the edge need smart contracts to collect payment for services. Chronicled lists an open source registry for IOT devices on the Ethereum platform.

Ethereum’s Dark Side

Not surprising given that Ethereum is a mere two years old, its founding chaos still swirls. In a May 2016 crowdsale, The DAO, a decentralized autonomous venture fund on Ethereum, raised a jaw-dropping $150 million. But — whoops! — in June 2016 The DAO was hacked and someone made off with $50 million.

In an attempt to defeat the hackers, Ethereum forked in two, with one version now called Ethereum Classic. In late 2016 there were two more forks in an effort to protect against attacks.

None of this inspires confidence. Famed investor Howard Marks, head of Oaktree Capitol, opined in a newsletter that digital currencies like Bitcoin and Ether are “nothing more than a fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.”

Marks’s comments, however, don’t acknowledge that Ethereum is much more than a cybercurrency. Moreover, in July 2017 the Securities and Exchange Commission ruled that ICOs (initial coin offerings, the blockchain equivalent to IPOs), are securities, and so are subject to federal securities laws. This oversight should lend legitimacy to Ethereum.

Still, Ethereum faces legions of inspired hackers. A cool $32 million of Ether was heisted due to a bug in wallet.sol, a multi-signature smart contract app. During an ICO organized by startup CoinDash, hackers lifted at least $10 million.

Also troubling, the nascent technology of smart contracts offers a morass of legal questions. What if there’s a glitch in the code that causes financial loss? Beta releases of software are famous for bugs. Must a company compensate to the tune of millions for a few errant lines of code?

Do existing regulations cover all — or any — of this?

It’s likely that we’ll see court cases about Ethereum’s legal issues. Certainly there are enough uncertainties to fill a future class in law school.

Ethereum and the Great Unknown

Beyond legal and security challenges, Ethereum could at some point face an existential threat from competing technology.

The Darwinian ethic in technology winnows most sectors, sometimes to a 500-pound gorilla (like Windows on the desktop), or a few top competitors (like AWS-Azure in public cloud). Investment flocks to the winners, while the also-rans become that era’s Betamax.

Blockchain itself will certainly become a foundational building block. But whether Ethereum as a platform for blockchain’s power will thrive long term remains an open question.

First, there’s a massive rush to create new cybercurrencies — there were 900 at recent count, and probably 950 by the time you finish this sentence. Ether could get lost in the crowd.

For instance, start-up Ripple launched cybercurrency XRP, which in July 2017 saw its value leap from the prior quarter by 1,159 percent. As of mid-year 2017 its market cap runs just behind that of Ether and Bitcoin. The Bank of England did a proof of concept with Ripple, and its clients include the Royal Bank of Canada and the Mitsubishi UFJ Financial Group.

Ripple and Ethereum aren’t necessarily competitors. Yet Ripple does tout itself as “the world’s only blockchain solution for global payment,” so it clearly overlaps with Ethereum.

Most significant, Ripple’s surging success shows that this market is still new and highly unpredictable. What’s to prevent a well-funded competitor from expanding their platform so that Ethereum becomes yesterday’s news?

Amazon, which has a habit of dominating every market it enters, announced a partnership with Digital Currency Group to enable Blockchain development.

Hyperledger, an initiative of the Linux Foundation, is another leading blockchain developer. Founded in 2015, its blue chip sponsors include Intel, Accenture, Hitachi, JP Morgan Chase and Cisco. IBM, in partnership with the London Stock Exchange, is using Hyperledger to construct a trading system for shares of private stock in Italian companies.

With projects like that, you might assume that Hyperledger could displace Ethereum. But apparently the two platforms will work in synergy. In April 2017, Hyperledger approved a proposal to develop its first Ethereum-based application, the smart contract app Burrow. And Hyperledger projects will begin to include an Apache-licensed Ethereum Virtual Machine.

As Brian Behlendorf, Hyperledger’s executive director, explained in a blog post, “any positioning of the Hyperledger and Ethereum communities as competitive is incorrect.”

So the future looks promising for Ethereum. With developers on board, a vigorous startup community, VC interest and wide corporate support, it’s a reasonable bet that Ethereum will become a dominant platform.

Perhaps the most balanced view of Ethereum is that it’s an exceptionally promising seedling whose growth contains significant doubt. Yet one thing is certainly true: whatever contender becomes the leader for decentralized applications — Ethereum or a variation — will play a profound role in the future of technology.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrpreneur

 

Author: Sam Quinn

Alan Zibluk Markethive Founding Member

Markethive

Top Cryptocurrencies Price Weekly Prediction – Next Days Will Be Rough For The Crypto Market

Top Cryptocurrencies Price Weekly Prediction – Next Days Will Be Rough For The Crypto Market

Top Cryptocurrencies Price Weekly Prediction — Next Days Will Be Rough For The Crypto Market

Not much has changed for most cryptocurrencies over the past few hours. Bitcoin is, together with Monero, the only currency in the top 10 noting a small loss, whereas most other coins have stabilized or regained some losses. Considering how the weekend is often a dreadful period for cryptocurrency trading this overall trend is rather positive. The total cryptocurrency market cap is heading toward US$90bn as well, which is a positive sign for the future.

CRYPTOCURRENCIES PREPARE FOR A STRONG WEEK

It seems evident most of the top 10 cryptocurrencies are in a good position for some notable gains over the next seven days. Even though we will see one Bitcoin hard fork materialize on August 1st, it is doubtful this will harm the price in a negative manner. Do not be mistaken in thinking Bitcoin Cash tokens come free of charge, though, as they may effectively subtract value from the actual Bitcoin price until the market stabilize.

That being said, we do see the Bitcoin price has dipped a whopping 0.19% over the past 24 hours. That in itself means very little as far as the world’s leading cryptocurrency is concerned. In fact, as long as Bitcoin doesn’t move by 5% or more over the course of 24 hours, there is absolutely nothing to be concerned about. A minuscule change such as this one means absolutely nothing.

lastest prices july

Despite the Bitcoin price “dip”, most altcoins are doing quite well. Ethereum is finally showing some life signs after weeks of declines. The 5.67% gain in the past 24 hours is quite substantial, as the price seems to be heading toward US$200 once again. It is still a far cry from US$400, though, and the currency is not out of the woods just yet. Future declines in value may still be a big part of Ethereum as there is still some funds in circulation which may be dumped across exchanges in the near future.

Other top currencies are showing small gains as well. Litecoin is up by 189%, whereas NEM, Dash, and IOTA all report gains below 1%. The big winners are XRP — up by 3.47% — as well as Stratis — up by 2.99% — and Ethereum Classic, which increased by 1.45%. The bigger question is when people will realize Ethereum Classic is the true, immutable Ethereum chain without SEC scrutiny, highly controversial ICOs, and a blockchain which can be rolled back when founders’ money is stake. Only time will tell if the ETH/ETC correlation will ever see proper momentum, as for now, all the hype and focus is still in Ethereum’s camp.

What is rather surprising is how Monero is the only top 10 currencies to note any losses, other than Bitcoin Monero lost6.41% of its value overnight, which is quite substantial. There is no real reason for this sudden downturn other than people speculating on the other currencies and trying to make a profit. Monero is still a very powerful cryptocurrency with honest developers who aim to provide anonymity to all users. Then again, a price of US$40.65 per XMR is still more than fair, all things considered.

Looking at the individual cryptocurrency market caps, it is pretty obvious Bitcoin remains the undisputed leader for some time to come. This also results in the Bitcoin Dominance Index going back above 50%, as it currently sits at 50.5%. Not too long ago, that percentage was heading toward 40% and lower, but it seems the market has finally come to its senses once again. There is no other currency capable of rivaling Bitcoin right now, that much is evident.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur
 

Author: Oliver Wood

 

Alan Zibluk Markethive Founding Member

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From Mining to Investing in Cryptocurrency

From Mining to Investing in Cryptocurrency

From Mining to Investing in Cryptocurrency
 

What Is Mining

Mining is the process by which transactions of crypto currencies are secured. For this purpose, the miners carry out mathematical computations for the network with their computer equipment. As a reward for their services, they collect the newly created coins, as well as the fees associated with the transactions they confirm. In this sense, miners are competing and their incomes are proportional to the computing power they deploy.

To better grasp the concept of mining, Andreas Antonopoulos, one of the most well-known and well-respected figures in the Bitcoin community, explains that “a good way to describe mining is like a giant competitive game of sudoku that resets every time someone finds a solution and whose difficulty automatically adjusts so that it takes approximately 10 minutes to find a solution. Imagine a giant sudoku puzzle, several thousand rows, and columns in size. If I show you a completed puzzle you can verify it quite quickly. However, if the puzzle has a few squares filled and the rest is empty, it takes a lot of work to solve! The difficulty of the sudoku can be adjusted by changing its size (more or fewer rows and columns), but it can still be verified quite easily even if it is very large.”

 

The Mining Equipment

In the beginning, mining with a processor (CPU) was the only way to mine bitcoins. Graphics cards (GPUs) eventually replaced CPUs due to their nature which allowed an increase of 50x to 100x in computing power, by using less power per megahash compared to a CPU.

The Bitcoin mining world is now dominated by Application Specific Integrated Circuit (ASIC). An ASIC is a chip designed specifically to accomplish a single task. Unlike FPGAs, an ASIC cannot be programmed to perform other tasks. An ASIC designed to mine bitcoins can and will not do anything else than mining bitcoins

The rigidity of an ASIC allows it to offer an increase in computing power of 100x while reducing power consumption compared to all other technologies by a factor of 7. Unlike the generations of technologies that preceded the ASIC, this last innovation is dubbed the “end of the line”, as there is nothing to replace ASICs today or soon.

Then came along Ethereum, a cryptocurrency that can be mined like Bitcoin — with an important difference. The Ethereum network was built to be resistant to ASIC hardware, making mining Ether with graphics cards viable. Ethereum is enjoying a Bitcoin-esque bubble of mammoth proportions right now, with the price of Ethereum skyrocketing.

This led to a shortage of graphic cards. Miners worldwide bought those Nvidia and Radeon cards that are best suited for mining — selling them out quickly. This is not the first time that graphics cards enjoyed a meteoric rise in price due to cryptocurrency. Bitcoin took GPU prices for a ride back in late 2013.
 

Innovation Meets Mining

Mining has nowadays become an activity that with an appetite for resources so enormous that it is bolstering the creativity of investors in this field, to always strive for the optimal solution. It is in this context that the concept of “cloud mining” was born. This means that the investor does not buy a physical mining rig, but rather rents computing power from a different company and gets paid according to how much power was bought. By doing so, investors get rid of the hassle of buying expensive equipment, storing it, cooling it, and maintaining it.

This industrialization of mining has led companies to seek out the lowest resource costs possible. While many areas of the globe offer competitive costs and infrastructure, polar areas offer unique mining conditions. Such was the idea of KnC Miner that announced the installation of computing power by the Arctic circle. This initiative, unfortunately, didn’t get enough time to reveal its true potential, as the company filed bankruptcy in 2016

Less in the north, in China, people have been puzzled by the fast growth of crypto-mining farms. Investors appeared on the scene with the wacky idea to mine Bitcoin using hydropower, thus benefiting from free water infinitely more profitable.

These innovative solutions have been of varying success. However, for the most profitable ones, it is still difficult to replicate and scale them up, as they require specific and unique geographic properties.

 

Is It Still Profitable?

The early days of Bitcoin mining are often described as a gold rush, but is it still the case in 2017?

Mining has grown from a handful of early enthusiasts into a specialized industrial-level venture. The easy money was scooped out a long time ago and what remains is buried under the cryptographic equivalent of tons of hard rock.

While mining is still technically possible for anyone, those with underpowered setups will find more money is spent on electricity than is generated by mining. In other words, mining won’t be profitable at a small scale unless you have access to free or really cheap electricity.

The good news is that mining is not limited to Bitcoin. New coins come up all the time with difficulties of mining that are vastly different from Bitcoin’s. Today, Ethereum is such a currency. When tomorrow Ethereum’s difficulty will make it less lucrative for mining, or when it’s moving to a different model altogether, other coins will be there that offer better returns.

If you want to go into mining yourself, the time you will spend educating yourself about the technology, the hardware, and the currencies, is significant. The setup costs for buying hardware are also considered when you want to mine at scale.
 

David Ogden
Entrepreneur

Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Markethive

Are Cryptocurrencies Recovering or is This a Dead cat Bounce?

Are Cryptocurrencies Recovering or is This a Dead cat Bounce?

Are Cryptocurrencies Recovering or is This a Dead cat Bounce?

 

No one can say there is such a thing as a boring day in the world of Bitcoin and cryptocurrency. After the onslaught of price declines throughout the weekend, we kick off this Monday on a positive note. All currencies are seemingly recovering their losses. The Bitcoin price surpassed US$2,000 again, but it looks like Ethereum is the winner of the day so far. Other currencies all doing quite well too, for now.

 

CRYPTOCURRENCY MARKET SEES A DEAD CAT BOUNCE

Even though we are not a big fan of the term “dead cat bounce“, it accurately describes what is going on in the cryptocurrency world right now, by the look of things. The markets are showing signs of positive momentum, but there is no reason to get overly excited just yet. After all, the gains made today can easily be wiped out in an hour or two of bearish trading. This is especially true for the currencies showing large gains compared to yesterday.

Taking a closer look at the charts, we can see there is only one coin in the top 50 without a green number next to it right now. Overall, that is a positive sign for cryptocurrency as a whole. At the same time, people have to keep in mind these positive changes are a direct result of the Bitcoin price going up slowly. Should Bitcoin drop in value again, these short-term gains for all altcoins will be wiped out pretty quickly.

While it is good to see the Bitcoin price bounce back to above US$2,000, maintaining that position will be quite challenging. There is a lot of negative pressure on the market, which may push the price back to to the US$1,900 range in the coming hours. Such a retrace will effectively prove to be a tough time for any altcoin struggling as of late, including the likes of Ethereum and Dash.

Speaking of those two particular altcoins, Dash has seen its value climb by 13.52% over the past 24 hours. This is despite a trading volume of under US$50m, mind you. Ethereum, on the other hand, notes an 18.02% gain over the past 24 hours, thanks to a trading volume which even surpasses Bitcoin’s. Many people still hope to see ETH return to US$400, but for now, it is a struggle to remain above US$160.

Seeing the Ethereum trading volume surpass Bitcoin’s is not entirely surprising. Korea and China are trying to push the ETH price back up, yet their efforts are not wildly successful so far. In fact, the price on Bithumb — denominated in US Dollars- is below the ETH/BTC price on Poloniex when converting it to USD. That is somewhat surprising, considering Korean exchanges often depict higher values for cryptocurrencies compared to Western markets.

It is still too early to tell if the cryptocurrency markets are effectively recovering. For all we know, this is just a temporary blip on the radar, which will be nullified before the day is over. It seems plausible to assume Bitcoin will have a tough time remaining above US$2,000 for an extended period of time. The markets remain volatile for quite some time to come, but there is always sunshine beyond the dip. No one needs to panic right now, as things will be alright in the end.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

Author: JP Buntinx

Alan Zibluk Markethive Founding Member

Markethive

Cryptocurrency Investors Must ‘Be Prepared to Lose Everything’

Cryptocurrency Investors Must 'Be Prepared to Lose Everything'

Cryptocurrency Investors Must 'Be Prepared to Lose Everything'
 

Potential investors in cryptocurrencies should focus on finding a great new concept rather than rushing to buy volatile Bitcoins, Dr. Campbell Harvey told Radio Sputnik.
 

The market in Bitcoin and other cryptocurrencies has been subject to remarkable growth but also volatility in recent months.

On June 11, the price of Bitcoin peaked at $3,019, an increase of more than 300 percent since the beginning of the year. However, the price has dropped since then and the cryptocurrency was trading at $2,207 on Friday.

 

The value of the Ethereum cryptocurrency has also decreased by almost half in recent weeks from a high of $392 on June 13 to $211 on Friday, according to Coindesk.com.

According to BlackRock's global chief investment strategist, cryptocurrency volatility may be a sign of a bubble in the market.

"I look at the charts, and to me that looks pretty scary," Richard Turnill told a media briefing in New York on Tuesday.

Dr. Campbell Harvey, Professor of Finance at the Fuqua School of Business, Duke University, told Radio Sputnik that the sharp rises in the value of cryptocurrencies this year is a cause for caution.

"Any time you see something go up in value by a factor of 20 over a few months, you need to be very cautious," Harvey said.

"I think part of it is just the nature of the actual game, that this is a new technology, it is extremely volatile. For instance, if you look at Bitcoin it is six times the volatility of the S&P 500. It is very volatile and it's very difficult to figure out what the actual value is. If you are speculating in cryptocurrency, you need to be prepared to lose everything," Harvey said.
 

"In the 'dotcom bubble,' people were basically buying lottery tickets. They saw firms go from one cent a share to $100 a share, it was like a lottery and you didn't want to be left behind. You wanted to have some kind of investment and that drove up the prices very dramatically and I think it's the same thing today with the cryptocurrencies."
 

'Digital Gold': Cryptocurrencies Soar as Investors Swap Dollars for Bitcoins

Harvey recommended that potential investors do their research before taking the plunge and focus on finding an attractive concept.

"You really need a good story behind a new crypto that you're offering. There will be a lot of people coming in with bad ideas that will get funding. The best way to do it is to invest directly in some of the start-ups in this space rather than just going out and buying some coins."
 

"When the prices go up so dramatically, a smart investor will basically take some profit and indeed this is what I recommend to your listeners. If you've doubled your money, sell half. What that means is that you've recovered your initial investment and everything that's left is just pure profit and if you lose it, you lose it.
 

"Given there's uncertainty in the US right now, people are looking elsewhere. Gold is an alternative but gold is real pain because you have to vault it, basically protect the gold. But cryptocurrency is basically extra-national, you need a wallet and backup. You don't need a vault or security guards."

 

In the future, cryptocurrencies will develop in several different ways. These include collateralized cryptocurrencies and the expansion of the blockchain technology behind them.
 

"One of the things we'll see is collateralized cryptocurrencies. There's an initiative with the Chicago mercantile exchange and the royal mint group in which they'll put some gold in a vault and issue a crypto based upon that gold.

"As soon as you do that, then the crypto is linked to the price of gold and its volatility is linked to the price of gold. You can do this with anything — with equity, bonds, commodities in general, that you can issue cryptos based on a vault or a storage facility with the actual collateral. I think we are just beginning to see the collateralized versions."

 

"In a broader context, most of the action in terms of blockchain is not with cryptocurrencies, it's with businesses using blockchain technology to solve things like supply chain problems and other property transfer problems where you don't even need a cryptocurrency. So, as I see it from a business point of view, most of the action won't come from the initial coin offerings, but the application usually of Ethereum-based blockchain technology in business."
 

"It's not as sexy as looking at the price of Ethereum or Bitcoin doubling or tripling or going up by a factor of 20. In the media, people focus on the cryptocurrencies but in the practice of business the action is blockchain applications to solve business problems, not as much the currency aspect."

David Ogden
Entrepreneur

David Ogden Entrepreneur

Alan Zibluk Markethive Founding Member

Markethive

Ethereum’s share of the cryptocurrency market has exploded

Ethereum's share of the cryptocurrency market has exploded

Ethereum's share of the cryptocurrency market has exploded
 

Ethereum is gobbling up share in the cryptocurrency market.

A new report by Autonomous NEXT, a financial technology analytics service, shows that Ethereum's percentage of the total cryptocurrency market has sharply risen since the beginning of the year.

In January it stood at approximately 5%. As of June 22, its marketcap as a percentage of the entire market rose to 30%.

Ethereum's impressive rise has led to a dramatic fall in bitcoin's marketcap as a percentage of the market. It has declined from about 85% at the beginning of the year to just under 40% as of late June. Up until mid June, Ethereum was on track to surpass bitcoin as the world's largest cryptocurrency by market cap, according to Coindesk, but its share of the market has since pulled back.

Still, the shift from bitcoin to Ethereum reflects a change in what the cryptocurrency industry wants from blockchain tech, according to the report.

"Early phase of cryptocurrency market development focused on who will be the “digital gold” — and Bitcoin won through the largest developer and adoption ecosystem," the report said. "However, current battle is for other functionalities, such as global decentralized computing or smart contracts infrastructure."

Ethereum, unlike bitcoin, wasn't built to simply function as a "digital gold." According to Paul McNeal, a bitcoin evangelist, the Ethereum blockchain was built as a platform on which two parties could enter into a so-called smart contract without a third party. As a result, it can be used as a currency and it can "represent virtual shares, assets, proof of membership, and more."

The multifaceted functionality of Ethereum has many folks in financial services bullish on its future. Mike McGovern, the new head of Investor Services Fintech Offerings at Brown Brothers Harriman & Co, is one such person.
 

"Ethereum is not only cheaper than bitcoin, it is also more robust and has more applications outside of simply financial transactions," he said in a recent interview with Business Insider.

A survey recently cited by Nathaniel Popper in The New York Times indicates that a lot of businesses are singing a similar tune. Almost 94% of surveyed firms said they feel positive about the state of ether tokens. Only 49% of firms surveyed had a positive feeling about bitcoin.

 

David Ogden
Entrepreneur

 

Author: Frank Chaparro

Alan Zibluk Markethive Founding Member

Markethive

Ethereum Price Drops Below $300 Amid Technical Issues and Cryptocurrency ICO Hype

Ethereum Price Drops Below $300 Amid Technical Issues and Cryptocurrency ICO Hype

Ethereum Price Drops Below $300 Amid Technical Issues and Cryptocurrency ICO Hype

 

Things are not looking all that great for Ethereum right now. The popular cryptocurrency suffered a major crash not too long ago and it remains the market is still recovering. The past two days have heralded another downturn for Ether, making it highly doubtful Ethereum will pass Bitcoin in market cap anytime soon. It seems safe to say more volatility is on the horizon for Ethereum holders.

 

WHAT IS GOING ON WITH THE ETHEREUM PRICE?

 

Looking over the Ethereum price charts leaves traders and investors disappointed, as their hopes for challenging Bitcoin’s crown subside. More specifically, the ETH price has taken another beating, as it declined by 7.65% over the past 24 hours. This puts the value of one Ether well below the US$300 mark and it is possible this value will keep heading toward US$270 or lower over the coming days. This momentum is not entirely surprising given Ethereum’s bullish trend throughout the first half of 2017.

 

It is not hard to forget once ETH was worth under US$11 back in early January of this year. Things have certainly picked up over the past few months, culminating in an Ether price peak of nearly US$400, according to Coinmarketcap. Such a spectacular price increase can only be met with future price volatility, which is what we are seeing on a daily basis right now. Even so, the Ether value increase has been nothing short of impressive this year.

 

Ethereum enthusiasts have referred to a phenomenon known as the flippening all year. This trend would occur once Ethereum’s market cap surpasses that of Bitcoin. Although both currencies were only separated by “just” US$8bn, the gap has widened once again. More specifically, Bitcoin’s market cap is close to US$41bn right now, whereas Ethereum’s is only US$26.32bn. The flippening will not be happening anytime soon at this rate.

 

The bigger question is why Ethereum is facing such a setback right now. Shifting market conditions are likely the culprit. Moreover, the Ethereum blockchain and its technology are weighed down by the influx of cryptocurrency ICOs. Transactions are confirmed far slower when a big ICO happens, and smart contracts used by these projects often contain issues which need to be fixed later on. The technology is still premature, yet investors also see this can become a much bigger problem if things aren’t resolved quickly.

 

Speaking of cryptocurrency ICOs, they have quickly become the main use case of the Ether currency. That is not necessarily a positive development either. With so many projects raising funds in Ether, the chances of a market “dump” will increase as well. When teams need funding, they will convert ETH to fiat currency, creating negative pressure across the exchanges. When more projects sell off their raised funds, the price per ETH will undoubtedly continue to go down quite quickly. It is unclear if that is part of the ongoing price drop right now, but it is something to keep in mind.

 

It is unclear what the future will hold for Ethereum right now. The Ethereum price is very volatile, which is only to be expected at this point. However, Ethereum is not a store-of-value by any means. With so many “dumb money” flowing into Ethereum to participate in cryptocurrency ICOs, it is virtually impossible to determine the real value of the existing coin supply. Technical issues are becoming a major problem as well. If this trend keeps up, the flippening may never happen at all. These are interesting times for Ethereum to prove its value, but so far, the project leaves quite a bit to be desired.

David Ogden
Entrepreneur

David Ogden Entrepreneur

 

Author: JP Buntinx

Alan Zibluk Markethive Founding Member

Markethive

Cryptocurrencies Continue Recovery, Resume 2017’s Growth Trend

Cryptocurrencies Continue Recovery, Resume 2017's Growth Trend

Cryptocurrencies Continue Recovery, Resume 2017’s Growth Trend

Cryptocurrencies continued their recovery from last week’s massive price fallout, resuming the upward trend that has characterized 2017. All but 12 of the top 100 cryptocurrenices posted gains in the last 24-hour period.

 

Market leaders bitcoin and Ethereum had the smallest gains the last 24-hour period, with the former adding 0.88 points and the latter 1.15 points and market caps of $45 billion and 31.7 billion, respectively.

Bitcoin’s price reached $2,760.61, attempting to reclaim the record $2,864.85 it set on June 9. The price has hovered in the high 2,700 range after falling to a monthly low near $2,100 last week.
 

Ethereum Recovers From Bottleneck

Ethereum, at $342.27, continued the recovery it began two days ago following two days of losses. Ethereum has been fighting a correction that came from a sudden increase in demand which caused a bottleneck that delayed its transactions.

Despite showing a correction since it peaked at $402 two weeks ago, Ethereum is still showing impressive overall gains this month.

Ethereum has suffered from scaling problems as more new digital currencies opt for the Ethereum platform when holding their initial coin offering (ICO). Status ICO, which raised more than $100 million in Ethereum, caused a demand spike that some exchanges couldn’t handle, causing Ether prices to drop 15% momentarily. This sudden drop also affected other currencies, as nine out of the top 10 registered losses.

 

Third place Ripple rose 9.19 points to $0.294288 in the last 24-hour period, reaching a $12.7 billion market cap, but still below the $0.348079 it hit on May 16.

 

Litecoin Hits A Road Bump

Litecoin, the fourth highest market cap at $2.408 billion, was the only currency with more than $1 billion in market capitalization to show a loss in the recent 24-hour period, losing 2.36 points. Litecoin nevertheless has managed to hold the number four spot, following the activation of the Bitcoin Core development team’s transaction malleability fix Segregated Witness (SegWit), which led to an increase in the demand for Litecoin and a significant surge in development. Within months after the activation of SegWit, Litecoin creator Charlie Lee announced his resignation and his intent to focus on the development of Litecoin full time, which further increased the expectation of the cryptocurrency community and market toward Litecoin.

Within three months, Litecoin’s market cap increased from $200 million to a staggering $2.5 billion, recording a 1,150 three-month increase. In that short period of time, Litecoin surpassed Ethereum Classic, Dash and NEM in market capitalization.

More importantly, the mid-term increase in the market cap of Litecoin, the activation of SegWit, successful testing of Lightning Network on Litecoin, issuance of services by companies such as BitGo and the shift in focus from Litecoin creator Charlie Lee further triggered the currency’s development community.

On June 19, Bitstamp, the eighth largest Litecoin trading platform within the U.S. Litecoin exchange market, announced the integration of BitGo’s Litecoin multi-signature security service. Although the majority of Litecoin trades are processed within the Chinese Litecoin exchange market and Bitstamp only accounts for a fraction of global Litecoin trading, it marked the first case in which a major international digital currency trading platform has integrated BitGo’s security services to secure Litecoin transactions.

 

IOTA Gained The Most

Among those with more than $1 billion in market capitalization, IOTA, number 7, posted the biggest gain as the price hit $0.525929 for a $1.461 billion market cap, a 26.48 point gain. IOTA has continued recovering since suffering one of the largest losses last week, when it dropped 36.5 points in a 24-hour period.

 

David Ogden
Entrepreneur

 

Author: Lester Coleman

Alan Zibluk Markethive Founding Member