Venezuela Cracks Down On Cryptocurrency Mining

Cryptocurrency mining has become an important source of income in Venezuela, a country ravaged by hyperinflation, but it has also become hazardous as police are cracking down on people they suspect of using too much electricity.

Venezuelans have turned to cryptocurrencies as inflation has ravaged the official bolivar, which has lost 99.4% of its value since 2012. As a result, mining has become more lucrative, and a way for people to earn money to pay for basic living expenses, according to CNBC.

Desperation Drives People To Mining

One miner, who agreed to speak only anonymously, became a miner because his $43 monthly salary couldn’t support his family. He began mining illegally by using government computers where he worked, and eventually quit his government job to mine at home.

Another miner who has since fled to the U.S. said mining kept him out of poverty in Venezuela. He said one mining rig will produce enough income to feed a family.

Another woman who works three jobs said mining produces 80% of her $120 monthly income. She said mining has allowed her to support herself and her daughter.

One man said the easiest way to acquire commodities in Venezuela is to use cryptocurrency to buy things on purse.io. He said he orders staples like soap and deodorant and has a courier deliver them to his office.

Miners often turn to online forums to learn how to mine.

Government Cracks Down

While mining has become a necessity to many, it has also become dangerous since it is illegal and police arrest people they suspect of using too much electricity. Subsidized electricity in Venezuela keeps the cost of mining down, but the government monitors its use carefully.

In 2016, two men in Valencia were arrested on charges of energy theft and possessing contraband. Since then, arrests have increased. One police official said the offenders are exploiting resources without documentation. A Reddit post said miners in the country are being arrested and charged with terrorism, money laundering and other crimes.

One 23-year-old who said he earned $20 a day mining Ethereum when the currency was at its price peak said he lives in fear of being arrested. Another miner said he was approached by intelligence officials who asked him why he was consuming so much power from his home. He said he moved to another location.

Still another miner said he conceals his electrical footprint by splitting his mining equipment across three locations. He pays neighbors to use their electricity for his mining.

Joe Lubin, Ethereum co-founder, said cryptocurrencies, despite their volatility, are integral to survival in places where natural currencies are spiraling out of control.

Author: Lester Coleman on 03/09/2017

Posted By David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

David

Bitcoin Price Nears $5,000; YTD Growth Exceeds 400%

2017 has been a breakout year for bitcoin and the cryptocurrency ecosystem as a whole. Now, as the bitcoin price approaches $5,000, it’s an excellent time to look back at the trials and triumphs that have contributed to this 400% YTD rally.

Global Adoption & the Road to $5,000

Bitcoin rang in the new year by crossing $1,000 for the first time since the 2013 melt-up, and the Financial Times promptly called it a pyramid scheme that would soon collapse to zero. The bitcoin price held at this level for the next three months, leading critics like Gizmodo writer Michael Nunez to complain that it “refuses to just die already.”

Of course, bitcoin obituaries like these ignored bitcoin’s increasing global expansion. There was once a time when bitcoin risked becoming a Western phenomenon, excluding the majority of the world’s population. Today, that could not be further from the truth. Bitcoin adoption has exploded in Asia, and the highest-volume cryptocurrency exchange is located in South Korea. Bitcoin has also made inroads into emerging markets such as Africa and India.

This year has also seen Japan embrace bitcoin more rapidly than perhaps any other nation. Toward the beginning of the year, Japan terminated its crippling 8% bitcoin consumption tax, and before long major retailers were accepting bitcoin payments. By the end of the year, analysts predict that as many as 300,000 Japanese businesses will accept bitcoin.

By late April, the crypto market advance had begun to pick up steam, leading to a market cap explosion in May and June. On May 20, the bitcoin price broke through $2,000. Less than a month later, it crossed $3,000 on several exchanges for the first time.

Bitcoin Price Nears $5,000; YTD Growth Exceeds 400%

YTD Bitcoin Price Chart from CoinMarketCap

Despite this bull run, bitcoin almost lost its status as the largest cryptocurrency by market cap. About this time, ethereum came within $10 billion of bitcoin’s market cap, making it seem inevitable that there would be a “Flippening” between the two cryptocurrencies. MarketWatch columnist Brett Arends, meanwhile, wrote that both cryptocurrencies were “complete garbage.” However, the Flippening never came. The markets took a bearish turn following the June 26 “Monday Massacre,” and bitcoin consolidated its position as the dominant cryptocurrency.

Eventually, the markets recovered. After falling as low as $1,900 during mid-July, the bitcoin price reversed course toward the end of the month, initiating the record rally that has carried bitcoin to the brink of $5,000.

Bitcoin Overcomes UAHF and PBoC Squeeze

The most astonishing aspect of the bitcoin price’s 2017 performance is not its 400% climb, but rather the trials it overcame to get there. Aside from the incessant claims by mainstream media analysts that bitcoin is a bubble, bitcoin faced adverse events that threatened its future. One of these was increasing regulation. Bitcoin has faced regulation since shortly after its inception, but its 2017 bull run has intensified government interest in cryptocurrency. As early as January, the People’s Bank of China (PBoc)–China’s central bank–began putting a regulatory squeeze on bitcoin exchanges in response to “abnormal [bitcoin] price fluctuations.” Exchanges shut their doors as the PBoC began conducting on-site inspections. However, the PBoC ultimately allowed Chinese bitcoin exchanges to continue their operations, albeit with strict supervision.

More recently, bitcoin survived the contentious bitcoin cash hard fork that split the bitcoin network into two different blockchains. Rather than lead the bitcoin price into decline, the hard fork actually appeared to build confidence in bitcoin’s ability to survive a serious community divide, and bitcoin soared more than 75% in the month that followed.

Scaling With SegWit

The bitcoin cash hard fork was caused by the debate about the best way to scale the bitcoin network. Bitcoin cash proponents, claiming to follow Satoshi’s vision, believed that raising the block size was the best way to ensure bitcoin remained a viable P2P transaction vehicle rather than just a settlement layer. Bitcoin Core, however, adopted Segregated Witness (SegWit), a scaling and transaction malleability fix that also facilitates the creation of Lightning Networks. SegWit was activated earlier this month, which should soon cause bitcoin transaction fees–which reached above $8 this month–to finally decrease to more acceptable levels.

SegWit2x and the Road Ahead

Of course, SegWit activation did not put the scaling debate to rest. Earlier this year, a group of prominent bitcoin companies and personalities signed the New York Agreement (NYA), which proposed a hard fork to the bitcoin protocol. SegWit2x, as the proposal is known, called for a block size increase in addition to SegWit activation. The proposal received near-universal support from miners, but Bitcoin Core developers have vociferously opposed it. Relations between Core and SegWit2x supporters have worsened over the intervening months, and several companies have reversed their NYA support. Despite Core opposition, SegWit2x proponents say they will proceed with the hard fork in November, creating a potentially-chaotic situation in which two blockchains will fight to be the “real bitcoin”.

Nevertheless, investors remain bullish on bitcoin, and the bitcoin price’s triumphant march toward $5,000 continue

Author: Josiah Wilmoth on 01/09/2017

Posted by David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

David

Ethereum, Bitcoin Prices Rally Despite Sluggish Market

Bitcoin and ethereum continued to rally on Wednesday, pushing the total value of all cryptocurrencies higher even as the wider markets were mostly red. The bitcoin price punched through $4,500 to set a new all-time high, while the ethereum price looks poised to make a record-setting run of its own.

The total cryptocurrency market cap climbed as high as $167 billion Wednesday morning, continuing its August bull run. At present, however, the crypto market cap has tapered to $162.6 billion.

Chart from CoinMarketCap

Bitcoin Price Targets $5,000

The bitcoin price spent the latter half of August stuck between $4,000 and $4,400. As the month waned, it did not appear bitcoin was going to be able to break past this level. However, the bitcoin price defied many investor expectations by spiking from $4,400 to $4,600 at about 12:30 UTC on August 29, posting a new CoinMarketCap average record of $4,627. On some individual exchanges, the price rose even further. The bitcoin price has not yet found solid support for $4,600, which has caused it to pull back to $4,501 this morning. Nevertheless, this represents a daily gain of 3% and gives bitcoin a $74.4 billion market cap.

Bitcoin Price Chart from CoinMarketCap

Now that bitcoin has broken through the $4,500 wall, many analysts predict it will cross the $5,000 threshold in short order. RT host Max Keiser, for instance, stated that he believes it will probably reach that level this week.

Ethereum Price Inches Closer to All-Time High

All eyes were on bitcoin as it set a new all-time high, but ethereum made impressive progress on Wednesday as well. Bolstered by increases in ETH/KRW and ETH/CNY, the ethereum price climbed to $389 on August 30, its highest level since June 14. At present, the ethereum price is $367, resulting in a market cap of $36.6 billion.

Ethereum Price Chart from CoinMarketCap

Altcoin Markets Take a Hit

Bitcoin and ethereum may have been posted solid gains on Wednesday, but traders dealt the altcoin markets a blow.

The bitcoin cash price fell to 2% to $573, continuing its week-long decline. The Ripple price managed to climb 1%, thanks to news that the FinTech startup had given a presentation on blockchain trends to officials from the central bank of China. The litecoin price was mostly stable, holding at about $62, while Dash and NEM each made minor advances.

Altcoin Price Chart from CoinMarketCap

This is where the chart starts to turn red. IOTA dipped 2% to $0.828, while the Monero price fell 6% to $128, despite strong volume from Bithumb’s newly-opened XMR/KRW market.

Monero Price Chart from CoinMarketCap

The hardest hit cryptocurrency in the top 10, however, was NEO. The “Chinese Ethereum” plunged by 17% to about $31. This reduced its market cap to $1.5 billion and gives it just a $41 million edge on 11th-ranked ethereum classic.

7-Day NEO Price Chart from CoinMarketCap

Outside of the top 10, the majority of cryptocurrencies engaged in a retreat. That retreat included Qtum and Hshare, which had just entered the $1 billion club on August 29. Unfortunately, these tokens had their membership cards revoked on Wednesday as they experienced declines of 19% and 27%, respectively.

Author: Josiah Wilmoth on 30/08/2017

Posted By David Ogden Entrepreneur

David

SEC Warns Public to Avoid ICO Scams Manipulating Stock Prices

The U.S. Securities and Exchange Commission (SEC) has issued an investor alert intended to warn the public about companies using claims about initial coin offerings (ICO) to manipulate their stock prices.

SEC: Avoid ICO-Related Microcap Scams

The alert, which was published by the SEC Office of Investor Education and Advocacy, specifically focuses on publicly-traded companies who claim to be involved with or investing in ICOs. They allege that companies use the lure of cutting edge technology like ICOs to manipulate their stock price and facilitate pump-and-dumps.

From the alert:

Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams. These frauds include “pump-and-dump” and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies.

The SEC had previously issued an investor alert regarding direct ICO participation, but they have found that companies may be “publicly announcing ICO or coin/token related events to affect the price of the company’s common stock.” This is particularly a problem with microcap companies, whose stock price can be manipulated in the same way that traders can artificially pump up the price of a cryptocurrency with a small market cap and then dump their coins to secure a profit.

SEC Cracks Down on Public Bitcoin Firms

The Commission says this type of fraud is often rampant within the emerging technologies sector. For this reason, they have been cracking down on publicly-traded bitcoin firms in recent months. In August alone, the SEC has suspended securities trading for CIAO Group (OTC: CIAU), First Bitcoin Capital Corp. (OTC: BITCF), and Bitcoin Crypto Currency Exchange Corporation (OTC: ARSC). All of these companies had seen dramatic increases in the price of their stock, leading the SEC to want to take a closer look at their operations.

According to the release, the SEC issues trading suspensions due to the following occurrences:

“A lack of current, accurate, or adequate information about the company – for example, when a company has not filed any periodic reports for an extended period;
Questions about the accuracy of publicly available information, including in company press releases and reports, about the company’s current operational status and financial condition; or
Questions about trading in the stock, including trading by insiders, potential market manipulation, and the ability to clear and settle transactions in the stock.”
A suspension does not necessarily mean a company is acting nefariously, but the SEC warns investors to take caution when considering an investment in a company whose stock has been suspended.

The SEC has been monitoring the cryptocurrency industry with an increasingly watchful eye. Last month, they issued a report concluding that DAO tokens are a security, which implies that smart contract tokens may also fall under securities regulations. This is one reason why Filecoin restricted its record-setting $250 million ICO to investors willing to submit to SEC accreditation.

Author: Josiah Wilmoth on 29/08/2017

Posted By David Ogden Entrepereneur

DAvid Ogden Cryptocurrency Entrepreneur

David

Cryptocurrency Mining – What It Is, How It Works And Who’s Making Money Off It

Cryptocurrency Mining - What It Is, How It Works And Who's Making Money Off It

Cryptocurrency Mining – What It Is, How It Works And Who's Making Money Off It

NVIDIA Corporation's second-quarter earnings released earlier this month, though exceeding expectations, elicited cautionary reaction from the investor as well as analyst communities. Traders bid down the stock by over 5 percent on Aug. 11.

One of the reasons cited for the negative reaction was cryptocurrency contributing to much of the outperformance.

Why should it be a cause for alarm?

Analysts Blayne Curtis and Christopher Hemmelgarn of Barclays believes revenue stream from cryptocurrency is fickle. Therefore, the analysts were not in favor of assigning a multiple to it, as it has the potential to become an eventual headwind.

Rival Advanced Micro Devices, Inc. Also had a similar tale to tell. The company indicated that cryptocurrency demand remains strong, while also suggesting that the demand might not last forever.

What Is Cryptocurrency?

Cryptocurrency, as the name suggests, is a form of digital money designed to be secure and anonymous in most cases. It uses a technique called cryptography — a process used to convert legible information into an almost uncrackable code, to help track purchases and transfers.

Giving a simple definition, Blockgeeks says it is just limited entries in a database no one can change without fulfilling specific conditions.

Cryptography is a technique that uses elements of mathematical theory and computer science and was evolved during the World War II to securely transfer data and information. Currently, it is used to secure communications, information and money online.

Cryptocurrencies allow users to make secure payments, without having to go through banks.

Some cryptocurrencies include bitcoin, Bitcoin Cash, Ethereum, DigitalNote, LiteCoin and PotCoin.

Bitcoin has the distinction of being the first cryptocurrency, having been introduced in 2009. Since then, this class of cryptocurrencies mushroomed, with more than 900 currently active.

How Cryptocurrencies Work

A cryptocurrency runs on a blockchain, which is a shared ledger or document duplicated several times across a network of computers. The updated document is distributed and made available to all holders of the cryptocurrency.

Every single transaction made and the ownership of every single cryptocurrency in circulation is recorded in the blockchain.

The blockchain is run by miners, who use powerful computers that tally the transactions. Their function is to update each time a transaction is made and also ensure the authenticity of information, thereby ascertaining that each transaction is secure and is processed properly and safely.

As payment for their services, miners are paid physically minted cryptocurrency as fees by vendors or merchants of each transaction.

The value of the cryptocurrency fluctuates based on demand and supply, although there is no fixed value for it. Buyers and sellers agree on a value, which is fair and is based on the value of the cryptocurrency trading elsewhere.

Since there is no intermediary like bank involved in the transaction, as it is a peer-to-peer transaction, the transaction fee that is associated with credit cards is eliminated. The identity of the buyer and seller are not revealed. However, each and every transaction is made public to all the people in the blockchain network.

One can acquire a cryptocurrency through exchanges found online or trade it for traditional currencies.

Assume X wants to buy an item valued at $10,000 and he realizes that the seller Y accepts cryptocurrency, say bitcoin, as a form of payment. X scouts around to find the prevailing exchange rate, say $1,000 per currency. X gets Y's public Bitcoin address from Y's website, although both parties remain anonymous to each other.

X can now instruct his Bitcoin client or the software installed on his computer to transfer 10 bitcoins from his wallet to Y's address. X's Bitcoin client will electronically sign the transaction request with his private key known only to him. X's public key, which is a public information, can be used for verifying the information.

When X's transaction is broadcast to the Bitcoin network, it would be verified in a few minutes by miners. The 10 bitcoins will now be transferred to Y's address.

Mining

Cryptocurrency mining includes two functions, namely: adding transactions to the blockchain (securing and verifying) and also releasing new currency. Individual blocks added by miners should contain a proof-of-work, or PoW.

Mining needs a computer and a special program, which helps miners compete with their peers in solving complicated mathematical problems. This would need huge computer resources. In regular intervals, miners would attempt to solve a block having the transaction data using cryptographic hash functions.

Hash value is a numeric value of fixed length that uniquely identifies data. Miners use their computer to zero in on a hash value less than the target and whoever is the first to crack it would be considered as the one who mined the block and is eligible to get a rewarded.

The reward for mining a block is now 12.5 bitcoins.

Earlier, only cryptography enthusiasts served as miners. However, as cryptocurrencies gained in popularity and increased in value, mining is now considered a lucrative business. Consequently, several people and enterprises have started investing in warehouses and hardware.

As enterprises jumped into the fray, unable to compete, bitcoin miners have begun to join open pools, combining resources to effectively compete.

Bank of New York Mellon Corp has been running an internal blockchain platform for U.S. Treasury bond settlements since early 2016, a Marketwatch report quoting Morgan Stanley said. The private nature of the platform has kept it out of the regulatory purview. Once the bank decides to roll it out to clients and use it commercially, regulatory oversight might come into the picture.

A complete mining kit consists of graphics cards, a processor, power supply, memory, cabling and a fan, which would cost between $2,400 and $3,800 on Amazon.com, Inc. According to Bloomberg.

The top three mining hardware, according to 99bitcoins.com, are Avalon6, AntMiner S7 and AntMiner S9.

Given that existing GPUs aren't powerful enough, now miners are flocking to application-specific integrated circuits, or ASICs. To circumvent this shortcoming, Nvidia and AMD are said to be working on GPUs, which could be used specifically for the purpose.

The two companies who are dominant in consumer-grade mining hardware are Canaan and Bitmain. Bitmain, based in Beijing, does mining as well as manufactures mining hardware.

Mining Pools And Their Share Of Mining

Mining pools including bitclub network

Mining pools are concentrated in China, which boasts of 81 percent of the network hash rate.

Why Mining Chips Are A Fickle Revenue Stream

For companies such as AMD and Nvidia, which have dominant positions in the gaming chip market, a focus away from their core business may not be a prudent course of action.

As seen, these companies may have to bring out new GPUs designed exclusively for this purpose to pose a real threat to the ASIC chips, which are predominantly manufactured by the Chinese, who are notorious for their low-cost market positioning. How viable is the spend on such exclusive chips is a moot point.

Additionally, national governments and exchanges are mulling over regulation of the whole realm of cryptocurrencies. Japan has recently introduced legislation to protect users after Tokyo-based Bitcoin exchange Mt Gox collapsed in 2014. Similarly, introducing taxation such as capital gains tax on Bitcoin sales may also impede the cryptocurrency industry.

Author: Shanthi Rexaline , Benzinga Staff Writer

August 21, 2017 8:59am

Posted by David Ogden
Entrepreneur

David

Get started in cryptocurrency with this beginner’s directory

Get started in cryptocurrency with this beginner's directory

Get started in cryptocurrency with this beginner’s directory

The wonderful world of cryptocurrency has grown from a budding idea to a full-fledged market bonanza. Hopefully you’re savvy to the terminology and ready to start putting your money where your technology is. This directory should provide you with the basic starting points to begin building your fortune in digital money.

(Don’t forget that cryptocurrency is an investment, and you shouldn’t trust your finances to an article you read on a news-source. We strongly advise contacting a financial adviser before risking your money.)

Bitcoin was founded in 2009. It represented the first decentralized cryptocurrency. It’s the oldest, and, as of August 17th it reached an all-time high of over $4,500. Just six months prior it was worth about $900. While you’re trying to wrap your head around that, keep in mind Bitcoin isn’t the only cryptocurrency.

How many cryptocurrency offerings are there? Over 850 are currently listed on CoinMarketCap. Before you decide which one to blow your speculation money on, make sure you have all your crypto-ducks in a row.

You need a wallet

Before you can buy into an initial coin offering (ICO), purchase cryptocurrency, or execute smart-contracts you’ll need a wallet. There are hardware wallets and software wallets; for now we’re only going to worry about software wallets.

Here’s a few to start you off:

Blockchain – possibly the most popular cryptocurrency wallet
Electrium – has been around since 2011
Gemini – boasts regulation by New York State Department of Financial Services (NYSDFS).

Buy an established coin

You don’t have to start off trying to predict which ICO is the best investment. There are numerous ways to aquire cryptocurrency from an established coin. Here are some of our favorite coins to get your research started:

Bitcoin – The big one. If you’ve got $4,000+ to fork out for a Bitcoin you can get in on the over/under $5,000 action. For what it’s worth there are experts on both sides of that fence.
Ethereum – Things get a little more complicated here, but worth listing as a currency simply because ETH is second only to Bitcoin in popularity.
Litecoin – Launched in 2011 billing itself the “silver” to Bitcoin’s “gold”.
Bitcoin Cash – Bitcoin managed to fork itself and now there’s this.
Siacoin – Sometimes cryptocurrency comes in the form of cloud storage.
World Coin Index — provides a great listing to check valuations out
Coin Market Cap — another listing of coin valuations

Or just find an ICO and dive in

Which is easier said than done. It seems like there’s an ICO for everything. We’re hesitant to even list any here, simply because you should research an ICO much more in-depth than would be prudent for the purpose of this directory. However, we’re happy to provide some links that might help:

Coin Schedule – provides analysis on current and upcoming ICOs
Smith and Crown – A curated list of ICOs
ICO List – One of the most popular international sites concerning ICOs

It’s time to hit the exchange

Depending on which coin you’re investing in you’ll either visit an exchange, or use whatever method of purchase or trade the offering requires. You may be able to set up an online store that accepts Bitcoin or ETH, for example. Or perhaps you know someone who will sell you some. One of the most common ways to get cryptocurrency is to visit an exchange.

Coinbase – probably the most popular exchange there is
Kraken – you’ll find this one is well-reviewed by insiders
Bittrex – US based and supports nearly 200 cryptocurrencies
Buy Bitcoin Worldwide— provides country-specific exchange information

The above links should provide you with enough information to get you started on a path to dominate the cryptocurrency markets and become rich beyond fantasy. Or you could lose a bunch of money.

by TRISTAN GREENE — 13 hours ago in EVERGREEN

Posted by David Ogden
Entrepreneur

David

Bitcoin Price to Reach $6,000 in 2018, Predicts Wall Street Strategist

The bitcoin price pulled back from its all-time high this weekend, weighed down by a bitcoin cash price surge and disagreements over the SegWit2x scaling proposal.

Bitcoin Price to Reach $6,000 in 2018, Predicts Wall Street Strategist

However, Wall Street strategist Tom Lee believes that the long-term prospects of the bitcoin price remain quite promising. As CNBC reports, Lee–who co-founded Fundstrat Global Advisors and is bearish on the outlook for the stock market–wrote a note to clients establishing a mid-2018 bitcoin price target of $6,000. He also forecasts that it could rise as high as $25,000 by 2022.

Bitcoin Price to Reach $6,000 in 2018

He says several factors will fuel bitcoin’s continued rise to $6,000, including a 50% increase public adoption of bitcoin as a store of value and mainstream financial investments in cryptocurrency:

We see bitcoin as gaining from institutional sponsorship, improving transaction platforms and ultimately, greater public adoption.

Pointing to LedgerX and CBOE Holdings, which have both receive regulatory approval, Lee says the availability of cryptocurrency options and futures trading will increase overall bitcoin transaction volume.

This implies significant rise in institutional holdings of Bitcoin in next 6-8 months given recent approvals….No doubt, this will lead to an increase in overall transaction volumes for bitcoin.

Central Banks Could Acquire Bitcoin

Lee’s comments echo a recent Goldman Sachs note, which advised that it is “getting harder” for institutional investors to ignore cryptocurrencies. He adds that even central banks may begin acquiring bitcoin if it reaches a market cap of $500 billion, which will happen if the bitcoin price reaches about $30,000.

While one may say this is preposterous to say central banks would own bitcoin — we believe that Central banks would view crypto currencies differently if Bitcoin’s aggregate value exceeded $500 billion

That said, Lee anticipates short-term volatility for the bitcoin price heading into late August of this year.

Short-term traders should be prepared for another volatile consolidation period heading into late August given the XBT is nearing our next resistance levels with daily/short-term momentum becoming overbought.

Other Bitcoin Price Forecasts

A number of financial analysts have issued bitcoin price forecasts. Sheba Jafari, a chief technical analyst at Goldman Sachs, believes the bitcoin price will near $5,000 but crash as low as $2,221 as its fifth wave ends. Stock researcher Ronnie Moas believes bitcoin will beat Lee’s target and cross $7,500 in 2018, and one Harvard academic believes a unique application of Moore’s Law could result in bitcoin breaking through $100,000 in 2021.

Author: Josiah Willmoth on 19/08/2017

Posted By David Ogden
Entrepreneur

David

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

David

Forget oil, Russia goes crazy for cryptocurrency

MOSCOW (AFP) – Standing in a warehouse in a Moscow suburb, Dmitry Marinichev tries to speak over the deafening hum of hundreds of computers stacked on shelves hard at work mining for crypto money.

"The form of currency we are used to is about to disappear," predicts the 42-year-old entrepreneur, who also works as President Vladimir Putin's adviser on internet matters.

Marinichev is one of Russia's leading crypto-businessmen at the helm of operations in this facility larger than a football pitch located in a former Soviet-era car factory, which collects virtual money on the accounts of its clients.

Individuals, or firms like Marinichev's, provide the computing power to run the so-called blockchain which records the world's virtual money transactions. In return for providing that service they receive virtual money, of which bitcoin is the most popular, as payment – a process bitcoiners call "mining".

Mining farms like this represent a growing craze in Russia for bitcoin and other virtual currencies not backed by governments or central banks that are increasingly used for goods and services on the internet.

The hunt for virtual currencies is accessible "to anyone who may be hardly familiar with computer science," Marinichev said. "It's no more complicated than buying a cellphone and connecting to a mobile network." The practice has become so popular in Russia that computer stores in the country have run out of graphic and video cards developed for gamers but are used by bitcoin miners to boost the processing power of their home computers.

Marinichev this week unveiled a more sophisticated setup, inviting investors to pitch in US$100 million to join a mining club and develop a Russian mining chip called Multiclet through his startup.

"The explosion of virtual currency value has made mining profitable enough to make it a professional activity," said Sergei, a 29-year-old computer scientist who runs half a dozen graphics cards plugged into the electrical grid of the company where he works.

He launched his mining operation in March, when the value of bitcoin and its main competitor ethereum, created by Russian-Canadian Vitalik Buterin, reached record heights on the currency's exchange.

Since the beginning of 2017, bitcoin has quadrupled in value, surpassing US$4,000 at the weekend, while ethereum experienced a rise of 4,500 per cent to hit a record of US$374 in June, later falling to US$268 in August.

While the assembly of a mining operation is easy enough, it consumes a large amount of electricity, which can reach the equivalent of several households' needs.

"All my friends who were interested in Bitcoin or ethereum built their devices and plugged them into their corporate networks, and I did the same," Sergei said. "Others cut into the municipal electrical cables."

Russia has a competitive advantage as an environment for mining, as Marinichev points out in a brochure for prospective investors: electricity here costs just 1.3 US cents per kilowatt hour while long winters save money on cooling systems.

Authorities in Russia were long suspicious of virtual money but have now come to recognise it as a force. A new bill is set to be debated this autumn which aims to regulate the possession and creation of crypto currency in the country.

The legal foundation for virtual money has so far been non-existent in Russia and it is associated with illicit activities like hacking and used to purchase drugs on the dark web.

"There is now an understanding at the highest level in the country that virtual currencies are not an absolute evil but a possible good, especially for the economy," said Marinichev.

Putin in early June even held a meeting at an economic forum with Buterin, the 23-year-old creator of ethereum, who lobbied the Russian president to expand the currency's use in Russia.

Last year, Russia's largest banks tested the platform for some of their transactions. The country's central bank even pondered development of a "national virtual currency".

Though at all-time-high in August at US$116 billion, the global cryptocurrency market is still quite young, volatile and prone to speculation.

Bitcoin, for example, lost almost a third of its value between mid-June and mid-July, before gaining it back over the course of a week. Since then, it has been regularly breaking records.

"The rush to virtual money is not a fad or a fleeting phenomenon. The virtualisation of our lives is a market process that has gone on and will continue," Marinichev said.

In a sign of the times, several cafes and restaurants in Moscow this summer began to accept payments in virtual currencies.

David Ogden
Entrepreneur

Source: The Straits Times

David

Understanding Cryptocurrency – How It Works, What Drives It, Should You Buy It

Understanding Cryptocurrency - How It Works, What Drives It, Should You Buy It

Understanding Cryptocurrency – How It Works, What Drives It, Should You Buy It

Cryptocurrencies have caught on in the mainstream and have made thousands of people millions of dollars. The most recent boom of Bitcoin now means that if you had invested just $500 8 years ago, you would now be a multi-millionaire. This meteoric rise in the biggest cryptocurrency by market cap has drawn a lot of attention. However, to the everyday man who is used to dealing with hard cash and actual value, cryptocurrencies can seem like an unknown and often unintelligible world. With terms like hash rates, data mining, market capitalization, and ultimately the fear of instability, there’s a little bit of a harsh learning curve to the technology.

In this article, I’m going to try to give a beginner’s guide to cryptocurrencies, explain how they work, what moves the prices, and whether you should invest.

What are cryptocurrencies?

Cryptocurrencies are essentially digital mediums that can be exchanged, just like government currencies, that use cryptography, or digital security measures, to secure the exchange of digital information and control the creation of new units. Explained even more simply, cryptocurrencies are digital coins that fluctuate in value similar to stocks with their exchange being backed by digital security measures.

Cryptocurrencies are digital currencies or money that is then exchangeable for physical money, like dollars. They’re comparable to how most apps have some form of digital money, like “orbs” in a mobile game that cost some amount like ” $10 for 1000 orbs.” In this instance, each in-game “orb” would be worth 1/1000th of a dollar. Even though these orbs are just data on your mobile device or on some server, they have some inherent worth equatable to dollars. In an extremely general context, this is what a cryptocurrency is.

So, how do they work?

In essence, cryptocurrencies provide a viable method of owning a unique digital currency which presents some ever fluctuating value. Each coin or currency, like Bitcoin, Ethereum, or Litecoin, are fully self-contained digital systems that both track and control each unit of cryptocurrency.

Each individual coin of a cryptocurrency acts like data moving through a network. Some cryptocurrencies can be valued as small as just 1 cent and others as big as 1 billion dollars. Some currencies are controlled by one entity, which is referred to as a centralized currency, and others are controlled by the public, which are decentralized. There are positives and benefits to each variation, but the stress should be placed on the fact that no cryptocurrency is identical to the next.

What drives them?

One of the most prominent aspects of cryptocurrencies is the fact that there isn’t a third part that verifies the transaction of crypto coins. To avoid this, cryptocurrencies use timestamping methods to verify each transaction. Bitcoin, which is the most popular crypto and largest by market cap, uses a proof-of-work scheme, which is commonly referred to as mining. In essence, mining Bitcoin means tasking a computer with solving some complex problem. When the problem is solved, the computer account is rewarded with a portion of Bitcoin relative to the amount of work it put in to solve the problem. This verification network gives Bitcoin value and backs up transactions. By having this in place, someone couldn’t just write code and give themselves x amount of bitcoins.

In many ways, cryptocurrencies are like stocks. Positive news about a certain coin’s security or general acceptance can drive the price up. The same is inversely true if coins are deemed unuseful in certain applications. Part of what has played into Bitcoin’s rise is that many retailers accept Bitcoin as currency. This makes the cryptocurrency easily translatable to physical value, thus influencing the price per Bitcoin accordingly.

The true answer to what drives cryptocurrencies is obviously much more complex due to the number of factors that go into the “value” of a currency.

Should you invest?

The answer to this question is likely the same for whether you should invest in stocks. While cryptocurrencies have experienced astronomic growth in recent years, these gains aren’t necessarily guaranteed to continue. You should only invest in cryptocurrency if you are willing to take on some risk. With that said, there are currencies that are more stable than others.

Litecoin, which is often regarded as the silver to Bitcoin, has been found to be a very stable currency of growth in recent months. Whereas Bitcoin, currently trading at all time highs, is known to make corrections of 30%, represents a large loss if you were to invest now.

The volatility of cryptocurrencies presents opportunities for day traders, and the significant long term growth of cryptos present great opportunities for long term investors.

You should do a significant amount of investigation into what cryptocurrency you want to invest in, just like any stock, before you buy. Buying can be done on many secure mobile apps or other online platforms. A quick Google search of where and how to buy cryptocurrencies can yield you with this information with ease.

To summarize, cryptocurrencies are often decentralized digital currencies that draw value from security, anonymity, and authentication measures that fluctuate much like stocks that can be traded and exchanged for “true value” currencies. While it may still sound hard to understand, a little bit of research into crypto can go a long way. Cryptocurrencies are here to stay, and while awareness of them is growing with the general public, people with actual knowledge about how they work is still very small. By taking the time to research and understand, you present yourself with an opportunity to excel in a technologically growing industry.

David Ogden
Entrepreneur

Author: TREVOR ENGLISH

David