Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Bitcoin price is making a correction from its recent selloff, but it might be ready to resume the drop soon.

Bitcoin Price Key Highlights

  • Bitcoin price has been selling off in the past few days on reports that China has officially confirmed it would be shutting down exchanges.
  • A bearish channel can be seen on the 1-hour time frame and it’s currently showing a pullback opportunity.
  • Price is stalling at the top of the channel resistance but a higher pullback to the $4000 area of interest might be possible.
  • Bitcoin price is making a correction from its recent selloff, but it might be ready to resume the drop soon.

Technical Indicators Signals

The 100 SMA is below the longer-term 200 SMA on this time frame, so the path of least resistance is to the downside. The 200 SMA dynamic resistance lines up with the channel resistance around $3850 and the 61.8% Fibonacci retracement level, adding to its strength as a ceiling.

However, there’s also another area of interest located at the $4000 psychological level, which held as support in the past. This could serve as the line in the sand for this correction and a break past the level could indicate that buying pressure is back in the game.

Stochastic is still pointing up so there’s some bullish momentum left. RSI is also heading north so bitcoin price might follow suit. If the selloff resumes, bitcoin could drop to the swing low near $3000 or form new ones closer to the channel support at $2800.

Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Market Factors

News that BTC China would be halting trading for its clients by the end of the month pretty much sealed the deal for speculations that the world’s largest bitcoin market would see a large drop in activity. Liquidation has been taking place for the most part of the previous week and this would likely carry on in the coming days.

As for the dollar, the focus has been on tax reform, which has been bullish for the fiat currency. Easing fears of a North Korea missile strike have also weighed on bitcoin price as this is often treated as digital gold during risk-off days. Meanwhile, the upcoming FOMC decision could still be a risk factor for BTCUSD as downbeat remarks could lead to a selloff for the dollar.
 

4:26 am September 18, 2017

Author Sarah Jenn

 

Posted by David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

David

U.S. Bill Would Ease Bitcoin Tax Regulations for Small Transactions

U.S. Bill Would Ease Bitcoin Tax Regulations for Small Transactions

U.S. Bill Would Ease Bitcoin Tax Regulations for Small Transactions

Two U.S. congressional representatives have introduced a bill that would reduce bitcoin tax reporting requirements. If the bill is signed into law, U.S. bitcoin users would no longer have to report transactions worth less than $600.

The Cryptocurrency Tax Fairness Act of 2017, introduced by Congressional Blockchain Caucus co-chairs Rep. Jared Polis (D-CO) and Rep. David Schweikert (R-AZ) is a bipartisan attempt to reduce the regulatory burden on people who use cryptocurrency to make small, everyday transactions and not solely as an investment vehicle.

Unfortunately, current laws classify bitcoin as “property” in all cases, meaning that U.S. residents have to pay capital gains taxes every time they make a cryptocurrency transaction, no matter how small. This bill would bring nuance to bitcoin tax regulations, ensuring that bitcoin is treated like a currency when used as one.

“Cryptocurrencies can be used for anything from buying a cup of coffee to paying for a car, to crowdfunding a new startup and more and more consumers are choosing to use this type of payment. To keep up with modern technology, we need to remove outdated restrictions on cryptocurrencies, like Bitcoin, and other methods of digital payment,” said Polis in a statement posted on his official website. “By cutting red tape and eliminating onerous reporting requirements, it will allow cryptocurrencies to further benefit consumers and help create good jobs.”

According to the U.S. Internal Revenue Service (IRS), most cryptocurrency users are already out of compliance with these laws. The tax agency says that only 802 people declared cryptocurrency transactions on their income tax returns in 2015. Consequently, the agency has contracted with blockchain-tracing firm Chainalysis to locate bitcoin tax cheats and has attempted to force bitcoin exchange Coinbase to reveal their customers’ personal information.

Of course, the Cryptocurrency Tax Fairness Act would not remove all reporting requirements for bitcoin transactions. Users will still have to pay the bitcoin tax on transactions larger than $600, which are more likely to be investment-related and thus subject to capital gains regulations.

That said, the legislative process is an arduous one, and many bills die before they even reach a vote. U.S. residents should demonstrate their support by contacting their representatives in Congress and asking to lend their support.

“Individuals all over the world are starting to use cryptocurrencies for small every day transactions, yet here in the States we have fallen behind and make cryptocurrency use more of a challenge than it needs to be,” added Schweikert. “With this simple legislative change, anyone can make digital payments to buy a newspaper or a bike without worrying about tax code challenges.”
 

Author: Josiah Wilmoth on 16/09/2017

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrpreneur

David

Bitcoin Price Analysis – A perfect storm

Bitcoin-Price-Analysis-Sept-15-2017-Banner3

Bitcoin Price Analysis – A perfect storm

Bitcoin has dropped ~USD$400 in the past 24 hours, contributing to a ~USD$1450 drop in the past seven days. The leading cryptocurrency is down ~US$1150 Since the recent high of ~US$4950 on Sept 2nd, or nearly 30%. The lackluster performance can be attributed to both technical and fundamental factors.

On September 4th, China announced an outright ban of all ICOs, suggested refunding any collected funds in any ongoing crowd sales, and hinted at the shuttering of exchanges trading ICOs.

Earlier today, the oldest Bitcoin exchange in China, BTCC, announced it would end trading on September 30th. Competitors OKcoin and Huobi have yet to make announcements but they may also close their doors.

Needless to say, the market has reacted. Today marked the highest volume for a daily candle since Chinese exchange regulation in January, according to the BLX.

Not making a single clear statement, and therefore adding to fear, uncertainty, and doubt (FUD) is a classic move from the Chinese government and has occurred multiple times in the past.

The crackdown in China occurs in the context of an already overbought market. These conditions are almost identical to those in January, when the Chinese government reigned in Bitcoin exchange trading.

One high volume Bitcoin trader, who likes to protect their identity, had this to say about the situation. “I see regulations as a means of protecting the investor. During the 1920’s the United States stock markets were cesspools of corrupt insider trading, front running and taking advantage of the general population. The Securities Act of 1933 put an end to most of that, although many now a days would say otherwise, ending the so called ‘wild west of the stock markets’. Cryptocurrency, still in its infancy in my opinion, is just this; markets untamed a wild west ruled by non professional pundits and early adopters. I expect regulation will potentially be a good thing at first. However, coming into larger global adoption – I fear that cryptocurrencies as a whole will become just as easily manipulated, if not more, by the J.P. Morgans and Goldman Sachs’ of the world, as has been demonstrated during the tumultuous events of the past seven days.”

When fundamentals and technicals are united, the price move and reaction becomes amplified. So no, CEO of J.P Morgan Jamie Dimon’s comments this week didn’t crash Bitcoin. The market was due for a large correction after spending only eight days in the 3000 range.

Exchange traded volume has been led by USD. Tether (USDT) is pegged to the dollar, and has also seen a significant bump in volume. This suggests that traders are using USDT as a safe haven from the pullback.

CNY volume accounts for <18% of exchange traded volume globally, but it’s clear that Chinese regulators have rattled the markets. Bitcoin has been selling for a significant discount in Yuan (CNY) markets, compared to other pairs, suggesting an influx of CNY traders selling bitcoin. CNY traders buying bitcoin had been paying a premium as recently as June.

In light of the China exchange bans, pending or otherwise, we can expect OTC volume to increase significantly, just as it did following the increased regulatory focus from the Chinese government in January.

On a geopolitically related note, North Korea appears to be itching for attention on the world stage, having fired another missile over Japan. Should an offensive campaign, police action, or outright war arise in the region, we can expect a reaction from Bitcoin in some fashion.

There has also been a great deal of press around the potential large scale bitcoin acquisition by North Korea, including: bitcoin mining based on an uptick of internet activity in the region, hackers targeting cryptocurrency exchanges, and their involvement with the WannaCry virus. Despite all the press, it is difficult to prove the extent at which this is occurring without significant and in depth investigations on several fronts.

However, Japanese Yen (JPY) and South Korean Won (KRW) constitute 28% of global bitcoin trading. Should Bitcoin be seen as a safe haven asset in those regions, we can expect a bullish spike in price, lead by bitcoin trading for a premium in those markets.

Technical Analysis

On weeks like this one, with intense selling, it’s important to understand why the selling is occurring from a technical perspective.

On the weekly timeframe, there was building volume and RSI bearish divergence, which was confirmed last week. This meant that as price is rising, it is doing so on less volume and less momentum that it had previously. It was losing steam.

Divergences are considered lagging indicators and are difficult to trade off in isolation. Much like this divergence however, traders will watch the momentum fade and take action when they are certain of the direction.

Bearish Divergences on the weekly chart have historically had significant pullbacks. Note that RSI divergences should be seen from the body of the candle, not the wick, because RSI is calculated at the close of the candle.

There have also been several hidden bullish divergences on the weekly chart, signaling weakening bearish sentiment. A hidden bullish divergence occurs when price makes a higher low on increased momentum. This means that in spite of increased momentum, price was unable to make a lower low.

This pattern has occurred several times on the weekly chart, and was a signal for strong bullish trend continuation. Should selling continue over the next week, there is the potential for another hidden bullish divergence.

When looking for strong high probability support, look no further than the Ichimoku Cloud. The Kijun (red) represents complete mean reversion of the historic prices over the past 30 periods. This zone is currently holding as support at the time of this article. Additionally, there is an incredibly small, but existing hidden bullish divergence should this zone hold.

Another indicator to use when looking for support is the Pitchfork (PF). They provide diagonals that can be thought of as a potential reversal zones or support/resistance lines. The upper diagonal zones being ‘most overbought,’ or the top bounds of the trend, and the lower diagonal zones being ‘most oversold,’ or the bottom bounds of the trend.
 

Based on the longstanding PF, beginning in 2015, there is potential for increased selling down to the median line, ~USD$2800. This zone also represents support from the previous ATH made earlier this year.

There is another noteworthy pattern developing on a shorter timeframe, the fifteen minute chart, a bullish three drives pattern with a growing volume and RSI bullish divergence.

Lastly, we are approaching a rollover date on the OKcoin quarterly futures. Although the alternating top/bottom price pattern between quarterly futures contracts began to get much looser on the most recent rally to ~USD$5000, volatility surrounding the contract dates is not unusual. With a potential touch of the 200EMA on the daily chart, this may very well represent an interim bottom until December, when another bull run may occur.

Conclusion

A perfect storm of technical weakness and Chinese regulatory belt tightening, neither of which was fully priced in until at least today. Once regulations are finalized and FUD is abated, we can expect a strong rally, similar to that in January of this year. Technicals are already showing signs of bearish momentum weakening, with support targets holding on the daily close. Interestingly, this drop has been timed almost perfectly with the open of a new quarterly futures contract on OKcoin. Although the volume on the daily candle is the highest it’s been all year, we’ve yet to see a strong capitulation wick, signaling the end of the pullback.

 

Author Josh Olszewicz , 15 Sep 2017 – Bitcoin Price Analysis, Opinion, Technical

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

David

China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

  • Order comes amid a broader clampdown on financial risk
  • China is home to nearly a quarter of world’s bitcoin trades

China plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, dealing another blow to the $150 billion cryptocurrency market after the country outlawed initial coin offerings last week.

The ban will only apply to trading of cryptocurrencies on exchanges, according to people familiar with the matter, who asked not to be named because the information is private. Authorities don’t have plans to stop over-the-counter trading of virtual currencies, the people said. China’s central bank said it couldn’t immediately comment.

Bitcoin slumped on Friday after Caixin magazine reported China’s plans, capping the virtual currency’s biggest weekly retreat in nearly two months. The country accounts for about 23 percent of bitcoin trades and is also home to many of the world’s biggest bitcoin miners, who confirm transactions in the digital currency.

“Trading volume would definitely shrink,” said Zhou Shuoji, Beijing-based founding partner at FBG Capital, which invests in cryptocurrencies. “Old users will definitely still trade, but the entry threshold for new users is now very high. This will definitely slow the development of cryptocurrencies in China.”

While Beijing’s motivation for the exchange ban is unclear, it comes amid a clampdown on financial risk in the run-up to a key Communist Party leadership reshuffle next month. Bitcoin has jumped about 600 percent in dollar terms over the past year, part of a broad surge in virtual currencies that has fueled concerns of a bubble. The People’s Bank of China has done trial runs of its own prototype cryptocurrency, taking it a step closer to being the first major central bank to issue digital money.

“There has been a general tightening of the screw on regulating financial and monetary conditions,” said Mark McFarland, chief economist at Union Bancaire Privee SA HK in Hong Kong. “All of these things suggest a longer term process of tightening scrutiny of activities that aren’t in the normal sort of monetary realm.”

China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

OKCoin, BTC China and Huobi, the country’s three biggest bitcoin exchanges, said on Monday that they hadn’t received any regulatory notices concerning bans on cryptocurrency trading. All three venues reported transactions on Monday, with bitcoin rising 6.3 percent on OKCoin as of 11:56 a.m. local time.

While bitcoin users will still be able to trade cryptocurrencies in China without exchanges, the process is likely to be slower and come with increased credit risk, analysts said.

The exchange ban is unlikely to have a major impact on the prices of cryptocurrencies because venues outside China will continue trading, according to FBG Capital’s Zhou. The country’s role in the bitcoin market had already started shrinking in recent months as authorities tightened regulation. At one point, exchanges in the country accounted for more than 90 percent of the world’s bitcoin transactions.

The bigger risk for global bitcoin traders may be the massive rally in prices, according to McFarland.

“Whenever you start to hear about Hong Kong taxi drivers becoming millionaires from buying bitcoin, you start to think this is not necessarily driven by fundamentals,” he said. “So you will get quite substantial pullbacks at some point.”

 

Bloomberg News
11 September 2017, 05:36 BST
— With assistance by Steven Yang, Gary Gao, Yinan Zhao, Yuji Nakamura, Lulu Yilun Chen, Justina Lee, and Eric Lam

 

Posted by David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

David

SEC Warns Public to Avoid ICO Scams Manipulating Stock Prices

SEC Warns Public to Avoid ICO Scams Manipulating Stock Prices

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

Standpoint Founder – Bitcoin Asset Class Will Grow Into $2 Trillion Market

Standpoint Founder - Bitcoin Asset Class Will Grow Into $2 Trillion Market

Standpoint Founder – Bitcoin Asset Class Will Grow Into $2 Trillion Market

 

Forget $5,000.

At a time when many are making short-term bets on the price of bitcoin and other cryptocurrencies, one bitcoin bull is going a step further. Ronnie Moas, founder of Standpoint Research, is making the case cryptocurrencies will not only be a decade-long trend, but a viable asset class.

In fact, he's going so far as to call for a massive rise in the market cap of cryptocurrencies. His prediction? The total value of all cryptographic assets, today valued at $150 billion, will soar to $2 trillion over the next 10 years.

And in a new interview, Moas walked CoinDesk through his forecast, explaining how it stems from his fundamental analysis of the capital markets and the broader macroeconomic trends he now sees in place.

The Standpoint founder's view stands in stark contrast to the highly bearish analysis of Peter Schiff, who called cryptocurrency a bubble, a speculative frenzy and a natural Ponzi scheme driven by "just plain greed" last week.

In the broadest sense, Moas sees the current state of the cryptocurrency market as a direct parallel to Silicon Valley during the 1990s, when a massive surge of innovation created new technologies that transformed the way we work and live and ushered in a period of massive wealth creation.

He explained:

"I am not any more concerned with bitcoin being at a record high than Amazon or Google investors were concerned when those share prices jumped hundreds of percent and hit $100 and $200 many years ago. Today, both of those stocks are above $900. The question is not where we are at – it is where are we going? I do not think we are in a bubble."

 

Roadmap to $2 trillion

How does Moas get to the $2 trillion market cap for cryptocurrency in his forecast?

He begins by looking at the $200 trillion that is currently invested in global capital markets today, including all major asset classes: cash, stocks, bonds and gold. Moas, who also does traditional equity analysis, begins his market breakdown with stocks, which he believes are currently overvalued.

According to Moas, three-quarters of the names in the S&P 500 are trading at least 18 times earnings, which is higher than his value threshold of 12 times earnings. He also adds that we haven't had a stock market correction in 20 months.

On the currency front, the U.S. dollar is currently losing 1 to 2 percent per year due to inflation. Moas also points out that the dollar has lost half its value since he was in high school 35 years ago.

 

From a global perspective, where most people don't have access to U.S. dollars, Moas believes the case for cryptocurrency is even more compelling:

"Now, imagine what they think of their own local currencies elsewhere in the world. Imagine you live in Venezuela and you're keeping your money under the mattress. Would you rather leave it there in Venezuelan bolivar or would you rather put it in bitcoin? It's not going to take you very long to make that decision."

Breaking his thesis down further, Moas believes that a conservative estimate is that at least 1 percent of the $200 trillion now tied up in stocks, cash, gold and bonds will migrate into cryptocurrencies over the next decade.

In that case, he says, "Bitcoin could end up with a market capitalization that is more than Amazon and Apple combined."

Under this scenario, that would mean that the current market capitalization of all cryptocurrencies would naturally grow.

And if Moas's market capitalization targets are correct, investors would then receive a 1,250 percent return on their cryptocurrency investments made today.

 

Diversified strategy

But he adds one major caveat to that prediction. Simply, "You've got to be in the right names."

Assuming you accept Moas's basic bull market thesis for cryptocurrencies, how do you know if you are invested in the right "names" in the cryptocurrency space? And, if the market boom in cryptocurrency is analogous to the roaring years of the 1990s tech boom, how can you avoid investing in the next Pets.com?

As Moas frames it:

"A lot of people say there is a bubble out there. I see a bubble when you get down below the top 50 cryptocurrencies. There are more than 800 names right now. In my view, what happens outside the top 50 is irrelevant."

Moas goes on to point out that 91 percent of the nearly $150 billion market cap is invested in the top 20 names and 70 percent is invested in bitcoin and ether alone.

He recommends, for the purposes of portfolio diversification, retail investors should hedge their bets and invest across the top 10 or 20 cryptocurrencies.

In Moas's view, the 800 cryptocurrencies that are now trading are analogous to the 800 stocks that were available on the Nasdaq at the height of the dot-com bubble nearly 20 years ago. While Amazon and Apple and Microsoft emerged to become among the most valuable companies of all time, there were many companies from that time period that died slow and painful deaths.

Or, as Moas more colorfully puts it: "Back then, there were hundreds of pump-and-dump, small-cap junk names just as there are in crypto today. Today, the crypto market is giving you the same signals with names like dash, ripple, litecoin, monero, bitcoin, ethereum, neo, nem, iota and others."

He went on to add that while there are certainly risks involved in investing in cryptocurrency, those risks are, in his view, outweighed by the possibility of 10-to-one or 20-to-one payout to the upside experienced by tech stocks.

 

The bull case

Of all the major cryptocurrencies, though, Moas seems especially bullish in his view of bitcoin. Unless there is a major shakeup in the underlying confidence, he believes that investors are going to want to buy-and-hold for their portfolios for 10 years or more.

Moas points out that there are currently only about 16 million bitcoins that have been issued of a possible total 21 million coins that will be created.

In his analysis, this could lead to tens of millions of people trying to get their hands on just a few million coins.

When asked for a specific price target, Moas summed up as follows:

"At the beginning of July, bitcoin was trading at $2,500. I believe in the next three years you will probably see $15,000 to $20,000 for bitcoin. It could double twice from here in the next 36 months."

 

 

Aug 24, 2017 at 09:00 UTC by Ash Bennington

 

Posted By David Ogden Entrepreneur

DAvid Ogden Cryptocurrency 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

Forget oil, Russia goes crazy for cryptocurrency

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

David Ogden Cryptocurrency 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

DAvid Ogden Cryptocurrency Entrepreneur

 

Author: TREVOR ENGLISH

David

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

One of the cryptocurrency world's more tenured fund managers is launching two new products aimed at bringing the emerging asset class mainstream.

Revealed exclusively to CoinDesk, Tim Enneking's Crypto Asset Management is today releasing a new product called CAMCrypto30 – a cryptocurrency index designed to mirror the 30 largest cryptocurrencies by market capitalization. In addition, the firm also announced a new, investable share class for the fund, which will track the cryptocurrencies listed in the index.

If successful, the index could one day be used as a shorthand for discussing cryptocurrency market movements, providing a reference point akin to an equity index. As indices are standard for traditional asset classes, this would allow investors to better analyze and track performance relative to other asset classes in their portfolios.

Index tracking products, such as the new share class, are designed to allow investors to gain broad exposure to an asset class while diversifying their holdings within it.

CAMCrypto30, which was constructed to resemble the Russell 2000 and FTSE 100 indices, is weighted by market cap.

Enneking told CoinDesk:

"We've used those two indices as our model because they are the closest to what seems to be appropriate in the crypto space. Not only is there no real index – there is certainly no investable index."

Unpacking the product

So, what's available today? For one, the index itself, which is separate from the investment vehicle, now has its own website.

An embeddable widget has also been made public for third-party websites to track CAMCrypto30 index data. (Notably, the index will be rebalanced monthly to better track the fast-moving cryptocurrency world, instead of being rebalanced quarterly, as is more typical with equity indices).

Otherwise, investors in the Crypto Asset Management fund are now able to participate in three separate fund classes, each of which provides exposure to a different type of investment.

The new index-tracking I-Class joins two other existing cryptocurrency fund classes: an L-Class, which is used to generate exposure to short-term lending rates, and a T-Class, which is a trading class.

All three classes are issued by two open-ended funds: a U.S.-based master fund, which is structured as a Delaware LLC, and a Cayman Islands-based feeder fund, primarily for international investors. The former, called Crypto Asset Management LLC, is open to accredited investors in the U.S., and is subject to a $25,000 minimum investment.

All Class-I shares, which track CAMCrypto30, have a fee structure of 2.5 percent on funds committed, but fees are not charged on returns, since there is no discretionary management involved in tracking the index.

 

David Ogden
Entrpreneur

David Ogden Cryptocurrency Entrepreneur

 

Author: Ash Bennington

David