A visual representation of Bitcoin cryptocurrency.

Edward Smith | Getty Images

Cryptocurrency companies dominated the main street at the World Economic Forum in Davos this year, a notable difference between this edition and the last one in 2020.

The high-profile presence from the industry came even as the cryptocurrency market crashed. It was sparked by the collapse of the so-called algorithmic stablecoin called terraUSD or UST, which saw its sister token luna drop to $0 in May.

Meanwhile, global regulators are setting their sights on the cryptocurrency industry.

WEF is the annual gathering of global business leaders and politicians that aims to set the agenda for the year.

Against that backdrop, it was the perfect time to catch up with some of the big players in the cryptocurrency industry. Here's what I learned.

There are currently over 19,000 cryptocurrencies and dozens of blockchain platforms in existence.

Blockchain is the technology that underpins these digital currencies and platforms include Ethereum, Solana and many others.

Many of the industry executives see the current state of the market as unsustainable.

Brad Garlinghouse, CEO of cross-border blockchain firm Ripple, predicted there may only be "scores" of cryptocurrencies left in the future. He said there are around 180 fiat currencies in the world and there is not really a need for that many cryptocurrencies.

Betrand Perez, CEO of the Web3 Foundation, likened the current state of the market to the early internet era, and said there were lots of "scams" and many "were not bringing any value."

Brett Harrison, CEO of cryptocurrency exchange FTX U.S., said there are "a couple of clear winners" when it comes to blockchain platforms.

You may have heard of stablecoins. They're a type of cryptocurrencies which are supposed to be pegged to a real world asset.

In practice, stablecoins like tether or USD Coin, which aim to mirror the U.S. dollar one-to-one, are backed by real assets such as currencies or bonds. They hold a reserve of these assets in order to maintain a dollar peg.

You may have also heard about the debacle surrounding a terraUSD or UST. This is a so-called algorithmic stablecoin. Instead of maintaining its peg by having a reserve of assets, it aims to mimic the U.S. dollar and maintain stability through a complex algorithm.

But that algorithm failed and caused terraUSD to lose its peg and collapse.

The crypto industry tried to warn users to make sure they know the difference between an algorithmic stablecoin, like terraUSD, and others that are backed by assets.

Everyone wants to be more more involved with crypto now, no one is ignoring the industry anymore.

Mihailo Bjelic

CEO of Polygon

The terraUSD collapse "made it very clear to people that not all stablecoins are created equal," said Jeremy Allaire, CEO of Circle, one of the companies behind the issuance of USDC.

"And it's helping people differentiate between a well-regulated, fully reserved, asset-backed dollar digital currency, like USDC, and something like that (terraUSD)."

Reeve Collins, co-founder of BLOCKv and co-founder of another stablecoin tether, said the terraUSD saga will "probably be the end" of most algorithmic stablecoins.

Believe it or not, the cryptocurrency industry welcomed the recent market crash, which saw major tokens like bitcoin fall more than 50% from their all-time highs.

"We're in a bear market. And I think that's good. It's good, because it's going to clear the people who were there for the bad reasons," said the Web3 Foundation's Perez.

This sentiment was echoed by other executives too, who say the massive rally in prices caused people to focus on speculation rather than building products.

[The] market, in my personal opinion, became maybe a little bit irrational, or maybe a little reckless to a certain extent. And when the times like that come, [a] correction is normally needed, and at the end of the day [is] healthy," said Mihailo Bjelic, CEO of Polygon.

Ahead of the World Economic Forum, European Central BankPresidentChristine Lagardesaid she thinks cryptocurrencies are "worth nothing."

It appeared to me like regulators and authorities were still antagonistic to cryptocurrencies, much like they had been over the past few years at Davos.

But executives said the thinking from regulators, for the most part, has shifted to something slightly more constructive.

"I think we've come a long way from three or four years ago when when I literally had just arrived here in the snowy version of Davos and someone said, you know, crypto is still a bad word here. That is no longer the case. So I definitely don't think 'antagonism' would be the right descriptor. I think 'curiosity,'" Ripple's Garlinghouse said.

"I think it's constantly changing both regulators, big enterprises. Everyone wants to be more more involved with crypto now, no one is ignoring the industry anymore," Polygon's Bjelic said.

In March, U.S. President Joe Biden signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies. Still, there is no major cryptocurrency regulation in the U.S. and other major economies.

Garlinghouse said that he wants "clarity and certainty" from regulators.

BLOCKv's Collins, meanwhile, called Lagarde's comments "ignorant." He highlighted the tension that still exists between the cryptocurrency industry and some authorities in traditional finance.

Follow CNBC International onTwitterandFacebook.

The rest is here:
After the crypto crash, here's what industry experts are waiting for next - CNBC

Jump to:A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world.

A Bitcoin can be divided out to eight decimal places, so you can send someone 0.00000001 Bitcoin. This smallest fraction of a Bitcoin the penny of the Bitcoin world is referred to as a Satoshi, named after the pseudonymous creator of Bitcoin.

Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved. Unlike traditional payment networks such as Visa, the Bitcoin network is not run by a single company or person. The system is run by a decentralized network of computers around the world that keep track of all Bitcoin transactions, similar to the way Wikipedia is maintained by a decentralized network of writers and editors.

Bitcoin was introduced in 2008 by a creator who goes by the name Satoshi Nakamoto, who communicated with the rest of the world only by email and social messaging. While several people have been identified as possibly being Satoshi, the identity of the real Satoshi has not been confirmed.

Satoshi created the original rules of the Bitcoin network and then shared the software with the rest of the world in 2009. The inventor largely disappeared from the public two years later. Once Satoshi had released the software, anyone could download and use it. This means Satoshi has no more control over the network now than anyone else.

The computers involved in Bitcoin mining are in a sort of computational race to process new transactions coming onto the network, solving complex math problems that require quintillions of numerical guesses per second. The winner of that race generally the person with the fastest computers gets a chunk of new Bitcoins. Since miners can earn rewards but are independent, this process is meant to incentivize participation and maintenance.

There is generally a new winner about every 10 minutes, and this will continue until there are 21 million Bitcoins in the world. At that point, no new Bitcoins will be created. The network is expected to reach that cap in 2140.

Every Bitcoin in existence was created through this method and initially given to a computer helping to maintain the records. In Bitcoins early years, a crypto enthusiast could mine coins by running software on a laptop. But as the digital assets have become more popular, the amount of power necessary to win the race and generate Bitcoins has soared. A single Bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, or enough energy to sustain the average U.S. household for 73 days, according to some estimates.

The original blockchain was the database on which all Bitcoin transactions were stored. It was named blockchain because the transactions coming onto the network were grouped into blocks of data and then chained together using sophisticated math.

After the Bitcoin blockchain had operated for a number of years, successfully storing every Bitcoin transaction and surviving numerous attacks from hackers, many programmers and entrepreneurs wondered if its design could be replicated to create other kinds of secure ledgers unrelated to Bitcoin.

Companies and governments that dont rely on currency have since begun using blockchain technology to store their data. Banks are building blockchains that can track payments between accounts, while governments are experimenting with using blockchains to store property records and votes.

Founded in San Francisco in 2012, Coinbase allows people and companies to buy and sell various digital currencies, including Bitcoin. In April 2021, Coinbase became the first major cryptocurrency company to list its shares on a U.S. stock exchange.

Coinbase set itself apart from other early blockchain businesses by becoming one of the first to get a new special license, called the BitLicense, to run a virtual currency company in New York. In addition to providing the brokerage service for small investors, Coinbase also runs an exchange called GDAX, which is tailored to larger investors.

The most well-known cryptocurrencies are Ether, Dogecoin and Tether.

Ether is the virtual currency used on the global computing network Ethereum, which operates according to rules defined by Ethereum software. Those rules allow the Ethereum network to be programmed to complete certain types of computing tasks, with every computer on the network completing the tasks simultaneously to ensure they are done correctly. Generally, the tasks involve money.

The creator of Ethereum, Vitalik Buterin, has likened the network to a global smartphone that can be programmed to operate according to the apps built on top of it. The apps are called Dapps because they are run by a decentralized network of computers.

Mr. Buterin was inspired by Bitcoins success to create Ethereum. But he set out to build something that could do more than Bitcoin: He wanted to build a system that would make it possible to program more complex financial transactions. With Ethereum, two companies can conduct transactions, such as settling a stock option on a shared computer, that allows them both to check the records.

Dogecoin was created as a parody of cryptocurrency in 2013 by two friends who had met in a chat room. Named after a meme of an expressive dog, Dogecoin was meant to mock the self-serious cryptocurrencies of the time, many of which never took off. The joke did, though, and it spawned a community of enthusiasts who have kept it alive for years.

Tether is the largest stablecoin, a type of cryptocurrency that is typically pegged to an existing government-backed currency. It is roughly half-invested in a type of short-term corporate debt called commercial paper.

DeFi is an umbrella term for the part of the crypto universe that is geared toward building a new, internet-native financial system, using blockchains to replace traditional intermediaries like banks and trust mechanisms. It has allowed crypto businesses to move into more traditional banking territory, offering services such as lending and borrowing.

Investors can earn interest on their holdings of digital currencies often a lot more than they could on cash deposits in a bank or borrow with crypto as collateral to back a loan. Crypto loans generally involve no credit checks since transactions are backed by digital assets.

To send or receive money in the traditional financial system, you need intermediaries like banks or stock exchanges. In DeFi, those middlemen are replaced by software. As people trade directly with one another, blockchain-based smart contracts do the work of making markets, settling trades and ensuring that the entire process is fair and trustworthy.

An NFT is basically a way to claim ownership of a digital file: You can think of it as a certificate of authenticity you might get if you buy an expensive sculpture. The sculpture can be copied, forged or even stolen, but because you have the certificate of authenticity, you can theoretically prove that you are the owner of the original.

NFTs make digital artworks unique and, therefore, sellable. Artists, musicians, influencers and sports franchises can use them to monetize digital goods that were previously cheap or free. The technology also responds to the art worlds need for authentication and provenance in an increasingly digital world, permanently linking a digital file to its creator.

The technology for NFTs has been around since the mid-2010s but became mainstream in late 2017 with CryptoKitties, a site that allowed people to buy and breed limited-edition digital cats with cryptocurrency. Since then, investors have begun buying and trading NFTs, often for eye-popping prices.

To promise holders that every $1 they put in will remain worth $1, stablecoin issuers hold a bundle of assets in reserve, usually short-term securities such as cash, government debt or commercial paper.

Stablecoins are useful because they help lock in value at the time of transaction. This is important since cryptocurrencies are volatile and prone to price fluctuations. They form a bridge between traditional money and crypto, and are exploding in popularity as a practical and cheap way to make transactions in cryptocurrency.

But many stablecoins are built more like slightly risky investments than like the dollars-and-cents cash they claim to be. And, so far, they are slipping through regulatory cracks.

Regulators are concerned about stablecoins because they have exploded in popularity very quickly, and because many are backed by traditional reserves, they could and trigger a kind of bank run that would potentially pose risks in the wider financial system. There is also no consistent oversight of issuers or a standard for reserves, and as such different stablecoin issuers have different types of reserve backing, including more or less cash, treasuries, commercial paper, etc.

There are a few kinds of stablecoins, including these digital assets backed by traditional reserves, others are collateralized by crypto and, finally, algorithmic stablecoins. The risk in algorithmic stablecoins which depend on a mathematical formula devised by issuers and investor interest to maintain stability was demonstrated in May when Terra/Luna crashed after the assumptions the algorithm was premised on did not pan out in the market and investors fled.

At its core, web3 aims to replace centralized corporate platforms with open protocols and decentralized, community-run networks. The term has been around for years, but it has become trendy in the past year or so. Packy McCormick, an investor who helped popularize web3, has defined it as the internet owned by the builders and users, orchestrated with tokens.

Web3 is seen as the next evolution of web1 (the era in the 1990s and early 2000s during which the internet was made up of blogs, message boards and early portals like AOL and CompuServe) and web2 (a phase starting around 2005 or so, characterized by social media behemoths like Facebook, Twitter and YouTube).

Proponents envision that web3 will take many forms, including decentralized social networks, play-to-earn video games that reward players with crypto tokens, and NFT platforms that allow people to buy and sell pieces of digital culture. The more idealistic ones say web3 will transform the internet as we know it, upending traditional gatekeepers and ushering in a new, middleman-free digital economy.

But some critics believe that web3 is little more than a rebranding effort for crypto, with the aim of shedding cryptos reputation as a place for rogues and rebels and convincing people that blockchains are the next phase of computing. Others believe its a dystopian vision of a pay-to-play internet in which every activity and social interaction becomes a financial instrument to be bought and sold.

Visit link:
Cryptocurrency and Bitcoin: Here's What to Know - The New York Times

Well, one thing is for sure: Nothing is going to be the same in the crypto market after this year.

Perhaps the most jarring example of the bearish crypto market this year has been the complete collapse of Terra (LUNA).

As you can see, its not pretty. The coin lost 98% of its value or around $40 billion, in a matter of hours.

While this drop was shocking for a lot of crypto investors (and rightfully so), it just goes to show that value destruction can happen to even the biggest cryptos out there.

The sister token to TerraUSD (UST) an algorithmic stablecoin pegged the U.S. Dollar exposed a major fault within the crypto industry: under-collateralization.

However, my team and I dont see this as fault. Instead, we see it as an opportunity of what to look for and what to avoid.

I firmly believe cryptos and blockchain in general represent some of the most promising innovations of our time. But just like the internet before it, this shift wont happen overnight.

Long-term, I am extremely bullish on cryptocurrencies. But this cryptocurrency bubble must reach its natural conclusion the same way the dot-com boom of 2000 did with an enormous crash.

While this may be the beginnings of the big one for cryptocurrencies, this crash isnt the end. Its far from it.

This is the beginning of the Cryptocurrency Revolution. Its the end of bad cryptos just built on hype and the emergence of strong ones made with world-changing tech.

We have strong cause to believe this, including using Gartners Hype Cycle. It teaches us that new technologies go through five phases:

The stages are represented graphically in the following chart.

We believe cryptos are somewhere in the Peak of Inflated Expectations phase. Big-name cryptocurrencies will begin to fail, and the mainstream media will begin writing about these failures.

Over the coming months to years, well enter the Trough of Disillusionment. This is where thousands of cryptos will fail. And several hundred billion dollars of value will be wiped out.

Investors who are smart here will make millions.

After the Trough of Disillusionment comes the Slope of Entitlement, swiftly followed by the Plateau of Productivity.The big money is made in these phases.

There, the wheat is separated from the chaff, and true visionaries and innovators in a new technology emerge.

During the internet era, this durable growth phase started in 2003. In that time, companies like Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), Facebook and Alphabet (NASDAQ:GOOGL) used the internet to create second- and third-generation products and services that would go on to change the world.

Cryptos will follow the same path.

You could do a lot worse than buying Bitcoin at this price. But theres a much bigger opportunity at hand

Indeed, you could domuch betterin several of Bitcoins smaller cryptocurrency cousins.

In fact, there are a handful of very small coins that could soar more than 31 times that of Bitcoin.

Thats right. If youre poised to make $10,000 in BTC, you could make 31 times that $310,000 in its tiny cousins.

Or if youre poised to make $100,000 in BTC, you could make $3.1 million instead.

The million-dollar question is:What are the best cryptocurrencies to buy today that have enormous long-term upside potential?These are the ones that could help you achieve total financial freedom in a very short time.

I urge you to learn about this huge story. Ill teach you about the transformative technology of altcoins. And Ill share how to leverage this undercurrent of cryptocurrency innovation to set yourself up for life-changing returns.

Right now, theres a fuse being lit under the altcoin market. And itll set off one of the largest explosions of wealth in modern history. People who invest modest stakes in altcoins will make millions of dollars.

To truly realize the magnitude of this opportunity, you must understand that altcoins are different than how most perceive them.

These assets arent fantasy internet money. And many are about to skyrocket thousands of percent.

Theyre investments in one of the most valuable, most revolutionary technologies ever created.

And theyll generate a multi-trillion-dollar tsunami of wealth for their owners.

Remember; the underlying technology behind Bitcoin and altcoins isthe blockchain.

You can think of cryptocurrency and the blockchain like a virtual ledger.

But I prefer to say blockchain technologies are justreally, really, reallyvaluable software programs.

Now, if youve paid attention to the stock market over the past30 years,you should be ready to jump out of your chair and buy altcoins with both hands right now.

Thats because software programs are the oil of the 21st century. They are one of the greatest forces for wealth creation on Earth.

In the 20th century, the discovery of oil deposits around the world minted millionaires faster than anyone could count.

It was one of the fastest, biggest accumulations of wealth in history. People went from being broke to having more money than their grandkids could ever spendvirtually overnight.

When I say software programs are of the greatest forces for wealth creation, Im not talking about conventional wealth creation. That takes 30 years to save up $1 million.

Im talking about wealth creationon steroids, where Investors can make $30 million inone year. I know that sounds outlandish, but lets look at the amazing facts right in front of us.

Bill Gates became one of the worlds richest men because of software programs. Just think about the Microsoft (NASDAQ:MSFT) spreadsheet program we call Excel.

How much time did Excel save the human race a billion years, 10 billion years?

Excel is now the worlds most popular spreadsheet program. By allowing us to automate calculations and financial analysis, it has saved us incredible amounts of time. We no longer have to do single calculations by hand.

One person running Excel can do the work of a million accountants from days past.

Software programs have incredible power. And its spread across all industries.

Over the past 30 years, software programs have created an explosion of efficiency and human productivity. Great software can help you make smart business decisions, find travel deals, talk to loved ones, and get a cheap ride home.

It has massively improved our ability to communicate, share information, complete transactions, and gather and analyze data.

Think about health care, education, transportation, manufacturing, energy production, food production, retail, banking, you name it. Computer programs have allowed us to do it all much more efficiently.

Good software has saved us so much time, money and frustration. Its no wonder its kicked off one of the largest, fastest accumulations of wealth in human history.

In 1986, computer program leader Microsoft went public. Shares are up more than 1,185% since then.

Computer program leader Oracle (NYSE:ORCL) went public in 1986 as well. Oracle founder Larry Ellison is one of the worlds richest people, worth over $90 billion.

In 1998, Larry Page and Sergey Brin founded Google and created the worlds most valuable search engine program. Both are now worth more than $90 billion each. And their early backers made billions, as well.

Software programs have become the worlds ultimate wealth creators. Thats because we all place enormous value on their ability to save us time and headaches. And its also because theyve made us massively more productive.

Which brings me to my million-dollar point.

Blockchain technology is about to unleash an epic new wave of computer program wealth.

Real altcoins arent anything like fantasy internet money, as theyre portrayed in the press. Investments in the best of them are investments in the next generation of revolutionary software programs.

Big picture, blockchain allows for disintermediation across all industries. Its arguably the most disruptive technology since the internet. And at its core is its centralized and immutable ledger.

This ledger enables innately untrustworthy entities to create trustworthy systems, all without the need for any central authority.

Blockchain enables folks to remove the middleman from legacy systems and replace them with a collective ledger.

Now why would we do that? Because middlemen are often unnecessary profit-takers.

Further, theyre sometimes subject to corruption (see: the financial crisis of 08).

By removing and replacing them with an automated and incorruptible technology, we can make todays systems and processes cheaper, faster, and more trustworthy.

The applications here are theoretically infinite. One that Wall Street is currently drooling over is decentralized finance (DeFi). With cryptocurrency, we can create a new era offinancethat doesnt involve big banks as profit-taking intermediaries.

And DeFi is the future.

After all, its intended to disintermediate banks, like Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), and Wells Fargo (NYSE:WFC). Those are multi-hundred-billion-dollar companies. The disruption opportunity is huge.

But theres a much, much bigger opportunity in disintermediating technology titans like Alphabet and Amazon, who are trillion-dollar companies.

Thats why I love the idea of dApps, or decentralized applications.

DApps are software applications built on the blockchain. And this can be anything. Think a video media application like YouTube, a driver-rider app like Uber (NYSE:UBER), a music streaming app like Spotify (NYSE:SPOT).

These apps are coded on the blockchain. And therefore, theres no central authority that runs and profits from the app, either via subscription sales or digital ads. By removing that central authority, dApps create a new generation of truly free software applications.

Oftentimes, these dApps have underlying cryptocurrencies. Theyre used as a form of in-app currency or incentive token for developers and blockchain participants.

The appreciating value for these cryptos represents the economic value of the dApp. Instead of developers profiting from digital ad sales, they make money by owning the dApps cryptocurrency. And that rises in value as more folks use the platform.

I firmly believe that dApps will disrupt everything. The future YouTubes, Ubers and Spotifys will be dApps. In fact, most, if not all, apps in the future will be dApps.

During the internet craze of the late 90s and early aughts, the companies that succeeded did something very simple.

They didnt reinvent the wheel or create brand-new industries.

They just digitized what was already workingin the physical world.

Malls were working. So,Amazondigitized malls and turned intothedigital mall.

Movie theaters were working. So,Netflixdigitized movie theaters and turned intothedigital movie theater.

The winning playbook in the dot-com boom was astoundingly simple. Find something thats working in the physical economy anddigitize it.

And the winning playbook in the Cryptocurrency Boom will be equally simple. Find something thats working in the digital economy anddecentralize it. The cryptocurrencies that dothisthe best will turn into 100X investment opportunities over the next decade.

When you shift your perspective on altcoins, you realize that theyre not fantasy internet money. Theyre investments in systems that make our lives easier, more productive, and more efficient.

Investing in the best altcoins now is like taking an early stake inAdobe (NASDAQ:ADBE) in 1998. It created the hugely popular PDF program. And the stock has soared 3,809% since then.

Thats why well be holding an emergency briefing on June 14 at 7 p.m. Eastern. Well discuss how the phenomenon plaguing the crypto markets recently could spark the minting of a new wave of millionaires.

Despite all the negative headlines weve been seeing, a new day is dawning. And a select few off-the-radar coins will emerge as the new leaders of the cryptocurrency markets.

If you want to get ahead of this phenomenon, sign up for my free Crypto in Crisis event now!

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Follow this link:
Understanding the Wealth-Creating Power of Cryptocurrency - InvestorPlace

By nature, Bitcoin mining is energy-intensive and relies on cheap energy to turn a profit. Bitcoin miners have started to flock to Texas because of the current goldilocks situation for cryptocurrency mining for three main reasons:

While Bitcoin mining has been criticized for being energy-intensive, Texas Governor Greg Abbott, among others, views Bitcoin mining as a solution to other related issues, such as taking advantage of untapped energy, including natural gas (such as surplus gas or associated gas) that would otherwise be flared or vented because of limited infrastructure to transport it to a destination.

Its no secret that for years oil and gas companies have struggled to solve the problem of flaring, not only in Texas but across the U.S. Unlike oil, which can be transported by truck or rail, natural gas requires pipeline infrastructure to deliver it to market. If a driller has no means of transporting its gas, either economically or because there isnt available pipeline infrastructure to do so they flare (or burn) it, and the environmental implications of doing so are substantial.

Instead, cryptocurrency miners can tap into this surplus gas, whether its flared gas or bad netbacks, and divert it to generators, which then can convert the gas into electricity and then use it to power their sophisticated supercomputers and servers. According to Argus Media, Companies see a double benefit reducing the negative impacts of gas flaring and cutting their carbon footprint. According to research from Crusoe Energy Systems, one of the largest Bitcoin miners in the U.S., the process reduces the CO2 equivalent emissions by about 63% compared to flaring. This opportunity to repurpose otherwise stranded energy and monetize it has not only been attractive to Bitcoin miners, but also to oil and gas companies to increase returns on their production while also complying with Environmental, Social, and Governance (ESG) initiativesmore specifically the E component for reducing their carbon footprint.

Regardless of the energy source for the Bitcoin miner, be it the gas that would otherwise be flared or energy sourced by renewables, the Bitcoin miner essentially behaves like a power plant by purchasing power at an agreed fixed price and owning the ability to sell the power back to the grid.

In contrast to Abbotts position that cryptocurrency mining provides financial incentives to build power infrastructure and produce more energy, his opponents argue that doing so would also trigger greater demand and stress on an already unstable power grid.

Abbotts position, however, relies on the belief that if a severe weather event occurred, such as Winter Storm Uri in February 2021, which resulted in substantial surges in power demand, miners would be forced to pause operations when ordered to do so. In other words, miners would halt their operations and return the power to the grid when demand surges. This concept is not only supported by basic humanitarian principles, morals, or ethics that power should be redirected to save human lives but also supported by the dynamic of the market itself. In the event of demand for power surgesas it did during Winter Storm Urispot power prices increase (sometimes dramatically) and therefore the miner would be financially incentivized to sell power back to the grid as opposed to consuming it.

For miners, the benefits are not exclusive to their ability to source cheap power but also the flexibility and optionality to return that power to the grid. For Texas, particularly ERCOT, the states power regulator, the ability for miners to turn off during peak demand prevents the need to turn on less efficient peak demand power plants allowing ERCOT to stabilize the grid more effectively.

According to the Texas Blockchain Council, there are at least 27 mining operations in the state with more on the way. This growth is not only attributable to the points discussed above but also to the larger crack-down on cryptocurrency mining abroad particularly in China, pushing many to flee to the U.S.

Its important to note that China is heavily dependent on dirtier energy sources such as coal, which produces roughly twice as much CO2 emissions as natural gas. Meanwhile, Texas is home to cleaner sources such as natural gas and wind. Moreover, within the U.S., Texas is a leader in the nations wind-powered electricity generation, comprising approximately 26% of the nations total net wind generatio

(Source: EIA)

Altogether these factors have incentivized and attracted Bitcoin miners to Texas with the Lone Star State becoming the fourth-highest hash rate (the measure of how much power is being supplied to the Bitcoin network) of any state, at approximately 14%.

From Rockdale, Texas, home to the two biggest Bitcoin mining companies in the world, to the first city in the U.S. to mine Bitcoin, to Fort Worth, Texas the Lone Star State is welcoming the Bitcoin mining industry with open arms!

View original post here:
Cryptocurrency In Texas: Why Bitcoin Mining Is Taking Off In The Lone Star State - JD Supra