Category Archives: Bitcoin

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In this episode of the Fed Watch podcast, Christian and I sit down with Dylan LeClair, head of market research at Bitcoin Magazine Pro. Each week, he and Sam Rule write near-daily updates for subscribers, and once a month they release a large Bitcoin market report. Bitcoin Magazine Pros May 2022 Report is what we are covering for the most part in todays episode.

You can find the slide deck we use for this episode here, or you can see all the charts at the end of this post.

Fed Watch is the macro podcast for Bitcoiners. Each episode, we discuss current macro events from across the globe, with an emphasis on central banks and currency matters.

Before we get into the awesome charts that LeClair brought, I want to get an idea of where he sees bitcoin in its market cycle timing. I ask, somewhat facetiously, if we are in a bear market, because we are definitely not in a typical 80-90% drawdown.

LeClair responds by saying we are in a classic bear market, not necessarily a classic bitcoin bear market. He points out that the upswing of this cycle didnt have the typical parabolic blow-off top weve seen previously in bitcoin, as well as there being more technical and fundamental support in the mid-$20,000s up to $30,000 so drawdown pressure will also likely be limited. LeClair also adds that the average user cost basis was hit by the wick to the recent lows. All in all, there is significant support under the current price and it remains to be seen if there is enough bear momentum to break to new lows.

Lastly, on the market-cycle timing questions, LeClair points out a very underappreciated market development: the collateral type on exchanges has mostly switched from bitcoin in previous cycles to now being stablecoins like Tether (USDT) and USDC. In other words, the dominant trading pairs and cash deposits on exchanges have changed from bitcoin to stablecoins. In the past, the most important trading pair for any altcoin was versus BTC, which has changed to being versus a stablecoin like USDT. This is a monumental shift in market dynamics and will likely lead to much more stable prices for bitcoin, because less bitcoin will be forced to liquidate in the hyper-speculative shitcoin bubbles.

This is Coinbase spot volume, being the dominant American exchange, and the Perp [perpetual futures] volume aggregated over a bunch of different derivatives exchanges. What we can see is various volume spikes. Historically, when bitcoin is trading hands in that size, it signals some sort of market top or bottom, some significant change in market structure. Dylan LeClair

Bitcoin perpetual futures and Coinbase spot volume

The next chart shows the difference in market structure due to stablecoins. LeClair says that 70% of the derivative market was still collateralized by bitcoin around the 2021 summer sell-off. Today, it is much much smaller than that. Therefore, we should expect there to be fewer liquidations in bitcoin when shitcoin bubbles pop, and thats exactly what we see.

Bitcoin long liquidations are shrinking due to stablecoin collateralization

What is great about the Bitcoin Magazine Pro newsletters is they not only look at the bitcoin market but also how macro could be affecting bitcoin. The next two charts are about CPI and interest rates. LeClair does a great job breaking these down during the podcast.

Cunsumer price index year-over-year and the monthly change

Cunsumer price index year-over-year versus the 10-year Treasury yield

I ask LeClair about his thinking on the Federal Reserve monetary policy, and he focuses his analysis around real interest rates. He says real rates will have to stay negative in order to erode the massive global debt burden. Therefore, if the Fed hikes even to 3.5%, for real rates to stay negative the CPI will have to stay above that.

Next up is CKs favorite indicator, the Mayer Multiple, or the 200-day moving average price divided by current price. When the price is below the 200-day moving average, this ratio is below 1, and has historically been a good way to time the market.

Bitcoin price weighted by Mayer Multiple

One of the most dense informational charts on Bitcoin Magazine Pro is up next, and that is Reserve Risk.

The Reserve Risk chart basically weighs Hodler conviction, whether strong or weak, with price.

Bitcoin price weighted by reserve risk

Our last chart for the day is Realized Price, and this is LeClairs favorite. It is a great way to strip out much of the noise and volatility of the bitcoin price and concentrate on the trend.

One of the cool things about the transparency of this network is, we can see when every single bitcoin has ever moved, or was ever mined. We can also [assign each UTXO a price of when it last moved] to come with what we call Realized Price. [...] We can see when everyone is underwater on average. LeClair

Bitcoin realized value ratio

At the end of the show we wrap up with a discussion on the recently proposed draft legislation, by Senator Lummis, that outlines a new framework for bitcoin and what the bill calls digital assets. In fact, they dont use the terms bitcoin, Ethereum, blockchain or even cryptocurrency in the draft at all.

Suffice it to say, we tease out some opinions from LeClair and go back and forth with the livestream crew, but youll have to listen to get that whole insightful discussion! We dive into the effects on the bitcoin market, exchanges and a future bitcoin spot ETF!

That does it for this week. Thanks to the readers and listeners. If you enjoy this content please subscribe, review and share!

This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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Analyzing The Current Bitcoin Market Cycle - Bitcoin Magazine

The beginning of the year 2022 has been quite hectic for cryptocurrency investors, with loads of interesting discussions taking place around certain currencies. Especially during April and May when the crypto market experienced one of its craziest periods in a long time.

As things are slowly returning to normality, many coins have seen an increase in value. Investors and enthusiasts have said that it is the best time to start looking at certain tokens. VeChain (VET), Bitcoin (BTC)and CashFi (CFI)are worth taking a look at throughout the rest of this year.

CashFi is the next-generation decentralised network, the CashFi platform will be designed to unite the blockchainecosystem to give faster, cost-effective and scalable services.

Being a platform that is familiar with staking, CashFihas plans to allow its users to unlock liquidity for a higher profit by staking CashFi (CFI)tokens. CashFis blockchain-based trading platform reaps benefits from a modern structure and smart user utilities, and will round up all network fees and payCFIstakeholders in the CashFi hub to ensure the platforms safety.

CashFi plans to create connections and partnerships by introducing its investors to a variety of asset classes like liquid staking and NFTs. CFI wants to unite NFTs into the CashFi ecosystems groundwork for making cross-chain NFTmarketplaces.

CashFi identifies the benefits of NFTs to boost peer-to-peer communication on a global scale, backed by total tenacity and security via transparency, cutting out the need for intermediaries and centralised regulatory structures.

With the Metaverse universe and NFTrealm expanding very fast, users can accomplish anything they want to by converting pieces of art, music, or even digital outfits into NFTs.

Bitcoinalso known as the digital gold of the internet came about in 2009 shortly after the economic crisis, Bitcoin became a revolutionary by its fixed and halving function.

Bitcoingives its users the ability to transact with anyone, anywhere in the world using a digital wallet. This allows users to send and receive money, which usually takes up to 10 or 20 minutes for the transaction to be completed.

Bitcoin uses peer-to-peer technology to operate with no central authority or bank. It is an open-source platform; its designed to be public, no one owns or controls it and is accessible to everyone.

With Bitcoin being the first cryptocurrency to be accessible and available to the world, it would be wise to consider investing in it.

VeChainis a Layer 1 supply chain token with many functionalities for small businesses and giant corporations. It was founded in 2015, VeChain is a blockchain built specifically for the tracing of products.

VeChainis a blockchaincompany which aims to connect blockchain technology to the world by giving enterprises solutions tailored to their business needs. After a period of analysing different businesses, the foundation identified that many companies and businesses were losing billions of dollars annually due to logistic issues.

Consequently, VeChain created a Tool Chain that acts as a solution package for enterprises that would like to adopt VETinto their processes. This package gives businesses the opportunity to attain chips and an interface to view the history of the products on the blockchainin every step of the process, from raw materials to the consumers hands.

KEYWORDS: Cashfi, CFI, Bitcoin, BTC, VeChain, VET, blockchain, NFT

CashFi (CFI)

Presale: Register for presale | CashFi

Website: Cashfi.Finance

Telegram: https://t.me/CashFi_Token

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Keep Your Eyes on These Cryptocurrencies - Bitcoin (BTC), VeChain (VET) and CashFi (CFI) - TechCabal

Photo Illustration by Luis G. Rendon/The Daily Beast/Getty

In another case of wealthy people shilling crypto to the financially vulnerable, rapper Jay-Z and Twitter founder Jack Dorsey have joined forces once again to launch a financial literacy program called The Bitcoin Academy that will teach residents of Brooklyns Marcy Houses, where Jay-Z grew up, about the world of cryptocurrency and how to avoid scams.

In a tweet announcing the new project on Thursday, Dorsey wrote, [B]itcoin is becoming a critical tool for many in Africa and Central and South America. We believe the same potential exists within communities in the US. Our goal is to prove that making powerful tools more available to people enables them to build greater independence.

He added, Education is where we start. This isnt just about bitcoinits about long-term thinking, local economies, and self-confidence. Courses are free to all Marcy residents, including kids. And to make it even easier were providing devices and data plans for all who need it.

According to The Bitcoin Academy website, the free, biweekly classesstarting June 22will be held online and in-person for 12 weeks, with dinner provided for in-person attendees. All participants will receive MiFi devices with a year-long, limited data plan and smartphones, which they can keep. Additionally, there will be a separate Crypto Kids Camp held on two Saturdays for residents ages 5-17.

Thats right. A child whos still learning how to read and add numbers will have the opportunity to learn (and most likely, forget) about blockchains, as opposed to having their groceries paid for or savings endowed, thanks to the generosity of two exorbitantly wealthy dudes.

Reese Witherspoon, Matt Damon, and the Hollywood A-Listers Embarrassingly Shilling Crypto

As one can imagine, backlash to Jay-Z and Dorseys initiative on social media was swift, with users primarily slamming Jay-Z. At a time when Hollywoods biggest entertainers are tweeting ominous warnings about the metaverse and showing off their hideous ape NFTs, celebrities that are part of the cryptocurrency revolutionusually for a cash grabare increasingly being held accountable for misleading the public. For example, Kim Kardashian and Floyd Mayweather Jr. are currently being sued over deceiving advertisements for the cryptocurrency token EthereumMax, the value of which quickly plummeted after Kardashian plugged it on her Instagram Stories last year.

Story continues

Namely, these endorsements, sent out to millions of followers on social media, typically omit the risks of entering into an extremely risky market where participants are frequently subject to scams and, in the case of NFTs, their art being stolennot to mention the substantial carbon footprint bitcoin production is leaving behind.

Likewise, the internet seemed mostly aware that Jay-Zs efforts would potentially bring more harm than good and werent much different than taking Marcy residents on a weekly outing to a casino. However, even if the financial literacy program didnt involve learning about crypto, the notion that poverty is determined by individual behavior and not structural forces is both misguided and deeply offensive. Its also characteristic of Jay-Zs brand.

The musician, a staunch believer in capitalism, has long proposed Black ownership and financial freedom as a path to liberation, as opulence has become a larger theme in the later parts of his oeuvre. Likewise, hes known to censure Black people for not handling their money properlylike in the song The Story of O.J. from his 2017 album 4:44. He controversially rapped, You wanna know whats more important than throwin away money at a strip club? / Credit / You ever wonder why Jewish people own all the property in America? / This how they did it / Financial freedom my only hope. And on the Pharrell Williams-assisted track Entrepreneur, an ill-received response to 2020s Black Lives Matter protests, he instructs listeners, for every one Gucci, support two FUBUs.

Marcy Houses, former home of rapper Jay-Z, in the Bedford-Stuyvesant neighborhood of Brooklyn, New York, on April 15, 2016.

Raymond Boyd/Getty

These financial principles are popular in mainstream hip hop and amongst members of the Black elite. Its more advantageous for Black celebrities to tell their followers how they should be spending their meager paychecks as opposed to advocating for free healthcare or affordable housing. Rapper 21 Savage was met with similar skepticism when he announced a virtual financial literacy course with the mobile banking app Chime in 2020. And this invest in your community rhetoric was a point of critique in an episode of Atlanta last season.

While everyone should learn how to budget, its safe to say that this particular gesture from Jay-Z and Dorseywhen they could redistribute the tiniest fraction of their wealth and make a much bigger, material impact on these residents livesis stingy and, quite frankly, gross.

Unfortunately, both businessmen understand that many people in desperate financial situations are willing to accept crumbs. Its understandable that potential participants of The Bitcoin Academy would be eager to get their hands on whats being sold to them as an entryway to sustainable wealth. But lower-income people are also often acutely aware of their economic situations, how they got there, and the systems that are constantly screwing them over. Hopefully, they take their new smartphones, free dinners, and tell those two billionaires to fuck off.

Read more at The Daily Beast.

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Why Are Jay-Z and Jack Dorsey Teaching Bitcoin to Poor Kids? - Yahoo News

Bitcoin could drop further and fall to $8,000 from its current levels, Guggenheim Chief Investment Officer Scott Minerd predicted Monday.

That would represent a more than 70% drop to Monday morning's price of just over $30,000.

"When you break below 30,000 [dollars] consistently, 8,000 [dollars] is the ultimate bottom, so I think we have a lot more room to the downside, especially with the Fed being restrictive," Minerd told CNBC's Andrew Ross Sorkin in a "Squawk Box" interview at the World Economic Forum in Davos, Switzerland on Monday.

Minerd is referring to the U.S. Federal Reserve's hiking of interest rates and tightening of monetary policy.

Since falling below $30,000 earlier this month, bitcoin has struggled to rally substantially above that level. It has regularly dipped below $30,000.

Scott Minerd,Guggenheim Partners LLC Global Chief Investment Officer, at the WEF in Davos, Switzerland on May 23rd, 2022.

Adam Galici | CNBC

If Minerd's forecast comes true, it would inflict further pain on bitcoin and the broader cryptocurrency market which has seen around $500 billion wiped off its value in the past month. Bitcoin is down around 24% in the last 30 days alone.

The CIO also said that most crypto is "junk" but that bitcoin and ethereum will survive.

"Most of these currencies, they're not currencies, they're junk," he said.

Even so, he said, "I don't think we've seen the dominant player in crypto yet."

Minerd compared the current situation to the dotcom bubble of the early 2000s.

"If we were sitting here in the internet bubble, we would be talking about how Yahoo and America Online were the great winners," he said. "Everything else, we couldn't tell you if Amazon or Pets.com was going to be the winner."

"I don't think we have had the right prototype yet for crypto," he said, saying that currency needs to store value, be a medium of exchange and unit of account.

"None of these things pass, they don't even pass on one basis," he said. Minerd added that additional technological advances could change that and help create an ecosystem where people get used to using cryptocurrencies for transactions and are confident they will hold their value.

Minerd's comments come after European Central BankPresidentChristine Lagarde said cryptocurrencies are "worth nothing."

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Bitcoin (BTC) could fall to $8,000, a 70% drop: Guggenheim's Minerd

In 2008, the backing reserve was basically houses. In cryptocurrency, I'm quite serious about this, the backing reserve is gullibility.

It sounds like youre saying, one, crypto is all nonsense, but, two, the nonsense will continue indefinitely, because as long as you can invent money out of thin air, you can find a sucker to buy it. Unless governments step in to say you cant do certain things anymore.

Yes. The good news is, there's regulation coming. Treasury is looking at this stuff very closely because they basically have to make sure that these crypto bozos cannot screw up the actual economy where people live. And they would absolutely screw it up, because they're idiots. And they got a taste of that in 2019 when Facebook did its Libra cryptocurrency, or tried to, and every regulator, central bank, and finance ministry in the world said, "No, you are bloody not." Because Facebook didn't know what they were doing and they were really arrogant about not caring that they didn't know what they were doing. So basically, about a month later, the entire US government, Democrats and Republicans were united in this, squashed it like a bug.

So on the regulation question, are we talking about something like, if you have a stablecoin, you actually have to be audited and prove that you really have a dollar for every one of these stablecoins that you say is backed by a dollar?

That sort of proposal, yeah. There's various versions of this, like requiring that stablecoins be issued by actual banks that are highly regulated and so forth. There have been proposed laws to this effect. None have passed, but these ideas are very much in the air.

The thing is that the regulators are reluctant to move too fast, and also they have restricted enforcement budgets. But I'll tell you who really wants to regulate crypto: the money laundering cops. FinCEN are absolutely humorless cops who don't care if they crush your business. And internationally, the FATF, who set rules that regulators are advised to follow if they want their country to be allowed to do business with anyone else. Those guys have put in a bunch of rules that came in 2021 about making crypto transactions more traceable. I think we're going to end up with some sort of two-speed crypto market. Youll have the entities that are known exchangers where people are traceable, and changing it back and forth to actual money is relatively easy, and then there will be another market which runs high on crack and is just incredibly unregulated and has a much harder time getting to the precious US dollars.

Most people don't own any crypto, and yet you have Fidelity offering Bitcoin in 401(k)s, you have Wall Street institutions investing increasingly in crypto. How much could a crypto collapse affect the broader economy?

The main thing you have to worry about is that these bozos really want to get their tendrils into the world of real money. I think for a lot of them, that's the endgame: get it into people's retirement accounts. Now, the Department of Labor actually issued a notification in March warning financial advisers not to tell retirees to put their 401(k) into crypto. And Fidelity went and offered this product anyway. They really, really want to get into important products, because that way, when it collapses, they're looking to the government becoming the bag-holder of last resort. And this is something to be fought against strenuously. It hasn't happened yet, but we need to fear it.

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Bitcoin and Other Cryptocurrencies Aren't Dead Just Yet - WIRED

United States President Joe Bidens executive order on digital assets has kickstarted an interagency mission to support financial innovation while protecting American consumers and interests. While many industry leaders welcome the constructive tone, some critics hope for a crackdown. We dont blame them.

Many cryptocurrency projects operate behind thin veils of decentralization. In public, theyre sold on the premise that they distribute power. Behind the curtains, leaders pull the strings. In the recent case of Wonderland, a serial scammer and felon directed a $1 billion treasury.

Many projects secretly pay influencers to shill their tokens. The price pumps. Insiders dump. Naive investors lose money. Sometimes, the shillers are celebrities. And, sometimes, those celebrities leak the surprisingly low cost of their integrity.

Related: Year of sponsorships: Celebrities who embraced crypto in 2021

Hundreds of projects suffer technical vulnerabilities. Seemingly every week, hackers exploit hidden software bugs. The third-largest ever occurred in early February, with $326 million gone. And then in late March, another $600 million poof.

Many cryptocurrencies are blatant scams some, proudly pyramid-shaped. Market participants treat these as facts of life, with oft-used terms for exit scams (rug pulls) and pyramid-shaped projects (Ponzis).

To most, cryptocurrencies look the same, like tomatoes pasted in Aisle 9 only tasteless, useless, and more numerous. The cynical see the menu of cryptocurrencies as a proxy most-wanted list. Neither group is entirely wrong.

Yet one item on the menu stands apart. It is arguably one of the more important technological advances since the internet, itself. Buy it or not, we dont care. But we three professors do care to bring one simple message: Bitcoin (BTC) is special. It deserves study and discussion.

Bitcoin is genuinely decentralized. Tens of thousands run nodes all around the world. Operating a node is easy; you could do so within the hour with an internet-connected computer and a few hundred gigabytes of storage. In 2017, these nodes vetoed a controversial change to Bitcoin that would have upped the networks centralization by making it harder for ordinary people to run a node. In doing so, they trumped a majority of Bitcoin miners, exchanges and other powerful legacy players.

Bitcoins decentralization makes it fair. No foundation enjoys a trademark or governs its monetary policy. This contrasts not only with more centralized cryptocurrencies but with the Federal Reserve, itself. In the past year, three Federal Reserve officials have resigned after a series of, lets say, well-timed trades. Bitcoin has never had any officials resign in disgrace it has no such officials. The network automates these jobs away.

Bitcoins decentralization also makes it secure. Most money is digital and sits under the thumb of third parties like banks and payment processors. But innocent Russian and Canadian citizens remind us that third parties can freeze and seize those balances, especially when subject to state pressure. Reliance on third parties jeopardizes funds. Bitcoin participants can hold their own private keys and thereby save and send value without third parties. Bitcoin is in a different league than other cryptocurrencies. In the digital age, Bitcoins unparalleled level of decentralization makes it the safe haven from state and corporate overreach.

Related: The meaningful shift from Bitcoin maximalism to Bitcoin realism

And unlike most other cryptocurrencies, Bitcoin never had a private token sale to venture capitalists or an initial coin offering to enrich insiders. Bitcoin is the most widely distributed digital asset. In an important sense, it has no insiders only early adopters.

The main early adopter, Satoshi Nakamoto, mined about a million Bitcoin (5% of the maximum supply). Satoshis holdings are fully visible, and Satoshi never spent a single dime. With most other cryptocurrencies, the rich get richer, sometimes in hidden ways, and have more say over the network. Not so with Bitcoin.

Whereas some projects move fast and break things, Bitcoin moves slowly but surely. Bugs are rare. Granted, this conservative approach has tradeoffs. Upgrades are as rare as bugs. And Bitcoin lacks the flexibility of other platforms. But in exchange, countries and corporations feel secure with Bitcoin on their balance sheets.

You may have heard of hacks and stolen Bitcoin. These cases dont involve weaknesses in Bitcoin, itself. They illustrate instead the pitfalls of insecure key storage or relying on third-party custodians.

Related: Satoshi may have needed an alias, but can we say the same?

Finally, Bitcoin is no scam. It can certainly be used for scams much like the U.S. dollar, or other digital assets. But the Bitcoin network offers final settlement of its native asset, much like the Federal Reserve System offers final settlement of the U.S. dollar. People do speculate wildly on the Bitcoin price. Such is the way for early stages of innovation. And people worldwide need it even as privileged Westerners speculate.

Bitcoins design involves tradeoffs, to be sure. Its public ledger makes privacy difficult, though not impossible. It requires energy for its security. And its fixed supply engenders price volatility. But for all that, Bitcoin has become something remarkable: a neutral monetary system beyond the control of autocrats. Ideologues will balk as they seek that perfect but perfectly elusive monetary system. Wise and pragmatic policymakers, by contrast, will instead seek to use Bitcoin to improve the world.

First, we must not assume that cryptocurrencies share more in common than they, in fact, do. Bitcoin leads them all precisely because no one leads it. The policy must begin here from a place of understanding not of cryptocurrency, in general, but of Bitcoin, in particular. As President Bidens executive order conveys, digital assets are here to stay. The general category isnt going anywhere precisely because Bitcoin, itself, isnt going anywhere. We owe it special attention. Not Bitcoin only, but Bitcoin first.

Second, Bitcoin is credibly neutral since the network remains leaderless. Consequently, the U.S. can use and support Bitcoin without picking winners and losers. Bitcoin has, in fact, already won as a globally neutral monetary network. Nurturing the Bitcoin network, using Bitcoin as a reserve asset, or making payments over Bitcoin would be analogous to deploying gold within the monetary system only digital, more portable, more divisible, and easier to audit and verify.

We commend President Biden for recognizing that digital assets deserve attention. Well need all hands on deck from computer scientists, economists, philosophers, lawyers, political scientists, and more to spur innovation and nurture whats already here.

This article was co-authored by Andrew M. Bailey, Bradley Rettler and Craig Warmke.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew M. Bailey, Bradley Rettler and Craig Warmke are fellows with the Bitcoin Policy Institute and the Resistance Money Bitcoin research collective and teach, respectively, at Yale-NUS College, the University of Wyoming and Northern Illinois University. Warmke is also a writer for Atomic.Finance.

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Bitcoin stands apart from other crypto, and what that means for US public policy - Cointelegraph

The below is a full, free article from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

The purpose of this release in specific will be twofold; the first will be to update readers on the latest updates for publicly-traded miner hash rate, production, and bitcoin holdings. The second will be to present a framework for how to approach investing in bitcoin miners, with a focus on the publicly-traded sector in particular.

With the end of the month near, we will have another round of public miner production updates for all of May 2022 in a couple weeks. With the latest monthly production releases, April 2022 was yet another month of growing hash rate and held bitcoin, despite a slightly lower production month. The group of public miners were tracking below now make up roughly 18% of total network hash rate using their April numbers of 37.91 EH/s and the latest decline in total network hashrate to 209.91 EH/s.

Bitcoin holdings across miners are now up to 46,132 bitcoin worth over $1.3 billion at a $29,000 price. Thats roughly a 7% monthly increase when including miners with reported data for both March and April. All of this data is pre bitcoins market fall from $40,000 so the next month of data updates will be key to see if top public miners are scaling down their bitcoin holdings or hash rate in response.

Hash rate of public mining companies

Hash rate of public mining companies March 2021 to April 2022

Bitcoin holdings of public mining companies

Monthly bitcoin production of public mining companies

Investing in publicly-traded bitcoin miners carries risks that buying bitcoin itself does not, due to the operational risk as well as the reality that public equities trade at multiples of future expected earnings. During environments where treasury yields rise significantly, this causes earnings multiples to fall, which is why equities as a whole have performed poorly over the course of 2022.

However, the dynamics involved with evaluating publicly-traded bitcoin miners is a bit different. Unlike other commodity producers, bitcoin miners often attempt to retain as much bitcoin on their balance sheet as possible. Relatedly, the future supply issuance of bitcoin is known into the future with near 100% certainty.

With this information, if an investor values these equites in bitcoin terms, significant outperformance against bitcoin itself is achievable if investors allocate during the correct time during the market cycle using a data-driven approach.

An extremely simple framework for investors is:

Hash price bull market = Bitcoin miners outperform bitcoin

Hash price bear market = Bitcoin miners underperform bitcoin

Hash price divides miner revenue by hash rate (daily miner revenue per 1 TH/s, as first coined by the team at Luxor).

While there are certainly other variables involved in valuing these companies, including the operational risks and the competence of the management team to just name a couple, this is a simple framework for investors to internalize and utilize going forward.

To start, lets display hash rate since the start of 2020, which hash price is partially derived from.

Average bitcoin hash rate

Below is the hash price (daily miner revenue per TH/s) in both USD and BTC.

Hash price in USD and BTC terms

Currently, hash price is $0.118, which is above the 2020 low of $0.074 but falling rapidly as hash rate (and subsequently miner difficulty) continue to increase as price falls/consolidates.

Lets take a look at the latest hash price bull and bear cycles and how the publicly-traded miners performed benchmarked not against dollars, but instead bitcoin (as this should be the entire purpose of investing in a mining operation).

Below is the hash price from its 2020 low to its 2021 high and the performance of a few publicly-traded miners ($MARA, $RIOT, $HUT) benchmarked to bitcoin. During the hash price bull market (where price rises faster than hash rate), these three names outperformed bitcoin by 318%, 207%, and 62% respectively.

Bitcoin hash price and public mining stocks priced in bitcoin

Following the hash price top in October at $0.4222 dating all the way to today where hash price is $0.1182, these same names have returned the following against bitcoin:

Hash price and public mining company stocks priced in bitcoin

While bitcoin itself has obviously drawn down significantly since its highs made in the fall of 2021 (down 57%), these publicly-traded miners have declined in value by significantly more with most down over 70%.

Public miner stocks percent drawdown from all-time high

Bitcoin public miner market capitalization

Bitcoin public miner stocks priced in bitcoin

The point of this article is to dissect the cyclicality of the mining industry, and how to think of these securities when navigating the bitcoin market cycle.

Another important fact of the bitcoin market is that hash rate has continued to rise in an exponential manner over the course of its history, which in turn means hash price is in a secular downtrend in both USD and BTC terms.

To circle back to a point made earlier, the entire purpose of investing into a mining operation should be to get a return on investment in bitcoin terms. If you cannot achieve a positive ROI in BTC terms, it was likely not a good investment in the first place.

Thus, because of the diminishing block reward and rising hash rate, hash price in BTC terms is falling in lockstep in programmatic fashion with each subsequent positive difficulty adjustment and halving event.

Bitcoin hash price

In simple terms, this means that it is becoming increasingly more challenging to produce a marginal unit of bitcoin with a unit of hash, which is also why nailing the timing of investing in publicly-traded miners as well as the ASIC rigs themselves can be so lucrative.

While nothing is ever certain, using a data-driven approach, it is possible to achieve significant return on investment in bitcoin terms with bitcoin miners, in both the public and private sectors.

While achieving advantageous levels of relative performance requires a fair share of analysis (and luck) regarding both the bitcoin hash rate, the bitcoin price action, and increasingly the macroeconomic backdrop, we expect the opportunity to once again arise for mining investors to outperform in the not-so-distant future.

While that day may not be here today, our mission is to put forward transparent analysis around the bitcoin ecosystem, with an aim to help individuals and institutions alike make informed decisions regarding their savings/investments.

If you enjoyed the content/analysis in todays free issue, make sure to give this post a like, share with a friend, and consider subscribing to our paid research tier

The Bitcoin Magazine Pro Team

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The Performance Cycle Of Public Bitcoin Miners - Bitcoin Magazine

The Giving Block, a bitcoin and cryptocurrency fundraising platform for nonprofits, announced the Miami Impact Index Fund, allows donors to provide funds to all participating Miami area nonprofits with a single donation, according to a press release sent to Bitcoin Magazine.

When donors provide donations to the fund, each participating nonprofit will receive an equal share of the donation. Donations will also be doubled due to The Giving Block partnering with Shift4, a payment processor, in a program called Caring With Crypto.

The partnership between the two companies will see Shift4 CEO Jared Isaacman personally match any donation up to the first $10 million donated to the program. This effectively doubles any donation made to all of the causes in a single transaction.

The release explains that it is more common for high net-worth individuals to donate property than it is to donate cash, as donating cryptocurrency like bitcoin directly to a 501c3 nonprofit is more tax efficient than a standard cash donation since the IRS classifies cryptocurrency as property.

When a donor donates bitcoin to one of the previously mentioned nonprofits, they receive a tax deduction equal to the fair market value of the bitcoin and they avoid paying the capital gains tax normally incurred by selling bitcoin, meaning that donors would have less access to donatable cash after paying the taxes to receive cash for selling the bitcoin. In short, donors can give more and deduct more from their taxes, which sometimes makes up to a 30% difference, according to the release.

Participants of the fund include but are not limited to: Nicklaus Childrens Health System, NU Deco Ensemble Inc., Third Wave Volunteers Inc, Chapman Partnership, Jackson Health Foundation, Legal Services of Greater Miami, and United Way Miami.

More here:
The Giving Block Launches First-Ever Bitcoin, Crypto Donations Fund For Miami Nonprofits - Bitcoin Magazine

Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.

Bitcoin had a very bad day a few weeks ago, its price crashing along with those of other cryptocurrencies, adding a dollop of misery for those who put money into the asset class without snatching it right back out. The crypto market is notoriously volatile, and the trouble this time was the collapse of part of it known as stablecoins. Go figure.

We refer to the recent misery as an added "dollop" because things did, well, stabilize for crypto, which trades around the clock. Even so, the most prominent cryptocurrencies of which bitcoin is the mostest are down by half since November.

So, that'd be a terrible thing to let people muck around with in their retirement accounts, right?

The U.S. Department of Labor thinks so, issuing guidance in March with concerns about the "reliability and accuracy of cryptocurrency valuations" and reminding fiduciaries about their "obligation to ensure the prudence of the options on an ongoing basis." The department isn't necessarily driving a "never crypto" bandwagon, but it's eyeing the reins.

More pointedly, the famed investor Warren Buffett once called cryptocurrency "rat poison squared." More pointedly still, his famed compatriot Charlie Munger recently said bitcoin is "like a venereal disease or something."

And yet.

In April, Fidelity the mostest among the hosts of retirement accounts announced a plan that would put bitcoin on the menu of investment options for 401(k)s. But just bitcoin for now, not the multitude of other cryptocurrencies, and only at levels of no more than 20% of an account, and only for those investors whose employers agree to it.

This isn't necessarily a bad thing, despite any purported resemblance of cryptocurrencies to rodenticides or worse. Even Buffett's and Munger's firm, Berkshire Hathaway, has invested in a bank that focuses on crypto.

Consider this: If you're a buy-and-hold investor of the broad market, which is basically what is recommended for most people for most of their working years, you're also down over the last few months about 20%, as it happens. History suggests that your account will bounce back, but history makes no guarantees about how fast.

Set aside the promises of astronomical long-term gains supporters say are inevitable because of the way some cryptocurrencies, including bitcoin, are designed. While crypto at present can only be described as speculative, there may come a day when it is a reliable alternative to asset classes influenced by central banks. As a nonphysical form of money created using encrypted data (thus the name), the movement of which is managed by decentralized computer networks, not by governments, it could offer investors a way to diversify and potentially steady their accounts.

The Star Tribune Editorial Board wrote last year about signs that crypto was beginning to gain serious traction. The Fidelity plans confirm that. We also wrote that there is room to let the crypto market shake out before deciding how best to regulate it. But that permissiveness can't last forever.

Indeed, there are reasonable questions about Fidelity's plans, and U.S. Sen. Tina Smith of Minnesota is among those raising them. Along with Sen. Elizabeth Warren, D-Mass., Smith wrote a letter to Fidelity asking why the company ignored the Labor Department's guidance; how it plans to deal with various crypto risks, including theft, fraud and the reliability of record-keeping, in addition to volatility; what fees it may charge, and whether it has a conflict of interest as a bitcoin miner. A response is pending.

"My job is not to tell people what to invest in," Smith told an editorial writer. "My job is to make sure that they have accurate and fair information."

That sounds right to us.

In any case, having a bitcoin option in retirement accounts doesn't mean investors have to choose it. They certainly shouldn't if they don't understand it, and even those who think they grasp the concept would be wise to limit their risk to less of their account value than Fidelity would allow. One recommendation we read recently was 1%.

In other words, handle it with care, as with any potential poison.

See original here:
Your 401(k) and the bitcoin boogie - Star Tribune

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SEVA announces bitcoin mining partnership to help advance the development of SunPark - WV News