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Kazakhstan imposes strict energy consumption reporting requirements on crypto miners

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Kazakhstan imposes strict energy consumption reporting requirements on crypto miners

Bitcoin › Mining

Kazakhstan requires every crypto-miner in the country to provide detailed information about their operations 30 days before commencing operations.

2 min read

Updated: May 5, 2022 at 1:38 pm

Cover art/illustration via CryptoSlate

Kazakhstan has imposed new reporting requirements that seek to determine the energy consumption rate by crypto miners.

The order requires every crypto-miner in the country to provide detailed information about their operations 30 days before commencing operations. 

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Kazakhstan requests new information from miners

The new rules aim to determine how crypto mining affects the country’s energy grid. Digital mining businesses have to provide information such as technical specifications for their connection to the power grid. 

They also need to include information about mining equipment and any investment within the next 12 months. The requirements also make it compulsory for mining companies to provide information about the legal entity in charge of the operation, its contact details, IP, and physical addresses used for mining. Such a legal entity must reside in Kazakhstan.

As part of the new reporting requirements, crypto miners will also have to submit quarterly reports where they update the initial information provided. In addition, companies that want to stop operating will also have to inform the government.

Kazakhstan’s anti-crypto mining policies

In recent months, Kazakhstan has changed its approach to dealing with crypto miners. The country had previously welcomed miners leaving China because of the new de-facto ban on crypto-related activities.

However, the impact of mining activities on its energy grid is leading Kazakhstan to rethink its strategy. The government has cut off miners’ access to power on occasion in recent months and begun increasing tariffs.

Crypto mining attracts tax 

The Minister of National Economy stated that the government is planning to increase the taxes on crypto mining. Energy costs are currently ten times higher for miners, but it could become a lot costlier if the tax proposal should go through.

The proposal also includes removing the Value Added Tax exemption on mining equipment. This new approach attempts to regulate the mining industry and shut down illegal mining, which has become popular in the country.

According to the Financial Monitoring Agency, it shut down 106 illegal crypto mining operations in March, seizing 67,000 pieces of equipment. The country has the second-highest Bitcoin hash rate after the US.

There are speculations that the new policy change could force crypto miners to migrate to other countries like Uzbekistan, which is looking to attract miners that use solar energy by waiving income tax.

Posted In: Bitcoin, Mining

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U.S. Mining Stocks Drop Almost 50% Despite Hashrate Increasing

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U.S. Mining Stocks Drop Almost 50% Despite Hashrate Increasing

The Cambridge Center for Alternative Finance, a financial research institute affiliated with Cambridge University, has found that the Bitcoin hashrate was up by 4% in August from the previous year, from 35% to 39%. But, still, the mining stocks have seen declines in the last month, with Bitcoin prices going down. The concluded figure involves BTC.com, Via BTC, and Pooling data.

Cryptocurrency mining involves verifying and broadcasting the transactions on the relative blockchain ledger. It is a computationally-intensive process that opens doors for validators (who validate transactions) to earn rewards. Validators verify the transaction by guessing a unique hash number associated with each transaction. And it requires computing power more than simple PCs.

Related Reading | New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate

Similarly, it needs a more powerful computer when verifying transactions on the Bitcoin network. Because the Bitcoin algorithm creates difficulty when too many validators come online simultaneously.

Mining Bitcoin through a home computer was feasible a decade ago. However, considering the problems that arose with the growth of BTC mining, U.S. public companies such as Marathon Digital Holdings, Riot Blockchain, and Core Scientific owned server forms have made this type of work more accessible.

Bitcoin is currently trading below $29,000 | Source: BTC/USD price chart from Tradingview.com

Mining Stocks Dropped Nearly 50%

The most recent bloodbath in the crypto market, which has seen the collapse of TerraUSD and the price dips of many cryptocurrencies, also caused a slump in the price of the shares of these mining companies.

Since April 18, mining stocks of Core Scientific and Marathon have nearly lost 47% of their value. Likewise, Riot’s shares are reduced by its one-half, and Canadian-based Hut 8 Mining Corp has similarly diminished by 41% of the value of its shares.

A few crypto traders point out that seeing the last month’s decline of 25% in Bitcoin price and the increasing correlation of crypto with the stock market, investors would now be cautious about cryptocurrency investment.

The level of correlation between crypto and stocks has lasted between 0.67 to 0.78, with the BTC falling 10% on the day of peak correlation. Here 0 refers to no relationship, and 1 implies being completely correlated.

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Richard Craib, chief of the San-Francisco-based hedge fund Numerai, stated that digital assets are now “part of the mainstream financial system, and that’s not good for its viability as an alternative asset class. It’s not serving its original purpose as an uncorrelated asset.” 

Related Reading | Bitcoin Bearish Signal: Whales Ramp Up Dumping

Analysts say that some traditional investors have ended up their crypto trading. The plummet of tech stocks has become the reason behind the exit of many investors. So they are selling their virtual assets to raise funds. 

In addition, the raised concerns about the environmental impacts of mining could also play their role in dropping stock prices. As of now, 160 crypto mining bills are waiting for the consideration of the government authorities in over 30 states.

Featured image from Pixabay and chart from TradingView.com

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Growth in US Bitcoin mining does not reflect in stocks performance

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Growth in US Bitcoin mining does not reflect in stocks performance

U.S.› Bitcoin › Mining

The price performance of most Bitcoin mining firms in the US in recent weeks has left a lot to be desired largely due to the overall market sentiment.

2 min read

Updated: May 18, 2022 at 11:21 pm

Cover art/illustration via CryptoSlate

The US has become the dominant country for crypto mining, but that dominance isn’t reflected in the crypto mining stocks, which continue to perform poorly as the market plunges, Barrons reported.

The Cambridge Bitcoin Electricity Consumption Index (CBECI) had revealed that the US accounts for around 38% of the global Bitcoin hash rate in January 2022; much of this progress is owed to China’s outright ban on crypto mining in May 2021.

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This ban led to crypto miners flocking to the US. However, the growth isn’t doing much for shares of crypto mining companies in the country.

Crypto miner stocks are down

Marathon Digital Holdings (MARA), the largest publicly listed crypto mining company, has seen the value of its stock drop from as high as $32.89 to the current $11.09. 

This month alone, the value has dropped by 46.94%, while its value has declined by 66.28% on the year-to-date metric. 

Riot Blockchain Inc (RIOT) has also lost 66.49% YTD and currently trades at $7.26, shedding $15.12 since the year started. However, it has recorded positive performance recently. Its value increased by 7.78% in the last five days and has gained 5.98% today alone.

The same goes for Core Scientific (CORZ). The crypto miner has lost 61.94% YTD and almost half of its value this month alone. The stock is currently trading at $3.97 on NASDAQ after gaining 3.12% today.

Explaining the decline

The massive drop in the value of these crypto mining firms throughout the year, especially in the last 30 days, can be tied to the enormous sell-off the market witnessed recently. Since most of these miners hold Bitcoin on their balance sheets, their stocks tend to move in correlation with the crypto market’s direction.

Apart from that, concerns about the environmental impact of Bitcoin mining could also be said to be affecting their businesses. New York recently passed a two-year moratorium on crypto mining, plus there was a recent campaign for Bitcoin to pivot to the proof of stake consensus that consumes less energy.

While Bitcoin’s price is steadily holding firm around the $30k range, fears of an increase in rates by the Fed to battle against rising inflation could lead to another streak of red candles.

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New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate

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New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate

China is back with a vengeance. The Cambridge Centre for Alternative Finance, or CCAF, collected data “spanning the period from September 2021 to January 2022” for their latest study. The headline is that, ban or no ban, the Asian country controls 21% of the Global Bitcoin mining hashrate. Since June 2021, here in NewsBTC, we’ve been wracking our brains trying to figure out why did China ban bitcoin mining. Maybe we were barking at the wrong tree the whole time. 

According to the CCAF’s numbers, unsurprisingly the “US has remained at the forefront of Bitcoin mining and extended its leading position (37.84%).” For their part, “China has re-emerged as a major mining hub (21.11%). Kazakhstan (13.22%), Canada (6.48%), and Russia (4.66%) have been relegated to more distant places.” Let’s see what else can we learn from the CCAF’s numbers.

Is China All The Way Back? How Did This Happen? 

As it turns out, the CCAF analysis uncovered numbers that “strongly suggest that significant underground mining activity has formed in the country”. Can we be sure that the explanation is real? And if it is, how did the underground China bitcoin mining industry surge so fast?

“Following the government ban in June 2021, reported hashrate for the entire country effectively plummeted to zero during the months of July and August. Yet reported hashrate suddenly surged back to 30.47 EH/s in September 2021, instantly catapulting China to second place globally in terms of installed mining capacity (22.29% of total market).”

The report wonders what happened, “a comeback of this magnitude within the period of one month would seem unlikely given physical constraints, as it takes time to find existing or build new non-traceable hosting facilities at that scale”. And theorizes that maybe the underground miners were using VPNs to hide their location and then, suddenly, decided that they were safe enough to stop hiding. Which seems unlikely.

BTC price chart for 05/18/2022 on Bitfinex | Source: BTC/USD on TradingView.com

Non-China Countries

Sadly but predictably, the study also found out that “the hashrate recovery has not been distributed evenly”. How did the non-China countries in the Top 5 do?

  • The United States “surpassed the rest of the world in terms of hashrate growth. This is evidenced by installed capacity surging from 42.74 EH/s (35.40%) in August 2021 to 70.97 EH/s (37.84%) in January 2022.”
  • In Kazakhstan, for their part, “Total hashrate continued to increase in September and peaked at 27.31 EH/s in October, until repeated power outages towards the end of last year, and a week-long internet shutdown earlier this year, forced miners to temporarily suspend operations.”
  • Surprisingly, “Russia on the other hand not only experienced a substantial drop in relative hashrate share from 11.23% in August 2021 to 4.66% in January 2022, but also a significant decline in total installed mining capacity contribution from 13.56 EH/s to 8.74 EH/s over the same period.”
  • Last but not least, “Canada experienced only a moderate increase in its hashrate from 11.54 EH/s in August 2021 to 12.15 EH/s in January 2022, which resulted in a loss in market share from 9.55% to 6.48% as total network hashrate was growing significantly faster. ”

The CCAF Spreads FUD

Of course, the Cambridge Centre for Alternative Finance couldn’t pass the opportunity to spread some unfounded rumors about bitcoin mining. This is what the CCAF said: 

“These geographic shifts in mining activities bring to the fore how relocations impact the overall sustainability of the network. For instance, recent research has suggested that the Chinese decision to ban Bitcoin mining has indeed worsened – rather than improved – Bitcoin’s environmental footprint.”

The CCAF is using this study’s findings, which basically says that they NOW believe what bitcoiners always said. That China was mostly using hydropower energy for bitcoin mining, and not coal. The fact is, as far as using green energy goes, bitcoin mining continues to be the cleanest industry in the world

Whenever we find intentional FUD spreading like this one right here, we have to check out who paid for the study. As it turns out, the numbers come directly from the Cambridge Digital Assets Programme. The CCAF host the CDAP “in collaboration with 16 prominent public and private institutions”. Among them, we find the International Monetary Fund (IMF), Mastercard, Visa, and the World Bank.

And right then, everything made sense.

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Featured Image by PublicDomainPictures from Pixabay | Chart by TradingView

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