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Tradeblock Estimates Post-Halving Mining Cost of $12,500 per BTC

15/02/2020 by Idelto Editor

Tradeblock Report Estimates Bitcoin's Post-Halving Cost at $12,500 per BTC

On February 7, the blockchain analytics provider Tradeblock published a report about the upcoming BTC reward halving. BTC’s block reward is expected to halve on or around May 12, 2020, and Tradeblock’s report estimates that the cost to mine BTC will be over $12,500 after the halving.

Also Read: The Controversial S2F Model Predicts Bitcoin Price Will Reach 100,000 USD Within 2 Years

BTC’s Price Must Rise According to Post-Halving Cost Estimate

The great reward halving of 2020 is coming and the discussion about this topic has intrigued crypto supporters. BTC, the largest blockchain network by market capitalization, will see a reward halving on or around May 12, 2020.

This means a miner who finds a block on the network will only get 6.25 BTC, in comparison to today’s 12.5 BTC reward. Of course, the BTC reward halving has prompted intense speculation on whether the price will rise prior to the halving and remain profitable to mine after the event as well. Across social media platforms and crypto-focused forums, individuals have been debating the subject regularly. Additionally, there’s been various studies done on the subject and Tradeblock recently published the firm’s thoughts on the upcoming BTC reward halving and estimated post-halving cost.

Tradeblock Estimates Post-Halving Mining Cost of $12,500 per BTC — Figure 1 from Tradeblock’s report shows BTC’s network hashrate and difficulty hit new all-time highs.

The blockchain analytics provider emphasized that the post-halving cost should be around $12,525. “In our latest estimates, we projected that commercial mining operators were likely operating at healthy profit margins as the price of bitcoin increased throughout 2019 (albeit with bouts of volatility over the year),” Tradeblock’s researchers noted. “However, the network hash rate has continued on a record run, making new highs nearly each week.” They added:

Hash rate increases as the number of resources, in aggregate, committed to securing the network through mining activities rises. As resources dedicated to mining rise over time, efficiency gains and/or mining costs rise. As such, in order to maintain healthy profit margins for miners, a rising hash rate is typically needed to correspond with a rising bitcoin price.

Analysts and Controversial Stock-to-Flow Charts Show the Halving Could Propel BTC’s Price to $100K

Tradeblock stressed that the gross cost to mine a single BTC after the halving would need to be around $15,062 per coin. However, by adjusting the assumption that hashrate remains relatively flat then the cost would drop to $12,525 per BTC. “It is important to note, however, that large scale commercial mining pools such as those operated by Bitmain will likely have a lower device price point as they will be utilizing Antminer devices at cost,” Tradeblock’s report highlights. “As such, this would allow breakeven costs to be somewhat lower than the above estimates.”

The Tradeblock report follows the report published in September by Bayerische Landesbank (Bavarian State Bank), which estimated BTC prices could touch $90,000 soon. The report’s estimates and reasoning derive from speculation concerning the reward halving and the controversial stock-to-flow (S2F) system. News.Bitcoin.com recently reported on how a few S2F charts show a possible climb to the $100K mark. Traders who wholeheartedly believe in S2F technical analysis think that the reward halving is one of the biggest reasons why the $100K price is achievable. Additionally, onchain data indicates that BTC miners are hoarding coins as the difference between freshly generated coins and their first spends have consistent gaps week after week.

Tradeblock’s report assumes miners will continue to expend resources in order to secure the network despite the reward halving. The study’s data suggests that the “cost (per mined btc) increase following the halving” will surely happen, but the rise in price is theoretical. “This suggests that miners are likely expecting the price of bitcoin to rise to higher levels (above ~$12,000-15,000 per BTC) around the halving allowing them to continue to generate a profit, or they likely will look to reduce resources following the halving resulting in a hash rate decline as profitability falls,” Tradeblock’s report concludes. If the price of bitcoin means it is not profitable to mine after the BTC halving in May, significant miner capitulation could occur.

What do you think about the BTC reward halving? Do you think the price is already priced in or do you expect BTC to rise just before the halving? Let us know what you think about this subject in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Price articles and market updates are intended for informational purposes only and should not be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader.

Image credits: Shutterstock, Wiki Commons, Twitter, Tradeblock report, bitcoinblockhalf.com, Bytetree, and Pixabay.

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Digital Remittances Reach Record High of $96 Billion, Fees Charged by Traditional Providers Open Door for Cryptocurrencies

14/02/2020 by Idelto Editor

In a globalized world where labor follows capital, the remittance industry has been growing constantly in both volume and users. Traditional providers like banks and money transfer companies have been charging high fees for their services which creates opportunities for alternative digital platforms and decentralized cryptocurrencies.

Also read: Russians Can Use Qiwi, Sberbank, Yandex Money and Now Binance P2P Exchange to Buy Bitcoin With Rubles

Digital Remittance Volume Projected to Touch $143 Billion by 2023

According to numbers gathered by market data provider Statista, the total transaction value of digital remittances, cross-border transfers made over the internet, has reached almost $95.96 billion in 2020, representing a year-over-year increase of more than 21%. At the same time, the number of users in this segment of the remittance market has been estimated at 8.5 million (+20.5% yoy). Both indicators are projected to increase by 2023, to over $143 billion in volume and 13.2 million users.

Last year, the largest share of users (32%) were between 25 and 34 years old, and another 25% were aged 35-44 years, a majority from labor-active age groups. The average annual transaction value per user in the digital remittances segment amounts to a little over $11,233 according to the data released this year. Five countries, United States, Switzerland, Saudi Arabia, Germany, and China, top the transaction value comparison chart. With a total transaction value of $21.297 billion, the U.S. is the pronounced global leader and Switzerland comes in second with $7.969 billion.

Total transaction value in the digital remittances segment, Source: Statista — Global comparison, transaction value. Source: Statista

The authors of the report note that remittances often occur on a regular basis and most of the user groups are not inclined to change their fund transfer provider very often. The sector is dominated by established service providers such as banks, post offices and money transfer processors like Western Union and Moneygram. The relatively high fees they charge has opened the way for alternative platforms such as Transferwise, Worldremit and Remitly, Statista points out, which have managed to cut costs by optimizing the use of digital infrastructures.

Ripple’s Latest Remittance Service Agreements Turn the Tide for XRP

While there have been various developments around XRP recently, some of them have influenced its market in a positive way. Two partnerships have been announced this month in which Ripple, the company associated with the cryptocurrency, will be providing remittance services. The price of XRP, the third largest cryptocurrency by market capitalization, spiked over the past couple of days, from a low of $0.2678 on Feb. 11 to a high of $0.3288 early on Feb. 13. Although the crypto lost some of the gains later on Thursday, the price jump is remarkable as it comes after a difficult year for one of the top coins.

According to media reports this week, the National Bank of Egypt (NBE), the country’s largest financial institution by assets and branches, has signed a cooperation agreement with Ripple to open a new channel for receiving remittances from Egyptians that live and work abroad. The bank said it wanted to employ Ripple’s blockchain solutions to further develop its remittance business supporting transfers from around the world and particularly the Gulf region.

The Egyptian deal follows another similar agreement announced by Ripple earlier in February. The company revealed it’s going to work with International Money Express (Intermex), a leading remittance services provider focusing on Latin America and the Caribbean corridor, to address the challenges with slow and expensive cross-border payments. Intermex plans to leverage Ripplenet for faster remittances between the United States and Mexico. Ripple claims the network links over 300 banks and financial institutions globally.

According to the World Bank, Mexico ranks third among countries with the highest number of remittance recipients. Data published by Banco de México, the nation’s central bank, shows that Mexican emigrants have sent home a record $36 billion in 2019, a 7% increase over the previous year’s almost $33.7 billion. Most of the money, a large portion of which comes from the U.S., has been transferred electronically and in small transactions averaging around $300. Intermex is one of the largest money remitters between the two countries processing more than $30 million in transactions annually.

The status quo in the digital segment of the remittance market undoubtedly creates opportunities for decentralized cryptocurrencies as well. Transaction fees in the case of bitcoin cash (BCH), for example, are less than a cent per transfer. Certain regions can benefit significantly – a 2019 report by the World Bank revealed that the average cost to send the equivalent of $200 to Sub-Saharan Africa is 9.3% of the transferred value, as news.Bitcoin.com reported last year. In 2018, African expatriates sent $46 billion to their home countries.

What are your expectations about the future of the remittance industry? Share your thoughts in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock, Statista.

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5 Mining Operations Command More Than 50% of BTC’s Network Hashrate

03/02/2020 by Idelto Editor

The cryptocurrency community has been discussing mining centralization after a report was published that disclosed five mining operations command more than 50% of the BTC hashrate. At the time of publication, between F2pool, Poolin, Btc.com, and Antpool, the pools are hashing more than 59% of the BTC network hashrate.

Also read: Bitcoin Verde’s New Project Aims to Promote Bitcoin Cash Node Diversity

Data-Driven Report Says BTC Hashrate Distribution Is Centralized

On January 31, researchers from the firm Tokenanalyst published a report entitled “Centralisation in Bitcoin Mining: A Data-Driven Investigation” which covers the BTC hashrate distribution in 2020. The latest Tokenanalyst study stresses that BTC is decentralized and a trustless system, but researchers believe hashrate distribution is quite centralized.

“In 2020, bitcoin has also become a highly centralised system that places an increasing amount of trust in a small number of large entities,” the report notes. Not only is the mining landscape “dominated by a small number of entities,” but Tokenanalyst also thinks “a few large crypto exchanges” dominate the industry as well. Tokenanalyst analyzed 276,000 distinct addresses that have received coinbase rewards and they “meticulously” QA’d their metrics and found 148,000 miner addresses “across the whole history of the bitcoin blockchain.”

“Of these 148k labeled addresses only 6.3k have ever received a coinbase reward,” the report details. “The other addresses are used by miners for other purposes, such as internal routing and change wallets to facilitate payments to mining pool participants.” The report continued by adding:

Of the 276k addresses that ever received coinbase rewards, 270k are unlabeled, and of these, 225k addresses (81.5% of the total) were only ever used once. Of the 6.3K labeled addresses that received block rewards, just 517 addresses received block rewards on more than 1 occasion (0.2% of the total). However, these 517 addresses are responsible for receiving a vast proportion of the block rewards in recent years.

Five Mining Operations Command More Than 50% of BTC's Network Hashrate — “Today, 95% of the blocks mined are by mining pools that Tokenanalyst has labeled,” the study notes. “The proportion of hashrate attributed to different mining pools. The miners who contributed the largest proportion of the hashrate over the last 12 months are labeled.”

The Stratum Protocol and Joining Smaller, Independent Pools

Tokenanalyst researchers detailed that the firm Bitdeer, a company that sells customers hashrate, leverages the five unique pools to do so. Currently, Bitdeer utilizes the top five mining operations hashing on the BTC network — Antpool, Btc.com, Btc.top, F2pool, and Viabtc. “On 27th January 2020 these 5 mining entities controlled 49.9% of the hashrate of the bitcoin network,” the study reveals. “Collaborating and cooperating would allow involved mining pools to hedge against risk — the risk of a single mining facility going offline, the risk of customers switching between pools, the risk of energy price fluctuations in particular regions,” the Tokenanalyst researchers insist.

A few BTC supporters are not too concerned with the current mining pool distribution situation and they believe the network will work itself out. There have been discussions of fixing the problem with a mining protocol called Stratum v2 as well, which allows software users to choose which BTC transactions get mined.

Stratum v2 allows protocol users to choose which BTC transactions get mined.

Tokenanalyst believes the “original model of bitcoin mining was to have a large number of independent miners which would make it all but impossible to attack the network by reversing bitcoin transactions.” So the researchers are telling the public to research the number of pools within the industry and to search for independent mining operations.

“Do your research before you connect your hardware to a pool, or pay for a hashrate plan on a particular pool,” Tokenanalyst’s report concludes. “Joining a more independent mining pool or a pool with a smaller proportion of the hash rate will help ensure the integrity of the network.”

What do you think about Tokenanalyst’s report that covers BTC hashrate distribution and dominant mining operations? Do you think it is concerning or do you think the network will work itself out over the long run? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Blockchain.com, Stratum website, Tokenanalyst, Fair Use, Wiki Commons, and Pixabay.

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Cambodia Announces State Cryptocurrency as More Details Surface About China’s Digital Yuan

03/02/2020 by Idelto Editor

Cambodia Announces Own Cryptocurrency as More Details Surface About China’s Digital Yuan

With China still in the lead, other countries are advancing their projects to develop payment systems around central bank digital currencies (CBDCs). Cambodia, for example, has recently revealed it will mint its own coin within months. The news comes as more details about the digital Chinese yuan indicate its main purpose will be to substitute cash in a system that provides “controlled anonymity.”

Also read: China Issues Digital Currency Guide for Party Cadres

Cambodia Becomes the Next State With Own Coin in the Works

Cambodia will issue the government-backed crypto to fuel what has been presented as “a blockchain-based, peer-to-peer payment and money transfer platform.” Named ‘Project Bakong,’ the system is supposed to go live in the next few months, Phnom Penh Post reported, as it already has the support of 11 banks and more are expected to join in the near future.

Chea Serey, director-general of the National Bank of Cambodia (NBC), told the daily that the Bakong commenced in July, 2019. She insisted that the scheme will be operational within the current fiscal quarter. While the newspaper describes it as “a quasi-form of a central bank digital currency,” the central bank official stated that it will be the “national payment gateway for Cambodia.” Serey elaborated:

Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform, making it easy for end-users to pay each other regardless of the institutions they bank with. Eventually, we hope to allow cross border payment through the Bakong system too.

One of the private banks helping the project, Phnom Penh Commercial Bank (PPCB), has been working to deploy the new system at all of its branches. In comparison with traditional payment and money transfer options such as credit cards and mobile platforms, Bakong is cheaper and more convenient, PPCB President Shin Chang Moo noted.

The banker also commented on concerns that financial institutions like his might lose market share to Bakong. He believes that in the long run the project will facilitate the establishment of more inclusive financial ecosystems that will be beneficial for all stakeholders in the industry. Cambodia’s financial sector is still relatively immature in terms of number of service providers and users, he remarked.

Chang Moo made a clear distinction between Bakong and permissionless decentralized cryptocurrencies like bitcoin – the Cambodian digital currency project is a closed system backed by the country’s banks and financial authorities, which leaves no room for speculation. He also revealed that the Bakong wallets will be linked to bank accounts allowing users to exchange their digital coins for the nation’s fiat currency. “All the transactions will be done on a real-time basis with the records stored safely at NBC,” the banker said, adding that other central banks are likely to develop similar systems.

Japan Must Be Ready to Issue CBDC, BOJ Deputy Governor Says

Other governments and regulators have been paying attention to the accelerating developments in the field of CBDCs. These include much more developed economies and financial systems such as Japan. Although Tokyo has no immediate plans to issue a digital currency, the Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya recently stated that the institution must nevertheless be ready to do so. Amamiya was quoted by Reuters saying:

The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan.

But if Japan is still on the sidelines and Cambodia has only recently entered the digital currency race, China has been Asia’s leader in terms of progress towards actually issuing a CBDC. It started working on one about five years ago and stepped up its efforts after the announcement of private projects such as Facebook’s Libra. Although no timeframe has been announced for the anticipated launch, the People’s Bank of China (PBOC) is preparing to begin trials of the digital yuan with the participation of four state-owned commercial banks and three telecom operators.

The goals of those behind such projects may be quite different. In countries where governments have continued to suppress interest rates as an anti-crisis measure, digital currencies can make it easier for central banks to introduce and maintain negative deposit rates. Limiting cash in circulation may be another prime objective as authorities are targeting tax evasion, money laundering and other illicit activities while limiting financial privacy.

Chinese Digital Yuan to Provide ‘Controlled Anonymity’

An analysis published by the Chinese company Huatai Securities reveals more details about the Digital Currency Electronic Payment (DCEP) system which China is now finalizing. It’s become obvious that unlike decentralized cryptocurrencies, DCEP will operate in a centralized environment managed by the PBOC. Its “legally encrypted” currency will be a digital form of the renminbi (RMB). Unlike electronic payments based on platforms such as Alipay, which digitize money in the existing commercial bank account system, M1 and M2 money supply, the digital yuan aims to replace banknotes and coins, or the narrowest money supply type, M0. To achieve that, DCEP will also support offline transactions.

The digital yuan will be distributed through a two-tier system. The central bank will issue the currency to commercial banks against their reserves and then provide it to the public. Compared to the traditional fiat system, DCEP will offer the Beijing government and the Chinese central bank greater controls over all transactions, which is impossible with paper cash. As a substitute for cash, the CBDC will share characteristics with both paper currency and digital fiat currency. For example, the digital yuan is supposed to ensure what the report describes as “controlled anonymity of transactions.”

The current electronic payment methods such as bank cards and third-party payment platforms are tightly linked to real-name bank accounts, the authors explain. The DCEP system will transfer value without going through bank accounts. The central bank will have access to transaction data and can trace the digital currency sources using big data analysis, but commercial banks and merchants won’t be able to obtain that information. Individuals and businesses will open digital wallets through commercial banks and deposits and withdrawals will require a corresponding bank account. Similar to paper money, however, transfers between users won’t involve a link between their bank accounts and the network.

Digital yuan transactions will be processed through a centralized ledger. The DCEP consists of a central bank digital currency system which issues the coin and registers ownership, commercial bank digital currency systems performing banking functions, and a system providing authentication for the interaction between the central bank, commercial banks, and payment terminals.

What is your opinion about the race between governments to issue sovereign digital currencies? Share your thoughts on the subject in the comments section below.

Images courtesy of Shutterstock.

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US Bank Silvergate Sees Growth in Crypto Clients, Despite Decreasing Deposits From the Sector

31/01/2020 by Idelto Editor

Financial results released by two U.S. banks providing services to the crypto industry have indicated a decline in deposits from digital currency customers. However, a positive trend has been observed as well. One of the crypto-friendly institutions, Silvergate Bank, has seen an increasing number of crypto clients throughout the year.

Also read: Swiss Bank Julius Baer Offers New Digital Asset Services With Licensed Crypto Bank SEBA

Silvergate Bank Adds 48 Crypto Customers in Q4

Last year saw a reversal of the crypto market downturn but the cryptoconomy hasn’t fully recovered yet. Although the growing regulatory clarity in the developed world, and hopefully restored interest in decentralized money can potentially increase turnovers in the near future, the recovery may take longer. Luckily, there’s a number of financial institutions willing to support the crypto sector.

Several of these banks operate in the U.S. and this week one of them, Silvergate Bank, published its Q4 and full year results for 2019. The California-based subsidiary of Silvergate Capital Corporation revealed that during the last quarter of 2019 its ‘digital currency customers’ grew to 804, from 756 in Q3 of this year and 542 at the end of December 2018.

Despite adding 48 new crypto clients in Q4, the bank registered a decrease in the digital currency customer related fee income which was $1.4 million, compared to $1.6 million for the third quarter of 2019 and $0.7 million for the fourth quarter of 2018. On yearly basis, however, that income has increased significantly – from $2.0 million in 2018 to $4.9 million in 2019. Silvergate further details:

Noninterest income for the year ended December 31, 2019 was $15.8 million, compared to $7.6 million for 2018. The increase in total noninterest income was primarily due to the increase in fee income from our digital currency customers and a $5.5 million gain on a branch sale that occurred in the first quarter of 2019.

Silvergate acknowledges a third quarter decrease in deposits which totaled $1.8 billion at Dec. 31, down $33.4 million from Sept. 30, 2019, although there’s an increase of 1.8% from Dec. 31, 2018. Noninterest bearing deposits were $1.3 billion, or around 74% of total deposits at the end of last year. They decreased by over $50 million from the previous quarter and by more than $238 million in comparison with Dec. 31, 2018. “The decrease in total deposits from the prior quarter reflects changes in deposit levels of our digital currency customers,” Silvergate notes.

Metropolitan Commercial Bank Registers Drop in Deposits From Crypto Companies

While larger financial institutions in the U.S. and around the world have mostly refused to work with the crypto industry, many smaller banks have accepted the challenge. The list is getting longer and already includes the German WEG Bank and a number of Swiss banks. They are not only opening accounts for blockchain companies but also cooperating with them to offer clients new financial services based on digital assets. Other crypto-friendly banks operating in the United States are Simple Bank, Ally Bank, Provident Bank, and Quontic.

Metropolitan Commercial Bank (MCB), another of these entities, recently shared data about the crypto segment as part of 2019 results included in its latest investor presentation. According to the information, the share of digital currency customers in the bank’s deposit composition has been shrinking throughout the whole year, dropping to $104 million at the end of December, from $220 million a year earlier. Corporate cash management deposits, for example, increased during the same period from around $1.6 billion to almost $2.8 billion.

Despite the 2019 decrease in crypto-related business, the New York-headquartered bank maintains its focus on the niche. The outlook section of the report details that it plans to “continue to provide cash management service to digital currency related clients” as part of its core deposit funding and to establish long-term profitable relationships. Among its customers are industry leaders like crypto exchange Coinbase as well as bitcoin payment processor Bitpay and digital asset wallet provider Crypto.com whose crypto debits cards are issued by MCB and support bitcoin cash (BCH) among other cryptocurrencies.

What do you make of the data released by the two crypto-friendly banks? Tell us in the comments section below.

Images courtesy of Shutterstock, Silvergate Bank, Metropolitan Commercial Bank.

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