In a Canadian province called Quebec, local authorities have come up with new regulations regards cryptocurrency mining. Now all Quebec companies that mine cryptocurrencies will receive an additional 200MW from the national energy company Hydro-Quebec.
In order to receive this electricity, the miners will have to meet several requirements. These requirements include providing jobs for the people of Quebec and ensure the secondary use of heat, which comes from the cryptocurrency mining process. Additionally by doing so, Hydro-Quebec hopes to reduce total electricity consumption by 10% and keep low tariffs for consumers.
Moreover, in June 2018, Hydro-Quebec presented a plan to the local authorities of Quebec which allowed to call off the moratorium for licensing mining operations. It was introduced by the ‘unprecedented’ demand for electricity in the province to be abolished.
Hydro-Quebec is a public utility that manages the generation, transmission, and distribution of electricity in Quebec. The Government of Quebec formed it in 1944 from the expropriation of private firms. This was followed by massive investment in hydro-electric projects like Churchill Falls and the James Bay Project. Today, with 63 hydroelectric power stations, the combined output capacity is 36,912 megawatts. Extra power is exported from the province and Hydro-Quebec supplies 10 percent of New England’s power requirements.
Over the last couple of weeks, the Bitcoin Cash network has recorded an increasing number of unknown mining pools who sign their coinbase transactions with the name of Satoshi Nakamoto.
Two possible scenarios
Experts believe that behind these miners may be supporters of the cryptocurrency Bitcoin SV. They might be trying to profit from BSV price increase. Experts point out that the main advantage for them is to withdraw funds from BCH to BSV. This will lower the Bitcoin Cash price and increase Bitcoin SV’s price.
According to another version, the miner’s activity may be due to an attempt to discredit blockchain Bitcoin Cash through reorganization attacks. Not so long ago the Bitcoin SV blockchain experienced a reorganization. Back then, disproportionately large block sizes caused the problem.
However, experts do not rule out the fact that the new computing power belongs to the Bitcoin Cash camp itself. They claim that it might be a security measure to protect the network from the so-called hashrate wars.
Currently, “Other mining pools” control 37% of the Bitcoin Cash network which is the largest share of the whole network. BTC.com comes second with 21,2%
Additionally, in March, ChainDD announced that 74.48% of the bitcoin network hashrate is controlled by six alternating pools, half of which are directly or indirectly controlled by the Chinese company Bitmain.
Alexander Lukashenko, during a meeting at the High Technology Park with the IT sector representatives, announced that he had “left a place” for Bitcoin mining near the Belarusian Nuclear Power Plant.
Lukashenko said: “Wait – we’re finishing the nuclear power plant soon, and there will be a surplus of electricity […] I left a place there. Let’s build up farms, mine these bitcoins and sell them. Besides, people are talking, if you have Bitcoins, there is no problem selling them.”
BelNPP (Belarusian Nuclear Power Plant) is located in Astravyets in Grodno County. The first power unit is set into operation in December 2019, second in 2020, during summer.
Additionally, the final rules of the cryptocurrency sector were defined during autumn 2018 at the Minsk High Technology Park (HTP). It is a special economic zone that its creators dream to see as the analogue of the Silicon Valley of the USA.
Lukashenko defends his IT specialists
Previously, decree number 8, which is meant for the development of the digital economy in Belarus, legalized cryptocurrency exchanges, cryptocurrency exchange operators and crypto-mining.
In a conversation with HTP residents, the President assured them that they would support Belarusian IT specialists and would “not let anyone offend them”:
“To some extent, you are my children. With my own hands, I created you as I could. But then you grew up, started offering ideas on how to go further. You wanted cryptocurrency, crypto exchange, crypto mining, farms, and everything. Let’s take this path together,”
Commenting on the perspectives of future development for this sector in the country, the President noted:
“Everyone has realized that you cannot make it without IT. We will get left behind. I understand that we are not a country spoiled with hydrocarbon. […] We needed to develop our country and look into a specific niche in order to ensure the country’s independence. We are located in a very beautiful but at the same time very dangerous place – central Europe. I needed to think about a more significant independence so that we don’t get suppressed. […] We must not stop, we have to go forward, because if we do not – then others will do and will overtake us.”
In recent news, China’s National Development and Reform Commission (NDRC) has added Bitcoin mining to its draft list of industrial activities that the agency is seeking to stop. This list, however, is live since 2011, but only now they added proposals of cryptocurrency mining ban. This has started a massive FUD (Fear Uncertainty Doubt) on the price and future of Bitcoin since China accounts for almost 70% of Bitcoin mining hash rate.
Bitcoin mining wastes resources and pollutes the environment
The agency has ruled out this draft proposal to the public and asks for additional comments until May 7. It lists out thousands of industrial businesses in three categories: Promoting, Restricting and Eliminating. Cryptocurrency mining has been categorized as “business that is recommended to be eliminated” and is grouped with other activities that produce high levels of pollution. However, a Twitter user @DoveyWan who is considered to be a legit source of information eases everyone by saying that this is only a proposal and actual implementation could be “tens of years down the road”.
He refers to a similar list China released in 2011. The 2019 draft still contains many proposals from 2011. He points out that many of the proposals from 2011 still haven’t been eliminated today.
Additionally, the belief that Bitcoin mining pollutes the environment is not as bad as previously reported. A report from CoinShares in late 2018 states: “based on historical data on energy mix and locations of cryptocurrency mining operations in China, we have shown that contrary to the common narrative, the vast majority of global Bitcoin mining capacity (minimum 77.6%) is running on renewable energy.”
While this is only a draft proposal, it is worth mentioning that Bitcoin mining in China is the largest portion of Bitcoin mining as such in the whole world. According to CoinDesk approximates, China’s southwestern region could hold around one million mining machines.
Moreover, China is the home for many top crypto-mining pools such as: BTC.com (17,6%), AntPool (13,9%), F2Pool (9,8%), Poolin (8,9%), BTC.top (7,7%), ViaBTC (7,6%), Dpool (3,9%).
Overall, China accounts for almost 70% of the Bitcoin hash rate.
Why China? China has one of the cheapest cost for electricity in the world. However, according to Anthony Pompliano, the companies and people of China “are investing more in mining today than ever before. And that doesn’t look like it will stop anytime soon.”
Not only about polluting the environment
As Anthony Pompliano writes, he thinks this is not only about Bitcoin being a massive threat to polluting environment. He refers to China as a “notorious government” which will ban everything that is not in their control. As we all know, China banned Facebook and Google due to a reason of centralization.
“..the government has prevented centralized, for-profit companies from entering the country. In this case, the government would be waging a battle against a decentralized network by attacking the infrastructure necessary to run the networks,”
writes Anthony Pompliano.
Moreover, Pompliano rules out numerous questions that asks for an answer in this particular situation:
“If they ban commercial mining activities, would they also ban individuals from running the Bitcoin software on their personal computers? Would they ban miners only if they are using non-renewable energy sources? Could miners continue only if they agree to pay high rates of tax or evolve their operations to become government-sponsored? What type of enforcement would be implemented if the recommendation was to discontinue mining activities?”
It sure looks like this issue has more questions than answers and this is still an open discussion until May 7.
The long-awaited Constantinople network upgrade is finally here! It will happen today in block 7280000. As a result, mining rig owners will start this spring not only in the sun – after all, the cost of a block will fall from 3 to 2 ETH. Will it make the miners to move, and the network hashrate – collapse, respectively? Let’s try to understand it.
Hardfork “Constantinople” on the Ethereum Network
Let’s put theory in first. Constantinople is the name of the next Ethereum’s system update. The developers planned to update the blockchain already on January 16, but due to the vulnerabilities found in the code, they decided to postpone the hardfork. However, Constantinople is not a controversial issue – developers, stock exchanges and other community members support it. Also, you should not wait for a chain split and the appearance of new coins.
By the way, it did not stop the fraudsters/scammers. They were trying to get some HOLDers coins by promoting coins like Ethereum Nova and other scam projects. This issue was partly responded by Vitalik Buterin. On January 10, he offered to accept the Zcash terminology to start calling such “hard forks” “network updates”.
What’s new in the Ethereum network update?
Constantinople needs to integrate five proposals, also known as EIPs, to improve Ethereum. They will affect the speed and functionality of the network, its members’ costs and, of course, the reputable ones. Let’s remember them.
The component will add bit shifting instructions to Ethereum Virtual Machine (EVM). It will allow bits of binary information to move left and right. It all sounds complicated, but the point is simple. Thanks to the EIP 145, changes in smart contracts will become 10 times cheaper.
The upgrade will teach smart contracts to approve each other using only one hash. Before Constantinople, this was done by checking the entire code, which is long and expensive.
Vitalik Buterin’s proposal activates so-called state channels. Ethereum scaling will be implemented through transactions outside the chain.
The update reduces gas costs for SSTORE operations and makes transactions cheaper.
The proposal consists of two parts: the postponement of the difficulty bomb for 12 months and the reward for block reduction. The block reward will decrease from 3 to 2 ETH. The reduction will not be the first: activation of the hardfork “Byzantium” at the end of 2017 reduced the reward from 5 to 3 coins.
At the same time, Constantinople will also activate St. Petersburg. Its task is to correct previous errors in the protocol.
Why Constantinople was postponed?
The day before the update, ChainSecurity specialists found a hole in the code that allowed them to steal user funds. There was not enough time to fix the problem – so developers postponed the update to another date.
What happened with the network after Constantinople was postponed?
The update was announced a few hours before the scheduled time, so not all members of the community knew about it. Sources say that about 10 percent of the advertisers did not update the software and stayed in the wrong chain.
But the most important event here is the activation of the difficulty bomb, which Constantinople had to move. Remember – this word combination means a mechanism that gradually increases the complexity of the PoW acquisition to complete the blockchain operation. The bomb was introduced for the future transfer of Ethereum to PoS – as originally planned.
The recent record-low volumes of new coins in the network are directly related to the difficulty bomb. Moreover, the mechanism increased the block time from 14.5 to 20 seconds.
In addition, an anti-record was recorded on February 17, with 12989 coins on the day. However, during autumn, the indicator remained stable at 20,000 ETH.
The coins from block rewards became less and less, and therefore changing the Ethereum network became even more disadvantageous. However, the miners knew what was happening and gradually got off the network. Look at the hashrate changes.
Is this the end of Ethereum mining?
In other words, the situation seemed hopeless. Miner’s profits already are low, and now comes Constantinople with a reduction in its block rewards. As the reward falls from 3 to 2 ETH, everyone is expected to lose 33 percent. Does this seem logical?
In addition, for example, boys from Epool have joined a small hysteria and conducted a Twitter survey. They asked users to predict where will the 154 TH go – namely the entire Ethereum network – after the update.
Most of the tweeters voted for Ethereum Classic. 53% – it’s serious. Is everything really so bad?
No. Firstly, as correctly pointed out by Josh J White, the survey was similar to the dreams of other coin shillers to gain a significant hash rate increase on their networks.
Secondly, what is particularly important, is that the reduction in block rewards in the current circumstances will be almost unnoticeable. You should thank the difficulty bomb for that.
After yesterday’s results, the average block time is 20.9 seconds. So, 2.87 blocks per minute, 172.24 per hour, and 4133.97 per day. Let’s round the score to 4134 and multiply it by 3 reward coins for each block. We get 12402 ETH.
Now let’s make the same calculations for 14.5 seconds, which will lead to the postponement of the difficulty bomb. 4.13 blocks per minute at 248.27 per hour and 5958.6 per day. Round off to 5959 and multiply by 2 (coins) – we get 11918 coins. Excluding ankl-blocks, the reduction will be approximately 3.9%. In a global context, it can hardly reduce the networks hash rate. The result is that the situation with Ethereum mining will hardly change. The balance of power will remain, mining rigs will continue to function.
The Constantinople update will not kill Ethereum’s mining niche – compared to February – profits will still be almost the same.
If we remember what happened in November, there will be less ETH coins to produce. Taking into account the base law of demand and supply, theoretically, it is even able to increase the price of ETH, but the overall trend of the market still plays a big role.
Overall, Constantinople is not about the price of Ethereum. The update will be another step towards Ethereum 2.0 and the consensus of Proof of Stake. Also, this will obviously bring more benefit to the community and humanity rather than yet another chance to meet speculative interest a few times.
This article is done in cooperation with our Latvian media partners Kripto.Media
Recent news show that the Cryptopia hack is continuing to cash out Ethereum. Previously we reported that Cryptopia encountered a security breach which resulted in $16 million worth of Ethereum stolen. Since then Cryptopia closed their website, as this is notified to government instances.
New Zealand police comments
Since the previous hack, New Zealand police is working on solving the crime. They are in talks with Cryptopia, to gain further understanding. “A dedicated investigation team is being established in Christchurch including specialist police staff with expertise in this area. Police are also liaising with relevant partner agencies in New Zealand and overseas,” says in the report.
Hacker continues to steal funds
Toady, judging by recent reports, the hacker stole a little more than 1,675 ETH. These funds, from around 17,000 Cryptopia user wallets, the hacker sent to these addresses. Among these 17k addresses were around 2k wallets that featured in the previous hack. Also, it included 5,000 wallets which users’ had even topped up since the previous theft.
These funds are sent back and forth using the aforementioned addresses, and now the address with most funds is “Cryptopia_Hack2” with 30,789 ETH. As you can see these addresses are flagged by etherscan.io.
Cryptopia no longer has control of their Ethereum wallets
It seems apparent that the hacker or group of hackers now have full control of Cryptopia’s Ethereum wallets.
They can operate at free will with the funds. A Twitter user @notsofast says that Cryptopia have to rebuild the entire hot/cold wallet system before recovering the rest of system’s assets. Also, in January 28th, they tweeted this image:
Users still depositing funds
Signs of users still depositing funds within the Cryptopia wallets happened just two hours after the second hack.<- Tweet this! Elementus, a universal Blockchain query engine, reports that these funds are coming from mining pools. Probably these users forgot that they have a designated mining address, where all the mining payments go straight to Cryptopia.
Let’s hope that Cryptopia solves this issue with private keys. Moreover, Cryptopia hasn’t communicated today about the second security breach.
Recent news shows that CONSOB (Commissione Nazionale per le Società e la Borsa), an Italian securities regulator, just added Togacoin to its “scam black-list”. The main reason is that Togacoin and two other companies were failing to obtain authorization to operate in Italy.
What is Togacoin?
Togacoin claims that they have been operating with hosting services and web development for many years. They are trying to separate mining operations from electricity costs. Also, they are working on diversifying investments to make the business safer from market variables.
“This guarantees a complete payout to the token holders: in case mining become no longer profitable, it will be gradually replaced by our other activities (hosting/housing, application design/development, and electricity sales),” says in their website.
“Promises” of huge returns
Within their website, they have a Revenue Calculator. It generates a huge return of 239% in one year and 654% in three years. That seems a bit too high judging by the current mining situation in the crypto-space. This reminds the height of absurdity which was going on during 2017, with the ICO craze. That would be interesting to see exactly how hosting, application design and electricity sales will cover up these huge returns. However, they have a disclaimer above the calculator:
In their Telegram feed which has a little more than 2,500 users, people started asking questions about the recent news. A chat administrator with a nickname “Sofia” replied to these allegations. She says that the appellation “Scam Blacklist” is incorrect as there is no such thing.
“We had a warning from CONSOB back at the end of October, stating that we were suspended from offering our tokens in Italy as they consider them a regular financial offer, so we decided to ask our hosting provider to block all Italian IPs to avoid any further issues,” she clarifies.
All this fuss is only about Togacoin being restricted to sell their tokens within Italy. Their company offer is “not suitable for the Italian public”. Sofia also states that Togacoin team haven’t lost a single payout since the start of their project. Moreover, they “will continue to work as hard as humanly possible to reach the softcap and make our project a reality”.
Togacoin Contacted Cointelegraph
As Togacoin is backing these scam allegations, they are in contact with Cointelegraph(CT), which initially posted the reputation-damaging article. Apparently, Cointelegraph didn’t contact any of the company officials to clarify the information. Sofia expresses disappointment with CT. She claims that they haven’t done proper research before publishing the article.
Moreover, Luca Puppi, the co-founder of Togacoin explains that they did the Revenue Calculator calculations when the price of 1 Bitcoin was $8500. Excusing that “as this [Bitcoin] price varies daily it is impossible to keep the calculator updated constantly.” He also comes clean about the communication with CONSOB:
“Back at the end of October, Consob issued a warning in which they asked us to suspend the offer of our Token to the Italian public (‘as a precautionary method for 90 days’ was said by Consob) unless we solicited an authorization. As was requested, we asked our hosting provider to block all Italian IPs in order to avoid any further trouble.”
No such thing as a Scam Black-list
Luca states that there is no such thing as a scam black-list, nor has ever existed. He ensures the unauthorized services of Togacoin within Italy’s boarders. When visiting the provided website of CONSOB it also shows no such term as “scam black-list”. It reads that CONSOB prohibited Togacoin and refers to the information already provided by Luca. Togacoin willingly agreed on suspending Italy from their business services.
All we have to say to the team of Togacoin is – guys, update the data of your calculator and website in general. The last time Bitcoin was at $8,500 was in May 2018. That is in case you want to avoid any more scam accusations because these numbers at this bear market period are looking absurd.
Recently on December 3, Bitcoin mining difficulty has seen a severe drop which is the second biggest in its history of existence. Judging by the statistics of BTC.com, Bitcoin experienced a -15,13% drop in difficulty on block height 552,384.
It is normal for Bitcoin’s difficulty algorithm to be adjusted every two weeks, to maintain the 10 minute block time. The previous adjustment was made on 17th of November when the Bitcoin difficulty dropped -7,39%.
This and the previous Bitcoin difficulty adjustment marks the beginning of the so-called “crypto winter”. There are multiple reasons why this has happened. First and foremost – the big market decline which Bitcoin experienced during mid-November when it entered an even bigger bear market losing around -40% in value. Then there is the previous hash rate clash between Bitcoin Cash and Bitcoin SV, after which Bitcoin Cash difficulty dropped to new lows since the beginning of 2018. Also, last but not least, the “terrible conditions” that global markets are in, reports CoinTelegraph.
History of difficulty drops
There have been significant Bitcoin difficulty adjustments in the past, but the latest counts as the second largest drop in Bitcoin’s history. November 1 2011, Bitcoin saw the single biggest decline in mining difficulty. It dropped -18%. What happened in 2011 at this time? Bitcoin had dropped almost 90% from its first ATH $28.92 to $3.15. And then it slowly came back and booked its next ATH $230 in 2 years time. Can we expect something similar?
Mining gear sold by weight
During late November, when Bitcoin price had fallen below $4.500, Chinese miners started selling the old mining machines by weight. This marked yet another price decline, as it planted some disbelief among investors. CoinTelegraph reports that Chinese miners were getting rid of the older models such as Antminer S7, Antminer T9, and Avalon A741. These models were not making any profit as they have reached their “shutdown price”. Videos of vast piles of miners dropped outside on the street were storming the internet.
We believe this is only temporary as new mining gear will come out which will be more powerful than the previous one. But this raises a question. If we look, for example, at Bitmain. Let’s say Bitmain holds A LOT of S9 miners. Bitmain also carries a lot of mining power and basically has a monopoly in mining Bitcoin. Aren’t they interested in developing the technology in order to profit more and mine more, respectively?
Or on the other hand – could it be that Bitmain and similar large companies are artificially holding back the development of mining technology? So that they don’t have to purchase new gear and throw out the old ones? But how long can someone hold back the development of technology?
Following yesterday, today the price is continuing to decline. Bitcoin alone has lost near to 5% today, and other cryptocurrencies are following. Today’s top100 loser is Mithrill, which was pumping yesterday with +15%. Today we see it declining the same -15%.
The statistics website coin360.io lately looks like they only have one color left – red. However, that is all good, that was predicted and is nothing to be frustrated about. Still, we can see Bitcoin worth $2000 or even lower. Only when we will see countless days of continuous price increase then we can start yelling phrases like “bull-run emerging!” and similar.
Norway has announced that by the end of this year they will cut the current discount for electricity. It applies to data centers and bitcoin mining factories, who produce more than 0.5 megawatts. Until now, they had to pay 0.48 cents per kilowatt-hour, instead of 16.58 cents.
A shock for the industry
Roger Schjerva, ICT (Information and Communications Technology)-Norway Chief Economist says that “this is shocking!” He expresses dissatisfaction as the government didn’t conduct any dialogue with the people working in the industry. He said that Norway scores high on the rankings of political stability and predictable framework, but now “they are gambling with the governments’ credibility.” The decision directly affects crypto-miners in Norway and Denmark. “We can only hope that the politicians understand that energy-intensive computing is something of what we are supposed to live by in the future,” he added.
Norway cannot continue like this
Several sources have pointed out that these cryptocurrency mining factories are gaining huge benefits from this tax discount. “Norway cannot continue to give huge tax breaks to the dirtiest form of cryptocurrency production as bitcoin. It requires an enormous amount of energy and provides large emissions of greenhouse gases globally,” stated a member from the Norwegian parliament. The Christian Democratic Party filed this proposal in combination with the coalition parties, and the tax cut will come into force by early January 2019.
ICT-Norway defends miners
It looks like the Norwegian crypto-miners have been living worry-free till now because the cost of roughly 0.5 cents per kilowatt is ridiculously small. It is hard to imagine what the effect will be profit or economic-wise. Since it is not yet mentioned what the future cost could be, it looks like ICT-Norway will not stand back and watch this escalate. They feel that the government hasn’t conducted a proper dialogue with the people working in the industry, and single-handedly decides on a sector that will be a big part of the future information technologies. It is still believed that this proposition will be filed for a more in-depth review. Whether it will be after the discount cut takes place, or before – that remains unknown.
Norway blocking Crypto?
However, if we look at this from a different perspective. Could it be that the Norwegian government is “throwing rocks” at bitcoin and cryptocurrencies in general? This decision seems odd, because of the recent news of Sweden announcing the development of their native cryptocurrency – E-Krona. Alternatively, on the other hand – this isn’t odd at all. Could it be that Norway is looking into its own cryptocurrency development? That could lead up to that. They have realized that the demand for mining Bitcoin is enormous and the consumption of electricity clearly shows that. I believe that one of the plans would be applying a standard electricity fee for Bitcoin miners. After which comes the creation of their own cryptocurrency, with a lower power tax than usual. Which at the end of the day will be more beneficial to miners. However, that is just a poor vision.
China controls almost 80% of the Bitcoin mining and the majority of Ethereum mining today. That is a huge share if we look at it globally. And of course, it generates a competition between the strongest players in the world. China and the U.S. have been competing in trade wars since Donald Trump won the election. And now that is the direction that Ripple is looking. They have been in close contact with the White House and the Trump administration. Cory Johnson, Ripple’s chief marketing strategist, an ex-journalist had an interview with BREAKER magazine last week where he shared some inside information on the Ripple situation. He tried on dispelling the centralization rumor by saying that Ripple controls only 10 of 150 XRP validators, but didn’t provide any factual proof, and he confirmed that Ripple owns 60% of the coin supply. He says that because Ripple has created a cryptographic lock they cannot go and sell it all into the market. Johnson explained that Ripple has quarterly letters where they announce exactly how much have they sold and how that affects the value.
Continuing on with questions about the White House, Johnson said that he was very surprised about the amount of knowledge that the White House representatives had: “When I started to meet with people in government and regulators, I had very low expectations. I have been truly amazed at the open-mindedness, number one. And number two, the smart questions, sometimes even tough questions. There’s clearly a lot of homework going on.”
Although it is not clear how the U.S. could be using Ripple in regards to a foreign control competition aspect, but one thing is clear – the U.S. White House administration is aware of the global cryptocurrency situation and they seem to think that Ripple could be the answer.
Johnson revealed that Ripple meets up with government regulators and politicians regularly, so we could be expecting a major Ripple implementation soon. Or on the other hand, the government is just starting to test various cryptocurrencies and seeks for a better use case. As he mentioned in the interview:
“I don’t know that the SEC wants to be in a position to have to comment on every single cryptocurrency or digital asset created and issue a ruling about it. I don’t know if they like what they did with bitcoin and Ether. I would guess that an administrative agency doesn’t want to take on regulating an entirely new part of the world when no one’s asked them to do it, and no one’s going to raise their budget for doing it.”
Could the future of the global crypto-situation turn out to be a competition between foreign affairs? Not so much, because China isn’t showing much appreciation towards Bitcoin and cryptocurrency mining. Having banned exchanges and ICOs in general, now they are looking towards mining farms, and the electricity they are using. That is the reason why most of the mining farms are expanding their headquarters to other countries like Canada and the U.S. China has a very low electricity price and in some places even free, so it is obvious why the country controls almost 80% of mining, but what is not clear is why China is pushing cryptocurrencies away from their domestic area? Are they just making it look that way? Could it be that China isn’t aware of the Bitcoin power they have?