ICOs Raked in $13 Billion Despite 90% ETH Price Drop, New Research Finds

ICOs made almost $13 billion in profits from their token sales despite the 2018 cryptocurrency bear market, new research from BitMEX reveals.


BitMEX: ICO Issuers ‘Gave Themselves $24 Billion’

Published January 16, the third instalment of the trading platform’s dedicated series on ICO statistics also suggests ICO teams “gave to themselves” tokens worth over $24 billion at the time of issuance.

“Today this figure has fallen to around US$5 billion, with the difference primarily being caused by a fall in the market value of the tokens, alongside ($1.5 billion) of transfers away from team address clusters (Possibly disposals),” BitMEX summarizes.

In total, combined with findings from the second installment in October 2018, a figure of $12.8 billion is now circulating as the total profit wrought from the ICO craze of the past two years.

While some teams have since launched products and demonstrated application of funds, many have yet to do so, staying dormant since their token sales.

As Bitcoinist reported, ICOs that raised hundreds of millions of dollars each faced a highly volatile market over the last twelve months with over 70 percent now underwater.

Others have since fallen foul of the law, with Paragon and Airfox both required to pay back huge sums to investors along with fines for flouting US securities regulations.

2020 ICO Renaissance?

Responding to the BitMEX findings, Blockstream CEO and Hashcash inventor Adam Back thus appeared unsurprised.

“[W]hen people start startups, they take usually a paycut (versus a) big (company), so modest pay, relatively,” he commented on Twitter.

[A]and take illiquid stock, that is not tradeable (sic) until they achieve technology and market success. [A]m I reading it right that ICOs just dipped into investor capital (and) gave it to themselves?

BitMEX CEO Arthur Hayes was also palpably nonplussed.

“When you create poo poo out of thin air, gravity is a bitch,” he tweeted.

Ethereum (ETH) 00, the major network used to issue ICO tokens, currently trades around $120, equating to a drop of over 90 percent versus its all-time highs.

Earlier this month, Hayes suggested that both ETH and the ICO market could see a resurgence within the next eighteen months.

What do you think about BitMEX’s new findings? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

Mongolia Will See At Least 1000 New Bitcoin Miners In 2019

Participants in Mongolia’s Bitcoin mining industry plan to significantly expand the scope of their operations, local media report January 11.


Japan’s Ginco Doubles Down On Mongolia

The East Asian country, known for its cheap electricity and being home to the world’s northernmost desert, will see one of its miners almost treble in size this year alone, despite the ongoing Bitcoin bear market.

“The business environment is increasingly harsh, but we can still produce a profit,” Yuma Furubayashi, CEO of Ginco  Mongol told Nikkei Asian Review.

Ginco is originally from Japan, where is offers cryptocurrency wallets, but operates two mining facilities in the Mongolian capital Ulaanbaatar.

As Bitcoin 00 dropped in value over 2018, miners have felt the pinch, with a lower price impacting on the profitability of minting new coins, though mining difficulty has adjusted since.

As Bitcoinist reported, China bore the brunt of the downturn, images appearing on social media of vast numbers of mining rigs being dumped due to being too expensive to keep running.

Bitmain, the Chinese giant which has traditionally held a monopoly over the market, has sparked multiple rumors about its debts, senior management reshuffles and plans to fire up to half its 2500 workers.

A Washington County is Taking Steps to Halt Illegal Cryptocurrency Mining

Bear Market Bulls

When raw materials need to be as cheap as possible, it is thus countries like Mongolia that are set to profit.

Although it only started in October, Ginco Mongol plans to increase the number of units it has dedicated to Bitcoin mining from 600 to 1600 by the end of the year. In an interview prior to the launch, Yuma also revealed ideas for spin-off projects, including miner repair services.

With the legal situation regarding mining also a gray area in China, it is little surprise that the Bitcoin industry is spreading more evenly across multiple countries worldwide. Increasingly, it is eco-friendly schemes in places as varied as Spain and Canada which plan to contribute to the market.

However, in future, the world’s Bitcoin mining crown will likely belong to Paraguay, the country’s government signing off on plans to build the largest mining farm on the planet under a project dubbed the ‘Golden Goose.’

What do you think about Mongolia’s Bitcoin mining expansion? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

Shapeshift Admits ‘Imposition of KYC’d Accounts’ Hurt Company Financially

shapeshift fox

The instant digital asset exchange platform ShapeShift has laid off one-third of its team because of the “dramatic and severe” crypto recession as well as being cautious in “a challenging regulatory environment.”


Crypto Winter Cold Bites Shapeshift

In a detailed announcement, the company’s CEO, Erik Voorhees, revealed “with a heavy heart” that the company has let 37 of its employees go or one-third of its team. Voorhees:

Today, we let 37 employees go, reducing the size of our team by a third. It’s a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.

According to the CEO, the issues within the company which led to firing people were structural, legal, financial, and customer-related.

Shapeshift is not the first company to feel the negative effects of 2018’s prolonged bear market. Bitcoinist reported that industry giant Bitmain has laid off its entire Bitcoin Cash development team last month.

KYC Stung Financially and Psychologically

One of the reasons for which ShapeShift has reached a point where it had to lay people off according to its CEO is introducing know-your-customer (KYC) accounts.

Vorhees noted:

Business was declining from both aggregate market recession and increased competition. Our imposition of KYC’d accounts, themselves the result of trying to be cautious in a challenging regulatory environment, caused many of our most valuable API partners to leave us for competitors who have not perceived regulatory risks in the same way. We expected it, but still, it stung both financially and psychologically.

The instant online exchange introduced mandatory KYC requirements back in September 2018, resulting in a backlash from some users.

Immediately after that, self-hosted payment processor BTCPay announced that it intends to ditch the platform and use an interim solution as quickly as it’s possible.

“The shapeshift button does not work anymore, and they will probably require KYC soon. Instead, I am thinking about open sourcing (ShapeShift.io) by making it easy for anyone to be liquidity provider like shapeshift,” BTCPay Server tweeted in September 2018.

Were regulations the biggest factor in ShapeShift downsizing? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

Grandma-Friendly Bitcoin Lightning Network Wallet Launches in Australia

Australia Sydney Lightning

A partnership to roll out Bitcoin payments using the Lightning Network across Australia went live January 4 with the beta launch of Wallet of Satoshi.


1000 Beta Wallets Launch

The product of payment gateway Living Room of Satoshi (LRS) and TravelbyBit, billed as “Australia’s first cryptocurrency travel agency,” the wallet aims to bring Lightning payments to entry-level Bitcoin users.

As Bitcoinist often reported, LN has made significant progress over the past year, breaking records for both capacity and adoption.

The technology nonetheless remains in an experimental state, and only technically-proficient users could previously navigate it efficiently.

Wallet of Satoshi’s developers wanted to change this, issuing a Lightning wallet with a user interface, which could make it simple to send and receive payments.

“We want everyone and their Mum to be able to participate in the new international economy, so it is focused on ease of use, and is available on iOS and Android,” LRS CEO Daniel Alexiuc told local cryptocurrency magazine Nugget’s News.

Lightning Emerges From The Tech Shadows

While uptake of Bitcoin for small-scale payments remains modest, LN has undertaken preparations to dramatically scale the number of transactions the Bitcoin network can handle.

Interest is tangible; Lightning now has over 5000 nodes, almost 18,000 channels and a total capacity of 543 BTC ($2,050,000) according to data from online monitoring resource 1ML.

“Lightning is the real world retail payment system we’ve been anticipating for years, and it is finally here!” Alexiuc continued.

Wallet of Satoshi is currently only available to 1000 beta users, prior to a full release “in the coming weeks.”

TravelbyBit meanwhile announced it had brought LN payments to all its Point of Sale merchants in Australia, which include Brisbane Airport. In October, exchange Binance invested $2.5 million in the company.

At the same time, other development teams are seeking to corner the ease-of-use market in Lightning, with BlueWallet last week releasing its own offering to which it is still adding features such as the ability to issue invoices (receive LN payments) and make withdrawals to on-chain BTC wallets.

What do you think about Wallet of Satoshi? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

Overstock Becomes First Major US Company to Pay Taxes in Bitcoin

Investment Into Overstock's Cryptocurrency Exchange Causes Share Price to Rocket

Internet retailer Overstock has announced that it intends to become the very first major US-based company to pay a part of its state business tax in Ohio using Bitcoin. 


Taxes With Bitcoin

According to its own investor portal, US-based internet retailer Overstock is set to pay part of its Ohio state business tax using Bitcoin. Supposedly, by doing so, the retailer will become the first major US company to pay its taxes using the digital currency.

Speaking on the matter was Patrick M. Byrne, Overstock CEO and founder, who noted:

We have long thought that thoughtful governmental adoption of emerging technologies such as cryptocurrencies (when accompanied by non-restrictive legislation over these technologies) is the best way to ensure the U.S. does not lose our place at the forefront of the ever-advancing global economy. […] We are proud to partner with forward-thinking governments and officials like Ohio and Treasurer Mandel to help usher in an era of trust through technology for our nation’s essential financial systems.

Earlier in November, Bitcoinist reported that Overstock’s share price soared as the company announced plans to sell its retail-oriented business and to focus on previously acquired blockchain startups.

‘Ahead of Its Time’

Paying taxes with Bitcoin in Ohio became possible in late November 2018 at OhioCrypto.com.

According to State Treasurer John Mandel, who pioneered the idea, Overstock’s move to pay its taxes with the cryptocurrency is ‘ahead of its time’:

We applaud Overstock for becoming the first national brand in America to register to pay taxes via cryptocurrency. Their embrace of blockchain technology was ahead of its time and we’re proud to have them join OhioCrypto.com.

In an interview for Fortune, Mandel also added that paying taxes with Bitcoin reveals certain financial advantages. According to him, taxpayers who use credit cards pay 2.5 percent service fees, while those who use Bitcoin will only incur a fee of 1 percent. Early filers like Overstock, however, won’t incur any fees at all.

What do you think of Overstock paying part of its state business tax in Ohio using Bitcoin? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

Japan’s Internet Giant GMO Quits Mining Hardware Bussiness

GMO Internet mining quit

GMO
Internet says it will no longer develop, manufacture, and sell Bitcoin
mining hardware following significant losses incurred in Q4 2018. The
Japanese IT company will instead focus on its in-house mining activities
following a comprehensive revenue review.


GMO Internet Downsizing Bitcoin Mining Operations

In a statement Dec. 25, 2018, the IT behemoth announced the shuttering of its cryptocurrency mining hardware business. The decision follows the enormous losses suffered by GMO Internet in Q4 2018 as BTC 00 hit the lowest price in over a year.

After taking into consideration changes in the current business environment, [GMO] expects that it is difficult to recover the carrying amounts of the in-house-mining-related business assets, and therefore, it has been decided to record an extraordinary loss.

Data from the company’s statement show consolidated and non-consolidated losses for Q4 2018 at ¥ 35.5 billion ($321 million) and ¥ 38 billion ($344 million), respectively.

However, despite shuttering its mining hardware sales department, GMO, which generated a total of ¥154 billion ($1.3 billion USD) in revenue in 2017, expects to continue its in-house mining operations.

Presently, the company admits that a decrease in the profitability of its in-house mining venture. This trend is mostly tied to the falling cryptocurrency prices throughout 2018.

GMO began developing, manufacturing, and selling mining hardware in September of 2017. Back in August, GMO shut down its Bitcoin Cash mining activities to focus solely on mining bitcoin.

Bitcoin Mining Firms Feel the Pinch

For most of the year, as prices fell, Bitcoin hash rate still continued to increase. This translated to increased operational costs for reduced rewards. It was thus only a matter of time before miners began to feel the pinch.

After the mid-November price crash that took BTC down to $3,200, as many as 800,000 (unprofitable) miners reportedly pulled out. However, the Bitcoin mining difficulty has adjusted a since, stabilizing the falling hash rate.

However, cryptocurrencies market woes may not be the core reason for GMO pulling out. According to BitMex Research, the company may not have been competitive to begin with and was thus unable to cope with falling prices.

Recently, Bitcoinist reported on massive downsizing going on at Bitmain. The mining behemoth closed down operations in Israel as well as its entire Bitcoin Cash development team.

Recent reports surfacing online even suggest that the staff layoffs might be as high as 85 percent of the company’s workforce.

Will Bitmain and GMO survive the bear market? Share your thoughts below.


Images courtesy of GMO and Twitter (@Excellion).

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Source: Blockchain

Coinbase President Says Institutions With Short-Term View Shouldn’t Touch Crypto

It hasn’t been the best of Christmases for the stock markets and let’s face it, Santa hasn’t exactly gone overboard when it comes to crypto. However, according to a CNBC Fast Money interview with Coinbase President Asiff Hirji, it hasn’t been all bad.


A Year of Innovation

When asked what happened to crypto in 2018 after such promise and expectation this time last year, Hirji reminded CNBC that Coinbase warned investors to be cautious.

In fact, in 2017, just when Bitcoin fans were starting to think all their Christmases had come at once, the world’s most regulated exchange dealt a cold blast of reality harsher than a Russian winter reinforcing that prices may be overinflated.

However, he went on to say that there had never been more innovation or institutional buy-in of crypto as there was in 2018, despite the fact that trading volumes were down. 

Not for the Faint Hearted

When asked about the BTC price 00 impact and its effect on his business, Hirji began to dance around the issue like any good president saying that years ago, Bitcoin was the only thing that mattered. Then along came Ethereum, and now there are around 3,000 to 4,000 cryptocurrencies out there but that:

There are probably 200 or so that matter.

Despite dealing a harsh hand to the flailing 2,800 cryptos or so that don’t make the grade, he said:

You should assume that (Coinbase) will over the course of time add all the cryptocurrencies that matter in as many geographies as we are allowed to add them.

He affirmed that he was full of expectations for the year ahead and that this was the start of the next great wave in crypto.

What Happened in 2018?

When asked why 2018 failed to deliver the institutional investor boost that everyone hoped would happen, Himji responded that buy-in was at an all-time high:

We’ve had hundreds of institutions onboard onto our custodian platform.

San Francisco

He added that they needed a valid venue to trade on and a qualified custodian to store with, as well as liquidity, and that Coinbase has the most compliant and regulated solution out there. 

Despite the dreadful year of 2018 for retail investors, 2019 would continue to be a good year for institutions going into crypto, he argued.

The Coinbase IPO?

When quizzed about a possible IPO for Coinbase and how its valuation must be affected by the lower prices, he recalled when the company was valued at $8 billion earlier this year, reinforcing that none of the investors were then betting on the price of the asset “today, tomorrow or even a year from now.”

“If that’s your time horizon, as an institutional investor, you shouldn’t be touching this [cryptocurrencies].

But, if you have a long-term constructive view of where crypto is going, we’re [Coinbase is] the best-leveraged bet on crypto that you can find.

Himji did admit, however, that the company’s revenue was directly tied to trading volume and that trading volume was way down, concluding:

We have a long way to go before we do an IPO.

What do you think about the Coinbase president’s comments on investing in crypto? Share your thoughts below!


Images courtesy of Shutterstock

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Source: Blockchain

Bitcoin’s Lightning Network is Quietly Scaling for the Next Bull-Run

Lightning network

Bitcoin passed more significant milestones this week as data reveals its Lightning Network (LN) implementation passed 500 BTC ($2,066,000) capacity for the first time.


Lightning Network Sees Parabolic Rise

Statistics from monitoring resource 1ML.com confirmed the record capacity for payments at press time, with the number of accessible nodes also rocketing 13.7 percent and channels close to 25 percent.

The figures cap a period of constant improvements for Lightning, which has only added to its growth in both technical prowess and popularity in recent weeks and months.

Last week, the sale of what became known as the “cheapest work of art in history” using an LN payment sparked renewed applause for the technology.

Adam Back, CEO of Blockstream, whose technology facilitated the sale, subsequently claimed that the cost of the microscopic artwork was cheaper than a single grain of sand at 1 millisatoshi ($0.00000004143).

Bitcoin ‘Not Going To Zero’

Lightning’s achievements were just some of the encouraging signs Bitcoin remains in a stronger technical position than ever in its history, despite the Bitcoin price 00 continuing to hover around $4000.

Further advances came in areas such as block propagation, the time transactions take to reach network nodes, which roughly halved through 2018.

A robust technical basis has become a key argument for proponents combating claims Bitcoin will ultimately trend to zero following this year’s extended bear market.

Other aspects, including institutional uptake of Bitcoin for trading, also see regular attention, this week from crypto-focused venture capital firm  Dragonfly Capital Partners.

“Bitcoin could maybe fall as low as $2,000, or even $1,000, but not $0. And that’s a milestone for an asset,” managing partner Alex Pack told Forbes December 23.

“For something like bitcoin, which is a landmark in the history of money, it has become a more dependable store of value. People buying and using it have got to be confident it’s not going to zero.”

Last week, Bitcoinist reported on a definitive bear market reversal occurring around the next block reward halving, set for May 2020.

What do you think about the Lightning Network’s growth? Let us know in the comments below!


Images courtesy of Shutterstock, 1ml.com

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Source: Blockchain

Bitcoin Price to $17K in 2020, Says ‘Unorthodox’ Mining Difficulty Prediction

Bitcoin price prediction

An ‘unorthodox prediction’ of mining difficulty increases puts the bitcoin price somewhere around $17,000 in 2020 — due to the possible power law relationship between the two.


Bitcoin price and difficulty ‘power law relationship’

Twitter user @100trillionUSD is back again with another intriguing chart — this time plotting the relationship between BTC price 00 and expected bitcoin mining difficulty in the coming years.

The previous graph visualized the relationship between the bitcoin mining reward halving and its impact on price over time, plotting the months before the halving event took place. This time the focus was on mining difficulty and price, since many analysts consider it to be inextricably linked to network hash rate.

 “Price follows hashrate,” said Max Keiser earlier this year. Adding that it’s been his “mantra” since bitcoin was at $3.

Mining is undoubtedly profitable when the hash rate is rising. It also means miners are confident in the future of Bitcoin if they are adding hardware to scale up their operations. However, a high hash rate also causes the Bitcoin mining difficulty to increase. This makes the mining process more resource-intensive as more hash power is needed to achieve the same results as at lower difficulty levels.

If the hash rate is too high relative to the price at which miners can sell their mined bitcoin (as we’ve seen this year), the most unprofitable miners will likely drop out. They may sell their equipment or simply turn off their rigs until the price recovers or it becomes easier to mine as difficulty adjusts. 

“Based on the poll results on bitcoin difficulty and the possible power law relationship between bitcoin price and difficulty (see formula below), an unorthodox prediction of the 2020 bitcoin price would be: $17,317,” explains 100trillionUSD.

Overall, 85 percent of respondents believe the difficulty will increase 10-100 times in the next two years. Meanwhile, only 10 percent think this is the beginning of the end for Bitcoin mining frequently referred to as the ‘death spiral’ (more about this later).

The biggest share of respondents (59 percent) expects the difficulty to rise 10x between today and the end of 2020. A smaller group (27 percent), however, believe the increase could be as high as 100X, which would translate into a price above $28,000.

Granted, the poll sample size was rather small with just over 250 votes. Nevertheless, mining difficulty is an important factor to consider for not only predicting BTC price but also evaluating the state of the network as a whole.

Difficulty Drops But No ‘Death Spiral’

Bitcoinist recently reported that the Bitcoin network mining difficulty just had another downward adjustment to lower price. The biggest in seven years, in fact, amid a year-long bear market that saw an 85 percent drop in market capitalization from its all-time high in late 2017.

But contrary to many ‘experts’ equating a break in the trend to the start of a mining ‘death spiral,’ the difficulty adjustment is an important counterbalance for the Bitcoin network. In other words, the adjusting difficulty (every 2016 blocks) relative to hash rate is a feature that enables the Bitcoin network to find the equilibrium for mining profitability.

What’s more, this is similar to what central banks do by raising and lowering interest rates with changing market conditions. However, in Bitcoin’s case, the adjustment is entirely baked into the code and thus, entirely predictable. 

Is mining difficulty a good metric to consider when predicting price? Share your thoughts below! 


Images courtesy of Shutterstock, blockchain.info, @100trillionUSD.

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Source: Blockchain

Argentina Gets 7 New Bitcoin ATMs For Christmas

Argentina Bitcoin ATMs

Argentina ends the year on a Bitcoin high, as Athena Bitcoin Argentina rolls out seven Bitcoin ATMs (BATMs) with more to come. This now makes it the country with the fourth highest number of BATMs in Latin America.


Argentina Getting More Bitcoin ATMs

Before 2018, Argentina was faring rather badly in terms of BATM numbers, with only two in the whole country. Both of these were in the capital, Buenos Aries, although one was a very cool looking ‘arcade‘ machine, which also acted as an educational tool.

One of the designers of the arcade ATM, Santiago Molins, is now Director of Innovation at Athena Bitcoin. His vision for a Bitcoin-savvy Argentina is clearly a lot larger in scope.

The company has installed five new machines since September, in high traffic locations like shopping malls and Walmart stores. These are all in Buenos Aries, and Molins says there are another two devices not yet showing on CoinATMRadar.

He added that before the end of 2018, they will install another device in the nearby city of La Plata. And then in January. Molins explained:

The idea is to put in the first and second week of January the last ones that we have left in the laboratory, which would be two or three more. At this moment we are covering the Federal Capital, Buenos Aires and its surroundings.

Why The Sudden Increase?

Certainly, the jump from two Bitcoin ATMs to twelve or thirteen is a fairly impressive gain. The reasoning behind it, however, is somewhat less impressive, as sadly Argentina is going through a similar financial crisis to Venezuela.

While in humanitarian terms, the situation is a far cry from Venezuela’s economic turmoil, inflation in the country is rampant. LocalBitcoins volumes have spiked, as residents flock to Bitcoin and other cryptocurrencies in an attempt to protect their savings.

Expect to see a further influx of BATMs in the next year if the Argentinian economy doesn’t get any better.

But What About The 4000 ATMs Promised?

A very good point. In May, Bitcoinist reported that easing of regulations was set to see an explosion of ATMs across the country. US firm Odyssey touted a pre-agreed 4000 of the machines and claimed to have already installed 200 the previous year.

Apparently, that was all talk and no trousers. Back in October, Odyssey was still supposedly planning 150 ATMs by the end of this year, of which 80% were to be operational by the end of January 2019. This was to be followed by about 1600 BATMs by the end of next year.

Seems it’s best to count the devices on the ground, rather than the ones in some executives head.

Can Bitcoin ATMs boost adoption and help people avoid inflation in Latin America? Share your thoughts below!


Images courtesy of Shutterstock

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Source: Blockchain