Weekly Roundup: BTC Ends Week Up, BCH Anticipates Fork, Chinese ASICs to IPO
In this week’s edition, we rejoice as bitcoin is seemingly crawling up from a 2018 bottom, discuss the potential fork in Bitcoin Cash that could have dramatically negative effects for the competitor, and talk about why bitcoin mining is still so popular despite BTC’s diminished price and the Bitcoin Network reaching all-time highs in both hash rate and energy consumption.
Bulls Remain Optimistic on Potentials of Correlation With Emerging Market Activity
In a rare display of optimism, the price of BTC marched carefully upward last week, ending up close to 5% over the last 7 days. It had otherwise been a terrible August for bitcoin, still down 18% over the last 30 days, starting the month close to $8000 and dropped below $6000 only 2 weeks later. For now, BTC has begun a careful recovery, with long-time HODLers hoping it has finally fared the worst that 2018 has to offer. For many altcoiners, hope has already been given up for repairing damage done to their coins as several prominent exchanges (such as OKEx, Poloniex and KuCoin) have been in the process of delisting swaths of altcoins during what has been a particularly brutal summer.
Bitcoin perma-bull and CNBC talking head Tom Lee suggested on Saturday that BTC could still end the year “explosively higher” if Wall Street deemed that emerging markets (stocks representing companies based in third world or developing nations) were once again favorable and began to pour money back into them. Emerging markets, one of the riskier investment categories for Wall Street, have taken a beating thus far in 2018 but are considered to be potentially primed for a comeback. As perhaps the riskiest investment class itself, cryptocurrency stands to benefit from a rising level of investor confidence, which could very well demonstrate itself through a resurgence in popularity of emerging market investments.
Bitcoin Cash to be Forked Amid Controversy
The highly contentious Bitcoin Cash (BCH) is now suffering problems within its own ranks as two major holders of the coin have become embittered in how to proceed with some major changes that were slated to be introduced to Bitcoin ABC, or Bitcoin Cash’s version of Bitcoin Core’s full client software. Bitcoin Cash – itself a fork of bitcoin – is now running a risk of being forked, fragmenting the competitive threat it may have once posed to Bitcoin Core (aka BTC, or the “original bitcoin”). On one side is the pro-ABC Jihan Wu, owner of Chinese mining equipment giant Bitmain. On the other side is eccentric Australian entrepreneur and ABC opponent Craig Wright, whose main claim to fame was almost tricking the world into believing he was Satoshi Nakamoto in 2016.
Wright feels the changes to be implemented, which ABC developers regard as necessary in the advancement of BCH’s ability to truly act as “cash,” have a philosophical weight behind them that he believes actually strays it from accomplishing this purpose. At center front of the changes is the reactivation of dormant features that allow Bitcoin Cash to enable “oracle”-type prediction services that Wright feels could essentially lead the software to be used for the purposes of “unlicensed gambling.”
“Something people fail to understand about bitcoin is it is intentionally limited in what it can do and how it can be changed. This is purposeful. Bitcoin is designed to be stable money and for that reason it is not designed to have new opcodes added outside the need for a few security-based replacements or to be altered.” – Craig Wright
To counter ABC’s planned changes, set to activate on November 15th of this year, Wright announced his plans to hard fork ABC’s code and implement his own changes that he believes will better suit BCH’s ability to act as “cash.” Perhaps as a tip of the hat to his famous claims of being Satoshi Nakamoto, Wright is naming his fork Bitcoin SV, with “SV” standing for “Satoshi’s Version.” Wright’s proposed move has caused quite a degree of controversy within the Bitcoin Cash community who is largely split on which side to back. The debate has even attracted the likes of Ethereum developer Vitalik Buterin, who took to Twitter to express his distaste for Wright’s plan to split Bitcoin Cash.
The BCH community should NOT compromise with Craig Wright to "avoid a split" and should embrace it as an opportunity to conclusively ostracize and reject him. Bitcoin Craig (BCC) can go take the ticker symbol from the now-defunct cryptocurrency to which it is a fitting successor.
— Vitalik Non-giver of Ether (@VitalikButerin) August 22, 2018
Bitcoin purists, who have generally opposed the idea of Bitcoin Cash since its inception, might come out as the only winners of the imminent forking of BCH, as both Wu and Wright are both owners of vast hoards of BCH, capable of crashing the price of each other’s version of BCH should they decide to dump their opposing coins on the open market.
“Well this didn’t pan out too well as expected Bitcoin is still going strong and unaffected while Bcash is still a cesspool of scammers still fighting between themselves good going you got exactly what you wanted
Enjoy your fork whichever you choose because you know that wright and ayre will most likely dump on ABC and there’s a good chance Jihan may also dump on the Wright/Ayre fork
And with the low hashing they may also double spend attack each other too
I’ll go back into retirement now good luck you’re probably going to need it” – Bitcointalk member tekmobile
Three Chinese ASIC Producers to Launch IPOs
Three bitcoin mining equipment Chinese manufacturers, Bitmain, Canaan Inc and Ebang International Holdings, are set to go public this year, having their companies listed on a Hong Kong-based stock exchange. The news comes as something of a surprise, as American manufacturer NVIDIA only managed to sell about 11% of analyst’s expectations of their own equipment so far this year. Increasing competition in the marketplace and a drastic reduction in the price of bitcoin are to blame for falling sales of ASIC miners. Out of the 3 Chinese companies, Bitmain and Canaan are posed to fare the best in current market conditions as their equipment can be used for purposes outside of mining bitcoin, such as mining other blockchains, big data analysis, cybersecurity measures or even artificial intelligence development.
Bitcoin Network Energy Consumption at All-Time High
Despite falling bitcoin prices and ASIC sales for NVIDIA, the average hash rate of the Bitcoin Network soared to all-time highs last week, closing in on the inconceivably-high 60,000 petahashes (or 60 billion billion hashes) per second. To put things in perspective, the average computer’s chance of “solo mining” a bitcoin block was around 1,000,000 to 1 on December 31st, 2017. The average hash rate has increased almost six fold since this point, meaning these odds have now decreased to 6,000,000 to 1. This means a solo miner would have to wait approximately 114 years before they found their first bitcoin block.
What does this mean in terms of total electricity consumed by the Bitcoin Network? It means that the Bitcoin Network now consumes roughly 1% of the world’s total energy supply on any given day, or as much to power the entire state of New York. Since bitcoin mining difficulty can never go down (it can only remain constant or go up), this figure will likely increase in the near future, unless the global power supply increases or the amount of electricity required to perform the functions of the best ASIC miners goes down. Not taken into account in this figure are additional electricity expenses, such as fans and other cooling systems that are required by most mining operations to prevent their rigs from overheating.
The implications of this revelation are unencouraging for bitcoin miners: in order to recreate the profit margins obtained when bitcoin was at its all-time highs back in December 2017, the price of 1 bitcoin would have to exceed $100,000, or the cost of electricity would have to plummet to zero. Neither scenario is likely to occur in the near future. While it is estimated that all the banks in the world consume over 3 times as much electricity as bitcoin, in a dichotomy with bitcoin they account for over 99% of all financial transactions in the world, compared to bitcoin’s 1%, again rendering bitcoin vastly more expensive in terms of energy than traditional financial institutions.
Coins Bucking the Trend
Instead of identifying coins which had done particularly better than all the others over the course of the last week, this week we’re switching things up a little bit to look at coins that have done particularly bad. After all, the trend for last week was “up,” so we will now examine some coins that bucked the trend by continuing to lose value.
Sometimes such coins are simply considered to be “oversold,” meaning the market has unfairly beaten them up, even though they remain fundamentally solid coins. Sometimes, however, the market has beaten them up for good reason, and they perhaps never should have been at a high a price as they once were. Because the altcoin market as a whole is largely speculation driven, it can frequently be difficult to determine whether a falling coin belongs in one of these categories or the other. One might assume that most of the coins in the top 50 by market capitalization have some fundamental merit to stand out so significantly from 1800+ other competitors, so chances are decent they could be due for a rebound in the upcoming weeks.
As in previous Weekly Roundup editions featuring this segment, we employed our own Goodness Index (GI) formula to identify a couple coins that were faring particularly badly last week compared to bitcoin. The lowest GI scores are basically determined by the coins in the top 50 that declined the most and on comparatively heavy volume.
Qtum (QTUM): -7%, GI = -84
It’s been a hard year for Qtum, the smart contract-oriented Bitcoin/Ethereum hybrid. Its premise had potential: making smart contracts easier to use and more widely applicable to every day business operations. Since skyrocketing to a price of $93 on January 7th, it has since lost over 95% of its value, currently trading at $4.18. Despite this massive sheering of wealth, Qtum still retains a rather commanding position at number 26 in the rank of coins by market cap.
So, how did Qtum manage to lose 7% during a week when bitcoin and most other coins were up? There’s a couple of reasons; for one, it is coming down off of a decent price boost caused by news earlier this month that it is now integrated with Amazon Web Service (AWS), meaning anybody can now use Qtum via web browser, or even run their own node. Second, lagging network speeds and an inability to distinguish itself among increasing competition have rendered the project uninteresting to most investors, as can be confirmed by the Qtum network’s declining number of nodes and daily transaction count. While Qtum is down, it is by no means out, and perhaps only one or two more positive news stories away before reversing course in price movement.
Dash (DASH): -4%, GI = -46
As one of the first privacy-oriented coins, Dash enjoys the benefits of having a robust, dedicated community, a brilliant system of self governance and relatively widespread adoption. It was a top-tier coin for several years and offered the promise of solving what were seen as the flaws of bitcoin, like slow transaction times and only partial anonymity. Lead developer Evan Duffield’s novel engineering of transaction mixing gave the coin a cult-like status among its followers. However, like Qtum, 2018 has not been kind to Dash, which has lost 90% of its market cap value since reaching its all-time high earlier this year.
Why did Dash manage to fare so poorly last week when by all accounts it was a good week for most other altcoins, even with recent news that it was being heavily used as the cryptocurrency of choice in the economic hardship-laden country of Venezuela? Though the team behind Dash and its core group of supporters is generally perceived to be a closed, silent-but-functional group of individuals, drama has been afoot in the Dash community, with many blaming CEO Ryan Taylor as the source of its continued problems. Taylor stands accused of not allocating resources at his disposal in a fashion beneficial to Dash’s success, chiefly through missing project deadlines, mishandling management funds and failing to create a safety net to keep its management afloat.
An anonymously submitted proposal calls for Taylor’s demotion from CEO to an “advisory role,” proposing that new leadership is the key to Dash’s woes. Will a change of CEO help Dash regain some of its territory in the rankings? The answer is unknown, but the flailing privacy coin would assuredly benefit from a renewed confidence in the cryptocurrency markets, buoyed upward as the byproduct of a rising bitcoin.
New merchants are added to https://t.co/MrMqst80it daily. The speed of #Dash adoption in #Venezuela 🇻🇪 in particular has been remarkable. Since start of August we've had 534 new merchants with 351 in Venezuela taking total listing count to 2,325! 🏆💪🚀 #FinTech #Cryptocurrency pic.twitter.com/zYFYna4gut
— Mark Mason (@StayDashy) August 21, 2018