ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 14

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 Russia U-turns on Crypto Use

Though Russia has been signaling its intention to use cryptocurrencies for quite some time, there seems to be a change in plan.

The Vladmir Putin-led country last week made a disclosure that it has banned the use of Bitcoin, Ethereum, and other cryptocurrencies for payment purposes within its borders. Rather, they can only be used for investment.

A loose translation of the law, as published on the Russian parliament website, states: “It is prohibited to transfer or accept digital financial assets as a consideration for transferred goods, performed works, rendered services, as well as in any other way that allows one to assume payment for goods (works, services) by a digital financial asset, except as otherwise provided by federal laws.”

Back in January, the Bank of Russia proposed an outright ban on crypto — for payments or investments. However, since Western sanctions were imposed following the invasion of Ukraine, Russia’s attitude towards cryptocurrency seems to have changed.

The central bank later made it clear that it is not against the use of cryptocurrencies in international transactions but frowns at it on the home front as it claims they pose some risks to retail investors.

There were even talks of considering accepting Bitcoin as payment for Russia’s oil and gas exports.

 Tesla in Bitcoin Sell-Off

Also making a somewhat u-turn is electric vehicle maker, Tesla, which disclosed in its Q2 earnings report that it sold about 75% of its Bitcoin holdings to increase its balance sheet by $936 million in cash. The carmaker, through its CEO, Elon Musk, in May 2021 stated over Twitter that it won’t be selling any of its Bitcoin.

Tesla reported a $106 million loss on the Bitcoin sale made public last week. However, despite the loss, Musk said the company is “certainly open to increasing our bitcoin holdings in the future” and has not sold any of its Dogecoin. According to Arcane Research, Tesla sold an estimated 29,060 Bitcoin at an average price of $32,209.

 Bitcoin Mining Efficiency Improved

After the Bitcoin Mining Council (BMC) announced it found that the sustainable power mix of the global Bitcoin mining industry has reached 59.5%, some enthusiasts have called on Musk to restart accepting Bitcoin as a payment method for Tesla products. Musk wanted the percentage of renewable energy usage for Bitcoin mining to be most likely at or above 50%, and that there is a trend toward increasing that number,

The BMC last week noted an increase of 6% and an indication that Bitcoin mining efficiency has increased by 46% from Q2 2021 to Q2 2022, making it one of the most sustainable industries globally.

This efficiency gain reaffirms the fact that as the Bitcoin Network continues to grow, it will become even more efficient over time, it states.

As a voluntary global forum of Bitcoin mining and other companies in the industry, the BMC disclosed its findings following its survey which focused on three metrics: electricity consumption, technological efficiency, and sustainable power mix.

It collected data from over 50% of the global Bitcoin Network, representing 107.7 exahash (EH), as of June 30, 2022, to show that its members and participants in the survey are currently utilizing electricity with a 66.8% sustainable power mix.

 Other Mining-Related Developments

Last week, saw Bitcoin usher in a mining difficulty adjustment at block height 745920 lowered by 5.01% to 27.69T to record the biggest drop in a year. It was also reported that hashrate growth slowed considerably in Q2–2022, particularly compared to last year given the post-China ban recovery and ASIC allocation frenzy.

According to Luxor Mining, the slowing is in direct response to bear market mining economics as many miners are shutting off and their costs outweigh the profits they can squeeze in this hostile hashprice environment.

Bitcoin’s 7-day moving average hashrate grew only 7% in Q2–2022 unlike 15% growth in Q1–2022 and 27% in Q4–2021.

 Not just Bankruptcies, Tesla’s Dump, but Also Public Miners?

While several factors may have led to the downtrend in the crypto markets in recent months, including reported bankruptcies and Tesla’s offloading of two-thirds of its Bitcoin holdings, public miners could have played a part in it too, suggests new data from Arcane Research.

The crypto analytics firm notes that public miners sold almost a quarter (25%) of their Bitcoin holdings at fire-sale prices — and we know how much that could mean.

They only sold between 20% and 40% of their bitcoin production from January to April. By May, they sold more than 100% of their production. But June was the peak — so far. They sold about 14,600 Bitcoin — almost 4x of May’s sale. When calculated against the 3,900 Bitcoin produced in the month, it means public miners sold almost 400% of their production to drain their holdings by nearly 25%. Core Scientific and Bitfarms sold the most while Marathon and Hut 8 now hold the most Bitcoin as they didn’t sell in May and June.

In another report in July, Arcane Research notes that large institutions have sold 236,237 BTC since May 10th.

 A week of cold numbers

The past week saw Bitcoin break through $22,000, and Ethereum over $1,450 recording a 24-hour increase of more than 6.4%. The spike led to a Bitcoin liquidation of about $189 million in four hours while Ethereum liquidated $118 million.

New data released at the same time shows that BNB Chain’s daily transaction volume was down 58.2% as of July 11 since its ATH in November 2021 while Solana and Ethereum were down 18.1% and 13.7%. Daily active addresses of the BNB Chain dropped by 68.8%, Ethereum by 27.2%, and Solana increased by 20.4%.

On market trends, the quarterly survey by a panel of 53 industry experts conducted by Finder in July put out its price prediction for the end of 2022. The experts expect Bitcoin to be priced at $25,473 by the end of the year, and Ethereum at $1,711. More than 70% of them do not see a recovery from the bear market this year. They also adjusted their 2030 estimate for the average worth of Ethereum — their initial $26,338 prediction for 2030 fell slightly in the April report ($23,372) and it is now at $14,412.

Still, on Ethereum, $1.7 billion worth of ETH futures contracts were bought in an hour last week to claim the network’s 7-month biggest hourly volume in market orders.

 Binance Fined by The Netherlands’ Central Bank

Last week, the Dutch central bank disclosed that it imposed an administrative fine of 3,325,000 euros on Binance Holdings Ltd on 25 April 2022 for offering crypto services in The Netherlands without registration.

The apex bank says companies that want to offer crypto services in The Netherlands “are obliged to register with DNB under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft)” but Binance hadn’t even after being warned in August 2021.

It says Binance has enjoyed a competitive advantage because it has neither paid levies to DNB nor incurred any other costs regarding ongoing supervision over its more than one year and a half period of violation (May 2020 to Dec 2021).

It, however, “moderated the fine by 5%” partly because Binance had now made a registration application — which is currently being assessed by DNB — and the exchange has been relatively transparent about its business operations throughout the entire process.

 G20 Economies Talked Crypto Regulation Again

At a meeting of G20 Finance Ministers and Central Bank Governors in Bali on July 15 and 16, 2022 in a hybrid mode, it was agreed among top economies to “strengthen cross-border coordination and regulation of crypto-assets.” They also supported implementing the G20 Roadmap for Enhancing Cross-Border Payments. How these measures are going to play out would have to be seen as they are implemented.

 Tencent’s NFT Platform Folds Up

The NFT platform of the largest internet company in China Tencent has announced its closure. Huan He has been unprofitable because the Chinese government does not allow transactions in the NFT secondary market where they could be traded with crypto.

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