Are We Close To A Bullish Cryptocurrency Mining Market?

At the end of 2017, cryptocurrency mining activities were at their peak. The famous virtual currency was traded around $20,000 dollars and miners were enjoying important returns after selling their coins in the market.

The last week, Bitcoin was able to sure and be traded over $8,000 dollars, the first time since May, after the G20 financial meeting agreed to leave the crypto market unregulated, at least for some more time. Indeed, the official document released by the G20 says that virtual currencies can deliver significant benefits to the financial system and the economy.

During an interview with Forbes, Genesis Mining co-founder, Marco Streng gave his point of view on the mining market and the possible future developments. It is important to mention that Genesis Mining is the world’s largest cloud bitcoin mining company.

Genesis was able to register an important win last week when regulators in South Carolina dismissed their cease-and-desist orders from March. On July the 16th, the Financial Stability Board (FSB) concluded that cryptocurrency platforms do not pose global financial stability risks.

The market is currently in its infancy and the future could be very bright for cryptocurrencies. But there are some things that yet need to be addressed. For example, the volatility is still six times higher than large cap stock.

One of the most bullish signs in the market we can mention the growing hashing rate. The hash is a calculation that is made by a miner in order to secure block rewards. At the moment, the miner that is able to find a block receives 12.5 BTC. In the future, Bitcoin miners will be rewarded with 6.25 BTC and so on.

Every ten minutes, a new block is mined. And 1,800 Bitcoin are created every single week. The increasing hashrate means that miners are very bullish on the market and in the future price of Bitcoin. They believe that mining Bitcoin now could be very profitable if they are able to keep the coins in their possession and sell them at a higher price.

During the current month of July, the number of operations moved above 45 trillion per second. This is a very important recovery from the last flood experienced in Sichuan, China, which affected the operations of some miners.

Power consumption is a very important topic of discussion in the media and in other fields. Crypto mining activities consume an important amount of energy, but some of the figures that we see in mainstream media are totally false.

The industry demand stands at 35 TWh. According to CoinShares Research analysts Christopher Bendiksen and Samuel Gibbons, this is less than the annual energy consumption of Luxembourg.

This figure is lower than other estimates that point that the consumption is 65 trillion watts per hour, rather than the number provided by the experts. He analysts explain that hardware efficiency is almost doubling every year (81%), and the cost of hardware is also reducing by half (-48%).

In the future, miners will have the possibility to do much more for much less energy. An important thing to mention is that miners operate in colder climates, allowing them to save energy on cooling their devices. Additionally, miners buy energy from green sources and at cheaper prices.

Bendkiksen and Gibbons explain:

“Our total findings suggest that the bitcoin mining industry is relatively healthy, profitable and continues to grow at breakneck speeds. The hash rate is tripling on an annual basis while the efficiency of the hardware is rapidly increasing and costs are coming down.”

There are currently several options to gain exposure to Bitcoin and other virtual currencies. Indeed, it is not necessary to directly buy the assets, there are other financial products available as well that are related to cryptocurrencies. Companies such as IBM and Hitachi were able to integrate their business with blockchain technology.

Another company, Bitmain, the most important crypto mining enterprise, is searching for $1 billion dollars from investors that want to finance their projects. But the interesting thing is that they are searching for the funds through an initial public offering (IPO).

The Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME), are offering Bitcoin futures since December 2017. There are other trading platforms that are receiving support from regulatory agencies to operate in a regulated environment.

One of the most important things that now are being debated is the possibility of having a Bitcoin Exchange Traded Fund – commonly known as ETF.

Back in 2003, when the first gold ETF was approved, the price of the precious metal skyrocketed over 420%. The market had more liquidity and was streamlined. It is not possible to be sure what will happen with Bitcoin or other virtual currencies if there is an ETF. What something is clear is that if a Bitcoin ETF is approved, the price of the famous virtual currency may see new highs.

According to a survey conducted by an international firm known as Foley & Lardner, 72% of the respondents said that they would certainly invest in an ETF holding Bitcoin or other virtual currencies.

But in the past, several crypto-ETF proposals have been denied by the SEC. For example, the Winklevoss twins presented two different Bitcoin-ETFs and both of them have been rejected. But even with these experiences, it is very possible that before the end of the year we would see the first Bitcoin ETF.

At the moment of writing this article, Bitcoin is being traded around $8,200 and has a market capitalization of $140 billion dollars. It is currently being traded more than 40% up from its lowest point this year.

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