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Bitcoin [BTC] mining: China commands hardware manufacturing sector despite fall in geographical dominance

Arijit Sarkar

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The changing dynamics of the global Bitcoin [BTC] mining
Credit: U.S. Navy Hosting

The decade-old cryptocurrency industry has been a witness to some of the most uncertain market conditions. However, in the face of the industry’s changing dynamics and growing crypto-acceptance, concerns surrounding crypto-mining can be viewed in a new light. In order to identify the changing depth of the market, CoinShares Research shared a report determining the future of Bitcoin’s [BTC] mining network.

Focusing on the electricity consumption factor, the report estimated the total electricity draw of the entire Bitcoin mining industry to be approximately 4.7 GW, similar to its November 2018 reading.

Source: CoinShares

Although the overall power consumption remains the same globally, the report reflected a steady trend of
reduction of Chinese geographical dominance among Bitcoin miners. This unforeseen reduction in miners can be attributed to the uncertainty of Chinese government’s policy towards miners. On the contrary, Chinese dominance in the hardware manufacturing sector remains as strong as ever and is showing no immediate
signs of reduction. Adding to it, the report says,

“It is also worth noting that the ~40% drop in hashrate observed at the tail-end of 2018 represents the first time we have ever observed a substantial and prolonged drop in hashrate as a result of sustained large-scale corrections in the Bitcoin price.”

Source: CoinShares

Contradicting the previous trend, the recent spike in hashrate can be due to either re-starting of much of the previously shuttered mining gear or the deployment of next-generation mining gear at appreciable scale. Meanwhile, the current amount of energy required for hashing alone is estimated to be ~4.3 GW, up from 3.9 GW in November 2018. This result is also broadly in line with a ~25% increase in hashrate and a ~10% increase in gear efficiency. On an annualized basis, the report estimated that the network currently draws the equivalent of ~41 TWh.

Overall, CoinShares’ findings reaffirm that Bitcoin mining is acting as a global electricity buyer of the last resort and therefore, tends to cluster around comparatively under-utilized renewables’ infrastructure. As the crypto-industry matures in the public eye, mining could act as a driver of new renewables developments in locations that were previously uneconomical.





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ErisX goes all hands on deck to launch a Bitcoin Futures market

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ErisX goes all-hands on deck to launch a Bitcoin Futures market
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ErisX’s CSO, Matt Trudeau, detailed the company’s four important plans for the future, which includes launching a spot market, to secure a Bit License, DCO, and to launch a futures market.

ErisX currently has a DCM contract, which is a Derivative Contract Market that allows ErisX to run a CFTC-regulated futures exchange. However, ErisX aims to get a DCO [Derivatives Organization], which will effectively allow it to run a CFTC-regulated clearinghouse. A clearinghouse would mean that ErisX can take control of the custody of the assets and clear and settled trades.

The CSO explained the benefit of this, stating,

“There is some efficiency for firms like producers [like mining companies]; if they need to hedge their inventory or need liquidity on a spot market, they could do that conveniently on a single platform. “

Trudeau added that from the “post-trade standpoint” and “the collateral management standpoint,” ErisX would have cash, crypto, and the futures, all stored in their clearinghouse. This would boost efficiency since it would be available for all customers under a single platform. The CSO added,

“… so there is some efficiency in terms of managing collateral, if you don’t have assets on  multiple platforms, it can all be in our clearinghouse.”

Apart from the aforementioned plans, Trudeau added that the crypto-industry needs to mature more and that ErisX plans to make a significant contribution to that. He added,

“The market is professionalizing and we think that in terms of what institutions are expecting from a trading/custody experience, we will bring some of the solutions to the market and that’s really the foundational pieces that they are looking in order to build their businesses on top of us.”

Apart from ErisX, LedgerX has also received a go-sign from the CFTC to settle Bitcoin Futures in Bitcoins. Other exchanges include Intercontinental Exchange’s Bakkt and Seed CX.





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