In a panel discussion with CNBC Fast Money on 18th July, Barry Silbert, the Founder, and CEO of the Digital Currency Group discussed the Bitcoin price recovery of above $7000 and the possibility of the beginning of a bull market.
Silbert, on the bullish nature of Bitcoin, implied that a large amount of institutional money was sitting in dry powder, seeking an opportunity to enter the market. Eventually, the ‘bears ran out of energy’.
Recently, several negative remarks have been passed on Bitcoin, by the Chairman of the U.S. Federal Reserve, Jerome Powell, and billionaires such as Ken Griffin and Howard Marks. Silbert stated that the Bitcoin prices standing firm in such circumstances is a strong sign of the bull’s long stay.
Bitcoin and other cryptocurrencies have received a plethora of protest from big authorities such as the U.S. Securities and Exchange Commission [SEC] and the U.S. Federal Reserve System. In this context, Silbert was asked about his ‘upstream swim’ in the cryptocurrency space. To this, he responded by saying that:
“That’s the best part I mean that’s, that’s really where you make money when you’re swimming upstream and like I started buying Bitcoin in 2012 when the price was $10 and I’ve gotten through now to 80 percent corrections and this was like a 65 percent correction. It’s the same old criticisms and I think a lot of it is just that they’re uninformed.”
Silbert also added that anybody who would spend the time to research on this asset class, in terms of its significance and potential, will turn into a believer of cryptocurrencies and want to put money in it.
The discussion moved to traditional hedge funds and their approach and feasibility in entering the cryptocurrency markets. Therefore, a panelist asked for Silbert’s opinion on the insufficiency in the infrastructure of the hedge funds to invest in digital assets and their interest in solving the same. Silbert concluded by explaining that many hedge funds do not want to be the first one or the last ones in entering the new space.
Regarding his company’s investments and whether the focus is more on the cryptocurrencies and tokens or the platforms, the CEO said:
“So we’ve invested in 130 companies. I would say… it’s entire spectrum – blockchain, wallets, exchanges – candidly on the enterprise blockchain very little traction, very little evidence that there’s product market fit. I’m really all about the store of value, value prop and I’m all about the infrastructure that’s required to create the on-ramps and off ramps for Wall Street to get involved in this asset class.”
Silbert continues, saying that 2019 is going to be the year of ease as well as social acceptance for those who want to get into the cryptocurrency space.
Further, he was also asked about the fundamental valuation approach to the digital asset class. Silbert explained that he has only invested in five cryptocurrencies that he believes in. The allocation, according to the Digital Currency Group balance sheet is 50% in Bitcoin, 25% in Ethereum Classic [ETC], 15% in Zcash [ZEC], and 5% each in Decentraland [MANA] and ZenCash [ZEN].
On the regulatory aspect of cryptocurrency investments, Silbert clarified that the firm stays away from ICOs and only concentrates on the store value side of the digital assets.
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Iran: Cryptocurrency miners on the brink of supply shock; power cut warning sounded
Cryptocurrency mining could soon be phased out of another Asian giant, Iran. An official from Tavanir, the Iranian state-run company responsible for the supply and distribution of power within the country, has sounded a warning for crypto-miners.
According to an Iranian news outlet, Iran Front Page [IFP], Tavanir’s Mostafa Rajabi Mashhadi, on June 23 said that in the month of May, the country’s energy consumption shot up by 7 percent, stating that the ‘main cause’ for the same was Bitcoin miners’ excessive energy costs.
Using the national grid for the mining of cryptocurrencies is “illegal,” and if these culprits continue to use the grid to mine Bitcoin and other digital assets, their “power will be cut off,” he added.
Mashhadi added that the commensurate amount of electricity consumed by a “Bitcoin mining machine” was equivalent to the energy consumption of 24 dwellings. He said that the Iranian administration had yet not confirmed the tariff on digital currency mining power consumption.
Electricity is one of the few utilities within the country that is subsidized. This is one of the reasons why activities like Bitcoin mining consumes so much electricity, mining being a highly energy-intensive activity. Additionally, this rise is concentrated in residential areas, rather than industrial hotbeds.
Interestingly, earlier this month, Iran’s Financial Tribune had quoted the Deputy Energy Minister of Iran, Homayoun Haeri, who stated that digital currency miners should be presented with electricity bills based on “real prices” of consumption. Haeri had added that power exports should be kept in mind when these consumption costs are calculated.
Finally, the report highlighted that Tehran pays $1 billion annually to circumvent the pay gap between real electricity costs versus the actual amount charged to customers.
Given the extensive computation and hence, energy costs of cryptocurrency mining, several countries are clamping down on domestic mining industries. China, home to the largest mining pools in the world, tabled a proposal to ban all forms of cryptocurrency mining citing extensive energy consumption.
The National Development and Reform Commission [NDRC] had announced plans of banning mining of all forms of digital assets, reinstating its long-held view of converting to a clean energy-producing country. This, coupled with the government’s ongoing crackdown of the domestic cryptocurrency industry, is seen by some as serving the best of both worlds.
However, with the decline of Chinese miners and the crackdown on Iranian ones, other countries might emerge as alternatives. Mati Greenspan, Senior Market Analyst at eToro opined that these “alternatives” could be Russia or Canada.
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