A district of Shanghai says it is ready to embrace blockchain technology – but will adhere to the government’s cryptocurrency ban.

Per a report in Chinese media outlet Eastday, Yangpu District, in the northeastern part of downtown Shanghai, is planning to nurture some 1,000 blockchain technology professionals, foster 100 blockchain startups and provide incubation facilities for 10 promising potential “unicorn” startups.

The move is the first blockchain incentive to be embarked upon by a single Shanghai district, rather than the greater city authorities.

Yangpu authorities were careful to stress that the new blockchain push would not stop them from “resolutely curbing illegal financial activities such as cryptocurrency trading and token financing” – in line with Beijing’s crackdown on crypto-related activities.

Earlier this week, Shanghai welcomed a group of Australian blockchain startups visiting on a trade mission co-organized by Austrade and the Australian Digital Commerce Association. Per Australian media outlet Financial Review, the group’s activities in the city involved paying a visit to the headquarters of fintech giant Ant Financial.

Meanwhile, a Nevada-based company with links to China has unveiled an ambitious plan to turn a United States Defense Department data center into a vast cryptocurrency mine.

Per a company statement, Wuhan General Group (China), says it is “negotiating a redesign” for the 51,000 sqm data center, although it has not revealed whereabouts in American the building is located.

The company says the facility already “has over 3MW of power ready to accommodate up to 1,300 mining machines for BitcoinZcash and other cryptocurrencies.” However, Wuhan says it hopes to deploy a further 12,000 rigs and hike the power capacity up to a 30MW by next year.

Although negotiations appear to be ongoing, Wuhan says its first order of rigs from ASICminer will “arrive in late October,” with more to follow “in the coming months.” Wuhan says the facility will bring in an initial monthly revenue “in excess of USD 3.5 million” once it is operational.

The company, which has bases in Nevada and the Chinese city of Hubei, made a name for itself producing industrial blowers and power generation equipment and batteries. However, earlier this month, it announced it was spinning off its battery business, and said it will now “focus its operations on large-scale mining cryptocurrency farms.”

 

This post credited to cryptonews Image source: iStock 

Hackers are illegally generating Monero, Bitcoin and other cryptocurrencies by exploiting a software flaw that was leaked from the U.S. government, according to new research, raising questions about the security of one of the fastest-growing corners of financial markets.

Detected cases of illicit cryptocurrency mining — the digital equivalent of minting money — have surged 459 percent in 2018 compared to last year, Cyber Threat Alliance said in a report released Wednesday.

The spike is tied to the 2017 leak of Eternal Blue, a tool to exploit vulnerabilities in outdated Microsoft Systems software. When the tool became known, it tipped hackers to a previously unknown flaw in the software, now the basis of some hackers’ efforts to commandeer computing power of others to generate digital currency.

As of July this year, 85 percent of all illicit cryptocurrency mining has targeted Monero, according to the report. Bitcoin made up about 8 percent, while other cryptocurrencies accounted for 7 percent.

Hackers can “sit back and watch the money roll in,” said Neil Jenkins, chief analytic officer of Cyber Threat Alliance, a group formed in 2014 by a consortium of cyber-security firms to share intelligence about cyber-threats. While the hacks are occurring across the globe, a significant portion are in the U.S., he added.

Bitcoin and other cryptocurrencies are generated through a process of solving complex mathematical equations, which requires significant computing power. Most users and investors lack the means to create, or mine, cryptocurrency and simply buy it from an online exchange. When hackers illicitly generate currency using others’ computers, it creates free money for them and could erode the overall value of the currency by increasing its supply.

Eternal Blue was allegedly stolen from the National Security Agency and leaked last year in an unsolved breach by a hacking group that calls itself the Shadow Brokers. The group has repeatedly released tools from that breach.

The code gained notoriety when Russia and North Korea used it in massive attacks. In the first instance, known as WannaCryNorth Korean hackers shut down computers in dozens of countries, including Britain, where hospitals were hit. In the second, known as NotPetya, Russia used Eternal Blue to hack computers at companies including Denmark’s A.P. Moller-Maersk A/S, leading to billions of dollars of damage, according to the White House.

“A security update was released in March 2017. Customers who applied the update are protected,” Jeff Jones, a senior director at Microsoft Corp., said in a statement.

The NSA declined a request for comment.

“The threat of illicit cryptocurrency mining represents an increasingly common cybersecurity risk for enterprises and individuals,” according to the report. And the “rapid growth shows no signs of slowing down.”

 

This post credited to bloomberg  Image source: Bloomberg 

If you are reading this article, you know what the blockchain is. What you may not know, however, is that so-called “sidechains” also exist in the distributed ledger ecosystem.

To enlighten you, you will discover what sidechains are and what impact they could potentially have on the future of cryptocurrencies.

Sidechains explained

The concept of sidechains was first introduced in 2014 in a paper titled ‘Enabling Blockchain Innovations with Pegged Sidechains’ written by a team of developers who later went on to form the blockchain startup Blockstream.

In simple terms, a sidechain is a separate blockchain that is linked to the main blockchain through what is referred to as two-way pegging, which enables digital assets to be interchangeable between the two chains without jeopardizing their performance or speed.

Sidechains are being developed first and foremost to address the issue of blockchain scalability but also to potentially add new functionalities to a blockchain, such as introducing smart contracts for the Bitcoin network, for example.

How do sidechains function?

To transact on a sidechain a bitcoin user first has to send his or her coins to an output address, where the coins are being locked so that the user can then spend them elsewhere. Once this transaction has been completed, a transaction confirmation is communicated across the two chains followed by a short waiting period for security reasons.

Once the waiting period is completed, the equivalent number of bitcoin is released onto the sidechain, allowing the user to then access and spend the coins as he or she pleases. To put coins back on the main chain, the reverse transaction needs to take place.

How sidechains can help to scale blockchains

Everyone who has used bitcoin in late 2017 will remember the excruciatingly high transaction fees that peaked at an average of over USD 50 per transaction in mid-December. This occurred because the Bitcoin blockchain could not accommodate the number of bitcoin transactions that the late-2017 bitcoin gold rush caused. As a result, transactions suddenly took hours to process and high fees made bitcoin unuseable as a spending currency.

In anticipation of this scaling challenge, Bitcoin developers have started to work on sidechains with the belief that they can provide the much-need relief for the Bitcoin blockchain to ensure that the digital currency can survive as its adoption continues to grow globally.

Through the creation of sidechains, much larger transaction volumes can be processed as the main blockchain is relieved of its burden. Hence, a functioning network of sidechains could potentially give blockchain technology the ability to scale to a commercial level.

Having said that, sidechains have not yet been implemented into Bitcoin network as issues such as security and centralization still need to be addressed before we can start spending our bitcoins using sidechains.

 

This post credited to cryptonews  Image source: iStock

Price Watch:

  • Bitcoin is up 2.69% this week to $6,700 surpassing $6,500 late last week after oscillating between $6,300 and $6,400 before flirting with the $6,600 level and the $6,200 level within days of each other. This week was remarkably similar but ended higher with this week starting off at the $6,500 level  and managing to hold it  coming into this week until Monday when the price hit $6,274 before coming back to the $6,500 level on Tuesday as some alts like Ripple surged. The next day was not quite as fruitful with prices falling back to the $6,200 level and oscillating between $6,200 and $6,400. Later in the week, the price managed to regain the $6,500 level showing several bullish indicators in CCN’s own Yashu Gola‘s analysis. The price finally ended at $6,700 as alts like XLM and Ripple continued to rally. The last time we were at this level was in the face of the 9 ETFs that were rejected.
  •  Ethereum is up 10% this week to $240 after a gain of 16% last week. The gains are a recent phenomenon with preceding week having a drop of 31% last week, 5% the week before and drops of 11%  and 24% in the preceding weeks with single and double-digit drops going back months. The recent drops have continued to be blamed on ICO sell offs and the recent price gains are seen by analysts as evidence that the price is coming back. It wasn’t until last Thursday that, despite negative statements by Vitalik, the price increased 9% and analysts said we’d finally hit ‘a’ bottom. This week wasn’t all gains with the price briefly dropping below $200 on Monday.
  • The entire coin market cap is up 8% as Ethereum, Ripple and Stellar recorded strong gains. Bitcoins comparatively small gains held the market back as it sought to regain the $225 billion level.
  • Targets:
    • Tim Draper Stands By Bullish $250,000 Bitcoin – Tech billionaire Tim Draper stands by his bitcoin price target of $250,000 for 2022. Despite the recent slump, Draper remains undeterred in his enthusiastic outlook for the largest virtual currency by market cap.
    • Novogratz Sets $10,000 Price Target for 2018 – Billionaire investor Michael Novogratz, a legendary ex-hedge fund manager, formerly of the investment firm Fortress Investment Group, has said that the Bitcoin price will likely see a 30 percent increase by the end of 2018.

Governments:

Enterprises & Exchanges:

  • Japanese Cryptocurrency Exchange Zaif Hacked, $59 Million in Losses – Japanese cryptocurrency exchange Zaif was the victim of a major hack last week, local media sources have reported and the company has now confirmed. The hack, which occurred on Sept. 14 but was not discovered until Sept. 17, saw the hacker steal various amounts of bitcoin, bitcoin cash, and monacoin from the exchange’s hot wallet, collectively worth 6.7 billion yen (just under $60 million).
  • Bitcoin Mining Giant Bitmain Unveils ‘Next-Generation’ 7nm Chip – China-based Bitmain’s CEO Jihan Wu announced on Friday that it had developed a new 7nm application-specific integrated circuit (ASIC) mining chip for the SHA256 algorithm used by bitcoin, bitcoin cash, and many other cryptocurrencies. The s announcement came just two days after competitor Bitfury unveiled a new SHA256 ASIC chip. The announcement also comes ahead of Bitmain’s rumored initial public offering (IPO), which will reportedly take place “very soon.”
  • UK’s Biggest Port Operator to Explore Blockchain Solution – The privately run UK port operator, Associated British Ports (ABP), has inked a Memorandum of Understanding with freight forwarder Marine Transport International to explore a blockchain technology application aimed at improving connectivity at the 21 ports it runs.
  • Coinsquare Lists Blockchain ETF On Toronto Stock Exchange – Coincapital, which is registered with the Ontario Securities Commission, has become Canada’s newest ETF provider following the introduction of the LDGR and the STOXX B.R.AI.N. Index Fund (THNK), the company’s first ETFs.  The ETF’s selections are based primarily on blockchain intellectual property patent filings, which enables the fund to identify blockchain adopters and innovators. The selections also make use of the iSTOXX Yewno Developed Markets Blockchain Index.
  • AntPool to Sponsor NBA’s Houston Rockets – A partnership agreement signed by AntPool and the Houston Rockets for the 2018-2019 professional season and will stand out as one of the significant moves by the China-based company towards achieving its expansion goals into the Houston area. At the same time, this joins in the increasing number of similar awareness and publicity programs being experienced by cryptocurrency in recent times, especially in associating with the sporting industry.
  • IBM: Blockchain for Drone Fleet Security – Computing giant and prolific blockchain researcher IBM has applied to patent a system that would use distributed ledger technology (DLT) to address privacy and security concerns associated with the increasing usage of drones in both commercial and recreational applications. The patent is similar to a a patent application from Walmart that sought to use blockchain technology to secure packages throughout a supply chain made up of robots and autonomous vehicles.

Crimes:

 

Noteworthy:

These are a few pieces that were particularly popular this week.

  • Decentralized Crypto Exchange is Solution to Hacks, Will They be Ready? – Analysis of the development of decentralized exchanges in the wake of  the successful hacking attempts on crypto exchanges Bithumb and Coincheck and most recently Zaif.

This post credited to ccn Featured image from Shutterstock.

In a recent interview, Michael Novogratz, former hedge fund manager and current Bitcoin bull, mentioned how we will all use bitcoins to pay at Starbucks and Microsoft – something the community quickly picked up on. Reddit is now speculating whether Novogratz is “dropping some insider crumbs of knowledge for us masses” in terms of adoption.

At the Yahoo Finance’s All Markets Summit, Novogratz called the crypto price rally of December 2017 “the first global speculative mania ever,” and added that, “Like with any mania, [things] got crazy.”

In terms of adoption, he talked about Bakkt, a heavyweight crypto platform in development, and reminded that Microsoft and Starbucks are partners there, which could drive the companies to start accepting cryptocurrencies as a form of payment.

“You’re all going to start using Bitcoin to buy coffee of games soon enough,” Novogratz said (04:10), adding that “Bitcoin is, I think, going to have a renaissance here soon.”

Yahoo Finance

@YahooFinance

Highlight: Galaxy Investment Partners CEO Mike @novogratz calls the cryptocurrency boom in late 2017 “the first global speculative mania ever. … Like with any mania, [things] got crazy.” http://bit.ly/2O1jky8 

Bakkt partnering with Microsoft, Starbucks and other companies had been announced back in the beginning of August: “The new company is working with a marquee group of organizations including BCG, Microsoft, Starbucks, and others, to create an integrated platform that enables consumers and institutions to buy, sell, store and spend digital assets on a seamless global network.”

Back then, Maria Smith, vice president of partnerships and payments for Starbucks, said that, “As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks. As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”

The company later clarified that customers will not be paying directly with bitcoin, but that the company has joined forces with other well-known brands to create a platform to “convert digital assets like Bitcoin into US dollars, which can be used at Starbucks.” “However, we will continue to talk with customers and regulators as the space evolves,” they concluded.

Financial results:

Starbucks

What Does Novogratz Know about Starbuck's Bitcoin Plan? 102
Source: Nasdaq

____
Microsoft

What Does Novogratz Know about Starbuck's Bitcoin Plan? 103
Source: Nasdaq

Novogratz’s comment is not unfounded then, but the community is speculating that he has insider knowledge that could mean bitcoin adoption in these companies will happen sooner than expected. He has also previously called a bottom on crypto prices. Bottom or not, at least at the time of writing the crypto market is green.

 

This post credited to cryptonews  Image source: iStock

Bitcoin’s underlying software code was split on Tuesday, generating a new clone called “Bitcoin Cash,” but the new virtual currency got off to a slow start due to lacklustre support for its network.

The initiative was headed by a small group of mostly China-based bitcoin miners – programmers who essentially operate the bitcoin network – who were not happy with scheduled improvements to the currency’s technology meant to increase its capacity to process transactions.

These miners, who get paid in the currency for contributing computing power to the bitcoin network, initiated what is known as a “fork” on Tuesday, where the underlying blockchain splits into two potential paths, creating a new digital currency.

The blockchain is a shared online ledger of all bitcoin transactions and has spawned a range of financial and business applications.

Bitcoin’s split has created a new competitor to the original digital currency, which remains the oldest and most valuable in circulation.

Yet only a small fraction of bitcoin miners have been contributing their computing power to the new blockchain, and it took nearly six hours for the first batch of Bitcoin Cash coins to be mined this afternoon, according to Blockdozer Explorer, a firm providing data on digital currencies.

“It’s been a slow start for Bitcoin Cash,” said Iqbal Gandham, managing director at trading platform eToro. “The delay … could be a result of a lack of miner support for the new cryptocurrency.”

Bitcoin Cash on Tuesday traded on certain exchanges at a median price of $146.37 (£110.76), according to bitinfocharts.com, while bitcoin was at $2,729 on the BitStamp platform, down 4.6 per cent from Monday.

After the split, Bitcoin Cash has all the history from bitcoin’s blockchain, creating the same number of tokens, plus the new currency created. People who held bitcoins before the split now have access to an equal amount of Bitcoin Cash for free, which they will then be able to trade for fiat currencies – legal tender such as euros and dollars – or other digital tokens.

 

The creation of new tokens may speed up as less computing power will be required to mine new blocks, said Jeff Garzik, co-founder of blockchain startup, in an email.

Ryan Taylor, chief executive of Dash Core, a firm that manages the development of the Dash digital currency, said Bitcoin Cash may yet be short-lived.

“Bitcoin Cash has not solved scaling,” Mr Taylor said. “It has merely kicked the can down the road with slightly larger blocks, but still lacks a credible technology to scale to massively larger numbers of users.”

 

This post credited to independent  Image source: Reuters

The royal family of one of Europe’s smallest states is open to investing in cryptocurrencies to boost its wealth.

Crown Prince Alois of Liechtenstein says digital tokens such as bitcoin were “something to look into more into the future”, but admitted the principality does not currently have the “internal expertise to do that [invest] directly”.

Speaking to CNBC, Prince Alois said that he is interested in the way blockchain, the ledger technology which underpins bitcoin, could be used as a way of improving administrative tasks in the country.

“Blockchain will change a lot of things. It could even help make our state more efficient the way it is administered”, said Liechtenstein’s Crown Prince.

Blockchain is a shared electronic database that updates itself in real time and can process transactions using computer algorithms.

While Prince Alois runs the principality on a day-to-day basis, it is his father Prince Hans-Adam II who remains the head of state.

Known as the richest royal in Europe, Prince Hans-Adam II has $4.4bn (£3.1bn) to his name and owns a collection of artwork and two palaces in Austria, according to Bloomberg.

By comparison, Queen Elizabeth II has a personal fortune of £269m.

Prince Hans-Adam’s wealth has been passed down since the 12th century and is currently invested in a private banking group that counts some of the world’s wealthiest people as its clients.

Liechtenstein is home to approximately 38,000 people, and is bordered by Switzerland and Austria.

The German-speaking principality has one of the lowest rates of unemployment in the world and has become wealthy partly due to its status as a tax haven.

The OECD removed Liechtenstein from its tax haven blacklist in 2009 after the constitutional monarchy agreed to share financial information with the US, UK and Germany.

 

This post credited to independent Image source: Reuters

A new report drafted by the New York attorney general’s office (OAG) alleges that a significant number of cryptocurrency exchanges may be vulnerable to market manipulation, a finding that could prove ominous for hopes among investors that federal regulators will approve a bitcoin ETF or other exchange-traded crypto products in the near-term.

3 CME-Partnered Exchanges Flagged by NY Probe

Bitcoin, according to Securities and Exchange Commission (SEC) Chairman Jay Clayton, is not a security under federal law. However, an exchange-listed fund that provides investors with exposure to bitcoin would be a security, which is why the approval of these products falls under the SEC’s purview.

While several bitcoin ETF applicants have sought to create a fund whose shares would be backed by physical BTC, the sentiment among most analysts is that the first cryptocurrency ETF to receive a green light from the SEC will be one that holds bitcoin futures, which are already regulated by the Commodity Futures Trading Commission (CFTC).

Currently, bitcoin futures are available on two regulated U.S. stock exchanges — CME and CBOE, both of which are based in Chicago. CBOE was the first to market with its cryptocurrency product, though CME’s sees much more average daily trading volume and bases its pricing data on a wider array of spot trading markets.

This is where the OAG report comes in. The report, published on Monday, is the culmination of a five-month investigation into the operations of 13 cryptocurrency exchanges. Among other things, the OAG examined whether exchanges, in its view, adequately combat market manipulation.

As noted by Bloomberg’s Matt Leising, three of the cryptocurrency exchanges that provide pricing data for CME’s future contracts had policies that the OAG flagged as problematic.

One, Kraken, incurred the OAG’s ire for publicly flouting the state’s inquiry, with CEO Jesse Powell arguing that market manipulation “doesn’t matter to crypto traders.” The report said that two others, Bitstamp and itBit, have no formal policies in place to prevent market manipulation.

Industry Yet to Implement ‘Serious’ Surveillance

CME Group Bitcoin Futures Bitcoin ETF
CME, the largest bitcoin futures trading platform, receives pricing data from three exchanges with policies that the New York OAG report flagged as problematic.

CBOE’s pricing data comes exclusively from Gemini, which has partnered with Nasdaq to use the stock exchange giant’s market surveillance tools on its platform.

However, that doesn’t necessarily mean that a bitcoin ETF based on CBOE’s futures would be more likely to gain SEC approval, though, because, even if no manipulation was occurring on the Gemini exchange itself, its market prices would nevertheless be affected by unlawful trading activities taking place elsewhere in the global spot market.

Per the OAG report:

“The industry has yet to implement serious market surveillance capacities, akin to those of traditional trading venues, to detect and punish suspicious trading activity. A platform cannot take action to protect customers from market manipulation and other abuses if it is not aware of those practices in the first place. Several platforms also told the OAG that it was impossible to effectively surveil for manipulative activity taking place on more than one platform, and so any one trading platform is necessarily limited in the steps it can take to police abusive activity.”

SEC Commissioner Hester Peirce has criticized the agency for denying past bitcoin ETF applications due to concerns over the underlying bitcoin spot markets, rather than problems with the ETF products themselves. She says that this represents an expansion of the SEC’s authority beyond its lawful mandate.

However, given the commission’s recent rulings, Peirce is in the minority on this point, which is one reason why the SEC may continue to punt on making cryptocurrency products wrapped as conventional financial instruments more accessible to retail investors.

 

This post credited to ccn Images from Shutterstock

For the first time in history, US household wealth has surged above the $100 trillion mark, fueled by the rise in the value of stocks and properties. However, analysts say the unsustainable growth in household wealth could cause a crash, which may lead millennials to flock to Bitcoin.

In September, US household wealth reached $100 trillion, and ostensibly it seems like a positive development for US markets. But, in comparison to the stagnation in actual US household income, it is quite evident that the rapid growth rate of US household wealth cannot be sustained in the long-term.

Speaking to Business Insider, AJ Bell investment director Russ Mould stated:

“Household net worth cannot sustainably grow this much faster than incomes. Assets have been bid up and at some stage there has to be chance that they correct, just as happened in 2000 and 2007.”

Bubble-Like Behavior

According to Mould, the US stock market experiencing one of the strongest bull markets in history and the real estate market continuing to increase in value led to an abrupt increase in household wealth. However, if household wealth cannot be backed by stable income, then the market will be vulnerable to a major correction.

“The difference is likely to be accounted for by the surge in the value of financial and other assets — equities, bonds, property and rankly everything from vintage cars to art to wine to baseball cards. And this is one warning that at some stage another collapse in financial markets will sweep around the globe,” Mould added.

Bitcoin Housing bubble crash

Nouriel Roubini, a widely recognized economist and professor at Stern School, also recently called for a financial crisis in the US market by 2020, explaining that the market has been demonstrating bubble-like behaviors over the past year.

With the discrepancy between US household wealth and income growing exponentially and global debt rising to $250 trillion, Mould emphasized that the US market is due for a correction, whether that will lead to a minor correction or a financial crisis as Roubini predicted remains uncertain.

Viability of Bitcoin as an Investment

Bitcoin, like gold, is often considered as a store of value with no correlation to the broader financial market. It moves independently of traditional assets and commodities, which allows Bitcoin to operate as a reliable store of value in times of uncertainty and market volatility.

While there exists no correlation between Bitcoin and the broader financial market, Matt Hougan, vice president of research and development at Bitwise Asset Management, told Bloomberg in an interview that the decline of the global market does not guarantee a bull market for crypto.

“Non-correlation is not the same as inverse correlation so there’s no guarantee that when the market goes down crypto will go up. Over the long term, we think the fundamental drivers of crypto are different from the fundamental driver of equities and other assets, and we would expect the low correlation to persist,” Hougan said.

Still, considering the increasing demand for Bitcoin from millennials, with surveys finding that over one third of millennials are planning to invest in cryptocurrency within the next few years and 80 percent of American millennials already aware of Bitcoin, it is highly likely that if a financial crisis occurs in the near future as experts predict, Bitcoin will emerge as a viable store of value alongside gold.

This post credited to ccn  Images from Shutterstock

It’s Saturday, which means nearly everyone is settled in for a relaxing weekend free from the turmoils of crunching numbers. Because Bitcoin is important and everyone uses electricity, here are a bunch of numbers to throw those people off.

I didn’t major in math so here goes nothing. First, here’s a dose of sobering perspective: Back when people talked to each other for entertainment, given the lack of iPhone chargers in the mid-1800s, people would look into the distance and say something to the effect of “There’s gold in them there hills,” and they actually dug gold out of the dirt all day long. That takes a lot of energy, right?

Cut back to today, mining still exists, but in two contexts. The first is actually sifting through the earth looking for the shiny yellow stuff, i.e. gold. The other is Bitcoinmining, which has some skeptics red-faced and sputtering about the amount of electricity it takes to make a blockchain. Those haters should probably calm down.

Here’s why: Bitcoin mining costs $4.3 billion dollars. That’s not exactly chump change, but compared to the $87.3 billion iceberg that sank the Titanic (AKA gold mining), there’s a sizable difference to be considered. Bitcoin and physical gold both have value, but their respective contexts are the decisive factor here. Because Bitcoin is decentralized in its approach and has no structure for measuring power usage, the millions of miners building blockchains don’t care how much power is consumed to do their job.

However, there are two ways in which power can be estimated per Panda Analytics Inc. investor Vladimir Jelisavcic’s calculations.

Number One: The Top-Down Approach

Generally, it takes 10 minutes to confirm the block transaction, and, according to LongHash.com, for every 12.5 BTC mined per newly created block, miners earn $562,500 per megawatt hour (MWh). The price of electricity is subjective, but if one MWh costs $100 and 30 percent of the total earnings is used to buy electricity, the end result is almost 1,700 MWh for powering the Bitcoin chain.

Number Two: Bottoms Up!

When Bitcoin is created, a function called hashing computes the Bitcoin code. The faster the hash rate, the faster new blocks can be discovered and rewards reaped. The software being used affects the rate at which hashing operates. For example, the Antiminer S9 looks like a kooky air conditioner but is capable of performing 14.5 terahashes per second.

Related: Bitcoin Hash Rate Continues To Increase, Reaches 61.8 EH/s

That’s 14.5 trillion hashing operations every second. If the total Bitcoin network facilitates 50 billion trillion hashes per second (this sounds made up, I know), at least 3.45 million S9 units are necessary to support the blockchain. We’re left with 7,000 MWh and a total energy cost of 4,344 MWh, or $4.3 billion.

So what the deal with gold? Well, according to the world’s largest gold mining company, Barrick Gold Corporation, energy costs are $288 million per year. Based on the corporation’s annual report, gold production costs $794 per ounce. Last year, the company mined 5.3 million ounces—$4.2 billion worth of the precious metal. Net earnings increased drastically from $-2.9 billion in 2014 to $1.4 billion in 2017.

Global Gold Mining

Gold is mined literally everywhere, save for Antarctica. So if the global average for gold mined every year is 88 million ounces, according to the World Gold Council, it’s fair to say gold production costs $70 billion every year. Newly discovered mines are set for excavation starting in 2021 and expected to be sustained by 2023, meaning millions in additional gold reserves and millions more in production costs.

Related: Bitcoin Hash Rate Rapidly Growing Despite Price

Barrick employees own 1.5 million shares of the company, so they have a fair interest in the gold hedge. Investing in Bitcoin, however, is too volatile for investors to risk their treasure chests on, so they’re content for the moment to stick to their laurels. In an interview with Forbes, financial author John Wasik advises investing no more than 10 percent of one’s total portfolio until cryptocurrency continues to establish itself as a regulated entity.

There’s no question that Bitcoin mining energy is the lesser of two evils. It’s more a problem of tangibility (and gold is pretty). But as cryptocurrency leaders continue to prove by example, there is a middle ground closing in on Bitcoin investing. The solution presented is regulation in technology that has its eye on the gold.

This post credited to cryptoslate  Image source: Unsplash