Bitcoin

The Future Mining Trends: Gold vs Bitcoin

Published

1 month ago

May 29, 2024

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Bitcoin is challenging the age-old allure of gold. As these two titans of value vie for dominance, the future of mining both assets stands at a crossroads.

Gold, with its long history, symbolizes traditional wealth. Bitcoin, on the other hand, represents the forefront of digital innovation.

Gold vs Bitcoin: Which Is Better Now?

Gold mining has stood the test of time. For centuries, it has been a symbol of wealth and stability. The process of extracting gold from the earth is labor-intensive and environmentally taxing. Yet, it remains a cornerstone of the global economy.

Gold’s tangible nature and historical significance make it a reliable store of value, especially during economic uncertainty.

In stark contrast, Bitcoin mining represents the cutting edge of digital innovation. It involves solving mathematical problems to validate transactions on the blockchain, a decentralized ledger. This process, known as Proof-of-Work (PoW), requires significant computational power and, consequently, large amounts of energy.

Gold Against Bitcoin Price Performance. Source: Bloomberg

Rob Chang, CEO of Gryphon Digital Mining, told BeInCrypto about Bitcoin miners’ strategic approach. He emphasized that Bitcoin mining can stabilize local grids and support renewable energy projects, offering a unique benefit that traditional gold mining lacks.

“Miners seek low-cost power, usually in areas with low demand or where there might not even be enough demand to support a stable grid. The presence of a Bitcoin miner who uses consistent amounts of power is beneficial for regions where the local area may not have the demand to justify a stable grid,” Chang said.

Both gold and Bitcoin mining have significant environmental footprints. Gold mining often leads to deforestation, water pollution, and habitat destruction. Efforts to mitigate these effects include stricter regulations and the development of more sustainable practices.

However, the inherent physical nature of gold extraction poses ongoing environmental challenges.

Bitcoin mining, on the other hand, is criticized for its high energy consumption. Although Bitcoin’s carbon footprint has drawn scrutiny, the industry increasingly turns to renewable energy sources.

Chang noted that Bitcoin mining’s competitive nature drives efficiency and innovation, which can lead to more sustainable practices over time.

“Bitcoin mining difficulty is an inevitable outcome of Bitcoin’s success and is something miners should expect and in fact embrace since it would only occur if Bitcoin continues to succeed. It incentivizes miners to be as efficient as possible and to innovate to stay as low cost as possible,” Chang added.

Bitcoin Mining Difficulty. Source: Glassnode

Competitive Mining Market for Both Assets

The economic viability of mining operations is crucial for both industries. Gold’s value is influenced by geopolitical stability, currency fluctuations, and market demand. Despite its stability, the profitability of gold mining can be affected by fluctuating ore grades and increasing production costs.

Bitcoin’s market dynamics are even more volatile. Its value is subject to market sentiment, regulatory changes, and technological advancements.

Chang explained that energy prices are the most critical cost variable for Bitcoin miners. Efficient energy management can make or break a mining operation.

“The best measure of this is the Bitcoin efficiency ratio, which measures the amount of Bitcoin generated per deployed exahash. A good way to think about this is Bitcoin is to oil as hashrate is to oil derricks. The more exahashes or oil derricks a company has, the more Bitcoin or oil they should generate,” Chang told BeInCrypto.

Energy Efficiency of Bitcoin Mining. Source: University of Cambridge

Moreover, hardware competition at the ASIC miner level is welcome and good for the industry. Historically, a few dominant players controlled the mining machine market, squeezing profitability by repricing equipment based on real-time Bitcoin prices. This has made it difficult for miners to compete, as most are forced to provide large upfront payments to procure machines.

The centralization of mining power is a potential concern for the Bitcoin network. While not an issue currently, vigilance is necessary to prevent bad actors from gaining control over the global hashrate. Decentralization is key to ensuring a secure blockchain.

Regulations also play a crucial role in the future of mining. Poor political environments can kill off mining operations altogether. Chang pointed out that most laws impacting Bitcoin mining relate to its energy use.

If a miner is carbon neutral, they can avoid regulations targeting carbon-emitting operations.

Bitcoin Hashrate Distribution. Source: Blockchain.com

Looking ahead, gold will remain a safe haven asset, but its environmental impact may drive stricter regulations and push for greener mining technologies. With its potential for supporting renewable energy and stabilizing grids, Bitcoin may pave the way for a more sustainable future in digital asset mining.

Disclaimer

Following the Trust Project guidelines, this feature article presents opinions and perspectives from industry experts or individuals. BeInCrypto is dedicated to transparent reporting, but the views expressed in this article do not necessarily reflect those of BeInCrypto or its staff. Readers should verify information independently and consult with a professional before making decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Bitcoin

Bitcoin Crash: VanEck Sees an Opportunity

Published

4 hours ago

July 5, 2024

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VanEck remains optimistic as Bitcoin (BTC) price continues to nosedive in the aftermath of woes around the German government and Mt. Gox.

Market corrections are a dreaded scenario, spelling fear among traders. While the otherwise “weak hands” cower, the bold lot seize the opportunity to grow their bags.

VanEck Urges Traders: Buy Bitcoin During Market Panic

Describing the ongoing Bitcoin crash as “4th of July discounts,” VanEck sees BTC price falling to the $53,000 range as a ‘buy the dip’ opportunity. On-chain platform Santiment shares the sentiment, urging bold traders to seize the moment.

“Markets have continued to bleed, and social media is now showing historic levels of FUD. It is rare for an hour to go by where there are more mentions of “sell” than there are “buy” across crypto forums. But we’ve seen a few of these instances in just the past 24 hours, including the largest ratio of negative vs. positive comments thus far in 2024. For bold traders, this is a window where some may wish to be a true contrarian and buy into the crowd’s anger and frustration”.

Amid the negative market sentiment, crypto researchers observe elevated fear levels. This is warranted as many traders suffer losses. Hundreds of thousands are getting “rekt” amid an ongoing bloodbath. Derivative data analysis platform Coinglass reports over $650 million in total liquidations.

Pseudonymous trader CryptoNagato reported that this is the second-largest liquidation event in the Bitcoin market after the one right after the FTX collapse in November 2022. All indications point to the ongoing sell-off between Mt. Gox and the German government, with their voluminous transactions stirring markets.

In a Thursday post, German lawmaker and Bitcoin activist Joana Cotar slammed the government for its “hasty” actions selling Bitcoin. Calling the selling spree insensible and counterproductive, she urged the state to emulate the US and hold Bitcoin as a reserve currency.

“Instead of holding Bitcoin as a strategic reserve currency, as is already being debated in the USA, our government is selling on a large scale. I informed Michael Kretschmer, Christian Lindner, and Olaf Scholz, why this is not only not sensible, but counterproductive and invited them to our lecture event (Bitcoin Strategies for Nation States” on October 17th in the Paul-Löbe-Haus) with Samson Mow,” Cotar wrote.

Cotar’s pro-crypto stance was best seen in November when she backed Bitcoin as legal tender and advocated for its integration into mainstream German finance.

Whales Buy BTC at a Discount

Meanwhile, Ki Young Ju, co-founder and CEO of CryptoQuant, suggests that whales are buying the dip and effectively becoming true contrarians. Based on the report, these traders are opening long positions.

Whales in crypto are investors holding over 1000 BTC, which means they have the power to influence market prices due to their large portfolios. At the moment they are betting on the Bitcoin price increasing in the future.

Small Bitcoin whales opening long positions, — BTC Whales Open Long Positions. Source: CryptoQuant

CryptoQuant’s Young Ju shares the optimism, saying, “The upward cycle is not over yet.” Nevertheless, he indicates that the ongoing correction could bottom out around the $47,000 threshold, urging spot traders to wait for a strong buying trend. Looking at the weekly chart for the BTC/USDT trading pair, there is a demand zone around the $47,000 range.

Bitcoin price BTC/USDT 1-week chart, Source: TradingView — BTC/USDT 1-week chart, Source: TradingView

A demand zone is an area with significant buying interest. Market participants would be willing to step in and purchase Bitcoin at $47,000, effectively creating a support level that can potentially lead to a price reversal.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Bitcoin

Mt. Gox Begins Bitcoin, Bitcoin Cash Payouts: Key Details

Published

9 hours ago

July 5, 2024

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Mt. Gox, a name synonymous with one of the most dramatic episodes in the cryptocurrency world, has started disbursing Bitcoin and Bitcoin Cash to its creditors. This significant move was announced on July 5, 2024, marking a pivotal turn in the long-drawn rehabilitation process of the defunct Bitcoin exchange.

Bitcoin and Bitcoin Cash’s prices have been volatile amidst this development.

Mt. Gox Still Holds Bitcoin Worth $7.69 Billion

The repayment initiative stems from Mt. Gox’s complex bankruptcy proceedings. The firm filed for bankruptcy after a massive security breach in 2014 that resulted in the loss of 850,000 Bitcoins.

“On July 5, 2024, the Rehabilitation Trustee made repayments in Bitcoin and Bitcoin Cash to some of the rehabilitation creditors through a part of the Designated Cryptocurrency Exchanges etc. in accordance with the Rehabilitation Plan,” Mt. Gox announced.

Creditors must meet several conditions before further disbursements. These include validating the registered accounts’ authenticity and finalizing agreements with the involved cryptocurrency exchanges.

Furthermore, the Trustee highlighted the necessity of ensuring secure and verified transactions before proceeding with more repayments. It also urged patience among the eligible creditors awaiting their turn.

In a related report earlier today, Arkham, a cryptocurrency analytics firm, noted that Mt. Gox had transferred 47,228 Bitcoins, worth approximately $2.71 billion, from cold storage to a new wallet. Despite this substantial movement, over 147,687 Bitcoins, valued at $7.69 billion, remain in the Mt. Gox reserves.

Following the repayment news, Bitcoin’s market price experienced a sharp decline, plummeting to $54,500. This price point is noted as the lowest in the past four months. Moreover, Bitcoin Cash’s price went below $290, down by over 18% in the past 24 hours.

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Here’s Why The Bitcoin Price Crashed Below $58,000

Published

1 day ago

July 4, 2024

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Bitcoin has dropped to as low as $58,000 in the last 24 hours, having failed to once again hold above the crucial support at $60,000. Different analysts have suggested that the CME gap caused this price decline and that BTC could enjoy a relief bounce going forward.

The CME Gap Caused Bitcoin To Decline Below $60,000

Crypto analyst Daan Crypto hinted in an X (formerly Twitter) post that Bitcoin experienced this recent price decline to close the CME gap around the $60,000 range. The CME gap is the difference between BTC’s price on the Chicago Mercantile Exchange (CME) futures market between when the market closed on Friday and reopened on Monday.

While sharing a chart of Bitcoin CME futures, crypto analyst Speed Racer also alluded to the CME gap as responsible for Bitcoin’s recent decline. He stated that the market makers were running the BTC market in the short term as there was no way they would leave a “$1650 CME gap from the weekend.”

Crypto analyst Ninja also explained that the recent price decline was caused by the CME gap and even tagged it as “bullish selling.” He assured that everything would be okay, with a market rebound likely on the cards. Ninja also urged market Bitcoin bulls not to panic, although he subtly admitted that the current market conditions are enough to make anyone panic.

Fortunately, the worst looks to be over, as Daan Crypto revealed that the CME gap has been fully closed. This suggests that Bitcoin should enjoy a relief bounce from its current price level. Crypto expert Michael van de Poppe also confirmed that the CME gap has closed and predicted that it’s time for BTC to bounce up.

Crypto analyst Titan of Crypto shared a similar sentiment while revealing that the CME gap has been filled. He claimed that nothing was holding Bitcoin back now and that it was time for the flagship crypto to send. From the chart the analyst shared, BTC could rise to $72,000 on its next leg up.

The CME Gap Might Not Be The Only Problem

Selling pressure on Bitcoin is another problem that is responsible for its price decline. Data from Farside Investors shows that the Spot Bitcoin ETFs are still witnessing huge net outflows, with fund issuers having to offload their BTC holdings to fulfil redemptions.

There is also significant selling pressure from the German government, which still appears to be selling its Bitcoin holdings based on data from Arkham Intelligence. This is in addition to concerns about the selling pressure that BTC could witness once the defunct crypto exchange Mt. Gox begins to repay its creditors about $9 billion worth of crypto.

At the time of writing, Bitcoin is trading at around $58,600, down over 3% in the last 24 hours, according to data from CoinMarketCap.