Exploring the transformation of value in the digital age By Michael J. Casey, Chief Content Officer Was this newsletter forwarded to you? Sign up here. |
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Thank God for the Merge. Amid the gloomy state of markets – worsened this week by Federal Reserve Chair Jerome Powell – at least Ethereum's switch to proof-of-stake from proof-of-work is giving us something meaningful to focus on and write about. That's what I do with this week's column, specifically to make the case that the Merge's advances are not priced into the market for ether. In this week's podcast, my co-host Sheila Warren and I talk to Near foundation CEO Marieke Flament about that protocol's ambitious efforts to grow its developer community and the importance of doing so, with real-world applications, amid crypto winter. Have a listen after reading the newsletter. |
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Launched in September 2017, KuCoin is a global cryptocurrency exchange with its operational headquarters in Seychelles. As a user-oriented platform with focus on inclusiveness and community action reach, it offers over 700 digital assets, and currently provides spot trading, margin trading, P2P fiat trading, futures trading, staking, and lending to its 20 million users in 207 countries and regions. In 2022, KuCoin raised over $150 million in investments through a pre-Series B round, bringing total investments to $170 million with Round A combined, at a total valuation of $10 billion. KuCoin is currently one of the top 5 crypto exchanges according to CoinMarketCap. Forbes also named KuCoin one of the Best Crypto Exchanges in 2021. In 2022, The Ascent named KuCoin the Best Crypto App for enthusiasts. |
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TradFi Investors Will Love Ethereum's Merge |
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(Rachel Sun/CoinDesk) Unless you've been living under a crypto rock, you'll know that Ethereum's long awaited, much discussed transition from a proof-of-work consensus mechanism to proof-of-stake is poised to happen this month.
The Merge, as it's known, is the most consequential alteration to a blockchain protocol in the history of cryptocurrencies. The question for investors is whether the market for Ethereum's native token, ether, is pricing in this momentous shift. This week's column will argue that it is not, primarily because of the value that institutional investors will eventually find in "Ethereum 2.0." (Note: my expectation for a higher ether price does not necessarily mean Ethereum 2.0 will perfectly adhere to the purest principles of decentralization. They are two different things.) Before we go into that, let's look at the factors behind ether's price declines of the past couple of weeks, which removed a short-lived, Merge-driven premium. That should help us assess the bears' case. Read the story here... |
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Off the Charts: Tornado Cash Loses Force
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How are bitcoin miners faring amid the market downturn?
For this interesting logarithmic chart, my CoinDesk colleague Sage Young used Glassnode data to compare three variables: bitcoin's price, the Bitcoin network's total hashrate and the hash price, otherwise known as "mining revenue per terahash," expressed in dollars. |
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Below the midline on the right axis you'll see miners are earning around 9 cents a terahash, which is close to the lowest ever payoff for the work they do. The main culprit is the bitcoin price, which has collapsed from its peak near $69,000 in November to around $20,000 currently. But the other key factor is that, despite that lost revenue, the hashrate, although leveling off, remains near its peak. That has kept difficulty rates high, which means miners must do a lot of work to earn each block reward. It's worth remembering: Miners aren't altruistic. If they're willing to keep boosting hashrate at these prices, it's because their operations are efficient enough to stay profitable. Many now see a cost-reduction opportunity. That will make it cheaper to cool overheating machines. Also, for those locked into demand-response contracts with grid operators – which compel them to turn off machines when there are spikes in the wider community's power demand – reduced air-conditioning usage will allow them to sustain operations longer. The only problem, as Eliza Gkritsi observed this week, is that as they all collectively ramp up production to get ahead of that, difficulty spikes further, which in turn lowers margins. Trends like this leave me baffled why mainstream economists aren't more interested in Bitcoin's mining industry. It's the nearest thing in the world to a perfect market. |
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The Conversation: Descent?
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What do you think? Is Srinivasan right to imply that water outages in Jackson, Mississippi, California's failure to beat wildfires and a precipitous drop in overall life expectancy mean the U.S. has entered into the exponential cycle of a "descending" state? Or, as Derek Thorn argued in a reply to my retweet of Srinivasan's thread, is he just cherry-picking data? |
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Relevant Reads: Sex, Weed and Guns |
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(Chris Hellier/Getty Images) The latest "theme week" package from CoinDesk's Layer 2 team: "Sin Week": |
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Which institutes are most impacting the blockchain world? Tell us your thoughts in a five-minute survey. We're welcoming responses until Sept. 7. Take the survey here. | |
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