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Survival of the fittest: A look at how hash rate tokens compete with existing mining products and services

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If you are a cryptocurrency and blockchain industry professional, the most commonly heard term would be computing power or hash rate, which is a quantitative measure of the computing speed of a mining machine. A new contender has entered the cryptocurrency mining scene – hash rate tokens.

What are they, and how do they impact the space as a whole? In this article, we explore what hash rate tokens are and compare them with other ways of mining, namely the use of cloud mining services, and running mining machines.

What exactly are hash rate tokens?

Hash rate tokens, also known as hash coins, tokenize the computing power of Bitcoin. A project hash rate token is equal to keeping its “corresponding Bitcoin mining power” and performance revenue is bound to the daily bitcoin mining profits. Unlike conventional cloud mining services, this model is equivalent to real-world mortgage assets.

Tokens are generated on the chain, providing a limited range of computing power assets with more liquidity. Mining can be carried out by holding hash rate coins to obtain mining income and by supporting flexible transactions, pledges, and other transactions that are convenient.

Token holders can also sell the hash rates they possess if they don’t want to generate profit from the hash rates.

There are currently two hash rate tokens on the market: Poolin Token (pBTC35A) and the Binance Hash coin, otherwise known as Bitcoin Standard Hash Rate Token, or BTCST. The hash rate token pBTC35A was launched by Poolin. On the other hand, BTCST was introduced by mining farms 360power and Ke Wo Ying Mining. The former has access to some mining services, while the latter is an over-the-counter transaction service provider for Binance Investments. At present, hash rate tokens are mostly Bitcoin-based, but support for other currencies – appear in the future.

Binance contributed greatly to the craze around hash rate tokens with BTCST. BTCST is a Bitcoin leveraged coin that is pegged to real-world computing power. While BTCST is currently a high-risk asset, the price of its currency has increased with the inclusion of its counterparts. Earlier, several media publications began to cover the leading players behind BTCST, namely Ke Wo Ying Mining and 360power, which were initially not major names in the industry. The frenzy is unlikely to end anytime soon. With the endorsement of Binance, hash rate tokens are poised to make a great impact.

Another value proposition of the hash rate token is the ease of its use. For example, in the case of BTCST, the way token holders can obtain rewards and become stakeholders in the project is easy to understand. The regular distribution of BTCST profits from staking is guaranteed when 60% of the total supply of BTCST has been staked. If less than 60% of the total supply of BTCST is staked in the dApp, the project team would still deposit 60% of net daily mining rewards to the dApp to be shared by the staking participants. These rewards are deposited to valid pledgers on a day-to-day basis.

The early bird gets the worm, and those who have discovered hash rate tokens early have so far achieved good returns. Since its debut on the Binance launch pool, more than US$300 million in returns has been farmed by staking BNB for BTCST. Other than that, miners that obtain and hold BTCST are incentivized to become market makers as well as support the project. This gives miners the opportunity to contribute more to the mining industry than ever before. The added flexibility is an attractive feature as well. For miners, hash rate tokens could be a new way to capture the profits derived from physical mining machines. Other than that, it provides a simple way to transfer hash rates to different mining farms. In terms of risk, hash rate tokens alleviate risks such as costs and downtime caused by force majeure factors such as mining machines being offline for whatever reason. Judging from these factors, there is a good argument for the case of hash rate tokens to be the best method of mining available.

Where do cloud mining platforms fit in this equation?

Cloud mining platforms and the use of mining machines directly compete with hash rate tokens. There is no question that with every emerging cryptocurrency model that arises, there are risks accompanied by the opportunities and potential they bring. Therefore, the possible dangers of hash rate tokens deserve attention.

Lack of transparency in hash rate tokens

Hash rate tokens are distinct from cloud computing systems that guarantee real mining operations. In theory, the hash rate token is pegged to the corresponding computing power and the revenue is divided and given out proportionally by accessing the computing power of the desired mining farm. However, it is uncertain if there is real computational power behind hash rate tokens and whether the project behind the token guarantees equivalent mining machine computing power.

Cloud mining platforms provide services based on real-time monitoring of computing power and scheduled compensation to users. While it may be a stretch to say that all cloud mining services on the market are reliable, the top-tier institutions generally make it a point to make transparency a priority and put the appropriate measures in place. For example, at Bitfufu, a cryptocurrency mining platform, users can track each computing power to the computing power plan that is run by the selected machine, and the platform can be traced back to the computing power package. Mining farms and individual mining machines have real computing power and send data, including mining pool computing power statistics, to the platform interface. In addition, every hash rate consumed in Bitfufu can be tracked and assessed. Mining revenues are calculated by the mining pool, which means that the earnings are derived directly from the pool to its customers. It is worth mentioning that, at present, only Bitfufu and Bitdeer have been able to divide computing power by hash rate (T).

A steady supply of computing power at cloud mining service providers

Cloud mining service providers partner with mining pools and other mining institutions to ensure the stable supply and authenticity of computing power used. Other than this, cloud mining platforms have resources that allow for mining with lower energy consumption ratios, while maintaining higher gains for users. As a one-stop physical mining machine mining platform centered on self-operated mines, Bitfufu contains a range of computing powers from their machines, and these plans have been carefully selected and approved by the platform. Suppliers, therefore, are able to provide transparent, fair, and easy to understand real mining services to customers. The platform dramatically reduces mining costs through economies of scale. At the same time, it has access to high-quality manufacturers worldwide.

The fees required for using a cloud mining service is also not as expensive as it may seem. For instance, mining fees at Bitfufu relatively affordable on the market in terms of computing power cost per terabyte of mining machines and the electricity cost per kWh. In fact, the computing power cost per terabyte at Bitfufu is almost the lowest price available in the industry. Save for an electricity charge of RMB 0.38 per kilowatt-hour, the platform does not charge any additional charges. In this regard, the fees for cloud mining are a small price to pay for peace of mind.

Cloud mining services are more risk-resistant

In terms of risk resistance, cloud computing power much more resistant to risk. Hash rate tokens, as a centralized currency, would suffer a sharp decrease in the price of the token in the event that the token is inflationary. The current market environment for bulls may cover some of these risks, but if the price of bitcoin plummets and mining income falls, the price of hash rate tokens is likely to fall off a cliff.

In contrast, cloud mining platforms are better able to hedge against the risks since the profits can be influenced by other factors outside of the price of the cryptocurrency. Taking Bitfufu and their 30/40/50 series of computing power service plans as an example, the most of energy consumed does not exceed 60W/T and for the 30-series plans, energy consumption ratio can even be as low as 30W/T, which is equal to the that of the current S19Pro model mining machine. It allows for the price of the plans to remain low even when the currency price drops, to mitigate the possible loss in gains. In addition, the energy consumption ratio of the regular hash rate anchored to the BTCST is 60W/J, which is exceedingly high.  This means that in the case the price of the currency decreases, the mining revenue may not be sufficient to cover the cost of energy, and because of that, the potential risk is very high.

Cloud mining service providers are becoming more innovative

The hash rate token is indeed a breath of fresh air, but existing cloud mining service platforms are still able to offer novel solutions to the market. Bitfufu has pioneered the standardization of cryptocurrency hash rate. What that means is that multiple models of the same series under Bitfufu are intelligently operated as a unified system to deliver standard power consumption. This mining product is bound to become the industry’s most effective response when it comes to promoting its ongoing development, while at the same time providing more efficient transactions and liquidity.

Even when it comes to the ease of transfer as seen in hash rate tokens, cloud mining services have also begun to offer convenience to their users. For instance, Bitfufu will enable users to transfer their purchased services to other users in January 2021. If the users wish to terminate the service for themselves, it can easily be transferred to other users. In addition, Bitfufu is expected to launch a free transfer of computing power in February 2021 so that users can conveniently trade in computing power.

It is also worth considering, of course, whether other cloud computing power platforms would in the future launch hash rate tokens and compete with projects, all while claiming a higher degree of reliability and security, but this remains to be seen.

Conclusion

Indeed, the emergence of hash rate tokens has provided conventional mining machines and cloud computing platforms some competition. It should be noted that engaging in cryptocurrency mining requires a strong grasp of industry expertise, and it is important to consider the risks behind it. Relatively speaking, cloud computing platforms such as Bitfufu are still the best choice for current mining users after benchmarking other choices in terms of convenience, reliability, and risk tolerance.

Disclaimer: This is a paid post and should not be taken as news/advice.

Source: https://ambcrypto.com/survival-of-the-fittest-a-look-at-how-hash-rate-tokens-compete-with-existing-mining-products-and-services

Blockchain

What Coinbase Going Public Could Do For Crypto

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Messari Values Coinbase At Nearly $30 Billion As The Bitcoin Exchange Prepares To Officially Go Public

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Coinbase, the biggest US-based cryptocurrency exchange has disclosed its detailed plan for the upcoming direct listing on the stock market by Nasqad. Coinbase submitted an S-1 report to the US SEC outlining key information such as revenue and ownership structure for investors to carry out due diligence on the company.

According to the document, Coinbase has 43 million verified users and an average of 2.8 million transactions per month. In 2020, the company returned a net income of $322 million from total revenue of $3.4 billion, with transaction fees constituting 96% of the net revenue.

Coinbase which makes most of its profit from bitcoin and Ethereum transactions, also saw a 56% increment on its $1.1 billion direct revenue for 2020 compared to $482 million in 2019.

The company incurred a total of $880 million in expenses for 2020, most of which went to sales, general administrative expenses, and research and development. Transaction reversal costs miners fees, staking fees, and verification expenses constituted $135 million of the total expenses,

Coinbase also made $533 million in 2019, against $579 million in operational and development costs, leading to losses totaling $46 million.

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Coinbase to Usher Crypto’s Real Mainstream Adoption

The report indicates that much of the revenue for 2020 was generated from institutional investors’ activity in the crypto market but with higher retail activity in Q4 2020 than in previous quarters.

Coinbase’s debut as the first publicly listed crypto-exchange in the US is estimated to be one of 2021’s largest new listings of the tech industry. This will have a huge positive impact on the crypto market investors and blockchain technology backers.

According to the crypto trader and analyst Rekt Capital, the public listing will officially open up cryptocurrencies to the public.

“Coinbase going public is another way of saying crypto is going public.”

Coinbase Becomes Decentralized

The update comes a month after Coinbase chose Nasdaq as its direct listing avenue on February 1, following a secondary Coinbase stock launch by Nasdaq Private Market on January 25.

Now that Coinbase has moved to a remote-first environment without headquarters in any city, the company is referring to itself as a decentralized company. Up to 95% of Coinbase employees have the option to work at home, in a post-office world setting, or a mix of both.

“since we’ve made the decision to go remote-first we’ve decentralized ourselves; even after people can safely return to offices, the executive team has no plans to be “in-office” on a regular basis,  and none of them currently live in San Francisco.”


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The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

Source: https://zycrypto.com/what-coinbase-going-public-could-do-for-crypto/

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Blockchain

3 types of bitcoin investors that ‘should be concerning to central banks’

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With 106 million global crypto users as of January 2021 and a crypto population that has now surpassed 100 million, a financial expert noted that central banks must now be wary of certain crypto investors. In a new seminar held by the University of Pennsylvania’s Wharton School, part-time professor, Mohamed El-Erian, who is also Chief Economic Adviser at Allianz said that Central Banks should be careful about three specific groups of Bitcoin investors. 

He explained that while the first group of people is investing for positive reasons, the second is motivated by negative factors to adopt Bitcoin. The positive investors “truly believe Bitcoins will become money ”or “a currency as opposed to a commodity.” 

However, El-Erian cautioned that central bank authorities must keep watch on those “being pushed out of everything else and pushed into Bitcoin”, forming the second group that the expert earlier mentioned. 

They look to Bitcoin in order to protect themselves from government investment options, which some investors believe has been “artificially jacked up.” Interestingly, a recent survey found that people aged over 55 opted for Bitcoin due to a fear of currency devaluation – as central banks have historically printed more money to boost economies. The expert said that such people are forced to invest in the asset because “they don’t know how else to mitigate risk.” 

Do you really want to invest in a government bond whose price has been? So ‘let’s diversify, let’s put 2% into Bitcoins.’

El-Erian further categorized “speculators” as the third type of investors, who face profits and losses albeit “in a single day.” According to him, all three types of investors “should be concerning to central banks.”

When it’s trading above $50,000, all three messages are problematic for central banks. So, we are going to see central banks look increasingly at cryptocurrencies as something they should be involved in, and not just stand on the sidelines.


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Source: https://ambcrypto.com/3-types-of-bitcoin-investors-that-should-be-concerning-to-central-banks

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Blockchain

Exchange listings and NFT boom back Enjin’s (ENJ) 52% rally to a new high

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Non-fungible tokens (NFT) are rapidly becoming a focal point of the cryptocurrency market as evidenced by stories of millions of dollars being raised in minutes for one-of-a-kind tokenized art pieces and rare collectibles that traders rush to get their hands on. 

One project that has been benefiting greatly from the resurgence of NFTs is Enjin Coin (ENJ), which broke out to a new all-time high of $0.67 on Feb. 25 following its listing on the Crypto.com exchange as well as the launch of spot and perpetual futures trading on FTX.

Data from Cointelegraph Markets and TradingView shows that ENJ rose 52% from a low of $0.438 on Feb. 24 to a new high of $0.67 before experiencing a pullback to its current price of $0.611.

ENJ/USDT 4-hour chart. Source: TradingView

A scroll through the project’s Twitter feed details numerous recent partnerships and integrations that have helped fuel Enjin’s price rise.

Minecraft is one of the most notable integrations for the Enjin ecosystem and users are able to earn special NFTs that unlock secret games inside the video game series.

The platform has also benefited from joining forces with the growing ecosystem of the Binance Smart Chain (BSC), which has launched an NFT educational campaign that Enjin will be part of.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for ENJ on Feb. 24, several hours before today’s price rise.

The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of the historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. ENJ price. Source: Cointelegraph Markets Pro

As seen on the chart above, the VORTECS™ score for ENJ reached a high of 70 on Feb. 24, shortly before the price began to spike to a new all-time high on Feb. 25.

The growing popularity of the NFT space, along with numerous big-name partnerships has Enjin well-positioned as the current bull market cycle progresses into 2021.

Its recent integration with the BSC provides a way to escape high fees on the Ethereum (ETH) network and could bring a new wave of activity to the Enjin ecosystem.

Source: https://cointelegraph.com/news/exchange-listings-and-nft-boom-back-enjin-s-enj-52-rally-to-a-new-high

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