Intel Could Make Bitcoin Mining Profitable Again
One of the biggest barriers to entry for small-time bitcoin miners is cost. Intel Corp. (NASDAQ:INTC), the largest U.S. semiconductor maker by market value, is looking to change that.
In a recent United States Patent Application, California-based Intel revealed plans for a unique hardware application dedicated to bitcoin mining. Intel originally filed a patent application for what is being deemed a Bitcoin mining hardware accelerator in September 2016.
Intel’s bitcoin accelerator hardware would aim to make mining of the digital currency less energy intensive, potentially increasing profitability along the way.
“As opposed to physical currency systems backed on natural resources (e.g., gold), Bitcoins may be created by using software and hardware systems to solve a series of mathematical algorithms (e.g., Secure Hash Algorithm 256 (SHA-256)),” according to Intel’s patent application.
Bitcoin algorithms require massive processing capabilities, resulting in higher energy costs to miners.
“When the Bitcoin mining algorithms are solved in a way that satisfies certain predefined conditions, a new block is added to the blockchain and a certain number of Bitcoins are awarded to the miner; thereby introducing new Bitcoins into the eco-system,” according to the patent application. “Bitcoin mining algorithms are inherently difficult to solve, and thus require large amounts of processing power. Because of the large amount of power utilized, and the relatively high cost of that power, mining Bitcoins can be a very costly endeavor. In some embodiments, the cost to mine a single Bitcoin may exceed the value of the mined Bitcoin.”
Cryptocurrency miners face other costs, including graphics cards. The graphics cards, usually made by Intel rivals AMD Inc. (NASDAQ:AMD) and NVIDIA Corp. (NASDAQ:NVDA) were initially made for gamers, but demand for those cards surged as the digital currency universe grew. Demand for those cards has soared so much that they are becoming scarce, leading to skyrocketing costs for gamers and digital currency miners.
While cryptocurrencies are not traditional commodities, such as gold or oil, there are break-even prices associated with mining cryptos. When the price of those commodities fall, producers can opt to scale back production and wait for higher prices. For example, an oil company that breaks even at $40 per barrel, could consider reducing output when prices linger around $45 per barrel.
Today, some bitcoin miners may be facing a similar scenario. At this writing late Sunday night, bitcoin traded just over $6,900, well below its December highs around $20,000. Some market observers believer the break-even price for many bitcoin miners is $8,000, a price the largest digital currency has not touched since late March.
Only 1.3 million Bitcoin are left in circulation on cryptocurrency exchanges!
Christmas is coming, and Bitcoin (BTC) scarcity is at historically low levels. CryptoRank announced in a recent tweet that just 6.3% of the overall Bitcoin supply, or 1.3 million BTC, are kept on cryptocurrency exchanges.
The decreasing amount is nothing new; it’s been steadily declining since the Bitcoin halving in 2020, when the BTC block reward was cut in half. The supply of BTC on exchanges has also decreased gradually over the past year, trending downward. On October 2020, exchange wallets made up 9.5% of the BTC supply, just before the all-time highs at Christmas time, and 7.3% in July 2019. In December 2021, the 6.3 percent figure is a record low.
However, the dominance of Coinbase’s BTC wallet is also falling. The American exchange used to store more bitcoin than all other exchanges combined. Over the past year, its domination has decreased from 50.52% to 40.65%.
Following a spate of good price statistics that tie into the rising price of Bitcoin, the announcement has sparked further excitement among investors. First and foremost, owing to the fact that BTC output is shifting from a “liquid” to an “illiquid” state, monthly BTC production has frozen at 100,000 BTC. In other words, more BTC is stored in cold storage than is being mined.
Additionally, it’s crucial to remember that many retail investors and several firms keep their BTC on exchanges, demonstrating that the “illiquid” BTC category may be even smaller. Instead of keeping their BTC in cold storage, some Bitcoin holders would entrust it to exchanges instead of leaving custody of their keys with them.
Surprisingly, Binance CEO and co-founder Changpeng Zhao has encouraged hot wallets, despite the best efforts of Bitcoiners like Andreas Antonopolous to the contrary: “Not your keys, not your bitcoin.” is part of everyday BTC mantra.
This may lead to the situation in which 1.3 million BTC is “stored” on exchanges, but they are not “circulating,” and they certainly do not contribute to the liquidity problem.
Despite calls for a “Santa Rally” on the back of strong analytics, the bears are not yet out of the woods. A tweet from BullRun Invest using Glassnode data showed that 24.6% of all BTC supply is sitting above $47,000.
According to the report, close to a fourth of the BTC purchased at those prices levels are now underwater. If BTC fails to make progress into the 50s, there may be fewer gifts under the tree tomorrow.
U.S. Takes Crypto Crime Seriously with Anti-Money Laundering Reforms
The United States passed into law its Anti-Money Laundering Act of 2020, which takes effect on January 1, 2021. This brings digital currency exchange companies and other digital-asset-related businesses under the scope of regulations of the Bank Secrecy Act (BSA), which requires financial institutions “to actively detect, monitor and report potential money laundering activity.”
“I’m pleased that our anti-money laundering legislation was included as a part of this year’s [National Defense Authorization Act]. This bipartisan legislation protects Americans by depriving criminals and terrorists of the tools they use to finance illicit activity. It is the first serious overhaul of our anti-money laundering system in decades, and it makes sense to include it in the biggest, most important national defense legislation Congress passes each year,” South Dakota Sen. Mike Rounds said in a press release.
The massive anti-money laundering reforms are targeting businesses dealing with digital currencies and assets by clearly specifying the definition of a “financial institution” to “‘a business engaged in the exchange of currency, funds, or value that substitutes for currency or funds” and “a licensed sender of money or any other person who engages as a business in the transmission of funds or value that substitutes for currency.”
The reforms further define a “money transmitting business” to include those who deal with “currency, funds, or value that substitutes for currency.” Now, there are no longer loopholes that digital asset companies can use when dealing with the Financial Crimes Enforcement Network (FinCEN), the agency that enforces the BSA.
Stricter Penalties Enforced
Aside from updating definitions to ensure that digital currency exchange firms and others dealing in digital assets are clearly within the scope of the AML Act of 2020 and the BSA, stricter penalties are now being enforced for crypto criminals.
Now, those who have been found guilty of violating the AML Act of 2020 and/or BSA are faced with fines amounting to profits earned while committing the violation and possible jail time. Those guilty of an “egregious” breach are also going to be banned from taking a board member position of any financial institution in the country for 10 years. Furthermore, employees of financial institutions who commit these crimes will be obligated to return to their employer all bonuses received during the time the act was committed.
FinCEN is being given additional resources, like increasing its manpower, to ensure the enforcement of these reforms. This will further safeguard investors against crypto crimes and nail down digital currency exchange firms and other digital-asset-related businesses that do not comply with BSA regulations.
Bitcoin (BTC) Crosses 55k And Is Heading Towards 60k Fast!
Less than two months into 2021, the price of bitcoin has risen 95.4%.
Based in the United States and want to trade via Binance.US? Click here to sign up now!
bei binance anmelden
May 18, 2023 at 1:30 pm
Thanks for sharing. I read many of your blog posts, cool, your blog is very good. https://accounts.binance.com/de-CH/register?ref=WTOZ531Y
May 23, 2023 at 4:37 pm
Weight loss of PC subjects was determined at the time of surgery compared with preoperative stable body weight cialis on line