Tag: POW

Understanding ETH/BTC Rate – Key Factors and Price Predictions

by Blockchain News

According to CME Group report, the two dominant cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), make up over 61% of the total market capitalization of all cryptocurrencies. The connection between these two cryptoassets has been especially strong since the introduction of BTC futures in December 2017, circling around +0.85 during the last year. 

When compared to the USD, these cryptocurrencies exhibit high volatility. BTC’s daily price volatility during the last year was 42% annualized, compared to ETH’s daily volatility of around 59%. This shows that ETH tends to climb more when BTC rises, and vice versa. 

It’s noteworthy to note that the volatility of the ETH/BTC (ETH-BTC) exchange rate is lower than that of either BTC or ETH alone. This has been the situation ever since BTC futures were introduced in late 2017. The volatility of ETH-BTC has decreased to 30% during the last year, which is around one-fourth less than that of BTC-USD and nearly half that of ETH-USD.

The ETH-BTC exchange rate has very little sway on changes in interest rates, gold prices, or crude oil futures. However, it has shown a greater interest in the future of the USD and technology stocks. Since May 2022, the one-year rolling correlation of ETH-BTC with the tech-heavy Nasdaq 100 has been consistently around +0.2, suggesting a modest but persistent positive correlation. 

The distinct sentiments of ETH and BTC can be attributed to their distinct applications and market supply methodologies. ETH’s market capitalization stood at $224 billion on July 11, 2023, while BTC’s was substantially higher at $550 billion.

ETH switched to a less energy-intensive proof of stake (PoS) paradigm in 2022, whereas BTC uses an energy-intensive proof of work (PoW) system. The maximum supply of Bitcoin is 21 million coins, with 19,4 million currently in circulation. In contrast, the total supply of ETH is theoretically unlimited, with the potential to mint up to 18 million new coins per year.

The mining of new ETH coins has begun to decrease since the implementation of the PoS system. The creation of new BTC coins has continued at an annual rate of 335,000. At the next halving event, which is anticipated to occur in April 2024, the BTC supply is expected to be halved.

BTC’s quadrennial halvings in 2010, 2014, and 2018 coincided with huge runups in price prior to the reduction in BTC supply growth, followed by enormous bear markets. Going into the three previous halvings, the amount of revenue that miners demand for validating transactions on the bitcoin blockchain has tended to spike, followed by tremendous declines in bitcoin prices of between 70% and 93%.

Looking ahead, if BTC rallies ahead of its upcoming April 2024 halving as it did ahead of previous halvings, that might also help ETH prices to rise even further on a relative basis. However, these possibilities are far from certain. 

In conclusion, the Ether-Bitcoin price nexus is influenced by a variety of factors, including the supply mechanisms of both cryptocurrencies, their correlation with technology stocks and the USD, and macroeconomic factors such as interest rates and monetary policy. As the crypto landscape continues to evolve, these dynamics will be crucial to watch.

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New York Governor Cuomo signs PoW mining ban

by Blockchain News

On November 22nd, the proof-of-work (PoW) mining moratorium was signed into law by New York Governor Kathy Hochul, making New York the first state in the United States to prohibit any proof-of-work crypto mining activities for a period of two years.

The PoW mining ban will not only prevent the establishment of new mining operations, but it will also prevent the renewal of permits for existing mining companies that are already inside the state.

Any new PoW mining enterprise that wanted to be started in the state had to employ entirely renewable energy sources in order to do so.

In April of this year, the measure concerning PoW mining was first passed with the approval of the state assembly, and then it was passed with the approval of the state senate in June.

As a result of pressure from lobbyists and in order for the state to reach its objectives for carbon emissions, Governor Huchkul was ultimately persuaded to sign the measure into law.

PoW mining is the method that the majority of miners for Bitcoin and a few other cryptocurrencies utilize to reach consensus.

When it comes to verifying the legitimacy of a transaction on a blockchain, this approach is regarded as among the most secure and decentralized there is.

Despite this, the technique has been tainted by disputes on the huge amount of energy that it requires.

The United States of America is now in first place on the list of shares of bitcoin mining hash rate by nation. The United States contributes 37.8% of the total hash rate that is generated by the bitcoin network. The prohibition on mining PoW for the next two years might prove to be expensive and perhaps set off a domino effect that would lead other governments to adopt a similar strategy.

The proof-of-work (PoW) mining FUD is not new and has been debunked numerous times; however, there has been a significant lobbying effort over the past year, particularly from the proponents of proof-of-stake (PoS) mining. 

On the other hand, legislators have conveniently ignored study findings suggesting a large portion of the energy used for bitcoin mining originates from renewable sources.

In the Markets in Crypto Assets (MiCA) legislation that was being considered in Europe, cryptocurrency authorities have advocated a ban on PoW mining.

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Crypto Mining May be Sacrificed as EU Continues to Battle Energy Crisis

by Blockchain News

The European Commission is preparing the minds of leaders in its member states as they may need to halt cryptocurrency mining on their shores should the strain on the energy industry in the region demand it. 

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According to a Press Release, detailing an action plan to digitalize the energy sector, the commission reiterated the onus may soon lie on its member states to completely ban Proof-of-Work (PoW) mining systems used by such crypto assets as Bitcoin (BTC), Ethereum Classic (ETC), and Dogecoin (DOGE).

The ongoing war between Russia and Ukraine has put additional strain on the region’s energy capabilities and the sanctions being placed on the Russian government also include the cap on the oil coming from the Putin-led country.

With winter coming, the energy demands of households and industries will increase. While it may be difficult to forecast the state of things between the EU and Russia in the most critical times, the European Commission has chosen to take a proactive approach towards preparing its member countries on what it might cost to free up the electricity grid with the load coming from crypto miners.

In the longer term, the European Commission plans to introduce a rating system that will categorize crypto miners based on their estimated environmental impact. The introduction of this rating system is a compromise attained when there was pushback earlier this year when the ban of PoW from the Markets in Crypto Assets (MiCA) regulation was vehemently opposed by members of the European Parliament.

According to the commission, the transition from PoW to a Proof-of-Stake (PoS) system by the Ethereum Network is more or less the nature of transformations it hopes to see in the near future. With the proposals for the crypto miner rating already underway, its implementation, if approved will be slated for 2025.

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Binance Launches Mining Pool for ETHW Protocol

by Blockchain News

Binance, tagged as the largest crypto exchange by trading volume, has announced the launch of the mining pool for the Ethereum Proof-of-Work (ETHW) protocol.

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According to Binance, users who choose to join the ETHW mining pool will not be charged any pool fees with the offer billed to run until October 29.

The exchange said it has only created enablement for ETHW withdrawals but that deposits will be available soon. The trading platform said in a bid to protect its customers, there is no guarantee as to whether it will list the ETHW in the near future. The exchange said it will adhere to strict policies as it does for other notable tokens it supports in order to protect its customers.

ETHW is a Layer-1 blockchain protocol that was forked from the Ethereum network after the Merge event that was initiated earlier this month. With the main Ethereum network now operating based on the Proof-of-Stake consensus model, the ETHW protocol has maintained the mining model to preserve the legacy of the network.

While many Ethereum-focused platforms like OpenSea have pointed out that they will not be supporting the ETHW protocol, the adoption level of the new coin has been broad, especially among retail holders who were airdropped the coin.

While Binance is unsure if it will list the token, a number of prominent exchanges, including FTX, Kraken, KuCoin, Huobi Global and Gate.io have listed the coin for trading. With the traction it has gained thus far, the EthereumPoW protocol has unveiled a list of the first protocols in its ecosystem and has invited the developer ecosystem to join its ranks.

With a price of $11.96 atop a market cap of $1.45 billion, according to CoinMarketCap’s data, ETHW is gaining the needed momentum just like Ethereum Classic, another digital currency that was forked from Ethereum back in July 2016.

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Ethereum to Undergo 4 Phases to Tackle the Scalability Issue after Merge

by Blockchain News

The much-anticipated Merge saw the light of day yesterday, September 15, setting the ball rolling for a proof-of-stake (PoS) consensus mechanism in the Ethereum (ETH) network.

Since the Merge is the first step towards solving the scalability trilemma, the second-largest cryptocurrency will have to undergo four more steps to solve this issue, as reported by Bloomberg. 

The four phases include the surge, the verge, the purge, and the splurge. Per the announcement:

“The Surge: Implementation of sharding, a scaling solution which will lower the cost of bundled transactions on Ethereum.”

The report added:

“The Purge: Elimination of historical data and technical debt. The Splurge: Miscellaneous updates after the first four stages to ensure smooth functioning of the network.”

The time frame for these stages is not well defined, but Sameep Singhania believes it might take two to three years. The co-founder of QuickSwap pointed out:

“It’s hard to talk about the timelines of the following four stages because all of them are still under active research and development. But, in my opinion, it will easily take 2-3 years before all phases are complete.” 

Aditya Khanduri, the head of marketing at Biconomy, also opined that the purpose of the four upgrades was to make Ethereum cheaper, faster, and more scalable.

Upon the completion of the remaining four phases, Ethereum co-founder Vitalik Buterin pointed out that the network would be in a position to process 100,000 transactions per second.

Therefore, the merge is seen as a stepping stone toward future improvements. Developers involved in the Merge noted that switching from a proof-of-work (PoW) to PoS would make ETH easier and friendlier to design future updates that lower gas fees.

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White House Suggests Banning Proof-Of-Work Crypto

by Blockchain News

The White House Office of Science and Technology released a report on Thursday urging the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to take measurable actions to control high energy consumption by crypto mining proof-of-work mechanism.

The report is among the first responses to US President Joe Biden’s executive order on cryptocurrencies.

The document acknowledges that cryptocurrency technologies use a high amount of electricity that contributes to greenhouse gas emissions, additional pollution, noise and other local impacts.

The first section of the report, which serves as an introduction, hints toward banning proof-of-work cryptocurrency mining operations if regulatory action fails to enable the country to achieve its climate goals.

“Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining,” the report said.

The next part of the document explores the impact of crypto mining on national electrical grids. The White House’s Science and Technology team claims that Bitcoin mining, powered by a proof-of-work consensus mechanism, adds stress on the power grid that results in cases of blackouts, fire hazards, and equipment deterioration. According to the report, Bitcoin mining has raised the average electricity cost for local consumers.

“Depending on the energy intensity of the technology used, crypto-assets could hinder broader efforts to achieve net-zero carbon pollution consistent with U.S. climate commitments and goals,” the report elaborated.

The final section of the report suggested ways in which Bitcoin mining can benefit efforts toward achieving U.S. climate goals. The report advocated for the responsible development of digital assets and solutions to drastically reduce crypto energy consumption.

The report recommended the use of the “less energy-intensive consensus mechanism, called Proof of Stake (PoS), which is considered to consume less than 0.001% of global electricity usage.

The White House also encouraged crypto miners to consider using electricity generated from vented and flared methane at oil and gas wells and landfills as another viable alternative. 

Why Is the White House Taking an Interest?

In March, U.S. President Biden signed an executive order, calling on the government to examine the risks and benefits of crypto assets.

The measures focused on six key areas like consumer protection, financial inclusion, financial stability, U.S. competitiveness, illicit activity, and responsible innovation.

The executive order was a kind of a ‘call to action’ that laid out a series of policy statements, such as the need to protect consumers, investors, and businesses in the US, as well as the need to support technological advances that promote responsible development and use of digital assets.

The executive order expected a set of reports coordinated through the interagency process from a broad range of executive branch stakeholders.

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Crypto Venture Capitalist Breaks Down Potential Winners and Losers from Ethereum Merge

by Blockchain News

Paul Veradittakit, a Partner at Pantera Capital which is a crypto investment firm based in California, talked about on Sunday what he thinks about winners and losers from the Ethereum “Merge.”

In an interview published by Forbes on Sunday, the media inquired whether the Ethereum merge would happen in September as planned earlier and requested which tokens would rise or fall as a result of the upgrade.

Veradittakit assured the public that the merger will happen – the transition from proof of work to proof of stake through a merging of two blockchains.  

The executive said the merge will bring a lot of visibility and growth to Ethereum.

“The Ethereum ecosystem is about to flourish, and people are going to see Ethereum, layer 2s. I also think it could be helpful for DeFi and potentially lead to some other use cases like NFTs on Ethereum as well. Therefore, it will probably focus a bit more on Ethereum. The other layer 1s have to evaluate how it goes and figure out what their differentiators are going to be after the merger,” Veradittakit explained.

Optimistic Remains About the Merge

Next month, the launch of Ethereum’s crucial update, the Merge, will signify the transition from the Proof-of-Work-based consensus mechanism to the more sustainable and less wasteful Proof-of-Stake system.

There has been a growing buzz within the crypto community about what the consequences that the Merge may bring for the blockchain network founded by Vitalik Buterin.

Some crypto experts have, however, urged that Proof of Work will live on after the merge.

The update, which is scheduled to be launched on 15th September next month, is expected to revolutionize the blockchain network, making it more scalable, cheap, and accessible.

The upgrade is expected to bring significant changes with the likes of mining, which could disappear. Miners, who have invested in infrastructure to mine on proof-of-stake networks, are most likely to become redundant after the merge.

Some believe that even after 15th September, the Proof of Stake consensus will continue to exist alongside the Proof of Work consensus, mainly to allow for a less traumatic transition and to take care of things in case the merge fails to complete its upgrade.

Some argue that miners could try using their pricy rigs on other networks. In recent weeks, Ethereum Classic (ETC) has witnessed a veritable price explosion. ETC, the hard fork of Ethereum created in 2017, will still maintain the Proof of Work system.

Ethereum’s proof-of-stake is considered more environmentally friendly, as it can validate transactions without consuming so much energy. The proof-of-stake mechanism is estimated to use 99.95% less energy than its proof-of-work chain.

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Ethereum Hits a Monthly High above $1,500, Merging Events Continues Engulfing the Market

by Blockchain News

Ethereum (ETH) returned to levels last seen in June based on renewed momentum following those upcoming potential merging events. 

Market insight provider Santiment explained:

“Ethereum’s return above $1,500 for the first time since June 12th appears to be happening as the crowd has little belief in this rebound. Despite this, the average ETH return of 30-day traders has ballooned to +28%, the highest since August 2021.”

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Source: Santiment

The 30-day return for Ethereum traders also hit an 11-month high, suggesting that the renewed momentum has driven their profits to levels last seen in August 2021.

Furthermore, ETH supply in profit also soared by 56%. On-chain insight provider Glassnode stated:

“Over the last month, almost 7.8% of circulating supply of ETH has transacted on-chain and changed hands. The total ETH supply in profit has now increased to 56%, after hitting lows of 41% prior to the current price rally.”

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Source: Glassnode

The second-largest cryptocurrency was up by 3.8% to hit $1,511 during intraday trading, according to CoinMarketCap. 

During a recent developers’ call, September 19 emerged as the most probable date for the merge.

Therefore, these upcoming events have been making airwaves, triggering a bullish momentum in the Ethereum market because the merge is anticipated to be the biggest software upgrade in the ecosystem.

The merge is expected to transform the Ethereum network to a proof-of-stake (PoS) consensus mechanism from the current proof-of-work (PoS) framework, which has been elusive for a few years.

The PoS algorithm will enable the confirmation of blocks in a more cost-efficient and environmentally friendly way because validators will stake Ether instead of solving a cryptographic puzzle. 

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Ethereum Hits a Monthly High above $1,500 as Merge News Continues Engulfing the Market

by Blockchain News

Ethereum (ETH) returned to levels last seen in June based on renewed momentum following those upcoming potential merging events. 

Market insight provider Santiment explained:

“Ethereum’s return above $1,500 for the first time since June 12th appears to be happening as the crowd has little belief in this rebound. Despite this, the average ETH return of 30-day traders has ballooned to +28%, the highest since August 2021.”

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Source: Santiment

The 30-day return for Ethereum traders also hit an 11-month high, suggesting that the renewed momentum has driven their profits to levels last seen in August 2021.

Furthermore, ETH supply in profit also soared by 56%. On-chain insight provider Glassnode stated:

“Over the last month, almost 7.8% of circulating supply of ETH has transacted on-chain and changed hands. The total ETH supply in profit has now increased to 56%, after hitting lows of 41% prior to the current price rally.”

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Source: Glassnode

The second-largest cryptocurrency was up by 3.8% to hit $1,511 during intraday trading, according to CoinMarketCap. 

During a recent developers’ call, September 19 emerged as the most probable date for the merge.

Therefore, these upcoming events have been making airwaves, triggering a bullish momentum in the Ethereum market because the merge is anticipated to be the biggest software upgrade in the ecosystem.

The merge is expected to transform the Ethereum network to a proof-of-stake (PoS) consensus mechanism from the current proof-of-work (PoS) framework, which has been elusive for a few years.

The PoS algorithm will enable the confirmation of blocks in a more cost-efficient and environmentally friendly way because validators will stake Ether instead of solving a cryptographic puzzle. 

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Ethereum Unlikely to Merge in June, Despite PoW Undergoing

by Blockchain News

The much-anticipated merge of Ethereum will not occur in June as planned, according to Ethereum lead developer Tim Beiko.

Beiko took to Twitter and tweeted:

“It won’t be June, but likely in the few months after. No firm date yet, but we’re definitely in the final chapter of PoW on Ethereum.”

This revelation comes days after the first shadow fork that served as the merge trial went live on the Ethereum mainnet.

The shadow fork was to stress test syncing and state growth on the ETH network, as revealed by Ethereum Foundation developer Parithosh Jayanthi. 

The merge will act as the biggest software upgrade in the Ethereum ecosystem by shifting the current proof of work (PoW) framework to a more cost-effective and environmentally friendly proof of stake (PoS) consensus mechanism.

Furthermore, validators will take up the role of miners when it comes to the confirmation of blocks based on the amount of ETH staked, acting as collateral against dishonest behaviour. 

Despite the PoW consensus mechanism on the Ethereum network is in the final stretch, Beiko did not give a precise date when the merge would happen, but he opined that it would happen a few months after June. 

A transition to the PoS will improve scalability by enabling upgrades like sharding on the ETH blockchain. 

The merge is being waited with bated breath because it will enhance Ethereum’s quest to be a deflationary asset. Its value is expected to continue increasing with time on the foundation of slashed supply. 

The second-largest cryptocurrency was up by 1.97% to hit $3,108 during intraday trading, according to CoinMarketCap. Ethereum reached an all-time high (ATH) price of $4,850 in November last year, but it has not yet reclaimed this level so far this year. 

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Bitcoin (BTC) $ 26,588.12 0.02%
Ethereum (ETH) $ 1,594.23 0.02%
Litecoin (LTC) $ 65.11 1.04%
Bitcoin Cash (BCH) $ 208.26 0.03%