New hardware is revolutionizing the mining industry, while other crypto sectors continue to falter.

The beginning of 2023 raised hopes that the blockchain industry was on the path toward recovery, but weaker-than-hoped financial performance and a bout of negative news in February have cast doubts on this outlook. However, these headwinds do not affect all sectors of the industry uniformly. Nonfungible tokens (NFTs) and security tokens have managed to decouple from the broader environment and showed positive signs in February, but the rest of the market remains cautious.

For those serious about understanding the crypto space’s various sectors, Cointelegraph Research publishes a monthly Investors Insights report that dives into venture capital, derivatives, decentralized finance (DeFi), regulation and much more. Compiled by leading experts on these various topics, the monthly reports are an invaluable tool to quickly get a sense of the current state of the blockchain industry.

Can the mining industry consolidate its finances?

The bear market has witnessed multiple news stories about struggling miners, particularly publicly traded United States mining operations with high levels of debt that correspondingly suffered from lower Bitcoin prices. However, the release of new, highly efficient mining hardware in 2022 — such as Bitmain’s Antminer S19 Pro and S19 XP and Microbt’s WhatsMiner M53 — has resulted in efficiency gains of up to 30%, according to data from Hashrate Index. Cointelegraph Research’s August 2022 trends report pointed investors to the release of this new hardware and projected that the Bitcoin network’s hash rate would rise as a result.

Since August, the hash rate has indeed kept hitting new all-time highs despite the bearish market conditions, which traditionally cause a drop. Iris Energy has purchased 44,000 Antminer S19j Pro miners, with CleanSpark adding 20,000 S19j Pro+ miners to its arsenal as well. This is despite Iris Energy defaulting on debt obligations back in November.

Staying ahead of the rest of the network is critical in the mining sector. Those who manage to raise capital and procure new electricity-saving hardware earlier than others will be able to turn significant profits before the difficulty catches up again. For miners that manage to raise this capital, there may be hope.

Intensifying regulatory pressure on the DeFi sector

Meanwhile, regulators are stepping up their enforcement actions and threatening the backbone of the DeFi sector. On Feb. 12, it was revealed that the Securities and Exchange Commission had initiated a crackdown on Paxos, a major stablecoin issuer. The SEC sent Paxos a Wells notice, informing the company of the regulator’s intention to file a lawsuit against it for offering unregistered securities — and specifically referring to Binance USD as the security in question. In the aftermath of the notice, BUSD lost over 40% of its market capitalization.

As stablecoins provide safe ways for traders to take profits, this crackdown is a major threat to the industry. Many fear that Paxos will not remain the only target and that these actions will become widespread. Labeling stablecoins as securities is a surprising move by the SEC, given that there are no obvious expectations of profit from them.

It remains to be seen whether the SEC’s action will be followed up with similar steps against Tether and its USDT stablecoin, which is allegedly being used by North Korea and Venezuela to evade sanctions. Other key developments in this area can be found in the Regulation and DeFi sections of this month’s Investor Insights Report from Cointelegraph Research.

 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Bitcoin may be set for a price rebound amid alleged Trump's plan to speak at Bitcoin convention

Bitcoin may be set for a price rebound amid alleged Trump's plan to speak at Bitcoin convention

Bitcoin's price dropped below the $60K level briefly on Monday following news of defunct exchange Mt Gox beginning to pay its creditors in July. However, Santiment data reveals that the recent spike in social volume of the phrase "bottom" could signal a potential price rebound for Bitcoin based on historical trends.

More Bitcoin News

Solana down 15% in past seven days amid claims of alleged SOL investigation

Solana down 15% in past seven days amid claims of alleged SOL investigation

Solana holders and crypto analysts on X slammed influencer Crypto Bitlord behind the X handle @crypto_bitlord7 for his hot take on Solana and an alleged investigation. The analyst said that the alleged investigation has been brewing for “some weeks now,” and the crypto community on X heavily critiqued the influencer.

More Solana News

Ethereum whales increase their holdings following recent price decline

Ethereum whales increase their holdings following recent price decline

Ethereum's price (ETH) is down nearly 6% on Monday after Mt. Gox announced it would begin repaying creditors their Bitcoin and Bitcoin Cash. However, ETH whales have pounced on the price decline as an opportunity to purchase ETH before the arrival of spot Ethereum ETFs.

More Ethereum News

SHIB whale sells amid controversy surrounding WATER meme coin and singer Jason Derulo

SHIB whale sells amid controversy surrounding WATER meme coin and singer Jason Derulo

SHIB whales could be selling as the Dogecoin competitor has not seen sustained price growth in the past three months. WATER token might be facing selling pressure from increased insider activity. Jason Derulo accused of promoting crypto pump-and-dump scams by analyst.

More Shiba News

Bitcoin: Is BTC out of the woods?

Bitcoin: Is BTC out of the woods?

Bitcoin appears poised for a slight decline this week, influenced by factors such as the German Government's deposit of over 1,700 BTC in exchanges, decreasing outflows in US spot ETFs, and on-chain data indicating no signs of BTC DeFi liquidation. 

Read full analysis

BTC

ETH

XRP