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.
Follow us on Telegram
Stay updated of all the news
Mastercard to settle stablecoin transactions in Asia-Pacific region with Australian platform
Stablecoins have long been considered the safer option for bringing crypto to the world. However, the recent few instances of stablecoin collapses have raised concerns regarding the same as well. Even so, Mastercard is attempting to widen its reach in the Asia-Pacific (APAC) region.
How IMX could respond to Immutable's new partnership with Polygon Labs as gaming tokens trend this week
Immutable X and Polygon Labs have partnered for Web3 game development acceleration. The partnership comes ahead of launching a zkEVM-powered platform for studios and developers and a day into the GDC. The news could fuel a 43% upswing for IMX as the hype around gaming tokens continues.
Bitcoin price nears $30,000 despite banking crisis; First Republic Bank crashes by 47% in a day
Bitcoin price has managed to pull itself away from the narrative of being correlated to the United States stock market and macroeconomic conditions. The biggest cryptocurrency in the world has been rallying for more than a week now despite the ongoing banking crisis in the country, which is close to bringing down another bank.
MANA eyes 21% gains thanks to the world’s largest event for the art and science of game making
Decentraland price is on a 10-day uptrend as it moves diagonally along an ascending trendline. MANA could ascend 21.68% from the current price to tag the $0.7330 resistance level last tested on February 21. The bullish thesis could be invalidated if the gaming token drops below the uptrend line at $0.6015.
Weekly Recap: Bank runs, stablecoin drama, Voyager bankruptcy hearing, threat to DOX Shiba Inu founder
US bank runs sent shockwaves through market participants, traders turned to Bitcoin and the “safe haven” narrative made a comeback. Binance’s $1 billion acquisition of bankrupt crypto lender Voyager is back on track with a ruling from a New York bankruptcy judge.