Armenia puts one foot in the crypto mining circle, Washington state takes one foot out, and the Ether short market gets shaken all about.
Here’s some of what’s happening for October 22, 2018:
Armenia Opens $50 Million Mining Farm
Hoping to become the next crypto mining hotspot, Armenia has opened a 3,000-machine mining farm at a cost of $50 million. As reported by local news outlet Arka News, the Yerevan farm – Armenia’s first – will be headed by Armenian real estate company Multi Group Concern and Omnia Tech International, a Malta-registered company.
The farm, which plans to increase the number of mining rigs to 120,000, will mine bitcoin and Ether. The opening ceremony on October 19 was attended by the Armenian acting prime minister and businessmen from China, South Korea, and the United Arab Emirates.
The farm is part of an attempt to create a free economic zone that will also house a state-of-the-art technology center, officials said. This reflects a growing globalization of crypto mining, with Russia announcing in August the conversion of a fertilizer laboratory into a crypto mining farm and Georgia’s establishment of a bitcoin farm two years ago.
Washington City Imposes Year-Long Crypto Mining Ban
While some areas are diving for mining opportunities, others are retreating. Citing large drains on electricity and increased noise pollution without producing new jobs, Ephrata, Washington, joined other Grant County cities in temporarily banning cryptocurrency mining in city limits. By a vote of 6-1, the city council voted for a one-year moratorium on new crypto operations, as reported by The Spokesman-Review.
The moratorium will not affect the four existing operations in the city. The Grant County Public Utilities Department (PUD) has already issued a plan to impose higher electricity rates for cryptocurrency companies starting April 2019. Per Choose Energy, Washington state has the second-lowest electricity rate in the United States, following Louisiana.
This moratorium follows a trend in Washington that includes a moratorium by the Chelan PUD following the discovery of unauthorized mining; it recognized unauthorized loads to the system as “power theft.” Franklin PUD also imposed a moratorium in July to give staff time to review the effects of mining.
Crypto Mergers & Acquisitions on the Rise Due to Bear Market
As reported by CNBC, the number of mergers and acquisitions of cryptocurrency companies have more than doubled since the past year. Per data from PitchBook compiled by JMP Securities, there have been 115 crypto- or blockchain-related deals since January 1, and that number is projected to hit 145 by the end of the year, up from 45 last year.
“You’re seeing a mispricing of assets,” said JMP Securities’ Satya Bajpai to CNBC in an interview. “Even for great businesses, the value of the token remains correlated to bitcoin, which can create an ideal opportunity for strategic acquirers.”
Due to the industry’s fast pace, many companies are finding it easier to buy infrastructure than to build it. A notable example is Coinbase’s purchase of Earn.com, which allows users to send and receive crypto for completing tasks, including replying to emails.
“As soon as a company becomes interesting, they get bought — the deal size may still remain small, but the number of deals will increase because that’s the most viable and fastest way to grow in this environment.”
Ether Now Only Accounts for 4 Percent of Genesis Trading Loan Book
Since launching in March, Genesis Global Trading has processed over $500 million in crypto loans. In March 2018, 42 percent of the loans made by Genesis were in Ether. Today, per a report released by Genesis, it is less than four percent:
“At launch, lending activity was driven largely by speculative hedge funds,” Genesis reports. “BTC loans primarily serviced working capital needs, while ETH loans were primarily used for short interest. Some of our largest single originations to date were ETH loans in March and May to hedge funds. Over the second half of the year, these hedge funds began covering positions as they realized profits and the short interest in ETH was replaced by other alternative assets. Also, more trading firms began borrowing BTC, as trading activity in derivative markets increased.”
The low value of Ether relative to its price earlier in the year makes the coin unsuitable for short-position loans. In an interview with CNBC Fast Money, Michael Moro, CEO of Genesis, insists that the platform’s short selling of ETH did not contribute to the coin’s price demise. Genesis’s portfolio assets fell from 25 percent Ether in August to 3.7 percent in September.
As reported by MarketWatch, Ether shorts are at a record high as traders are betting for another price drop. Bitfinex is currently reporting more than 300,000 outstanding Ether short positions at a market value of approximately $60 million.
“So we saw a dramatic shift in sort of portfolio competition between August and September. You can read the tea leaves to figure out what that ultimately implies in terms of the bottom for Ethereum.” Moro told CNBC.
Be fast, be clever, be wise. Most importantly, be here tomorrow for your Daily Byte.
Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.
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