First Mover Asia: A Bear Market Survival Strategy for Cryptominers; Bitcoin and Ether remain in standby mode

Some miners earn more by selling power capacity back to the grid than by mining bitcoin; cryptocurrency markets await Friday’s speech from Fed Chair Jerome Powell.

Hello. Here’s what happens:

Price: Thursday offered the latest installment of crypto sideways trading this week.

Insights: Some crypto miners are selling power capacity to make up for lost revenue in the current bear market.

Prices

Bitcoin and Ether Remain in Their Recent Holding Patterns

A day before Jerome Powell’s much-anticipated speech at the Federal Reserve conclave in Wyoming, bitcoin has been idling in roughly the same place it’s been for much of the week — well above $25,000.

The largest cryptocurrency by market value recently traded around $21,500, roughly flat in the past 24 hours, as nervous investors continued to watch for comments from the Federal Reserve president. Friday that could indicate the next rate hike by the Fed. Several central bank governors have spoken to the media, but have provided few hints as to whether the bank will continue with its current policy of approving another 75 basis point hike (which is likely to accelerate asset markets – crypto and traditional) or by taking it to the next level. moderately aggressive 50 points.

“People are going to be looking for some kind of accommodative tilt, and if we don’t get it, it might be a little ugly,” said Matthew Tuttle, CEO and chief investment officer of exchange-traded fund provider Total Capital Management.

Ether continued its recent trend to outperform bitcoin. The second-largest cryptocurrency by market capitalization recently traded just below $1,700, up about one percentage point over the same period. Other major altcoins were mixed, with popular meme coins SHIB and CVC rising more than 6% each recently, but EOS and KNC soaring more than 2% and 1% respectively.

Still, non-fungible token (NFT) and metaverse-related cryptocurrencies have underperformed over the past week due to declining sentiment in the NFT market. The Flow network’s FLOW token, which can be used to create NFTs and decentralized applications (dapps), is down 20% in the past seven days. FLOW’s decline was the second-largest over this period of 52 cryptocurrencies with a market cap of more than $1 billion, according to crypto data and analytics firm Messari.

Other NFT and metaverse related tokens that have sunk include AXS, GALA, MANA and GMT, all of which fell between 14% and 20%.

Shares

Equity indices closed higher after the US Department of Commerce released data showing the economy contracted in the second quarter at a slower pace than preliminary estimates suggested. The tech-focused Nasdaq, S&P 500 and Dow Jones Industrial Average (DJIA) all rose by at least 1%. Investors were also supported by a slight decline in unemployment benefit claims, underscoring the continued resilience of the economy. Oanda’s senior market analyst Edward Moya called the latest indicators “the perfect prelude to Fed Chairman Powell’s aggressive speech on Friday”.

Moya added that “there is still a chance that this imbalanced economy will have a soft landing and that should prevent equities from coming under severe downward pressure.”

In news about the cryptocurrency industry, Voyager Digital, the lender whose bankruptcy has exacerbated this year’s cryptocurrency market crisis, is attracting interest from some of the biggest players in the space, including Binance and FTX exchanges, according to people in the know. with the issue.

And Sam Bankman-Fried’s FTX Ventures denied a Bloomberg report Thursday that the venture capital arm of FTX and the venture capital business of sister company Alameda Research would merge.

Total Capital’s Tuttle cautiously noted that bitcoin’s price remains “below all major moving averages”.

“It looks like a merchant’s flag,” he said. “We’re seeing” some support around that 20,800 level. If the market doesn’t hear what it wants to hear on Friday, that’s where crypto is headed. When the market hears what it wants to hear, we go up. »

Knowledge

A bear market survival strategy for some crypto miners

By Aoyon Ashraf

The ongoing bear market has hit crypto miners harder than other companies, as their main income comes from mining digital assets. Now, miners may have found another way to make up for some of their losses — by selling power back to the grid.

Crypto miners consume huge amounts of energy to mine their digital assets, and the cost of energy is the main variable in their profit margins. With the price of bitcoin falling more than 50% this year and electricity costs rising, their margins have shrunk significantly.

However, some miners are now being paid to shut down their operations and return electricity capacity to the grid during peak times, while reducing their electricity costs.

“The ability for some mining companies to generate electricity for sale to the grid or to meet demand gives them an additional profitability option,” said Ethan Vera, chief operating officer of software and service provider mining bitcoin (BTC). Luxor Tech.

Riot and Mawson

More recently, one of the largest bitcoin miners, Riot Blockchain (RIOT), said it made about $9.5 million in energy loans by shutting down its mining operations in Texas during an extreme heat wave. The miner said he significantly reduced his energy costs by using this strategy.

Another bitcoin miner, Mawson Infrastructure (MIGI), said it generated $1.8 million in unaudited revenue by engaging in similar types of strategies to Riot. “When energy prices are low, Mawson engages in bitcoin mining and generates income by selling self-mined bitcoins on a daily basis, as it has done since its inception,” the miner said in a statement. “When energy prices are high and available, Mawson participates in programs to meet energy demand, collect revenue and reduce overall energy costs,” he added.

One caveat to this strategy is that a miner must have a purchasing power agreement at a fixed price, rather than purchasing power in the spot market. For example, Argo Blockchain (ARBK) said that unlike Riot, it was unable to participate in Texas demand response because it paid spot market prices, which have been higher in recent months. .

However, miners who can take advantage of this strategy during the heat of the summer could benefit significantly even if the bear market persists. “In the current environment, the mining economy has plummeted, while energy prices have skyrocketed, making this an opportune time for these miners to sell power to the grid. In many cases, miners can earn more than double that per kWh by selling electricity instead of mining,” says Vera de Luxor.

Important events

9 p.m. HKT/SGT (11 a.m. UTC): Speech by Fed Chair Jerome Powell at the economic symposium in Jackson Hole, Wyoming.

4pm HKT/SGT (8am UTC): European M3 money supply (July/3M/annual)

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