For sports fans, DOGE is starting to look like crypto’s real MVP

In addition to its increasing attention from investors, Dogecoin appears to have found a niche following among sports fans.

Speaking to Cointelegraph, Dallas Mavericks basketball team owner Mark Cuban said that the people had “taken control of DOGE,” as evidenced by the tickets and merchandise sales he had seen since first offering the token as a method of payment in March. Prior to adopting the asset, the Mavericks had already been accepting Bitcoin (BTC) payments through BitPay since 2019.

However, Cuban indicated that no other cryptocurrency had quite produced the numbers they’ve seen from Dogecoin (DOGE):

“We sell more Mavs merchandise for DOGE on a typical day […] than we did in a year with BTC or ETH,”

Major League Baseball fans have begun to show similar enthusiasm in recent days. Oakland Athletics president Dave Kaval announced this week that the franchise had sold two plaza infield tickets the same day the team said it would be offering them for 100 DOGE — roughly $46 at the time. In contrast, it took more than two weeks for a sports fan to cough up the BTC needed to pay for one of the stadium’s six-person suites. However, at 1 BTC, the price of the tickets was significantly higher.

At time of publication, the price of DOGE is more than $0.63, having surged significantly over the last week, month, and quarter to reach new all-time highs. Mike Novogratz’s Galaxy Digital recently published a report referring to DOGE as “the most honest sh*tcoin,” while many expect Tesla CEO Elon Musk to pump the price of the token during his Saturday Night Live appearance this weekend.

All the attention from social media and news outlets regarding the token over the last several months may have demanded a lot from its co-creator Jackson Palmer. The San Francisco Bay Area resident’s tweets are now protected and his website’s homepage includes a message stating he does “not have any thoughts to share” on crypto or Dogecoin.

Speaking on Dogecoin’s value as an asset, Mark Cuban said “DOGE is the ultimate in strength in numbers,” elaborating:

“It’s the ultimate decentralized evolution. Rather than an edict coming from an ivory tower that defines value, the law of supply and demand are defined by an algorithm.”

Back in February, the billionaire referred to DOGE as the «lowest cost economics teaching tool available that entertains at the same time,” later jesting that he expects the coin’s price to reach $1 should the Dallas Mavericks sell an additional 6,556,000,000 DOGE worth of merchandise. At its current price point, the asset needs only to rise another 59% to reach that milestone. 

Bitcoin miners’ revenue rebounds to $60M per day — Is the bull run about to resume?

Bitcoin (BTC) miners collected $60 million on a thirty-day average timeframe as of May 5, showing the first signs of recovery after last month’s severe revenue drop that followed mass miner outages in China’s energy-rich provinces.

In April, coal mining accidents and subsequent inspections in Xinjiang lacerated energy supply to the regional cryptocurrency mining industry. That forced miners to turn off their Application Specific Integrated Circuit (ASIC) hardware, which exclusively generates computing power to secure and put the «work» into Bitcoin’s proof-of-work.

According to data from Blockchain.com, Bitcoin Mining revenue fell from its 30-day average peak of $60 million — recorded on April 16 — to as low as $57.08 million on May 2. The given resource collects miners’ data from block rewards and transaction fees paid to miners.

Bitcoin miners revenue. Source: Blockchain.com

The drop in profits coincided with a decline in the Bitcoin network’s hash rates, signifying that many ASIC hardware went offline after losing their chief energy source. The total hash rate per second (7-day average) plunged from a record high of 172 EH/s on April 16 to 131 EH/s on April 23, a drop of roughly 30%.

Bitcoin Hash Rate Source: Blockchain.com

It has since recovered to 168 EH/s on May 5, indicating that miners are resuming their bitcoin operations, following a considerable mining difficulty drop four days ago.

Effects on Bitcoin spot rate

Bitcoin prices suffered significant declines following China’s outages.

The benchmark cryptocurrency was already correcting lower after establishing a historical peak near $65,000 on April 14. The China FUD apprehensively accelerated the sell-off, causing the BTC/USD exchange rate to plunge to as low as $50,591 as of April 25.

BTC/USD 1-day candle chart (Coinbase). Source: Tradingview

Bitcoin’s price and hash rate drop occurred almost simultaneously, feeding another evidence about a higher positive correlation between the two metrics.

Simply put, the hash rate represents the computational power of the Bitcoin network. This means that the higher the hash rate, the higher the cost of theoretically «attacking» Bitcoin, making this metric synonymous with the network’s security.

The Bitcoin rate has recovered to a little over $55,000 as of Wednesday, much in line with the hash rate, signifying that the network reset is helping to maintain the cryptocurrency’s prevailing bullish bias.

More upside tailwinds come from Bitcoin mining difficulty projections. For example, data from BTC.com shows it should rise by a modest 1% in the subsequent bi-monthly (or 2,016-block periods) adjustment on Thursday next week.

The network difficulty, which shows how difficult it is for nodes on the Bitcoin network to solve the equations necessary for mining operations, had dropped 12.6% on May 2. That tends to increase margins for both inefficient and efficient miners, promising lower risks of Bitcoin sell-off at the producers’ end.

Meanwhile, with an upside adjustment looking more likely and mining activity rising on the Bitcoin network, the long-term bias for the cryptocurrency remains bullish.

An earlier report from Cointelegraph compared the correlation between Bitcoin prices, hash rate, and mining difficulty, ruling out that the first has a lagging correlation with the latter two despite the popular mantra, «price follows hash rate.»

The BTC/USD exchange rate had closed 2020 at $28,990 after Bitcoin’s network difficulty plunged to 17.438 TH/s from 19.679 TH/s in the November-December session. The period also saw a significant drop in the hash rate but left Bitcoin’s overall upside bias untouched.

Is China softening on Bitcoin? A turn of phrase stirs the crypto world

They were only two seemingly innocuous words: “investment alternatives.” But when applied to Bitcoin — the seminal cryptocurrency — by an official from the People’s Bank of China in a recent panel discussion, they reverberated like a firecracker.

“A remarkable step for BTC,” Lennix Lai, director of financial markets at OKEx, calls the statement. Michael Peshkam, executive in residence at European business school INSEAD, describes the central banker’s remarks as “a significant shift in the country’s position” on crypto.

To recap: On April 18 at a CNBC event at the Boao Forum for Asia, Li Bo, deputy governor of the PBoC — China’s central bank — said: “We regard Bitcoin and stablecoin as crypto assets. […] These are investment alternatives.” CNBC reporter Arjun Kharpal commented:

“Industry insiders called the comments ‘progressive’ and are watching closely for any regulatory changes made by the People’s Bank of China.”

“Yes, I do see a change in tone” in China, “a softened and more open approach to considering the role of Bitcoin,” Kevin Desouza — professor of business, technology and strategy at Queensland University of Technology Business School — tells Magazine. “I still do not see a full embrace of Bitcoin.”

“This is a very important development,” Daniel Lacalle, chief economist at Tressis SV, tells Magazine — one that involves a “significant change of heart” on the part of China’s government as it “separates itself from its former monetary policy.” 

The government is saying, in effect, that it isn’t going to ban or put the brakes on the growth of Bitcoin and other cryptocurrencies, which have been an ever-present risk for both China and other governments, Lacalle suggests.

If so, why now? China is close to rolling out one of the world’s first major central bank digital currencies at scale — sometimes referred to as the Digital Currency Electronic Payment, or digital yuan. “If it wants a digital yuan that works, it can’t ban crypto,” Lacalle says. Rather, it needs to show that its DC/EP is as attractive as a crypto alternative.

Connecting the dots: BTC and DC/EP

What exactly, though, is the connection between Bitcoin and China’s DC/EP? Aren’t they two different things — one an emerging global store of value, like gold, and the other a domestic payment system? 

The Chinese yuan, as currently constituted, is used in very few international transactions. “It is underutilized globally because China maintains capital controls,” Lacalle tells Magazine. China has long feared that if it were to drop these controls, its economy would quickly become “dollarized” — i.e., its citizens would send dollars away from China to the United States. 

As things stand today, the rollout of a digital yuan would be an international failure, though it might succeed domestically. Outsiders would assume that the Chinese government wants to control it like it does its traditional yuan.

“But if they open the market for crypto in China, they are signalling that capital controls won’t apply to the digital market,” including a digital yuan, Lacalle explains. This is arguably an “intelligent move” on the part of the Chinese government, which like Russia before it now sees benefits in opening its economy to crypto. In fact, cryptocurrencies may eventually — albeit, in a “distant future” — hurt Western fiat currencies, authorities speculate. But in the meantime, a new tolerance with regard to Bitcoin can make its digital currency more viable beyond its borders. 

A potential currency?

Peshkam tells Magazine that Li’s statement goes beyond recognizing BTC as just another investment asset, which is scarcely an earth-shaking revelation. China now sees crypto “as a future potential currency in global trade.”

Using Google Trends data from 2014 to the present, Peshkam notes that interest in Bitcoin within China — i.e., among its domestic population — follows a similar pattern as in the U.S., as well as the world at large, as measured by the number of searches for the word “Bitcoin.” Ignoring this growing interest on the part of its populace “might not be economically and financially prudent for the country in the long run, thus the shift” in Chinese policy, opines Peshkam.

China’s DC/EP will probably become “the main means of daily trade from grocery shopping to payment of bills and larger ticket items” domestically, Peshkam says. But it is too early to gauge its international impact, including whether or not it will be a threat to the U.S. dollar as the world’s primary trading currency.

Just in case, continues Peshkam, China would like to have BTC on hand to reduce its dependence on the dollar for global trade. A strong BTC could also similarly weaken the dollar’s hold on China’s regional neighbors, making them more open to using the new digital yuan. “The shift in China’s position seems to be a strategic move to safeguard its future economic dominance should Bitcoin move from ‘investment alternative’ to ‘trading currency alternative,’” says Peshkam.

Who is Li?

Perhaps one is reading too much into a single person’s statement? Li, after all, is just one of seven deputy governors of China’s central bank. Might these remarks on the matter of Bitcoin and cryptocurrencies simply be one banker’s opinion?

No, Lacalle tells Magazine. “That doesn’t happen in China.” Not in forums like these. “When they want to alert the world about some new [financial] policy, the first comment is often from an analyst in a state-owned bank.” Next, typically, is a statement by a central banker. And finally, at a later date, the policy is officially announced, explains Lacalle. This is what happened when China devalued the yuan in 2015, for instance. “It is subtle but efficient.”

China’s central bank is not as independent as some of its Western counterparts, including the U.S. Federal Reserve, another source, who wished to remain anonymous, tells Magazine: “In his [Li’s] place, it would be natural to check whether his statement is in accord with the government view. Or, alternatively, he has been tipped that this is the government view.”

So, Li is simply acting as a government spokesperson? “It can be viewed this way,” says Molly Jane Zuckerman, head of content at CoinMarketCap, in a conversation with Magazine. She adds: “The vice governor of the People’s Bank of China and the former governor of the PBoC both mentioned Bitcoin while explaining the progress of CBDC development” in the recent forum. They considered Bitcoin a special asset and said the government would bring it under supervision and regulation. Earlier, the central bank had called Bitcoin a virtual commodity. 

But maybe an “alternative investment” is just an alternative investment — and nothing more?

“It’s hard to be confident, but perhaps PBoC Deputy Governor Li Bo’s intent is simply to say that Bitcoin is a valid alternative investment,” Darrell Duffie, Dean Witter distinguished professor of finance at Stanford Business School, tells Magazine. “China probably remains against the use of Bitcoin as a payment medium, which is a different application.” This would be consistent with Li’s prior remarks, continues Duffie, adding:

“As a payment medium, Bitcoin makes it more difficult for the authorities, in any country, to monitor payments for compliance with laws and regulations, such as anti-money laundering. When used as a payment medium, Bitcoin also makes it somewhat easier to bypass China’s capital controls, which China would not want to see.”

Li may have been saying that Bitcoin is all right as a store of value — i.e., as gold 2.0 — but not as a payments platform. James Barth, finance professor at Auburn University, tells Magazine: “Bitcoin, like gold, might be viewed and allowed as an investment with the ability to serve as an inflation hedge.” He adds that it “makes sense to view Bitcoin as an ‘investment alternative.’ […] This still allows China to impose restrictions by barring financial institutions within its borders from facilitating transactions involving cryptocurrencies.”

The banker also may have simply been describing the current reality. Kevin Werbach, professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania, tells Magazine: “Calling cryptocurrencies ‘investment alternatives’ is a factual statement. It doesn’t necessarily imply anything about whether and how those alternatives would be available to Chinese investors.”

Contrary to what some believe, Werbach says that China has never attempted to thwart Bitcoin and blockchain activities. “China has never been uniformly hostile to cryptocurrencies,” he says, adding: “Chinese authorities shut down initial coin offerings and renminbi-to-crypto exchanges in 2017 because they were concerned about excessive speculation, fraud, and capital flight. There has been no indication of that view changing.”

Meanwhile, China has tolerated a huge crypto mining industry within its borders and has actively promoted blockchain technology “as part of its ‘new infrastructure’ agenda,” adds Werbach. “Many of the world’s largest crypto exchanges, such as Binance, Huobi, and OKcoin, have major ties to China, even if officially they are headquartered elsewhere.” In summary, Werbach tells Magazine:

“My guess is that Li Bo was saying that Bitcoin should be viewed as a speculative investment, not as an alternative currency or payment system. That would be very consistent with China’s approach. I think the crypto community took the wrong message from his remarks.

Others, however, continue to discern a policy shift behind the banker’s statement. For instance, OKEx’s Lai tells Magazine: “The new statement from the PBOC banker gave a very clear stance to the market that BTC would be considered as an alternative investment tool. We think it’s a remarkable step for BTC and we will likely see BTC regulated with a similar framework as those for other alternative investments.”

Distrust of China

Others were quick to see ulterior motives on China’s part. “China’s latest move softening its position on cryptos should be taken with a healthy dose of skepticism,” Pablo Agnese, lecturer in the department of economy and business organization at UIC Barcelona, tells Magazine. He adds: “China is and has been for long a big black box, and the old adage ‘beware of Greeks bearing gifts’ seems as fitting as ever.”

But Bitcoin may be getting too big to ignore, even for China, suggests Agnese — especially considering it has a market cap that recently surpassed the $1 trillion mark. “China will still try to ride the crypto wave just to undermine the power of the USD in international trade transactions” — which accounts for roughly 60% of foreign exchange reserves — “as there is a trade war still going strong.” As for China’s own CBDC project, Agnese comments:

“Cryptos at large, and BTC in particular, have precisely come to challenge the financial status quo, not only by introducing much needed competition, but also by exposing its long-standing weaknesses.”

Yu Xiong, associate dean international at Surrey University and chair of business analytics at Surrey Business School, tells Magazine that the statement by Li only meant that China was starting to pay more attention to cryptocurrencies — with the intent of regulating them. “This will not mean China will play a softer position toward cryptocurrencies. China will only become soft when the government can really monitor the transactions and cash flows. […] This will not happen in the foreseeable future.”

An “asset class that should be regulated”

In sum, the Chinese government has shown little interest until now in regulating Bitcoin — which would be tantamount to acceptance of the cryptocurrency. But last month, a deputy governor of China’s central bank, presumably with the government’s knowledge and approval, signaled that the central bank will not only not block Bitcoin in China but spoke for the first time in positive terms about the digital currency.

“This is extremely significant for both domestic institutional investors and high net worth individuals” looking to invest in “alternative assets such as Bitcoin in the future,” Zuckerman tells Magazine.

Lai adds: “After years of development, I think all major governments and regulators” — now including China — “have recognized BTC as a viable asset class that should be regulated instead of a complete ban.”

There is a growing realization in China that the nation could benefit from a rising crypto sector. The electricity that powers crypto mining, after all, is largely based in China. The Chinese already have a stake, too, in many blockchain-based enterprises. And meanwhile, the nation has an ambitious digital currency project underway, so some softening with regard to BTC may also be tied, as Lacalle posits, “to its desire to have a [globally] functioning digital yuan.”

For sports fans, DOGE is starting to look like crypto’s real MVP

In addition to its increasing attention from investors, Dogecoin appears to have found a niche following among sports fans.

Speaking to Cointelegraph, Dallas Mavericks basketball team owner Mark Cuban said that the people had “taken control of DOGE,” as evidenced by the tickets and merchandise sales he had seen since first offering the token as a method of payment in March. Prior to adopting the asset, the Mavericks had already been accepting Bitcoin (BTC) payments through BitPay since 2019.

However, Cuban indicated that no other cryptocurrency had quite produced the numbers they’ve seen from Dogecoin (DOGE):

“We sell more Mavs merchandise for DOGE on a typical day […] than we did in a year with BTC or ETH,”

Major League Baseball fans have begun to show similar enthusiasm in recent days. Oakland Athletics president Dave Kaval announced this week that the franchise had sold two plaza infield tickets the same day the team said it would be offering them for 100 DOGE — roughly $46 at the time. In contrast, it took more than two weeks for a sports fan to cough up the BTC needed to pay for one of the stadium’s six-person suites. However, at 1 BTC, the price of the tickets was significantly higher.

At time of publication, the price of DOGE is more than $0.63, having surged significantly over the last week, month, and quarter to reach new all-time highs. Mike Novogratz’s Galaxy Digital recently published a report referring to DOGE as “the most honest sh*tcoin,” while many expect Tesla CEO Elon Musk to pump the price of the token during his Saturday Night Live appearance this weekend.

All the attention from social media and news outlets regarding the token over the last several months may have demanded a lot from its co-creator Jackson Palmer. The San Francisco Bay Area resident’s tweets are now protected and his website’s homepage includes a message stating he does “not have any thoughts to share” on crypto or Dogecoin.

Speaking on Dogecoin’s value as an asset, Mark Cuban said “DOGE is the ultimate in strength in numbers,” elaborating:

“It’s the ultimate decentralized evolution. Rather than an edict coming from an ivory tower that defines value, the law of supply and demand are defined by an algorithm.”

Back in February, the billionaire referred to DOGE as the «lowest cost economics teaching tool available that entertains at the same time,” later jesting that he expects the coin’s price to reach $1 should the Dallas Mavericks sell an additional 6,556,000,000 DOGE worth of merchandise. At its current price point, the asset needs only to rise another 59% to reach that milestone. 

Bitcoin miners’ revenue rebounds to $60M per day — Is the bull run about to resume?

Bitcoin (BTC) miners collected $60 million on a thirty-day average timeframe as of May 5, showing the first signs of recovery after last month’s severe revenue drop that followed mass miner outages in China’s energy-rich provinces.

In April, coal mining accidents and subsequent inspections in Xinjiang lacerated energy supply to the regional cryptocurrency mining industry. That forced miners to turn off their Application Specific Integrated Circuit (ASIC) hardware, which exclusively generates computing power to secure and put the «work» into Bitcoin’s proof-of-work.

According to data from Blockchain.com, Bitcoin Mining revenue fell from its 30-day average peak of $60 million — recorded on April 16 — to as low as $57.08 million on May 2. The given resource collects miners’ data from block rewards and transaction fees paid to miners.

Bitcoin miners revenue. Source: Blockchain.com

The drop in profits coincided with a decline in the Bitcoin network’s hash rates, signifying that many ASIC hardware went offline after losing their chief energy source. The total hash rate per second (7-day average) plunged from a record high of 172 EH/s on April 16 to 131 EH/s on April 23, a drop of roughly 30%.

Bitcoin Hash Rate Source: Blockchain.com

It has since recovered to 168 EH/s on May 5, indicating that miners are resuming their bitcoin operations, following a considerable mining difficulty drop four days ago.

Effects on Bitcoin spot rate

Bitcoin prices suffered significant declines following China’s outages.

The benchmark cryptocurrency was already correcting lower after establishing a historical peak near $65,000 on April 14. The China FUD apprehensively accelerated the sell-off, causing the BTC/USD exchange rate to plunge to as low as $50,591 as of April 25.

BTC/USD 1-day candle chart (Coinbase). Source: Tradingview

Bitcoin’s price and hash rate drop occurred almost simultaneously, feeding another evidence about a higher positive correlation between the two metrics.

Simply put, the hash rate represents the computational power of the Bitcoin network. This means that the higher the hash rate, the higher the cost of theoretically «attacking» Bitcoin, making this metric synonymous with the network’s security.

The Bitcoin rate has recovered to a little over $55,000 as of Wednesday, much in line with the hash rate, signifying that the network reset is helping to maintain the cryptocurrency’s prevailing bullish bias.

More upside tailwinds come from Bitcoin mining difficulty projections. For example, data from BTC.com shows it should rise by a modest 1% in the subsequent bi-monthly (or 2,016-block periods) adjustment on Thursday next week.

The network difficulty, which shows how difficult it is for nodes on the Bitcoin network to solve the equations necessary for mining operations, had dropped 12.6% on May 2. That tends to increase margins for both inefficient and efficient miners, promising lower risks of Bitcoin sell-off at the producers’ end.

Meanwhile, with an upside adjustment looking more likely and mining activity rising on the Bitcoin network, the long-term bias for the cryptocurrency remains bullish.

An earlier report from Cointelegraph compared the correlation between Bitcoin prices, hash rate, and mining difficulty, ruling out that the first has a lagging correlation with the latter two despite the popular mantra, «price follows hash rate.»

The BTC/USD exchange rate had closed 2020 at $28,990 after Bitcoin’s network difficulty plunged to 17.438 TH/s from 19.679 TH/s in the November-December session. The period also saw a significant drop in the hash rate but left Bitcoin’s overall upside bias untouched.

Is China softening on Bitcoin? A turn of phrase stirs the crypto world

They were only two seemingly innocuous words: “investment alternatives.” But when applied to Bitcoin — the seminal cryptocurrency — by an official from the People’s Bank of China in a recent panel discussion, they reverberated like a firecracker.

“A remarkable step for BTC,” Lennix Lai, director of financial markets at OKEx, calls the statement. Michael Peshkam, executive in residence at European business school INSEAD, describes the central banker’s remarks as “a significant shift in the country’s position” on crypto.

To recap: On April 18 at a CNBC event at the Boao Forum for Asia, Li Bo, deputy governor of the PBoC — China’s central bank — said: “We regard Bitcoin and stablecoin as crypto assets. […] These are investment alternatives.” CNBC reporter Arjun Kharpal commented:

“Industry insiders called the comments ‘progressive’ and are watching closely for any regulatory changes made by the People’s Bank of China.”

“Yes, I do see a change in tone” in China, “a softened and more open approach to considering the role of Bitcoin,” Kevin Desouza — professor of business, technology and strategy at Queensland University of Technology Business School — tells Magazine. “I still do not see a full embrace of Bitcoin.”

“This is a very important development,” Daniel Lacalle, chief economist at Tressis SV, tells Magazine — one that involves a “significant change of heart” on the part of China’s government as it “separates itself from its former monetary policy.” 

The government is saying, in effect, that it isn’t going to ban or put the brakes on the growth of Bitcoin and other cryptocurrencies, which have been an ever-present risk for both China and other governments, Lacalle suggests.

If so, why now? China is close to rolling out one of the world’s first major central bank digital currencies at scale — sometimes referred to as the Digital Currency Electronic Payment, or digital yuan. “If it wants a digital yuan that works, it can’t ban crypto,” Lacalle says. Rather, it needs to show that its DC/EP is as attractive as a crypto alternative.

Connecting the dots: BTC and DC/EP

What exactly, though, is the connection between Bitcoin and China’s DC/EP? Aren’t they two different things — one an emerging global store of value, like gold, and the other a domestic payment system? 

The Chinese yuan, as currently constituted, is used in very few international transactions. “It is underutilized globally because China maintains capital controls,” Lacalle tells Magazine. China has long feared that if it were to drop these controls, its economy would quickly become “dollarized” — i.e., its citizens would send dollars away from China to the United States. 

As things stand today, the rollout of a digital yuan would be an international failure, though it might succeed domestically. Outsiders would assume that the Chinese government wants to control it like it does its traditional yuan.

“But if they open the market for crypto in China, they are signalling that capital controls won’t apply to the digital market,” including a digital yuan, Lacalle explains. This is arguably an “intelligent move” on the part of the Chinese government, which like Russia before it now sees benefits in opening its economy to crypto. In fact, cryptocurrencies may eventually — albeit, in a “distant future” — hurt Western fiat currencies, authorities speculate. But in the meantime, a new tolerance with regard to Bitcoin can make its digital currency more viable beyond its borders. 

A potential currency?

Peshkam tells Magazine that Li’s statement goes beyond recognizing BTC as just another investment asset, which is scarcely an earth-shaking revelation. China now sees crypto “as a future potential currency in global trade.”

Using Google Trends data from 2014 to the present, Peshkam notes that interest in Bitcoin within China — i.e., among its domestic population — follows a similar pattern as in the U.S., as well as the world at large, as measured by the number of searches for the word “Bitcoin.” Ignoring this growing interest on the part of its populace “might not be economically and financially prudent for the country in the long run, thus the shift” in Chinese policy, opines Peshkam.

China’s DC/EP will probably become “the main means of daily trade from grocery shopping to payment of bills and larger ticket items” domestically, Peshkam says. But it is too early to gauge its international impact, including whether or not it will be a threat to the U.S. dollar as the world’s primary trading currency.

Just in case, continues Peshkam, China would like to have BTC on hand to reduce its dependence on the dollar for global trade. A strong BTC could also similarly weaken the dollar’s hold on China’s regional neighbors, making them more open to using the new digital yuan. “The shift in China’s position seems to be a strategic move to safeguard its future economic dominance should Bitcoin move from ‘investment alternative’ to ‘trading currency alternative,’” says Peshkam.

Who is Li?

Perhaps one is reading too much into a single person’s statement? Li, after all, is just one of seven deputy governors of China’s central bank. Might these remarks on the matter of Bitcoin and cryptocurrencies simply be one banker’s opinion?

No, Lacalle tells Magazine. “That doesn’t happen in China.” Not in forums like these. “When they want to alert the world about some new [financial] policy, the first comment is often from an analyst in a state-owned bank.” Next, typically, is a statement by a central banker. And finally, at a later date, the policy is officially announced, explains Lacalle. This is what happened when China devalued the yuan in 2015, for instance. “It is subtle but efficient.”

China’s central bank is not as independent as some of its Western counterparts, including the U.S. Federal Reserve, another source, who wished to remain anonymous, tells Magazine: “In his [Li’s] place, it would be natural to check whether his statement is in accord with the government view. Or, alternatively, he has been tipped that this is the government view.”

So, Li is simply acting as a government spokesperson? “It can be viewed this way,” says Molly Jane Zuckerman, head of content at CoinMarketCap, in a conversation with Magazine. She adds: “The vice governor of the People’s Bank of China and the former governor of the PBoC both mentioned Bitcoin while explaining the progress of CBDC development” in the recent forum. They considered Bitcoin a special asset and said the government would bring it under supervision and regulation. Earlier, the central bank had called Bitcoin a virtual commodity. 

But maybe an “alternative investment” is just an alternative investment — and nothing more?

“It’s hard to be confident, but perhaps PBoC Deputy Governor Li Bo’s intent is simply to say that Bitcoin is a valid alternative investment,” Darrell Duffie, Dean Witter distinguished professor of finance at Stanford Business School, tells Magazine. “China probably remains against the use of Bitcoin as a payment medium, which is a different application.” This would be consistent with Li’s prior remarks, continues Duffie, adding:

“As a payment medium, Bitcoin makes it more difficult for the authorities, in any country, to monitor payments for compliance with laws and regulations, such as anti-money laundering. When used as a payment medium, Bitcoin also makes it somewhat easier to bypass China’s capital controls, which China would not want to see.”

Li may have been saying that Bitcoin is all right as a store of value — i.e., as gold 2.0 — but not as a payments platform. James Barth, finance professor at Auburn University, tells Magazine: “Bitcoin, like gold, might be viewed and allowed as an investment with the ability to serve as an inflation hedge.” He adds that it “makes sense to view Bitcoin as an ‘investment alternative.’ […] This still allows China to impose restrictions by barring financial institutions within its borders from facilitating transactions involving cryptocurrencies.”

The banker also may have simply been describing the current reality. Kevin Werbach, professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania, tells Magazine: “Calling cryptocurrencies ‘investment alternatives’ is a factual statement. It doesn’t necessarily imply anything about whether and how those alternatives would be available to Chinese investors.”

Contrary to what some believe, Werbach says that China has never attempted to thwart Bitcoin and blockchain activities. “China has never been uniformly hostile to cryptocurrencies,” he says, adding: “Chinese authorities shut down initial coin offerings and renminbi-to-crypto exchanges in 2017 because they were concerned about excessive speculation, fraud, and capital flight. There has been no indication of that view changing.”

Meanwhile, China has tolerated a huge crypto mining industry within its borders and has actively promoted blockchain technology “as part of its ‘new infrastructure’ agenda,” adds Werbach. “Many of the world’s largest crypto exchanges, such as Binance, Huobi, and OKcoin, have major ties to China, even if officially they are headquartered elsewhere.” In summary, Werbach tells Magazine:

“My guess is that Li Bo was saying that Bitcoin should be viewed as a speculative investment, not as an alternative currency or payment system. That would be very consistent with China’s approach. I think the crypto community took the wrong message from his remarks.

Others, however, continue to discern a policy shift behind the banker’s statement. For instance, OKEx’s Lai tells Magazine: “The new statement from the PBOC banker gave a very clear stance to the market that BTC would be considered as an alternative investment tool. We think it’s a remarkable step for BTC and we will likely see BTC regulated with a similar framework as those for other alternative investments.”

Distrust of China

Others were quick to see ulterior motives on China’s part. “China’s latest move softening its position on cryptos should be taken with a healthy dose of skepticism,” Pablo Agnese, lecturer in the department of economy and business organization at UIC Barcelona, tells Magazine. He adds: “China is and has been for long a big black box, and the old adage ‘beware of Greeks bearing gifts’ seems as fitting as ever.”

But Bitcoin may be getting too big to ignore, even for China, suggests Agnese — especially considering it has a market cap that recently surpassed the $1 trillion mark. “China will still try to ride the crypto wave just to undermine the power of the USD in international trade transactions” — which accounts for roughly 60% of foreign exchange reserves — “as there is a trade war still going strong.” As for China’s own CBDC project, Agnese comments:

“Cryptos at large, and BTC in particular, have precisely come to challenge the financial status quo, not only by introducing much needed competition, but also by exposing its long-standing weaknesses.”

Yu Xiong, associate dean international at Surrey University and chair of business analytics at Surrey Business School, tells Magazine that the statement by Li only meant that China was starting to pay more attention to cryptocurrencies — with the intent of regulating them. “This will not mean China will play a softer position toward cryptocurrencies. China will only become soft when the government can really monitor the transactions and cash flows. […] This will not happen in the foreseeable future.”

An “asset class that should be regulated”

In sum, the Chinese government has shown little interest until now in regulating Bitcoin — which would be tantamount to acceptance of the cryptocurrency. But last month, a deputy governor of China’s central bank, presumably with the government’s knowledge and approval, signaled that the central bank will not only not block Bitcoin in China but spoke for the first time in positive terms about the digital currency.

“This is extremely significant for both domestic institutional investors and high net worth individuals” looking to invest in “alternative assets such as Bitcoin in the future,” Zuckerman tells Magazine.

Lai adds: “After years of development, I think all major governments and regulators” — now including China — “have recognized BTC as a viable asset class that should be regulated instead of a complete ban.”

There is a growing realization in China that the nation could benefit from a rising crypto sector. The electricity that powers crypto mining, after all, is largely based in China. The Chinese already have a stake, too, in many blockchain-based enterprises. And meanwhile, the nation has an ambitious digital currency project underway, so some softening with regard to BTC may also be tied, as Lacalle posits, “to its desire to have a [globally] functioning digital yuan.”

Bitcoin miners’ revenue rebounds to $60M per day — Is the bull run about to resume?

Bitcoin (BTC) miners collected $60 million on a thirty-day average timeframe as of May 5, showing the first signs of recovery after last month’s severe revenue drop that followed mass miner outages in China’s energy-rich provinces.

In April, coal mining accidents and subsequent inspections in Xinjiang lacerated energy supply to the regional cryptocurrency mining industry. That forced miners to turn off their Application Specific Integrated Circuit (ASIC) hardware, which exclusively generates computing power to secure and put the «work» into Bitcoin’s proof-of-work.

According to data from Blockchain.com, Bitcoin Mining revenue fell from its 30-day average peak of $60 million — recorded on April 16 — to as low as $57.08 million on May 2. The given resource collects miners’ data from block rewards and transaction fees paid to miners.

Bitcoin miners revenue. Source: Blockchain.com

The drop in profits coincided with a decline in the Bitcoin network’s hash rates, signifying that many ASIC hardware went offline after losing their chief energy source. The total hash rate per second (7-day average) plunged from a record high of 172 EH/s on April 16 to 131 EH/s on April 23, a drop of roughly 30%.

Bitcoin Hash Rate Source: Blockchain.com

It has since recovered to 168 EH/s on May 5, indicating that miners are resuming their bitcoin operations, following a considerable mining difficulty drop four days ago.

Effects on Bitcoin spot rate

Bitcoin prices suffered significant declines following China’s outages.

The benchmark cryptocurrency was already correcting lower after establishing a historical peak near $65,000 on April 14. The China FUD apprehensively accelerated the sell-off, causing the BTC/USD exchange rate to plunge to as low as $50,591 as of April 25.

BTC/USD 1-day candle chart (Coinbase). Source: Tradingview

Bitcoin’s price and hash rate drop occurred almost simultaneously, feeding another evidence about a higher positive correlation between the two metrics.

Simply put, the hash rate represents the computational power of the Bitcoin network. This means that the higher the hash rate, the higher the cost of theoretically «attacking» Bitcoin, making this metric synonymous with the network’s security.

The Bitcoin rate has recovered to a little over $55,000 as of Wednesday, much in line with the hash rate, signifying that the network reset is helping to maintain the cryptocurrency’s prevailing bullish bias.

More upside tailwinds come from Bitcoin mining difficulty projections. For example, data from BTC.com shows it should rise by a modest 1% in the subsequent bi-monthly (or 2,016-block periods) adjustment on Thursday next week.

The network difficulty, which shows how difficult it is for nodes on the Bitcoin network to solve the equations necessary for mining operations, had dropped 12.6% on May 2. That tends to increase margins for both inefficient and efficient miners, promising lower risks of Bitcoin sell-off at the producers’ end.

Meanwhile, with an upside adjustment looking more likely and mining activity rising on the Bitcoin network, the long-term bias for the cryptocurrency remains bullish.

An earlier report from Cointelegraph compared the correlation between Bitcoin prices, hash rate, and mining difficulty, ruling out that the first has a lagging correlation with the latter two despite the popular mantra, «price follows hash rate.»

The BTC/USD exchange rate had closed 2020 at $28,990 after Bitcoin’s network difficulty plunged to 17.438 TH/s from 19.679 TH/s in the November-December session. The period also saw a significant drop in the hash rate but left Bitcoin’s overall upside bias untouched.

Is China softening on Bitcoin? A turn of phrase stirs the crypto world

They were only two seemingly innocuous words: “investment alternatives.” But when applied to Bitcoin — the seminal cryptocurrency — by an official from the People’s Bank of China in a recent panel discussion, they reverberated like a firecracker.

“A remarkable step for BTC,” Lennix Lai, director of financial markets at OKEx, calls the statement. Michael Peshkam, executive in residence at European business school INSEAD, describes the central banker’s remarks as “a significant shift in the country’s position” on crypto.

To recap: On April 18 at a CNBC event at the Boao Forum for Asia, Li Bo, deputy governor of the PBoC — China’s central bank — said: “We regard Bitcoin and stablecoin as crypto assets. […] These are investment alternatives.” CNBC reporter Arjun Kharpal commented:

“Industry insiders called the comments ‘progressive’ and are watching closely for any regulatory changes made by the People’s Bank of China.”

“Yes, I do see a change in tone” in China, “a softened and more open approach to considering the role of Bitcoin,” Kevin Desouza — professor of business, technology and strategy at Queensland University of Technology Business School — tells Magazine. “I still do not see a full embrace of Bitcoin.”

“This is a very important development,” Daniel Lacalle, chief economist at Tressis SV, tells Magazine — one that involves a “significant change of heart” on the part of China’s government as it “separates itself from its former monetary policy.” 

The government is saying, in effect, that it isn’t going to ban or put the brakes on the growth of Bitcoin and other cryptocurrencies, which have been an ever-present risk for both China and other governments, Lacalle suggests.

If so, why now? China is close to rolling out one of the world’s first major central bank digital currencies at scale — sometimes referred to as the Digital Currency Electronic Payment, or digital yuan. “If it wants a digital yuan that works, it can’t ban crypto,” Lacalle says. Rather, it needs to show that its DC/EP is as attractive as a crypto alternative.

Connecting the dots: BTC and DC/EP

What exactly, though, is the connection between Bitcoin and China’s DC/EP? Aren’t they two different things — one an emerging global store of value, like gold, and the other a domestic payment system? 

The Chinese yuan, as currently constituted, is used in very few international transactions. “It is underutilized globally because China maintains capital controls,” Lacalle tells Magazine. China has long feared that if it were to drop these controls, its economy would quickly become “dollarized” — i.e., its citizens would send dollars away from China to the United States. 

As things stand today, the rollout of a digital yuan would be an international failure, though it might succeed domestically. Outsiders would assume that the Chinese government wants to control it like it does its traditional yuan.

“But if they open the market for crypto in China, they are signalling that capital controls won’t apply to the digital market,” including a digital yuan, Lacalle explains. This is arguably an “intelligent move” on the part of the Chinese government, which like Russia before it now sees benefits in opening its economy to crypto. In fact, cryptocurrencies may eventually — albeit, in a “distant future” — hurt Western fiat currencies, authorities speculate. But in the meantime, a new tolerance with regard to Bitcoin can make its digital currency more viable beyond its borders. 

A potential currency?

Peshkam tells Magazine that Li’s statement goes beyond recognizing BTC as just another investment asset, which is scarcely an earth-shaking revelation. China now sees crypto “as a future potential currency in global trade.”

Using Google Trends data from 2014 to the present, Peshkam notes that interest in Bitcoin within China — i.e., among its domestic population — follows a similar pattern as in the U.S., as well as the world at large, as measured by the number of searches for the word “Bitcoin.” Ignoring this growing interest on the part of its populace “might not be economically and financially prudent for the country in the long run, thus the shift” in Chinese policy, opines Peshkam.

China’s DC/EP will probably become “the main means of daily trade from grocery shopping to payment of bills and larger ticket items” domestically, Peshkam says. But it is too early to gauge its international impact, including whether or not it will be a threat to the U.S. dollar as the world’s primary trading currency.

Just in case, continues Peshkam, China would like to have BTC on hand to reduce its dependence on the dollar for global trade. A strong BTC could also similarly weaken the dollar’s hold on China’s regional neighbors, making them more open to using the new digital yuan. “The shift in China’s position seems to be a strategic move to safeguard its future economic dominance should Bitcoin move from ‘investment alternative’ to ‘trading currency alternative,’” says Peshkam.

Who is Li?

Perhaps one is reading too much into a single person’s statement? Li, after all, is just one of seven deputy governors of China’s central bank. Might these remarks on the matter of Bitcoin and cryptocurrencies simply be one banker’s opinion?

No, Lacalle tells Magazine. “That doesn’t happen in China.” Not in forums like these. “When they want to alert the world about some new [financial] policy, the first comment is often from an analyst in a state-owned bank.” Next, typically, is a statement by a central banker. And finally, at a later date, the policy is officially announced, explains Lacalle. This is what happened when China devalued the yuan in 2015, for instance. “It is subtle but efficient.”

China’s central bank is not as independent as some of its Western counterparts, including the U.S. Federal Reserve, another source, who wished to remain anonymous, tells Magazine: “In his [Li’s] place, it would be natural to check whether his statement is in accord with the government view. Or, alternatively, he has been tipped that this is the government view.”

So, Li is simply acting as a government spokesperson? “It can be viewed this way,” says Molly Jane Zuckerman, head of content at CoinMarketCap, in a conversation with Magazine. She adds: “The vice governor of the People’s Bank of China and the former governor of the PBoC both mentioned Bitcoin while explaining the progress of CBDC development” in the recent forum. They considered Bitcoin a special asset and said the government would bring it under supervision and regulation. Earlier, the central bank had called Bitcoin a virtual commodity. 

But maybe an “alternative investment” is just an alternative investment — and nothing more?

“It’s hard to be confident, but perhaps PBoC Deputy Governor Li Bo’s intent is simply to say that Bitcoin is a valid alternative investment,” Darrell Duffie, Dean Witter distinguished professor of finance at Stanford Business School, tells Magazine. “China probably remains against the use of Bitcoin as a payment medium, which is a different application.” This would be consistent with Li’s prior remarks, continues Duffie, adding:

“As a payment medium, Bitcoin makes it more difficult for the authorities, in any country, to monitor payments for compliance with laws and regulations, such as anti-money laundering. When used as a payment medium, Bitcoin also makes it somewhat easier to bypass China’s capital controls, which China would not want to see.”

Li may have been saying that Bitcoin is all right as a store of value — i.e., as gold 2.0 — but not as a payments platform. James Barth, finance professor at Auburn University, tells Magazine: “Bitcoin, like gold, might be viewed and allowed as an investment with the ability to serve as an inflation hedge.” He adds that it “makes sense to view Bitcoin as an ‘investment alternative.’ […] This still allows China to impose restrictions by barring financial institutions within its borders from facilitating transactions involving cryptocurrencies.”

The banker also may have simply been describing the current reality. Kevin Werbach, professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania, tells Magazine: “Calling cryptocurrencies ‘investment alternatives’ is a factual statement. It doesn’t necessarily imply anything about whether and how those alternatives would be available to Chinese investors.”

Contrary to what some believe, Werbach says that China has never attempted to thwart Bitcoin and blockchain activities. “China has never been uniformly hostile to cryptocurrencies,” he says, adding: “Chinese authorities shut down initial coin offerings and renminbi-to-crypto exchanges in 2017 because they were concerned about excessive speculation, fraud, and capital flight. There has been no indication of that view changing.”

Meanwhile, China has tolerated a huge crypto mining industry within its borders and has actively promoted blockchain technology “as part of its ‘new infrastructure’ agenda,” adds Werbach. “Many of the world’s largest crypto exchanges, such as Binance, Huobi, and OKcoin, have major ties to China, even if officially they are headquartered elsewhere.” In summary, Werbach tells Magazine:

“My guess is that Li Bo was saying that Bitcoin should be viewed as a speculative investment, not as an alternative currency or payment system. That would be very consistent with China’s approach. I think the crypto community took the wrong message from his remarks.

Others, however, continue to discern a policy shift behind the banker’s statement. For instance, OKEx’s Lai tells Magazine: “The new statement from the PBOC banker gave a very clear stance to the market that BTC would be considered as an alternative investment tool. We think it’s a remarkable step for BTC and we will likely see BTC regulated with a similar framework as those for other alternative investments.”

Distrust of China

Others were quick to see ulterior motives on China’s part. “China’s latest move softening its position on cryptos should be taken with a healthy dose of skepticism,” Pablo Agnese, lecturer in the department of economy and business organization at UIC Barcelona, tells Magazine. He adds: “China is and has been for long a big black box, and the old adage ‘beware of Greeks bearing gifts’ seems as fitting as ever.”

But Bitcoin may be getting too big to ignore, even for China, suggests Agnese — especially considering it has a market cap that recently surpassed the $1 trillion mark. “China will still try to ride the crypto wave just to undermine the power of the USD in international trade transactions” — which accounts for roughly 60% of foreign exchange reserves — “as there is a trade war still going strong.” As for China’s own CBDC project, Agnese comments:

“Cryptos at large, and BTC in particular, have precisely come to challenge the financial status quo, not only by introducing much needed competition, but also by exposing its long-standing weaknesses.”

Yu Xiong, associate dean international at Surrey University and chair of business analytics at Surrey Business School, tells Magazine that the statement by Li only meant that China was starting to pay more attention to cryptocurrencies — with the intent of regulating them. “This will not mean China will play a softer position toward cryptocurrencies. China will only become soft when the government can really monitor the transactions and cash flows. […] This will not happen in the foreseeable future.”

An “asset class that should be regulated”

In sum, the Chinese government has shown little interest until now in regulating Bitcoin — which would be tantamount to acceptance of the cryptocurrency. But last month, a deputy governor of China’s central bank, presumably with the government’s knowledge and approval, signaled that the central bank will not only not block Bitcoin in China but spoke for the first time in positive terms about the digital currency.

“This is extremely significant for both domestic institutional investors and high net worth individuals” looking to invest in “alternative assets such as Bitcoin in the future,” Zuckerman tells Magazine.

Lai adds: “After years of development, I think all major governments and regulators” — now including China — “have recognized BTC as a viable asset class that should be regulated instead of a complete ban.”

There is a growing realization in China that the nation could benefit from a rising crypto sector. The electricity that powers crypto mining, after all, is largely based in China. The Chinese already have a stake, too, in many blockchain-based enterprises. And meanwhile, the nation has an ambitious digital currency project underway, so some softening with regard to BTC may also be tied, as Lacalle posits, “to its desire to have a [globally] functioning digital yuan.”

Bitso reportedly becomes Latin America’s first billion-dollar crypto exchange

Mexican cryptocurrency exchange Bitso has concluded a $250 million Series C capital raise, putting it in the upper echelons of Latin America’s fintech industry. 

The latest investment round gives Bitso a total value of $2.2 billion, making it the first Latin American cryptocurrency exchange to be worth over $1 billion. It’s also the third-most valuable fintech company on the continent.

The raise was led by Tiger Global and Coatue, with additional contributions from Valor Capital Group, BOND and Paradigm.

Daniel Vogel, Bitso’s co-founder and CEO, said it took his exchange six years to get its first million customers and less than ten months to reach 2 million. As Cointelegraph previously reported, Bitso registered its one-millionth user in July 2020.

“People in Latin America are using this technology in their everyday lives,” Vogel said, referring to his cryptocurrency exchange. “We are proud to grow with the industry and continue to make these powerful financial enablers available to everyone.”

He explained that the latest investment round will be used to grow company capabilities as the exchange continues to expand its regional operations:

“Last week we launched operations in Brazil. This round will be used to expand our capabilities, our product offering, and to continue to make cryptocurrencies useful throughout Latin America.”

Launched in 2014, Bitso offers cryptocurrency exchange services settled in Mexican pesos. The platform processes deposits and withdrawals using the Ripple payment gateway and is available in both desktop and mobile versions.

The Series C fundraiser follows a successful Series B raise in December 2020 that brought in $62 million from various investment funds, including Kaszek Ventures and QED Investors. At the time, Vogel said the funds would be used to further expand company capabilities across Latin America.

Argentina was one of Bitso’s first expansion targets in 2019 after the company deployed investment funds obtained from a Ripple-led capital raise. It took the exchange just six months to become Argentina’s most popular Bitcoin trading platform.

Crypto is flourishing in Argentina as locals cope with a crumbling economy, high fiscal pressure and the sharp devaluation of the peso. Capital controls during the pandemic also hastened Bitcoin adoption as more people sought to navigate around a troubled banking system.

Bitcoin miners’ revenue rebounds to $60M per day — Is the bull run about to resume?

Bitcoin (BTC) miners collected $60 million on a thirty-day average timeframe as of May 5, showing the first signs of recovery after last month’s severe revenue drop that followed mass miner outages in China’s energy-rich provinces.

In April, coal mining accidents and subsequent inspections in Xinjiang lacerated energy supply to the regional cryptocurrency mining industry. That forced miners to turn off their Application Specific Integrated Circuit (ASIC) hardware, which exclusively generates computing power to secure and put the «work» into Bitcoin’s proof-of-work.

According to data from Blockchain.com, Bitcoin Mining revenue fell from its 30-day average peak of $60 million — recorded on April 16 — to as low as $57.08 million on May 2. The given resource collects miners’ data from block rewards and transaction fees paid to miners.

Bitcoin miners revenue. Source: Blockchain.com

The drop in profits coincided with a decline in the Bitcoin network’s hash rates, signifying that many ASIC hardware went offline after losing their chief energy source. The total hash rate per second (7-day average) plunged from a record high of 172 EH/s on April 16 to 131 EH/s on April 23, a drop of roughly 30%.

Bitcoin Hash Rate Source: Blockchain.com

It has since recovered to 168 EH/s on May 5, indicating that miners are resuming their bitcoin operations, following a considerable mining difficulty drop four days ago.

Effects on Bitcoin spot rate

Bitcoin prices suffered significant declines following China’s outages.

The benchmark cryptocurrency was already correcting lower after establishing a historical peak near $65,000 on April 14. The China FUD apprehensively accelerated the sell-off, causing the BTC/USD exchange rate to plunge to as low as $50,591 as of April 25.

BTC/USD 1-day candle chart (Coinbase). Source: Tradingview

Bitcoin’s price and hash rate drop occurred almost simultaneously, feeding another evidence about a higher positive correlation between the two metrics.

Simply put, the hash rate represents the computational power of the Bitcoin network. This means that the higher the hash rate, the higher the cost of theoretically «attacking» Bitcoin, making this metric synonymous with the network’s security.

The Bitcoin rate has recovered to a little over $55,000 as of Wednesday, much in line with the hash rate, signifying that the network reset is helping to maintain the cryptocurrency’s prevailing bullish bias.

More upside tailwinds come from Bitcoin mining difficulty projections. For example, data from BTC.com shows it should rise by a modest 1% in the subsequent bi-monthly (or 2,016-block periods) adjustment on Thursday next week.

The network difficulty, which shows how difficult it is for nodes on the Bitcoin network to solve the equations necessary for mining operations, had dropped 12.6% on May 2. That tends to increase margins for both inefficient and efficient miners, promising lower risks of Bitcoin sell-off at the producers’ end.

Meanwhile, with an upside adjustment looking more likely and mining activity rising on the Bitcoin network, the long-term bias for the cryptocurrency remains bullish.

An earlier report from Cointelegraph compared the correlation between Bitcoin prices, hash rate, and mining difficulty, ruling out that the first has a lagging correlation with the latter two despite the popular mantra, «price follows hash rate.»

The BTC/USD exchange rate had closed 2020 at $28,990 after Bitcoin’s network difficulty plunged to 17.438 TH/s from 19.679 TH/s in the November-December session. The period also saw a significant drop in the hash rate but left Bitcoin’s overall upside bias untouched.