The world is waking up to the enormous potential of Bitcoin. Renowned investors Stanley Druckenmiller and Bill Miller recently revealed their exposure to the asset. This comes after several corporations followed MicroStrategy’s lead and invested cash on their balance sheet into Bitcoin. With hard-coded supply constraints, Bitcoin price naturally has to rise to facilitate increased demand.
Let’s compare that with the state of the US government and the Federal Reserve. If capital is rushing into Bitcoin, it is bleeding out of the federal government. In October, the US government ran a deficit of $284 billion. To sustain such a deficit, the Federal Reserve must print more money to purchase debt from the government. In recent days, the Federal Reserve’s balance sheet hit record highs while the M2 money supply of the US dollar has also hit record highs.
Bitcoin sometimes seems like an echo chamber of enthusiasts evangelizing how the asset fixes a broken monetary system. But after the events of 2020, it is hard not to book a permanent seat in the Bitcoin echo chamber. Oh, did I mention that Mexico’s third-richest man announced that he has 10% of his portfolio in Bitcoin?Here’s what he said:
“Bitcoin protects the common citizen against government expropriation”
Market Movements – Bitcoin Hits All-Time High Market Cap
Bitcoin price movements have been reflecting the inflow of serious capital. At the time of writing, Bitcoin price is up 73% since the start of October. Price looks destined to hit record highs and the market cap for the Bitcoin network has already surpassed its previous high.
For Bitcoin miners, the price increases have significantly widened margins. Miners profitability has been further improved by a lower difficulty level. Compared to the start of October, the difficulty level of mining is roughly 9% lower. This has created the most profitable conditions for miners since the May halving.
However, for Bitcoin miners that have been looking to establish operations or upgrade in response to the price increases will face higher capital expenditure costs. Data gathered by the Compass team shows that the price of latest-gen rigs have significantly risen since the Bitcoin price rise. Since the start of October, prices of spot market Antminer S19 Pros with immediate shipping have risen by 30%.
Industry developments – Bit Digital, Bitcoin Cash, Bitmain, and DMG Blockchain
NASDAQ-listed Bit Digital purchases 1 EH/s of hashrate for $13.9 million worth of company shares. Bit Digital – a company which began Bitcoin mining early this year – has secured an asset purchase agreement for mining rigs. Mining rigs with a total hashrate of 1 EH/s will be exchanged for 4,344,711 ordinary shares of the company at $3.20 each. Bit Digital are paying roughly $13.9 per TH in the agreement. While the type of rigs being purchased are not specified, Bit Digital has previously purchased batches of Whatsminer M21S rigs. Bit Digital shares have risen 63% since the announcement.
The Bitcoin Cash blockchain splits after the November 15th upgrade. The ABC software implementation of Bitcoin Cash introduced a new rule for the Coinbase transaction which would direct 8% of the Coinbase to a fund for Bitcoin Cash development. However, the proposal received backlash in the months leading up to the upgrade and a significant part of the community deviated to support software rules which would not implement the 8% “tax”. This group – originally called Bitcoin Cash Node – attracted the majority of hashpower and has inherited the BCH ticker symbol.
Bitmain Announces AntRack. After a turbulent year for Bitmain , the leading Bitcoin ASIC manufacturer has announced a new product. AntRack seeks to innovate how miners upgrade their operations. In current conditions, miners are forced to upgrade to the latest-generation equipment as it is released or otherwise observe their profit margins squeeze. AntRack aims to allow miners to upgrade more cost-effectively. The design of the AntRack allows miners to replace the hashboards of ASICs with the latest generation chips.
Exchange-listed DMG Blockchain is launching a Bitcoin mining pool which will only append blocks that comply with US OFAC rules. The Bitcoin mining pool will be launched by DMG’s US subsidiary Blockseer. Blockseer will use proprietary technology to ensure that transactions are OFAC compliant before being included in a block.
HASHR8 Podcast – Seth Ginns of CoinFund
Seth Ginns – Managing Partner at CoinFund – anticipates that Bitcoin could reach $150k within the next 24 months. He shares his reasoning in the latest HASHR8 podcast. Seth also discusses the crypto venture capital ecosystem.
Listen here: Funding Mass Adoption with Seth Ginns of CoinFund