Bitcoin mining machine maker Canaan skyrockets 37% as bitcoin pushes past $1 trillion market cap for the second time

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  • Canaan’s stock jumped as much as 37% on Tuesday amid another run for bitcoin.
  • Bitcoin hit a $1 trillion market capitalization for the second time on Tuesday.
  • The mining machine maker Canaan recently announced it has a 100,000 order backlog for AISC mining machines.
  • Watch Canaan trade live here.

Bitcoin mining machine maker Canaan saw its stock skyrocket as much as 37% on Tuesday as bitcoin pushed past $1 trillion in market capitalization for the second time in its history.

Beijing-based Canaan was founded in 2013 by Nangeng Zhang. The company manufactures supercomputers for use in bitcoin mining and is known for having invented the world’s first ASIC(application-specific integrated circuit)-powered bitcoin mining machine.

Canaan’s stock has been on a historic run over the past six months, rising more than 1,000% as bitcoin continues its mainstream breakout. The mining machine maker traded at just $2.06 per share in September of last year.

Canaan’s stock has been on a tear as the company enjoys an increase in mining unit sales.

Canaan recently announced that it had received “purchase orders totaling more than 100,000 units of bitcoin mining machines from customers in North America.”

Mr. Nangeng Zhang, Chairman and CEO of Canaan said the company changed its “operations model” in 2021 which led to the rising sales.

Previously the company had been selling bitcoin mining machines mostly to individual mining operators, but in late 2020 the client base shifted to mainly publicly traded companies and bitcoin-focused investment funds.

This has led to more sizable orders with longer-term commitments as well as improved revenue forecasting for investors.

As an example of the mining machine manufacturer’s new business model, on February 7 Canaan sold 6,000 of its A1246 model AvalonMiners to Core Scientific.

And Hive Blockchain ordered some 6,400 next-generation bitcoin miners from the company on Jan 23.

Canaan traded up 37.13% as of 11:55AM ET on Tuesday.

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Bitcoin mining company Cipher to go public via $2 billion SPAC merger with Good Works

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Newly formed bitcoin mining operation Cipher Mining Technologies announced it will go public in a merger with blank-check company Good Works Acquisition. The deal values the combined entity at $2 billion.

The transaction is expected to close in the second quarter of 2021. Upon closing, the combined companies will be named Cipher Mining and will trade under the Nasdaq ticker symbol CIFR.

The deal is expected to give the combined companies $595 million in gross cash proceeds, which includes a $425 million PIPE (private investment in public equity) from investors such as Fidelity Management & Research Company and Counterpoint Global, a unit of Morgan Stanley.

“We were attracted to Cipher Mining as we believe the Bitcoin mining space represents a compelling way to gain risk-adjusted exposure to the growing crypto ecosystem,” said Good Works Co-Chairman Doug Wurth in a statement

Cipher Mining is a subsidiary of Bitfury Top HoldCo B.V or Bitfury Group. Since 2011, the Bifury Group has been a provider of bitcoin mining hardware and other blockchain software and services.

 

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Bitcoin’s energy use is ‘staggering’ and a worry for big investors, Kleinwort investment chief says

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Bitcoin mining uses vast amounts of electricity.

  • Bitcoin uses a “staggering” amount of energy each year, the chief investment officer of Societe Generale’s UK private bank said.
  • Fahad Kamal said it means bitcoin clashes with the new focus on environmental investing.
  • Yet advocates say that bitcoin mining can be powered by renewable energy.
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The energy use of bitcoin is a key factor that makes the cryptocurrency unattractive to institutional investors, the chief investment officer of Société Générale’s UK private bank has said.

“We are very alarmed, I’m sure as others are, by the environmental aspects of bitcoin,” Fahad Kamal, the investment boss at SocGen’s Kleinwort Hambros bank, told Insider. He said the energy it used was “staggering.”

Estimates from the University of Cambridge suggest that bitcoin uses more electricity each year than Argentina and Ukraine, due to the energy-intensive mining process.

As the price of bitcoin has soared in recent months, a number of investors have raised questions over bitcoin’s energy consumption. Yet others argue that bitcoin increasingly uses renewable energy – and will do so more in the future.

Bill Gates told CNBC’s Andrew Sorkin in a live-streamed Clubhouse session last week that the currency “uses more electricity per transaction than any other method known to mankind.”

Kamal said bitcoin’s energy use means it clashes with environmental, social and governance investing, which is becoming increasingly important in the financial world.

“If you think about various trends that are occurring in the market, right now, bitcoin is one but ESG is a much bigger one.”

The issue of bitcoin’s energy use has come to the fore in recent weeks, after Elon Musk’s electric car company Tesla announced it had bought $1.5 billion of the currency in January.

Bitcoin is “mined” when computers are hooked up to the cryptocurrency’s network to verify transactions. As a reward for this work, which involves solving puzzles, miners can sometimes receive small amounts of bitcoin.

Read more: MORGAN STANLEY: Buy these 14 infrastructure stocks now as Congress gets ready to pass a deal later this year – including 8 that could rise at least 55%

Some miners have hooked up whole warehouses of computers to try to get more bitcoin, using vast amounts of electricity.

Yet Matt Blom, head of trading at Nasdaq-listed crypto exchange group Diginex, said fears about bitcoin’s environmental impact were overblown, because in the future almost all mining could be done through renewable energy.

“As time goes by I think that is the way things are going to be,” he told Insider.

A report from Cambridge University in September 2020 estimated that 39% of proof-of-work mining is powered by renewable energy, primarily hydroelectric. And it said more than 70% of miners used renewables as part of their energy mix.

Kamal said: “You can imagine that bitcoin gets environmentally friendly too and is only mined using solar power, but we’re not there yet.

“As of right now, it’s a huge consumption of electricity used to mine it. And that electricity is produced in very dirty ways.

“And for us, that is a big factor,” he said. “The fact that bitcoin is dirty, relatively speaking, is a pretty big issue.”

However, Kamal said Kleinwort Hambros – which is part of SocGen’s €119 billion ($145 billion) private banking network – does not have a “black and white view” of cryptocurrencies.

“There’s obviously some really positive aspects to it, and some not.” He said many of bitcoin’s problems, such as high volatility, would become less serious if more people adopted the cryptocurrency.

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Bitcoin miners raked in more than $1 billion in combined earnings last month. Here’s how they make money.

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Bitcoin miners earned a combined $1.1 billion in January.

  • Bitcoin mining is the process that allows new coins to enter circulation, adding to the crypto ecosystem.
  • Miners receive bitcoin as a reward for verifying “blocks” of transactions on the blockchain.
  • Last month, they earned more than $1 billion in combined earnings. Here’s how they do it. 
  • Visit the Business section of Insider for more stories.

Bitcoin is created on a decentralized network called the blockchain, where a vast network of digital “miners” work to verify transactions at any given time.

These miners earned a combined $1.1 billion in January, up 62% from December, when bitcoin’s price surged to $42,000. The road to making this amount of money is no easy feat.

What do bitcoin miners do?

Miners have the responsibility to audit transactions on the blockchain to ensure the legitimacy of the network. They also work to avoid the “double-spend” scenario, in which a bitcoin owner could sneakily spend the same coin twice through duplication or falsification.

Miners don’t necessarily work as a team. They work to compete with each other in order to add the next “block,” or a record of all bitcoin transactions, to the chain. A block contains a partial record of the most recent transactions and carries 1 MB (megabyte) worth of data.

The miner who receives a reward would be the first among a bunch to run through hordes of number combinations to solve a numeric problem, known as proof of work, to arrive at an acceptable 64-character code. The code of this winning block helps keep the blockchain secure. It would normally look something like the last line in this image: 

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By being the first to solve the equation and successfully adding the next block to the chain, the miner is rewarded a certain amount of bitcoin. Only one such block can be added at a time, and each one takes about 10 minutes to verify and attach.

Over the course of the next 20 years, a total of 21 million coins will be released.

What are the rewards worth?

In 2009, the first time bitcoin was created, miners were rewarded with 50 bitcoin per block. But according to a mandate by Satoshi Nakamoto, rewards for mining are halved every four years. The rewards were cut to 25 bitcoin by 2012 and to 12.5 bitcoin by 2016.

As of February 2021, miners gain 6.25 bitcoin for every new block mined – equal to about $330,475 based on current value. They’re also allowed to keep the transaction fees from each trade carried out on that block, which is worth $20 per trade.

An estimated 1 million bitcoin miners are in operation, at present.

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Riot Blockchain jumps 25% as bitcoin momentum continues and the company notches new mining milestone

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Riot Blockchain’s stock jumped as much as 25% on Thursday after the company hit a new milestone in its crypto mining operations amid a surge in bitcoin prices.

The company announced it achieved a 1.06 Exahash per second (EH/s) mining rate with 2,002 new S19 Pro Antminers from Bitmain.

Riot now has a total of 11,542 Antminers in operation after the new additions, leading to a nearly 26% increase in production over its prior operational hash rate.

“Exceeding 1 EH/s in hash rate capacity marks a major milestone for the Company,” said Jason Les, CEO of Riot Blockchain.  “While we are proud of this accomplishment, we view it as the successful completion of just one of many steps of our ongoing growth plan.”

Read more: A Ruffer portfolio manager invested a portion of his $4.8 billion fund in Bitcoin. Here’s what swayed him to bet on crypto – and the 2 other ways he’s hedging against worrying speculative bubbles

Jason Les came on as CEO on Monday, replacing Jeff McGonegal who has served as Riot’s CFO since 2003.

The newly minted CEO said he expects to more than triple the company’s mining capacity by the fourth quarter this year. Riot has 26,100 S19 Pro and S19j Antminers on order with Bitmain and expects to have a total of 37,642 miners in operation by the end of the year.

The bullish news from Riot comes as Bitcoin’s price pushed above $48,000 per coin on Thursday for only the second time in its history. The jump came after Mastercard and BNY Mellon announced support for the cryptocurrency on Thursday. Elon Musk also tweeted about bitcoin in a post that received well over 100,000 likes.

Bitcoin always has vocal critics, though. On Wednesday “Dr. Doom” economist Nouriel Roubini argued Bitcoin’s fundamental value is negative due to its environmental impact.

A study out of Harvard backed up Roubini’s claims, revealing there is “a scenario where each $1 of cryptocurrency coin value created would be responsible for $0.66 in health and climate damages.”

Read More: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold – here’s why the bank says it could end up ‘worthless’

Still, that hasn’t stopped investors from scooping up shares in the bitcoin miner. Share prices have risen 95% in the last month alone.

Even California’s state pension fund-California Public Employees’ Retirement System (CalPERS)-believes in Riot. The fund now holds 113,034 shares of the miner, according to SEC filings.

Riot traded up 24.95%, at $45.68, as of 3:33 p.m. EST on Thursday.

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