Bitcoin mining firm Core Scientific is going public via SPAC in a $4.3 billion deal

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  • Crypto mining firm Core Scientific is going public via a SPAC in a deal that values the combined entity at $4.3 billion.
  • The mining firm will merge with Power and Digital Infrastructure Acquisition Company.
  • Core Scientific operates proprietary mining facilities and hosts digital asset mining hardware for customers.
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Core Scientific, one of North America’s largest crypto miners, is going public via a SPAC merger in a deal that values the combined entity at $4.3 billion, the firm said in a Wednesday announcement.

The mining firm will merge with Power and Digital Infrastructure Acquisition Company, whose anchor investor is BlackRock. Following the transaction, the combined company will operate as Core Scientific and trade on the Nasdaq exchange.

Core Scientific owns four US facilities where it operates proprietary mining facilities and hosts bitcoin and other digital asset mining hardware for customers. The company said it operates with 100% net carbon neutrality through using clean energy inputs and purchasing renewable energy credits.

The proceeds from the SPAC merger are expected to fund mining equipment purchases of and infrastructure build out.

The firm mined 755 bitcoin in the first quarter of 2021. Publicly traded competitor Marathon Digital Holding’s mining fleet produced 196 newly minted bitcoins during the same period. Core Scientific also estimates it will boast a mining capacity of 510 megawatts by the end of the year through its four facilities.

For the first half of 2021, Core Scientific has mined 1,683 bitcoins total.

The merger is expected to be completed in the fourth quarter of 2021. Shares of Power and Digital Infrastructure Acquisition Company have jumped as high as 2% since the close Tuesday before the transaction was announced.

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China’s crackdown on crypto has led to a 23% decline in ether mining over the last month

Mining software
Mining software

  • Mining activity on the ethereum network has dropped by almost a quarter in the month since China’s crypto crackdown.
  • Analysts said the fall could also be the result of an upcoming major upgrade to ethereum.
  • Ether has tumbled by around 40% since hitting record highs in mid-May. The drop in mining has added to the pressure.
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China’s crackdown on crypto mining has dented ethereum’s hashrate, which has fallen at its fastest pace on record in the last month, since peaking in May according to data from Y charts.

By Wednesday, the rate had fallen by 23% to 492.1 terahashes per second (TH/s) from 643.8 TH/s at the peak on May 20, data shows.

A lower hash rate means the chances miners have less chance of getting a correct hash, which is the total computational power to mine ether on the network. A drop in the hash rate reflects a fall in the number of miners active in the system.

“The global mining landscape is reconfiguring — both geographically away from China, and into capital-led rather than hardware-led approaches. It is increasingly important for the miners and validators of crypto networks to be uncensorable so that the software systems they support continue to run and perform computation,” Lex Sokolin, a developer at ConsenSys a leading ethereum development company, said.

Ethereum hashrate tumble.
Ethereum hashrate tumble.

China began clamping down on mining activity in May. One of the country’s state media publications, The Global Times, reported 90% of mining bases for rival coin bitcoin were going to be shut down, which likely discouraged ether miners.

“This kind of drop is unusual, though there were similar falls in late 2018 and early 2019. It could be due to the mining crackdown in China. But equally, hashrate tends to follow price, and price is substantially down over recent weeks as well. It is difficult to disentangle these two causes,” Ben Edgington, another developer at ConsenSys, said.

Indeed, the ether token has lost almost 40% since May 20 and is trading around $2,105. It’s tumbled by more than 50% since hitting a record high of $4,380 on May 12.

The Chinese crackdown is not the only factor responsible for the collapse in the ethereum network hashrate. The ethereum 2.0 upgrade is on the verge of winding up. Soon the system will go from proof of work to proof of stake, which means ether tokens do not need to be mined. Miners will instead become block validators that are awarded more money based on the amount of capital they are willing to work with in the first place.

Upgrades for ethereum 2.0 will take place until 2022 and the idea is that the changes will improve sustainability, security and scalability which is the hash rate the system can handle.

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Nvidia CEO Jensen Huang talks about the value of ethereum, advances in crypto mining and the global semiconductor shortage in a recent interview. Here are the 10 best quotes.

Jensen Huang - Nvidia CEO Jensen Huang speaks during a press conference at The MGM during CES 2018 in Las Vegas on January 7, 2018.
Nvidia CEO Jensen Huang

  • Nvidia CEO Jensen Huang spoke to a group of journalists at the Computex IT conference.
  • He said ethereum will be valuable due to its scalability and credibility in areas including DeFi.
  • He also spoke about Nvidia’s role in the future of crypto mining and said he believes a metaverse is imminent.
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Jensen Huang, the CEO of chip and graphics card producer Nvidia, recently spoke to a group of journalists at the IT expo Computex about his views on ethereum’s value, how Nvidia’s products fit into the crypto ecosystem and why he thinks we’re on the cusp of creating a metaverse in an interview published by VentureBeat.

Nvidia’s graphic processing units are top-level graphic cards that also have crypto mining capabilities. Huang, a big proponent of artificial intelligence, unveiled a lower resolution graphics card at the conference that has been designed specifically for crypto mining. He also addressed the global chip shortage, Nvidia’s role in it and whether he believes the Chinese government will interfere in the development of artificial intelligence.

Here are Huang’s ten best quotes from the interview, lightly edited and condensed for clarity.

  1. “Am I excited about proof of stake? The answer’s yes….Ethereum has established itself. It has the opportunity now to implement a second generation that carries on from the platform approach and all of the services that are built on top of it. It’s legitimate. It’s established. There’s a lot of credibility. It works well. A lot of people depend on it for DeFi and other things. This is a great time for proof of stake to come.” – on the opportunities ethereum provides and the network’s value for blockchain and crypto.
  2. “We reduced the performance of our GPU on purpose so that if you would like to buy a GPU for gaming, you can. If you’d like to buy a GPU for crypto mining, either you can buy the CMP version, or if you really would like to use the GeForce to do it, unfortunately the performance will be reduced.” – on how Nvidia is trying to decrease graphic card prices and why they developed CMP.
  3. “We’ll just keep working with our supply chain to inform them about the changing world of IT, so that they can be better prepared for the demand that’s coming in the future. But I believe that the areas that we’re in, the markets that we’re in, because we have very specific reasons, will have rich demand for some time to come.” – on managing the ongoing global shortage of semiconductors.
  4. “It’s now established that ethereum is going to be quite valuable. There’s a future where the processing of these transactions can be a lot faster, and because there are so many people built on top of it now, ethereum is going to be valuable. ” – on the outlook for the ethereum network based on its scalability.
  5. “I believe we’re right on the cusp of it. […] There will be many types of metaverses, and video games are one of them, for example. […] We’ll see this overlay, a metaverse overlay if you will, into our physical world.” – on when and how a metaverse will become real.
  6. “You need that blockchain to have some fundamental value, and that fundamental value could be mined. Cryptocurrency is going to be here to stay. Ethereum might not be as hot as it is now. In a year’s time, it may cool down some. But I think crypto mining is here to stay.” – on the future of crypto mining and blockchain networks.
  7. “I believe that there will be a larger market, a larger industry, more designers and creators, designing digital things in virtual reality and metaverses than there will be designing things in the physical world. […] The economy in the metaverse, the economy of Omniverse, will be larger than the economy in the physical world. Digital currency, cryptocurrency, could be used in the world of metaverses.” – on his vision for the omniverse that Nvidia is developing.
  8. “My sense is that we’re welcome in China and we’ll continue to work hard to deserve to be welcome in China, and every other country for that matter.” – on whether the Chinese government will step in and regulate Nvidia’s work on artificial intelligence.
  9. “One of the most important technologies that we have to build, for several of them – in the case of consumers, one of the important technologies is AR, and it’s coming along.” – on the development and accessibility of augmented reality.
  10. “This is the largest market opportunity the IT industry has ever seen. I can understand why it inspires so many competitors. We just need to continue to do our best work and run as fast as we can.” – on the future of the graphics processing unit industry and the competition within it.
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Jack Dorsey’s Square is investing $5 million in building a bitcoin mine that runs on solar power

Jack Dorsey
Twitter CEO Jack Dorsey speaking at CES tech conference in 2019

  • Square is working with bitcoin technology company Blockstream on creating a sustainable bitcoin mine.
  • Square will invest $5 million in the open-source project, while Blockstream will provide infrastructure.
  • Jack Dorsey and Square have argued bitcoin could drive a positive impact on the environment.
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Jack Dorsey-led Square is investing $5 million into building a bitcoin mine that runs on solar power, teaming up with bitcoin technology company Blockstream on the project as debate over crypto’s environmental impact intensifies.

While digital payments company Square is backing the project financially, Blockstream is providing infrastructure and expertise for the renewable-energy bitcoin-mining facility. It will be developed at one of Blockstream’s existing crypto-mining sites in the US and be designed to function as a “proof-of concept” to demonstrate that bitcoin mining can be sustainable.

“We hope to show that a renewable mining facility in the real world is not only possible, but also prove empirically that Bitcoin accelerates the world toward a sustainable future,” Blockstream said in a joint statement on Sunday.

Twitter creator and Square CEO Jack Dorsey has argued that bitcoin encourages global moves toward sustainability and renewable energy, and the project is part of the digital payments company’s Bitcoin Clean Energy Initiative.

“Together, we’ll be creating a public-facing dashboard to serve as a transparent case study for renewable energy and bitcoin mining. As we continue to explore the synergies between the two, we’re excited to share our ongoing learnings and real-world data points.” Square said on Twitter.

The project will be open-source, meaning that the code and process behind it will be publicly accessible. All associated economic data will also be shared. The partners said they hope the “open and transparent nature” of the effort will provide a model for other businesses.

The impact of bitcoin mining on the environment is a hotly debated topic in the cryptocurrency industry. Each bitcoin transaction, purchase or sale adds to the blockchain network which therefore requires a constantly increasing amount of energy.

While bitcoin fans share Dorsey’s view and argue that bitcoin mining mostly runs on renewable energy, critics say that the environmental impact is detrimental and contributes to climate change, among other issues.

In April, Square published a report with Cathie Wood’s Ark Invest saying that the bitcoin network could function as “unique buyer energy” that paves the way for renewable, sustainable-energy-based approaches to crypto mining.

Environmental concerns are said to be part of the reason for China’s recent crypto crackdown. The vast majority of crypto is mined in China, driving up energy demand in the country and therefore making it difficult for China to reach its net zero emissions by 2060 target.

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A massive cannabis farm raided by UK police turned out to be a bitcoin mine

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The bitcoin ‘mine’ uncovered during industrial unit raid in UK.

  • When UK police were getting ready to raid what they suspected was a cannabis farm, they discovered a crypto mine instead.
  • Police said the mine said was stealing thousands of pounds worth of electricity from the main supply.
  • “It’s certainly not what we were expecting,” the police said in a statement.
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When police in West Midlands, UK were getting ready to raid what they suspected was a cannabis farm on May 18, they instead discovered a cryptocurrency mine that was stealing thousands of pounds worth of electricity from the main supply.

“It’s certainly not what we were expecting,” Sandwell Police Sergeant Jennifer Griffin, said in a statement.

British police were alerted of numerous people visiting the location at different times of the day. Wiring and ventilation ducts that were visible and voluminous also raised concerns. Following these suspicions, the police flew a drone above the location, which picked up a considerable heat source from above.

“It had all the hallmarks of a cannabis cultivation set-up,” Griffin said.

But upon entry, they discovered a bank of around 100 computer units as part of what’s understood to be a bitcoin mining operation. Griffin said this is believed to be the only second such crypto mine British police have encountered in the region.

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The bitcoin ‘mine’ uncovered during industrial unit raid in UK.

“We’ve seized the equipment and will be looking into permanently seizing it under the Proceeds of Crime Act,” Griffin said. “No one was at the unit at the time of the warrant and no arrests have been made – but we’ll be making enquiries with the unit’s owner.”

Cryptocurrency mining has long been criticized due to its heavy energy use and environmental impact. Various research, including a study from Cambridge University, has shown that bitcoin mining around the world uses more energy each year than some entire nations.

“My understanding is that mining for cryptocurrency is not itself illegal but clearly extracting electricity from the mains supply to power it is,” Griffin said.

Western Power, the electricity distribution operator for the Midlands, revealed that thousands of pounds worth of energy had been stolen to power the mine, bypassing the normal electric supply.

More and more governing bodies have raised concerns about the massive energy consumption needed to mine cryptocurrencies.

On May 26, Iran has banned cryptocurrency mining over the summer ahead of an anticipated surge in electricity demand.

China’s Inner Mongolia Autonomous Region on May 19 doubled down on its crypto-mining ban by setting up a hotline for the general public to report suspected activity.

In New York, a bill introduced in the State Senate is seeking to halt bitcoin mining for three years until the state has assessed its impact on the environment.

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Cryptocurrency rally cools off as tighter regulations loom, leaving bitcoin heading for its biggest monthly drop since November 2018

The photo shows physical imitations of cryptocurrency

The recovery in the cryptocurrency market ran out of steam on Thursday, with traders cashing in on the rally that began earlier this week, as regulators and governments honed in on the sector, with Iran implementing a temporary ban on mining for digital assets the previous day.

Coins across the board stumbled in the 24 hours to Thursday in the Europe morning, with many major cryptocurrencies falling by around 5% based on Coingecko data. Bitcoin fell 4.9% in the 24 hours to 04:15 E.T., when it was trading at $38,336.14. Bitcoin had reached record highs in April, but has since lost over 40% of its value based on its Thursday valuation.

The world’s biggest cryptocurrency is on track to reach its largest monthly drop since November 2018 this month. Since the start of the month, bitcoin has declined by almost 34%, almost matching the 37% decline of November 2018.

The second largest cryptocurrency ether was down by 4% in the 24 hours to Thursday midday in Europe and was valued at $2,738.64. It reached record highs earlier this month and has lost 37.5% in the past two weeks alone.

Smaller coins followed suit as binance’s BNB token was down 5.3%, XRP lost 4.9% and dogecoin dipped by 6.3% in the 24 hours to 04:15 E.T. on Thursday.

The cryptocurrency market has been cooling off in recent weeks as an increasing number of governments and regulators have indicated that tighter restrictions and rules could be imminent, which has rattled crypto investors.

Most recently, Iran had banned crypto mining for the upcoming summer months over fears of electricity shortages. Several blackouts had occurred in recent weeks as the country’s electricity network became overloaded.

China has been leading the crackdown on crypto mining and trading, which caused several crypto firms to halt operations in the region earlier this week. In the US, SEC Chairman Gary Gensler reiterated the authority would be prepared to fight bad actors in the crypto industry. Security and environmental concerns as well as investor protection have been cited as reasons for the increased regulatory attention.

Environmental concerns also caused Elon Musk’s Tesla to halt bitcoin payments this month after pioneering the use of cryptocurrencies as a form of payment for goods and services.

Despite these headwinds, the crypto market may be on the road to recovery.

“Overall, the crypto markets look to cap off a busy and volatile month next week and potentially leave behind the bearish price action seen with it. After all, despite the high volatility, Bitcoin’s sentiment among traders appears largely unfazed, with many calling it a “buy the dip” opportunity,” Thomas Westwater, analyst for DailyFX.com, said about the future of crypto.

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Iran bans crypto mining for the summer ahead of peak electricity demand

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Bitcoin mining uses vast amounts of electricity

Iran has banned cryptocurrency mining over the summer ahead of an anticipated surge in electricity demand, Bloomberg first reported. The country the past few days has experienced widespread blackouts due to higher than usual energy consumption, compounded by drought and high temperatures, according to Arab News.

While cryptocurrency mining was highlighted, other electricity-intensive activities were also prohibited, President Hassan Rouhani announced on state television Wednesday.

“The ban on the mining of cryptocurrencies is effective immediately until September 22,” Rouhani said as Reuters reported. “Some 85% of the current mining in Iran is unlicensed.”

Cryptocurrency mining has long been criticized due to its heavy energy use and environmental impact. Various research, including a study from Cambridge University, has shown that bitcoin mining around the world uses more energy each year than some entire nations.

Mining cryptocurrencies, a complex process that includes validating data blocks to include in the public ledger, is power-intensive and often relies on fossil fuels.

Approximately 4.5% of all bitcoin mining occurs in Iran, according to blockchain analytics firm Elliptic.

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The fact that the country has restricted access to foreign currencies also makes cryptocurrency mining more attractive.

The ban however raises concerns about pushing the practice -including those licensed-into the black market. Iran in the past has launched a crackdown on illegal miners, accordin to Bloomberg.

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Elon Musk met with Bitcoin miners to discuss making the cryptocurrency more environmentally friendly

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Bitcoin mining uses huge amounts of energy.

  • Elon Musk met with leading Bitcoin miners to discuss the environmental impact of their industry.
  • In a tweet, the Tesla CEO called the proposed next steps “potentially promising.”
  • Bitcoin prices shot up after Musk’s tweet from about $38,000 to a peak of $39,600.
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Elon Musk joined a discussion among leading Bitcoin miners centered around ways to improve the cryptocurrency’s environmental impact, the Tesla CEO tweeted on Monday.

MicroStrategy founder and CEO Michael Saylor said he convened industry leaders including Blockcap, Hut 8, Marathon Digital Holdings, and Riot Blockchain to discuss forming an organization that would establish reporting standards and ESG goals for mining. The companies did not immediately respond to a request for comment.

“The miners have agreed to form the Bitcoin Mining Council to promote energy usage transparency & accelerate sustainability initiatives worldwide,” Saylor said in a tweet.

Bitcoin prices popped from about $38,000 to a peak of $39,600 after Musk’s initial tweet, before sliding back down below $39,000.

MicroStrategy holds roughly 21,000 bitcoin as part of its treasury reserve policy, which was worth roughly $2 billion in April, according to its first-quarter financial disclosures.

The price of the currency has been especially volatile this month after Musk expressed concerns about the environmental impact of crypto mining and said Tesla would no longer accept the currency for car sales.

In a response to Saylor’s tweet, Texas-based miner Blockcap highlighted its use of clean energy, saying that “56% of our electricity comes from carbon-free sources, & we will continue to work together with energy innovators & providers to constantly increase that amount.”

Marathon Digital Holdings Executive Chairman tweeted , “As a founding member of the Bitcoin Mining Council, @MarathonDH will do our part to contribute to sustainable mining and transparency.”

Bitcoin mining consumes over 113 terawatt hours per year, slightly more than the country of the Netherlands at 110 terawatt hours, according to a real-time estimate from the University of Cambridge’s Bitcoin Electricity Consumption Index.

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

Bitcoin generic images

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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