Category: Crypto

By Medha Singh and Lisa Pauline Mattackal

(Reuters) – Bitcoin miners are making hay while the sun shines.

The business has been yanked out of the doldrums by the cryptocurrency’s recent rally – and now mining companies are racing to lock in profits before bitcoin’s “halving”, when rewards for producing the tokens are cut in half.

The next halving is expected in April 2024, a process designed to slow the release of bitcoin, whose supply is capped at 21 million – of which 19 million have already been mined.

“You’re seeing a lot of urgency to plug rigs in ahead of the halving,” said Gregory Lewis, analyst at brokerage BTIG that covers the 13 biggest U.S.-listed bitcoin miners.

Bitcoin’s hashrate – a measure of the computational power needed to mine a coin – has spiked to an all-time high, according to crypto platform Blockchain.com. That means miners are having to use more and more power and speed to crack the complex maths puzzles that earn them a bitcoin.

Analysts at J.P. Morgan estimate the hashrate has hit record highs for 11 consecutive months, including a historic surge in October.

PLAYING THE GAME

Bitcoin has risen about 37% in the past month to around $37,000 after months of listlessness, a rebound that’s encouraged miners to hook up their powerful computers to crack the puzzles and sell newly minted coins.

The 30-day average of revenue earned by miners has improved steadily this year to hit a 18-month at $32.46 million on Nov. 11, blockchain.com data shows.

However, mining – a highly energy-intensive process – is still not as profitable as in its 2021 heyday.

A measure of miners’ earnings from using 1 petahash per second of computing power in a day has risen to over $81 from $70 at the start of November but remains well below a peak of $127 in early May, according to mining data platform Hashrate Index.

With six months to go till miners’ share of rewards is slashed, they are looking for ways to keep their margins from shrinking in the highly competitive environment.

“Every halving forces miners not playing that game at a high enough level to get washed out,” said William Szamosszegi, CEO of mining company Sazmining.

HALVING OPPORTUNITY

Bitcoin prices have typically rallied in the past following halvings. Six months after the first halving in 2012, the price jumped to $126 from $12. After the second halving in 2016, it went to $1,000 from $654 within seven months and in 2020 it shot up to $18,040 from $8,570 in the same time period.

Bitcoin’s third halving in 2020 brought down miner rewards to 6.25 bitcoin per block and the upcoming one is set to push it down to 3.125 in April.

At current prices, mining each block reaps $231,250.

Matteo Greco, analyst at digital asset investment company Fineqia International, said many mining companies were upgrading their equipment and boosting their hashrate power to stay competitive.

To conserve their profit margins, some players have resorted to moving their operations to Central American countries where energy prices are more affordable, and governments friendlier to cryptocurrencies.

“It’s too early to say if all bitcoin miners are out of the wood,” said Ludovic Thomas, portfolio manager at Swiss-based Criptonite Asset Management that invests in digital assets. “Profitability increase always leads to network hashrate and difficulty increase.”

(Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Editing by Vidya Ranganathan and Pravin Char)

By Niket Nishant and Hannah Lang

WASHINGTON (Reuters) – Onetime crypto poster child Sam Bankman-Fried was on Thursday found guilty of defrauding customers of his now-bankrupt crypto exchange FTX, in a high-profile criminal case that rocked the industry.

But he’s not the only one in regulators’ sights. As token prices plummeted last year, the sector saw other stunning meltdowns that put several industry moguls into authorities’ crosshairs.

Investigations are not necessarily an indication of wrongdoing, and charges may not result in convictions. All the executives below have denied wrongdoing.

Changpeng “CZ” Zhao

The U.S. Securities and Exchange Commission (SEC) sued Binance and its CEO Zhao in June for allegedly operating “a web of deception.” Binance and Zhao were also sued by the U.S. Commodity Futures Trading Commission in March for operating what the regulator alleged were an “illegal” exchange and a “sham” compliance program.

The SEC alleged that Binance artificially inflated its trading volumes, diverted customer funds, failed to restrict U.S. customers from its platform and misled investors about its market surveillance controls.

The company has said the SEC’s lawsuit was “unjustified by the facts, by the law, or by the Commission’s own precedent.” Zhao, a billionaire who was born in China and moved to Canada at the age of 12, called the CFTC’s complaint “unexpected and disappointing” and said it contained an “incomplete recitation of facts.”

Do Kwon

A South Korean national, Do Kwon co-founded Terraform Labs and developed the TerraUSD and Luna currencies. The market value of TerraUSD and Luna was once estimated at more than $40 billion, and their downfall precipitated a wider collapse in token prices.

Kwon faces multiple charges of fraud in the U.S. and was arrested in Montenegro earlier this year for allegedly forging documents, authorities said. The SEC has also filed civil charges against Kwon and Terraform Labs, accusing the two of “orchestrating a multi-billion dollar crypto asset securities fraud.”

Kwon has denied forging documents, according to a Montenegrin court press release. In an Oct. 30 court filing, Terraform said the “SEC is evidentiarily no closer to proving that the defendants did anything wrong.”

Alex Mashinsky

The founder and former CEO of crypto lender Celsius Network’s company filed for bankruptcy in July 2022.

He has pleaded not guilty to U.S. fraud charges that he misled customers and artificially inflated the value of his company’s proprietary crypto token. In January, New York state’s attorney general sued Mashinsky, also alleging fraud. A lawyer for Mashinsky at the time said he denied those allegations and “looks forward to vigorously defending himself in court.”

Mashinsky also faces lawsuits from the SEC, the CFTC and the U.S. Federal Trade Commission (FTC) that allege he touted Celsius as safe even as the company took increasingly risky steps to deliver promised returns of as much as 17%.

Barry Silbert

Silbert is the boss of crypto group Digital Currency Group whose subsidiary Genesis Global Capital filed for bankruptcy in January.

He was sued by New York Attorney General Letitia James last month along with Genesis and DCG, alleging that they defrauded customers of more than $1 billion.

Silbert called the allegations baseless and said he would fight the lawsuit in court.

“Last year, my and DCG’s goal was to help Genesis weather the storm… and position Genesis for success going forward. It is unfortunate that this lawsuit omits that fundamental fact,” he said.

Stephen Ehrlich

Stephen Ehrlich’s Voyager Digital is another casualty of last year’s crypto meltdown. The CFTC and the FTC have accused him of misleading customers about the safety of their assets while taking “excessive risks” that led to the crypto lender’s demise.

Ehrlich has said he was being used as a “scapegoat for the bad actions of others at different companies.”

“Having spent nearly my entire career working in regulated markets, including more than 10 years at public companies, I have never had a single blemish on my record,” he said in a statement last month.

Justin Sun

The SEC in March charged Chinese cryptocurrency entrepreneur Justin Sun and his companies including the Tron Foundation with fraud, accusing him of artificially inflating trading volume for his companies’ crypto tokens and concealing payment to celebrities to promote those tokens.

Sun said in a post on social media platform X that the complaint “lacks merit.”

Source: Reuters stories

(Reporting by Niket Nishant and Hannah Lang; editing by Michelle Price and Anil D’Silva)

By Hannah Lang

(Reuters) -Cryptocurrency exchange Coinbase on Thursday beat estimates for third-quarter revenue, but saw trading volumes decline for the second quarter in a row, sending shares of the company down in after-hours trading.

Trading volumes at the crypto exchange in the third quarter came in at $11 billion, compared with $26 billion a year earlier, mirroring a similar fall in the prior quarter ended June 30.

Total revenue in the three months ended Sept. 30 was $674.1 million, compared with analysts’ estimate of $653.19 million, according to LSEG data.

Shares of the crypto exchange fell more than 4% in extended trading after results as investors weighed the waning trading volumes.

“Although we continue to be in a down market with volatility the lowest we’ve seen in years, Coinbase is financially healthy,” said Coinbase CEO Brian Armstrong on a post-earnings call with analysts.

Investor sentiment toward cryptocurrencies has been lukewarm this year after a string of high-profile collapses in 2022 led to outflows of more than a trillion dollars from the sector.

The decline in trading volumes comes as Coinbase continues to battle the U.S. Securities and Exchange Commission (SEC), which sued it and rival Binance in June, alleging it traded at least 13 crypto assets that are securities without registering them with the regulator. Both have denied the allegations.

In its previous earnings call, Coinbase Chief Legal Officer Paul Grewal said he expects Coinbase to prevail in the case.

In its shareholder letter, Coinbase said it generated approximately $105 million of total transaction revenue in October as the price of bitcoin – the world’s largest cryptocurrency – enjoyed a bounce, but the company urged caution in extrapolating those results.

(Reporting by Hannah Lang in Washington; editing by Jonathan Oatis and Marguerita Choy)

By Hannah Lang and Kanjyik Ghosh

(Reuters) -Bitcoin, the world’s largest cryptocurrency, hit a three-month high on Monday, rising 4.73% to $31,420 amid investor enthusiasm about the possibility of a spot bitcoin exchange-traded fund.

The rise in bitcoin sent shares of cryptocurrency and blockchain-related companies such as Coinbase Global and Marathon Digital Holdings up 6.5% and 11.9% respectively. Bitcoin is up more than 18% from the year’s low of $26,533 on Oct. 11.

The move also comes as concern ripples through the broader markets about the risk of Israel’s war with the Islamist group Hamas becoming a wider regional conflict.

“We have seen recent geopolitical tensions drive demand for scarce assets, including both physical gold and bitcoin, which many investors view as digital gold,” said Zach Pandl, managing director of research at Grayscale Investments, a crypto asset manager.

On Monday, the yield on 10-year U.S. Treasuries reached as high as 5.021%, the latest stage of a relentless sell-off in government bond markets.

Bitcoin briefly soared on Oct. 16 following an erroneous news report about asset manager BlackRock’s high-profile application for a spot bitcoin ETF, which would track the underlying price of the token. The U.S. Securities and Exchange Commission is still reviewing the proposal and is expected to deliver a decision by next year at the latest.

“Over the past month, the growing investor confidence in the imminent approval of BTC spot ETFs has driven considerable momentum toward BTC,” Matteo Greco, a research analyst at crypto- and fintech-focused investor Fineqia, said in a note.

Ether, the coin linked to the ethereum blockchain network, rose 2.79 % to $1,710.6 on Monday.

(Reporting by Hannah Lang in Washington and Kanjyik Ghosh in Bengaluru; Editing by Krishna Chandra Eluri and Jonathan Oatis)

LONDON (Reuters) – Global banking regulators on Tuesday proposed a standardized format for major banks to disclose their holdings of crypto assets from January 2025 to support “market discipline” by giving a complete picture to investors.

The Basel Committee of banking regulators from the world’s main financial centers agreed new rules last December on how much capital banks should hold to cover different types of crypto assets. On Tuesday, they set out for public consultation how the holdings should be disclosed to investors.

“Under the proposals, banks would be required to disclose qualitative information on their activities related to crypto assets and quantitative information on exposures to crypto assets and the related capital and liquidity requirements,” the Basel Committee said in a statement.

Banks would also be required to provide details of the accounting classifications of their exposures to crypto assets and crypto liabilities, it said.

The public consultation ends on Jan. 31, 2024.

(Reporting by Huw Jones; Editing by Kirsten Donovan and Emelia Sithole-Matarise)

By Giulio Piovaccari

MILAN (Reuters) – Ferrari has started to accept payment in cryptocurrency for its luxury sports cars in the U.S. and will extend the scheme to Europe following requests from its wealthy customers, its marketing and commercial chief told Reuters.

The vast majority of blue-chip companies have steered clear of crypto as the volatility of bitcoin and other tokens renders them impractical for commerce. Patchy regulation and high energy usage have also prevented the spread of crypto as a means of payment.

These include electric carmaker Tesla, which in 2021 began to accept payment in bitcoin, the biggest crypto coin, before CEO Elon Musk halted it because of environmental concerns.

Ferrari’s Chief Marketing and Commercial Officer Enrico Galliera told that Reuters cryptocurrencies had made efforts to reduce their carbon footprint through the introduction of new software and a larger use of renewable sources.

“Our target to reach for carbon neutrality by 2030 along our whole value chain is absolutely confirmed,” he said in an interview.

Ferrari said the decision came in response to requests from the market and dealers as many of its clients have invested in crypto.

“Some are young investors who have built their fortunes around cryptocurrencies,” he said. “Some others are more traditional investors, who want to diversify their portfolios.”

While some cryptocurrencies, such as the second-largest, ether, have improved their energy efficiency, bitcoin still attracts criticism for its energy-intensive mining.

Ferrari shipped more than 1,800 cars to its Americas region, which includes the U.S., in the first half of this year.

Galliera did not say how many cars Ferrari expected to sell through crypto. He said the company’s order portfolio was strong and fully booked well into 2025, but the company wanted to test this expanding universe.

“This will help us connect to people who are not necessarily our clients but might afford a Ferrari,” he said.

The Italian company, which sold 13,200 cars in 2022, with prices starting at over 200,000 euros ($211,000) and going up to 2 million euros, plans to extend the crypto scheme to Europe by the first quarter of next year and then to other regions where crypto is legally accepted.

Europe, the Middle East and Africa (EMEA) is Ferrari’s largest region, accounting for 46% of its total car shipments in the first half of this year.

“Interest is the same in the U.S. and Europe, we don’t see huge differences,” Galliera said.

Countries where cryptocurrencies are restricted include China.

Ferrari has turned to one of the biggest cryptocurrency payment processors, BitPay, for the initial phase in the U.S., and will allow transactions in bitcoin, ether and USDC, one of the largest so-called stablecoins. Ferrari might use other payment processors in different regions.

“Prices will not change, no fees, no surcharges if you pay through cryptocurrencies,” Galliera said.

Bitpay will immediately turn cryptocurrency payments into traditional currency on behalf of Ferrari’s dealers, so they are protected from price swings.

“This was one of our main goals: avoiding, both our dealers and us, to directly handle cryptocurrencies and being shielded from their wide fluctuations,” Galliera said.

As the payment processor, BitPay will ensure that the virtual currencies come from legitimate sources and not derived from criminal activity or to be used to launder the proceeds of crime or evade tax.

Ferrari’s marketing and commercial chief said that the majority of its U.S. dealers have already signed up, or are about to agree, to the scheme

“I am confident others will join soon,” Galliera said.

($1 = 0.9495 euros)

(Reporting by Giulio Piovaccari in Milan; additional reporting by Tom Wilson in London; Editing by Louise Heavens)

By Hannah Lang and Elizabeth Howcroft

(Reuters) – The global cryptocurrency market remains badly scarred following the tumultuous collapse of crypto exchange FTX and other big players last year, with crypto prices, volumes and venture capital investment well below their 2021 peaks.

Sam Bankman-Fried, the former CEO of FTX, stands trial in New York on Tuesday, charged with seven counts of fraud and conspiracy stemming from the exchange’s abrupt collapse in November 2022. He has pleaded not guilty.

FTX was one in a series of industry meltdowns that sent bitcoin crashing to its lowest price since 2020. While bitcoin and other major tokens have partially recovered, the sector remains far from the fever pitch it hit in late 2021.

Here are five charts that show how the crypto landscape has changed.

BITCOIN BLUES

Bitcoin, by far the biggest cryptocurrency and the chief barometer for crypto market sentiment, has bounced back about 37% since Nov. 1.

The cryptocurrency was riding high in 2021, hitting a record $69,000 in November that year. But as central banks began to hike rates in early 2022, riskier assets like cryptocurrencies began to feel the pain as investors sought better returns elsewhere.

Bitcoin lost more than 65% of its value last year, pummeled by the collapse of stablecoin terraUSD, which led Singapore hedge fund Three Arrows Capital to file for bankruptcy and caused wider havoc in crypto markets.

Several other companies also collapsed, but the fall of FTX pushed bitcoin under $16,000 in November last year. Bitcoin took another hit earlier this year when Silvergate Bank, a popular U.S. partner for crypto companies, said it would shut down.

Still, bitcoin has regained almost three-quarters of its value this year on interest from major financial firms including BlackRock and hopes that interest rate hikes are ending. It was trading on Monday at around $28,089.

“The FTX debacle came at the end of an annus horriblis that had already seen a tech sector collapse, sharply higher interest rates and self-inflicted industry wounds,” said Ben Laidler, global markets strategist at eToro.

CRUMBLING MARKET CAP

After peaking at $3 trillion in November 2021, the value of the overall crypto market plummeted through 2022, hitting a two-year low of $796 billion as FTX imploded. It has since clawed back some ground, hovering above $1 trillion most of this year.

“The issues with FTX have undoubtedly hit confidence in the crypto ecosystem at large,” said Usman Ahmad, CEO of Zodia Markets, the crypto exchange of global bank Standard Chartered.

STABILIZING BITCOIN?

Known for its volatility, bitcoin has gained some stability this year.

Yet the relative calm in crypto markets is not necessarily a good thing, said some market participants, noting that many investors are attracted to crypto precisely because of its volatility, which offers opportunities to make quick profits.

“We expect low to medium volatility over the near-term,” said Anders Kvamme Jensen, founder of crypto firm AKJ.

VC CRYPTO BETS TUMBLE

Venture capital (VC) investments flooded into crypto during its boom year of 2021, and even through 2022. But such bets have slowed considerably this year, after many firms were burnt by the market meltdown.

U.S. VC crypto investments totaled $6.12 billion in the first quarter of 2022, but slumped to just $870 million in the same quarter this year, according to data firm PitchBook.

“This slowdown wasn’t primarily due to the failure of FTX but was already underway with the collapse of the [terraUSD] ecosystem earlier in the year,” said Robert Le, senior crypto analyst at Pitchbook.

“Venture investors are now proceeding with caution,” he added.

VANISHING VOLUMES

Since FTX failed, crypto trading volumes have collapsed, causing traders that had been attracted to the market’s strong liquidity to pause buying and selling tokens, or exit the market altogether.

In September 2023, total monthly volumes across spot and derivative markets fell to $1.4 trillion, down more than 60% from September 2022, according to London-based researcher CCData. Spot markets bore the brunt, with volumes down more than 70% at $272 billion.

Derivative volumes, meanwhile, have fallen by 60% to $1.1 trillion in the 12 months since September 2022.

“The exit of some large market makers post-FTX significantly reduced liquidity which has led to both low trading volumes and low volatility,” said Noelle Acheson, an economist who closely follows crypto.

(Reporting by Hannah Lang in Washington and Elizabeth Howcroft in London; Additional reporting by Tom Wilson in London; Editing by Michelle Price and Andrea Ricci)

By Suzanne McGee

(Reuters) – Investment manager Valkyrie Funds LLC has begun adding ethereum futures to its existing Bitcoin futures exchange-traded fund, after getting the green light from the U.S. Securities and Exchange Commission (SEC), the company said on Thursday.

The renamed Valkyrie Bitcoin and Ether Strategy ETF will launch on Monday, Valkyrie’s chief investment officer Steven McClurg told Reuters.

It would be the first time futures based on Ethereum or “ether” contracts would be available to investors via an exchange-traded fund, in a boost for the crypto market.

The SEC did not respond to calls seeking comment.

Rival asset managers VanEck and ProShares are looking to offer pure ether futures ETFs, in contrast to Valkyrie’s hybrid ETF. McClurg said the SEC has told VanEck and ProShares that they can also launch on Monday.

VanEck said in a statement on Thursday that the launch of its fund is “upcoming” and declined to comment further.

A ProShares spokesman told Reuters that “no one is in a position to launch ahead of us,” but did not provide specific details on timing.

The SEC’s decision to drop long-held objections to ether futures ETFs is a boost for the crypto industry, which has been pushing the agency to expand the types of crypto ETFs they can offer. Several companies have applied to launch spot bitcoin ETFs.

Media reports that the SEC was poised to approve ether futures ETFs appears to have been boosting the token’s price.

Ethereum prices, little changed over the last month, have rallied nearly 6% this week alone, including a 3.3% jump on Thursday. Steve Sosnick, chief strategist at Interactive Brokers, however, said it is unclear whether the run-up was due to early buying in ether futures by Valkyrie, or other traders buying in anticipation of future trading.

“Either is possible,” said Sosnick.

(Reporting by Suzanne McGee; editing by Michelle Price)