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Hash Rate Resurgence

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Satoshi&Co Daily Crypto Newsletter

June 3 · Issue #188 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as our recently-launched podcast series with leading crypto industry participants at our newly-launched website www.satoshiand.co

(Listen to our latest podcast here. It is with Sandeep Nailwal of Matic Network, which is a layer 2 protocol working on ETH’s Plasma. Matic Network recently finished a successful launch on Binance Launchpad and is also the first Indian crypto startup to receive funding from Coinbase Ventures).
Today we revisit the concept of BTC hash-rate, something that we have covered some time ago.
After having declined in late 2018 as a result of BTC’s price crash, the hash rate of the Bitcoin network has proven to be resilient and is back on track to reach new highs. A network’s hash power is perhaps the single most important indicator of a network’s security. Greater the hash power, the harder it is to attack a blockchain. As shown in the figure below, Bitcoin’s hash rate has been on the rise since its launch in 2009. The growing hash power highlights the confidence that miners have in the Bitcoin blockchain in the long run, as miners have to decide which blockchain offers the most risk-adjusted reward for mining on a particular chain.
In November last year, when the price of bitcoin had fallen by more than 80% from it peak, there was a meaningful exodus from miners as the margins were compressed and profitability looked bleak. As a result, the network’s hash power declined by more than 25% from the peak, resulting in Bitcoin detractors claiming that the lack of profitability would eventually lead to “mining death spiral.” However, the crucial aspect of Bitcoin mining that was overlooked was that the mining difficulty adjusts itself every two weeks to match the overall hash power of the network, in order to ensure that there is sufficient hash power guarding the network. With prices broadly rising since the last week of March, miners have added deployed more capacity in to the network, in an effort to profit from the rise in Bitcoin prices.  
Source: blockchain.info
Source: blockchain.info
Meanwhile in Crypto Wonderland....
“USC Project Raises $63 Million”
The Utility Settlement Coin (USC) project — led by some of the world’s largest banks — has announced the creation of a new firm and closure of an accompanying £50 million ($63.2 million) Series A financing round. The news was revealed in a press release shared with Cointelegraph on June 3. The USC platform aims to facilitate the issuance of blockchain-based currencies in the commercial and central banking sector worldwide. According to today’s press release, USC project partners have now become the founding shareholders in a new firm representing the project’s commercial realization —  dubbed Fnality International. They include some of the world’s major banking players: Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, MUFG Bank, Nasdaq, Sumitomo Mitsui Banking Corporation, State Street Corporation and UBS.
“Facebook’s Discussion With CFTC”
Facebook has started a discussion with the U.S. Commodity and Futures Trading Commission (CFTC) over the social media giant’s crypto stablecoin initiative. According to a report from the Financial Times on Sunday, the CFTC chairman Christopher Giancarlo said the agency held “very early stages of conversations” with Facebook. The goal was to better understand if the firm’s crypto stablecoin could potentially fall under the CFTC’s regulatory remit.The news comes amid recent reports that Facebook also held talks with government officials in both the U.S. and the U.K. to discuss opportunities and regulatory issues for its crypto stablecoin called GlobalCoin.
“BitMEX Invests in PDAX
BitMEX Ventures, the investment arm of Seychelles-based HDR Global Trading, poured an undisclosed amount of funding into cryptocurrency exchange Philippine Digital Asset Exchange (PDAX). The investment can help PDAX expand the service capabilities of its platform by supporting a number of digital assets apart from cryptocurrency. It plans to enable the trading of commodities, real estate equities, and debt securities in token form. The exchange, which is licensed by the Bangko Sentral ng Pilipinas, is an order-book exchange focused on the Philippine market. Other crypto exchanges operating in the country include Coins.ph, Remittance Inc., and Virtual Currency Philippines Inc.
“Localbitcoins Stops Serving In-person Cash Trades”
On June 1, cryptocurrency enthusiasts were shocked to hear that the peer-to-peer exchange Localbitcoins has ceased offering in-person cash trades. According to a few users, all pending fiat trades have been canceled, leaving local traders who prefer cash high and dry and forced to seek other avenues. One of the oldest over-the-counter BTC exchanges, Localbitcoins, has removed cash trades from its list of options. This means that people cannot use the platform to meet in person and sell BTC for cash or vice versa. Localbitcoins hasn’t officially announced why it removed the option, but a few traders have stated that all in-person cash trades were suddenly canceled.
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