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VARIABILITY IN BTC REWARDS

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Satoshi&Co Daily Crypto Newsletter

January 24 · Issue #112 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as short (but great) conversations with leading crypto industry participants at our newly-launched website www.satoshiand.co

We plan to keep today’s blurb short, and hopefully it’s a refreshing breather from all the stablecoin and CBDC discourse that we have been piling up on our readers this week so far. We conducted a simple statistical analysis to see the variability in Bitcoin’s reward emission. As we all know that the ten minute block interval is actually a ballpark estimate and the actual time to find the next block varies depending on the network’s difficulty and hash power.
Bitcoin’s difficulty algorithm adjusts itself every 2016 blocks based on the network hash power so as to ensure that two consecutive blocks are 10 mins apart. For example, if an inordinate amount of hash power suddenly joints the network, block mining will be faster because the network hash power outstrips the difficulty of finding the block. However, at the next adjustment date, the difficulty of the network increases to factor in the recent surge in network hash rate. This effectively puts to bed the ‘mining death spiral’ thesis that a steep decrease in BTC prices will cause miners to leave the network as mining becomes unprofitable, which makes the prices to drop further and so on.
The below graph shows that a majority of the daily block rewards are concentrated around the 1800 BTC mark (which is a theoretical estimate for daily BTC emission assuming 10 min block intervals and 12.5 BTC per block). The mean of the reward distribution was 1883 BTC and the standard deviation was 208 BTC. The only time when block rewards were anomalously low was during the news of Segwit2x hard fork when the hash power was very volatile.  
Meanwhile in Crypto Wonderland....
“Galaxy to Raise $250 Million Fund”
Galaxy Digital, founded by bitcoin king Michael Novogratz, is raising at least $250 million for a credit fund to offer loans to cryptocurrency firms. Borrowers will be able to get a loan by using cryptocurrencies, buildings, and cryptocurrency mining machines as collateral.Galaxy has been lending to crypto firms on its balance sheet since last year, and it has seen growing demand from borrowers despite the downturn in crypto markets.
“VanEck ETF Application Withdrawn”
CBOE has withdrawn the VanEck ETF, one of the most closely watched applications for an exchange traded fund tied to bitcoin, according to a filing. Originally, VanEck was looking to get an ETF off the ground alongside crypto firm SolidX. The two firms filed with the SEC last June to list the fund on CBOE Global Markets, one of the markets behind bitcoin futures in the US. Most recently, the SEC extended the comment period for the fund on December 6 and the market has been waiting for regulators to give the fund the green light to trade.
“Crypto Exchanges Not Subject to MTA”
The American state of Pennsylvania has clarified that cryptocurrency exchanges do not fall subject to the Money Transmitter Act (MTA), according to a Department of Banking and Securities (DoBS) document. The document clarifies crypto exchanges thus do not require a license to offer their services to Pennsylvania residents. The DoBs underscores that the transmission of money under the MTA necessarily involves the transfer of fiat currency “with or on behalf of an individual to a 3rd party”.
“A16z-backed Custodian Goes Live”
The Anchorage cryptocurrency custodian for institutional investors has now launched, following a $17 million funding round led by venture fund Andreessen Horowitz. According to the announcement, PayPal co-founder Max Levchin’s SciFi VC, venture company Khosla Ventures, Mark McCombe of investment firm Blackrock, and others also took part in the series A funding round. The developers claim they intended to make a custodian that would be more secure than cold storage in order to better support institutional investments, along with enabling active on-chain participation.
Crypto Twitter Pick
Galaxy
Bitcoin went from 0.008$ to 20K without any ETF.

Just saying.
What We Are Reading / Listening To
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This newsletter does not constitute an offering of securities in any jurisdiction. The contents of this note should not be construed as investment advice or as a recommendation to purchase securities. This note is intended for the consumption of the recipient alone and not for public distribution. Please consult a certified financial advisor or other appropriate practitioner as may be appropriate as per your jurisdiction.

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