ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 13
In case you missed them, here are the top developments over the past week that we think would be of interest to you. It’s another edition of ProBit (Blockchain) Bits.
Ethereum’s PoW to PoS Switch Postponed to Sept 19
The past week saw Ethereum core developers suggest September as the new timeline for The Merge upgrade. After their 91st bi-weekly meeting on Thursday, July 14, the developers say they expect Ethereum’s switch from Proof of Work to Proof of Stake mechanism to hold tentatively in the week of Sept 19 following the outcome of the Goerli testnet.
Goerli, one of two testnets to go with Sepolia post-Merge upgrade, is planned for the week of August 8. Its updates will be discussed during the Merge Community Call #6 on Friday, August 12.
Lead developer, Vitalik Buterin, had noted in his ETH Shanghai Web 3.0 Developer Summit presentation that the upgrade — which had previously been delayed — would happen in August, but could be moved to September or October if there is a risk.
Celsius Gave Up to Bankruptcy
After the uncertainty around its operation, troubled crypto lending firm, Celsius Network LLC (CNL), filed for bankruptcy in the U.S. Bankruptcy Court of the Southern District of New York.
Filing documents show that the company holds $4.3b of assets and $5.5b of liabilities with a $1.19 billion deficit on its balance sheet. The lender is reported to have operated one of the largest crypto mining enterprises in the United States in addition to its financial and trading operations. The documents show that between November 1, 2020, and 2021, Celsius purchased mining rigs with up to $750m to now have 80,850 rigs with 43,632 in operation. It had planned to operate approximately 120,000 rigs by the end of 2022. Celsius’ bankruptcy comes after the collapse of TerraUSD in May and the bankruptcy of another crypto lender Voyager Digital Ltd on July 6.
UN Agency Says Cryptos Grew 2300% in Developing Countries
The United Nations Conference on Trade and Development (UNCTAD) released a report that shows the cryptocurrency ecosystem has expanded by 2,300% between September 2019 and June 2021, particularly in developing countries. It identifies two main reasons for the increased use of cryptocurrencies in developing countries during the pandemic.
The already high costs of traditional remittance services rose even higher during lockdown periods so the use of cryptocurrencies became an attractive option for remittances in terms of price and speed, the intergovernmental organization that seeks to promote the interests of developing states in world trade states. It also notes that cryptocurrencies have emerged as a way to protect household savings since they are held mainly by middle-income individuals in developing countries — particularly in countries facing currency depreciation and rising inflation — who see them as part of financial investments and speculation.
Mixers Receiving More Crypto Than Ever in 2022
Chainalysis data shows that mixers are receiving more cryptocurrency than ever in 2022 for several reasons. The value mixers receive may fluctuate day-to-day but its 30-day moving average reached an all-time high of $51.8m worth of cryptocurrency on April 19, 2022, roughly doubling incoming volumes at the same point in 2021, the blockchain-based data platform for detecting and preventing the illicit use of cryptocurrencies states.
Designed to provide more privacy in cryptocurrency transactions, mixers create a disconnect between the cryptocurrencies a user deposits and what they withdraw to confuse the flow. Mixers are sometimes used to obscure the source of funds to “fool” blockchain investigators hence naturally attractive to cybercriminals.
In other words, while cybercriminals can use them, mixers have become a tool for investigators and compliance professionals to understand. They are also used for legitimate reasons like to ensure financial privacy, especially for people living under oppressive governments or who otherwise need the ability to make legal transactions anonymously.
Paraguay Inches Closer to Legally Recognize Bitcoin Activities
Senator Fernando Silva Facetti confirmed that a bill that will regulate crypto asset activities in Paraguay has been approved by the Senate.
The Paraguayan House of Representatives had passed the bill late in May and presented it to the Senate and the President for their approval to make it a law.
If and when granted, Bitcoin mining as well as industry players like cryptocurrency exchanges would be given legal recognition. Aside from giving miners and investors the much-needed legal certainty for their investment, it also brings the creation of a legal framework to advance companies linked to the cryptocurrency sector in the country and region as a whole.
Congressman Carlitos Rejala tweeted that the proposed mining operations will use 100% hydroelectric renewable energy.
Falling Electricity Cost Detrimental to Bitcoin’s Future Price Outlook
Meanwhile, JPMorgan says the electricity cost of mining a Bitcoin is falling. The multinational investment bank reports that the cost of electricity for a Bitcoin has fallen from about $24,000 in early June to about $13,000 now.
This is as a result of miners deploying more efficient rigs, it says, as well as due to the decline in the use of electricity for mining. While the development could help miners’ profitability in the long term and reduce their pressure to sell their Bitcoin, it could be seen as a negative for pricing.
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