The Weekly Wrap - 28 May 2021

Bitcoin Suisse

May 28, 2021 - 5 min read

The Facts:

In a panel next week organized by the Sichuan energy regulatory office, the impact of stopping local Bitcoin mining will be discussed. Bitcoin miners help to absorb excess hydropower.
Meanwhile, Inner Mongolia has outlined eight measures to restrict crypto mining and businesses that support it.
Iran has temporarily banned Bitcoin mining due to multiple power blackouts in cities.

Why it’s important:

Bitcoin mining and its environmental impact has been a hot topic over the past week. China is one of the largest Bitcoin mining hubs, so its actions and regulations regarding the topic are closely watched.
China has recently reiterated their stance on the topic; however, it remains to be seen how much follow-through there is.

The Facts:

Arbitrum is opening its mainnet to developers on May 28.
It is a second layer scaling solution using optimistic rollups and requires only few code changes from current Ethereum mainnet smart contracts.
Typical transactions on Arbitrum use 2-3k gas.

Why it’s important:

In recent times, the cost of transactions on the Ethereum mainnet has risen, which has certainly hindered full DeFi adoption. Layer 2 solutions, such as Arbitrum or Optimism, might alleviate this issue.
Many DeFi protocols are looking into using such layer 2 solutions to improve the user experience and transaction costs – recently, the Uniswap community conducted a vote to deploy v3 smart contracts to Arbitrum.

The Facts:

FTX is raising up to $1 billion at a $20 billion valuation.
The spot and derivatives exchange currently holds about 10% of the total open interest in the BTC futures markets.
Crypto venture capital firm 1confirmation raised $125 million for its third fund, focusing on early-stage crypto projects.

Why it’s important:

Crypto infrastructure continues to improve, both on the centralized as well as decentralized fronts. Fresh capital seems to look for investment in the “shovels during the gold rush”.
Providing funding for early-stage projects will help to secure the future and pace of developments of the crypto space.

Number of the Week

since the launch of liquidity mining on Compound

The Facts:

The Federal Reserve has announced its plans to release a discussion paper on digital payments and CBDCs.
It also noted that a CBDC rollout would require the Fed to have additional legal rights.
The central bank of Indonesia has also made its future steps into the digital payments space public.

Why it’s important:

The development of CBDCs continue to advance around the world – the majority of central banks are now at least very closely evaluating the topic or have already made plans for pilot projects.
China is likely the closest to launching its digital yuan. Other central banks are starting to catch up, but for most, a widespread launch still seems to be years out.

In absolute and relative terms, the dollar is used for illicit purposes far more than Bitcoin.

The Facts:

GPU manufacturer Nvidia sees demand for graphics cards potentially dwindle once Ethereum switches to proof-of-stake. Ethereum’s current proof-of-work mining algorithm uses graphics cards.
Nvidia reported an 84% YoY increase in revenue to $5.7 billion – during the same time, the total Ethereum hash rate has increased by about 3.5x.
Meanwhile, there is currently a graphics cards shortage in the market, likely due to high demand from cryptocurrency miners.

Why it’s important:

Ethereum’s switch to proof-of-stake (currently anticipated end of this year/early next year) will bring some relief to the graphics cards markets – cryptocurrency miners have driven up the cost of the hardware, since Ethereum mining is highly profitable due to the rise in price and activity on the chain.
While it is hard to gain insight into the exact supply chain mechanisms of Bitcoin’s ASIC-driven mining, publicly traded companies selling GPUs can offer some insight into the mining hardware markets of Ethereum.

Bitcoin Suisse