Worldcoin (WLD), the controversial global ID project founded by AI pioneer Sam Altman, went live on mainnet on Monday. The much anticipated project has been verifying users with its iris-scanning “Orb” since last year, and recently started airdropping WILD tokens to some early users. It ultimately plans to develop into a global universal basic income (UBI) project. Crypto exchanges Binance, Huobi, Bybit and OKX have all listed Worldcoin’s WLD token for trading, contributing to a 20% price jump to $2. The project’s tokenomics show that 75% of the total 10 billion WLD token supply is earmarked for the community, 13.5% will go to investors of development group Tools for Humanity and the remaining will go to the dev team and treasury. Ethereum co-founder Vitalik Buterin is just one among many with criticisms, lashing out against Worldcoin’s privacy and data security risks – including a balanced view of the Orb biometric hardware device.
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An in-depth look into the latest advancements and current challenges in crypto and bitcoin mining
Oil and gas companies are keen to use gas that would normally be flared off to run bitcoin mining operations. But environmentalists claim the practice merely perpetuates the use of fossil fuels.
Miners have flocked to the state since China banned mining in 2021, encouraged by cheap energy, grid incentives and an alignment of values. “Bitcoin is all about freedom,” says one miner. “And in my dealings with the utilities and the regulators, Texas is all about freedom.”
Long Term Holders
Long-term bitcoin (BTC) holders, or addresses that hold coins for at least 155 days, now control a record three-fourths of the cryptocurrency’s circulating supply. Data tracked by analytics firm Glassnode shows the balances held in these wallets have increased to a record 14.52 million BTC this month. The new high means bag holders own 75% of the circulating supply of bitcoin’s free-floating supply, and suggests that more people are holding. bitcoin for longer. Separately, amid a decline in VC investments overall, some $201.4 million in venture capital funding poured into crypto projects last week. At least 11 companies announced funding rounds.
Smells Musky
Elon Musk can still get DOGE to jump. Amid a wider crypto market pullback dogecoin, the meme-based fork of Bitcoin, rallied ~5% on Monday following Musk’s decision to rebrand Twitter as X – supposedly part of a suite of intelligence-focused companies called X.AI – and briefly add the shiba inu dog logo reappeared to his Twitter bio. One of the first bounties posted to the controversial Arkham Intel Exchange, where you can pay for on- and off-chain data, was a request for info identifying Musk’s wallets. The ARKM token has slid 13% to 65 cents since its debut three days ago.
A quick look at the Bitcoin network’s hashrate, a measure of the amount of computing power committed to running the network, shows a bountiful capacity with which to run crypto’s premier network. As of July 21, Bitcoin’s hashrate was 400 exahash per second, up five-fold from June 2021.
That said, in about nine months time, the entire economics of the mining industry will undergo a profound change, and there’s nothing anyone can do about it. In April 2024, we will see the fourth Bitcoin halving.
Right now, every time a bitcoin block is mined the owner of the machine that mines the block is able to claim the coinbase transaction. The coinbase transaction consists of up to 6.25 bitcoins. These new bitcoins are how bitcoins are minted. After the halving in April, that 6.25 BTC reward will become 3.125 BTC.
Miners earn money through network transaction fees and through the block subsidy (i.e. the coinbase) – with most earnings coming from the block subsidy. And so the halving means that, all else equal, miners will lose out on 3.125 bitcoins (~$90,000) worth of earnings per mined block.
Environmental headwinds
Bitcoin mining uses energy and, given Bitcoin’s growth in the last few years, we now operate in a world where energy markets and bitcoin mining are intimately tied.
Many have argued that mining is a way to improve energy grids, especially in states like Texas, since Bitcoin can operate as a “buyer of last resort” for energy and so provides utilities with some level of a predictable revenue source. Bitcoin miners participate in demand response programs (as do other types of businesses like supermarkets and hospitals), agreeing to help grid operators reduce stress on generators and transmission and distribution lines in exchange for lower electrical rates. This is in exchange for curtailing their energy use when demand for energy peaks.
On the other side, environmentalists argue that miners are using more energy than would otherwise be the case, and unnecessarily, and perhaps there’s merit to that argument. But predictable demand for energy should be preferred to outright wasting it.
A very mobile industry
Another thing that is fundamentally great about bitcoin mining is that it can be done anywhere.
Like in, say, rural Kenya, which is what microgrid developer Gridless is doing. Gridless, a startup backed by ex-Twitter CEO Jack Dorsey, has brought electricity to people in Kenya and Malawi who are otherwise excluded from the grid. They have set up hydropower microgrids and are mining bitcoin with the energy the people don’t use.
Political grandstanding aside, most of the national rules targeted at miners don’t really exist. Where they do exist is at the state level, albeit not to a fatal extent.
Texas is a good example, whose State Senate passed a bill which would have limited bitcoin miners’ ability to participate in demand response programs only for it to be shot down in the State House.
The unpredictable aspect
Lastly, the mining industry has many inputs which are more or less predictable (or at least, logical). That said, there are many potential unpredictable factors which could crop up and turn it all on its head. We’ve already touched on the price of bitcoin. That’s unpredictable – who knows what the mining world would like if bitcoin hit $1.48k or $148k or $1.48 million. But there are many other potentially unpredictable things.
Just take Ordinals, Bitcoin’s answer to NFTs, which have mostly been created on Ethereum. Ordinals were incredibly popular earlier this year and they ushered in a huge spike to miner fees for a few months. While the Ordinals spike in miners fees has mostly fallen away, there’s always potential for innovators to create new ways to use the Bitcoin network, creating new demand for the services that miners provide.
Mining is still a young industry, and it’s ripe for change.
It is now more important than ever to set industry standards and align on practical short-term and long-term objectives through pointed conversations with the best legal minds and Washington D.C.’s most important decision makers.
Join us at State of Crypto: Policy and Regulation on October 24 in Washington D.C. for an unprecedented opportunity to evaluate, dissect and ultimately shape crypto regulatory frameworks that support a vibrant, secure and healthy future for the digital economy.
