From the basics of Bitcoin mining made clear and simple, to its ‘secret’ dynamics which even some experts are not aware of: How miners really interact with Bitcoin’s price floor, miners’ seasonal migration and ‘bullish’ miners’ natural selection

If you are familier with Bitcoin mining you can scroll down to the blue line.

Mining is a crucial part of the Bitcoin network. But to most Bitcoin holders it’s a relatively mysterious business. Mining is where Bitcoin connects the internet to the real world. A lot of electricity is needed for mining, and it’s crucial for the protection of the 18 million Bitcoins, worth today $180 billion, stored using Bitcoin’s decentralized financial records.

Mining is a very competitive business. Every 10 minutes, approximately, hundreds of thousands of mining computers around the world start competing for a new batch of 6.25 Bitcoins. …


Bitcoin miners will produce 324,000 Bitcoins (currently worth $3.2 billion) this year but are just starting to use financial tools which will fundamentally change the mining landscape. This week we go down the rabbit hole of the new mining financialization industry, and the tools coming to life to make Bitcoin a professional commodity.

By the next halving, the mining landscape is likely to be unrecognizable. It‘s even possible the new tools being developed today will play a role in the next mining capitulation cycle. This post will introduction the new financial tools being built for Bitcoin miners, which are lately seeing increasing adoption. We’ll explain how they’re going to impact the mining industry and very possibly the Bitcoin markets as well.

“I see ourselves at the precipice, it’s 1973, gold has been unlocked and we’re moving forward trying to give birth to a new industry,” said Matt D’Souza the founder of Blockware Solutions on a panel discussing new mining financial solutions.

“Liquidity is centralized, generally speaking, so we want to keep this a bitcoin market but bring tools over from the transitional segments, that will allow this market to expand.”

Hashrate Derivatives

Futures were originally invented for farmers to lock in profitable prices for crops before they are harvested. The farmers can lock in their price, transferring the risk to speculators and agree to deliver the goods on a future date. Coincidentally, OkEx’s first Bitcoin futures were launched in 2014, with the intent to provide Bitcoin miners with the ability to hedge their exposure to Bitcoin’s price (according to Okex’s Lennix Lai). …


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You can also watch the panel here

Summary of the main points from the panel moderated by Charlie Shrem with Efficient Frontier CEO ; Roei Levav, Hummingbot co-founder ; Michael Feng, QCP partner ; Darius Sit and Cumberland’s Head of BD ; Justin Chow. Enjoy!

Participants:

Charlie Shrem: The moderator of the panel. Investor, host of Untold Stories and of course, the founder of The Bitcoin Foundation and BitInstant.

Michael Feng: CEO of Hummingbot, a DeFi product that allows anyone to create market making bots.

Darius Sit: CEO of QCP, a cryptocurrency trading firm with a focus on quantitative methods and derivatives, as well as a geographic focus on Southeast Asia. …


Peeking in the Bitcoin time machine and deciding the halving is a pre-game for the next massive bull run

When the 630,000th block of Bitcoins is “mined”, Bitcoin’s production will drop to 6.25 Bitcoin’s in each new block from 12.5, lowering the yearly Bitcoin inflation to 1.8%.

No one knows the exact effects of the halving beside the raw fact of Bitcoin mining becoming more expensive, but there’s just enough information to offers some juicy speculation.

Did you say something about a bull run?

Right now Bitcoin’s price is following the pattern it did towards the last halving (i.e. “buy the rumor sell the news”), Bitcoin’s price went up sharply and lost heat before the main event. In our view, the real effect of the production halving will be felt over the longer term. …


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5 differences worth knowing that explain why Bitcoin futures are gaining popularity

Both margin trading in a spot market and leverage in future contracts give you the ability to speculate with more money than you have in your account.

If you buy 1 Bitcoin worth $10,000 by putting up 0.2 BTC and choosing 5X leverage, in both spot and futures if the price of Bitcoin shortly goes up to $10,100, hooray, you can cash out at around a $500 profit. If instead subsequently Bitcoin crashes close enough to $8,000, your 0.2 BTC are gone forever.

So what’s the difference?

1) Synthetic VS real

Spot markets are by definition dealing with trading a real asset, while futures are by definition a Derivative, a synthetic commitment. If you hold a normal futures contract to its end you’ll many times need to either buy or sell the real underlying asset, while some contracts are settled in cash according to the price of the asset at the due date of the contract. Meanwhile Perpetual Swaps never expire. The utility of a Futures contract that is never settled or expires will be made more clear by the end of this post. …


While the entire planet is in crisis mode, we’ve seen an increased interest in Bitcoin, gold and the central banks’ progressively dominant policies. Meanwhile, usage of Bitcoin’s resilient financial network is steadily rising among some of the people who need it the most and becoming increasingly understood by institutional investors.

Amidst the Covid-19 crisis, we’ve seen a worldwide increase in interest in both Bitcoin and central banking policy.

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Google searches for Bitcoin and the Federal Reserve spiked in the middle of March 2020

Whether you’re just trying to understand what’s going on, a strict believer in Bitcoin and gold or believe in the government’s ability to navigate this difficult and complex situation successfully, this is an important time to take notice of what is going on not only in Bitcoin but in the world of money and monetary policy.

So how is Bitcoin doing in these dramatic and unprecedented times, and where is it standing in the bigger picture?

Bitcoin’s healthy growth and cyclical stability

First of all, here’s some metrics for the Bitcoin asset and…


Is it easy to benefit off glitches in the crypto matrix?

As you might of noticed, today was one of the most volatile days in the history of Bitcoin trading. Not to mention the general chaos with so many people experiencing fears and uncertainty about the future, which is a bit more important. Still as Brian Bemaish likes to say “traders gotta trade”.

Opportunities?

In the cryptocurrency markets things easily get out of hand. But was it that easy to make money off today’s glitches in the markets matrix?

24 hours ago Bitcoin was traded at above $8,000. When we arrived at the office this morning it was around $7,500. It dropped to a low of $5,683 (XBX) by the time of writing (Edit: later dropping to below $3800), and most of this distance was traveled within one hour! …


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How price manipulation kills liquidity. A real market manipulation case study!

At Efficient Frontier we’re strict AND serious about self regulation and playing fair and believe avoiding market manipulation is a sign of professionalism. We wrote much more about this in August 2019.

So, what do you do when a prospect requests a strategy you are not willing to get behind? Sometimes you’ll have to go your separate ways, but first point them to this article!

A few months ago we came across a project that will remain unnamed and unidentified. Members of the project were seeking a strategy we could not adhere to. …


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Ori Cohen, the Chief Technology Officer and co-founder of Efficient Frontier has under his belt more than a decade of developing algo-trading systems , and was one of the first heavy hitting professionals to pioneer the cryptocurrency markets. For the first time Ori Cohen shares on the record his takes and insight on algo-trading and crypto markets, his surprising background and the not so secret secrets of the trade.

What do you think allows companies or people to be successful in algo-trading?

Good question. Being persistent, a strong network with other players in the industry, having smart people and putting in hard work. Being persistent is a lot of it, really.

Do you believe in technical analysis? It’s a hot topic for my friends to argue about.

Technical analysis is a very broad term, the question is what kind of technical analysis. At the end of the day algo-trading is also technical analysis. I believe in checking the theory. No matter what the theory is, check it before you run it.


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Algo-trading and financial services firm Efficient Frontier recruits Alon Elmaliah to lead derivatives markets trading expansion

Efficient Frontier is glad to announce Alon Elmaliah has joined us as Head Of Research. Alon served as a core developer, Staff Research Engineer and leader of the Israel based R&D team of The IOTA Foundation and as a chip designer at Intel. Alon joined the EF team last month, bringing his strong technological skills, research and management talents to our growing company.

About

Sarah Wiesner

@efrontier_io, @bitcoinembassy

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