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Cryptocurrencies across the board are rallying along with crypto-related stocks after a federal judge ruled that the sale of Ripple’s XRP tokens on exchanges and through algorithms did not violate federal securities laws.

U.S. Judge Katherine Polk Faila questioned both sides on a range of topics in a Manhattan courthouse on Thursday.

Coinbase said Thursday that it will re-enable trading of XRP after a federal court ruled that some transactions on exchanges didn’t constitute the sale of securities. 

“Coinbase will re-enable trading for XRP (XRP) on the XRP network,” the company said in a tweet. “Do not send this asset over other networks or your funds may be lost. Transfers for this asset remain available on @Coinbase & @CoinbaseExch in the regions where trading is supported.”

“Trading is anticipated to begin later today, if liquidity conditions are met,” the exchange continued. “Once sufficient supply of this asset is established trading on our XRP-USD, XRP-USDT and XRP-EUR trading pairs will launch in phases. Support for XRP may be restricted in some supported jurisdictions.”

After the mixed ruling from the Southern District Court of New York in the lawsuit between the Securities and Exchange Commission and Ripple Labs, the case could now go to trial or be appealed. A wide-range of U.S.-based cryptocurrency exchanges halted trading in XRP at the end of 2020 when the agency first sued Ripple.

A number of trading firms had also stopped making markets for the token, which is closely associated with Ripple. 

Gemini is also exploring listing of XRP

“Given today’s ruling that the sale of XRP on exchanges is not a security, @Gemini is exploring the listing of XRP for both spot and derivatives trading,” the firm said in a tweet.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Following a partial defeat in its longstanding case against Ripple Labs over the company’s sale of its native token XRP, a spokesperson for the Securities and Exchange Commission left the door open for a possible appeal of the decision.

In a statement, an agency spokesperson said that the markets regulator will “continue to review the decision” and touted other parts of the judge’s ruling that went in the agency’s favor. 

“We are pleased that the court found that XRP tokens were offered and sold by Ripple as investment contracts in violation of the securities laws in certain circumstances,” the spokesperson said in a statement provided to The Block. “The court agreed with the SEC that the Howey test governs the securities analysis of crypto transactions and rejected Ripple’s made-up test as to what constitutes an investment contract, instead emphasizing that Howey and subsequent cases have held that a variety of tangible and intangible assets can serve as the subject of an investment contract.”

The spokesperson also noted that the federal judge in the case, Judge Analisa Torres of the Southern District of New York, ruled that ignorance of securities law was not a sufficient defense. 

Independent experts expect an appeal from the SEC, if not both sides, as Torres found that over $700 million worth of XRP sales were unlawful and ordered a trial to determine personal liability for Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen.

 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Nexo says its former managing partner left with a hardware wallet full of the company’s crypto.

U.S. federal court ruled on Thursday that sale of XRP tokens on exchanges and through algorithms did not constitute investment contracts.

From single-token buy-and-hold to quantitative management, we compare the pros and cons of 3 different approaches to crypto investing.

Bitcoin miner Xive is among a growing number of crypto mining firms looking to repurpose unused or inefficient crypto mining rigs for AI. It’s CEO and founder, Didar Bekbauov, thinks that miners can leverage their experience in building large-scale data centers to cater to the growing demand from the sector for computing power.

While this wouldn’t be possible with the specialized application-specific integrated circuits used in bitcoin mining, Ethereum’s transition to proof-of-stake consensus during The Merge last year, in addition to now inefficient rigs previously used for mining other blockchains, has resulted in a significant amount of graphics processing unit inventory that can be redirected toward AI tasks.

“So in terms of switching miners to AI data centers, I believe that there is an opportunity for new projects because bitcoin miners are quite experienced in building large-scale data centers and instead of putting in bitcoin miners we can put anything like GPUs for mining other coins or GPUs for doing AI,” Bekbauov said in an interview with The Block.

“The logic behind how it works is all the same,” he continued. “You get the electricity, then you build the infrastructure, you do the cooling systems and then everyday maintenance of the facility.”

The trouble finding AI customers

Bekbauov acknowledged that the main challenge in transitioning or diversifying from mining to AI data centers lay in securing clients who required computing power. While bitcoin mining generates output in the form of bitcoin, AI computing would require establishing partnerships with companies engaged in AI-related activities, such as image and video rendering, with Bekbauov finding the AI industry more closed compared to the open culture of crypto.

“I don’t see any problems and to switch from mining to AI data centers. The only one is where to find customers,” he said.

“Someone potentially can buy GPUs in bulk and then start some AI computing on it,” Bekbauov added. “But again, with AI, you have to secure the demand side which will be using your computing power. You have to talk to companies like ChatGPT [Open AI] and others, especially AI companies working on pictures or videos, because they need a lot of computing power to render them. I think the software part of these companies is developing really fast, but the hardware part is the bottleneck.”

Referring to his company Xive, which is currently a 100% bitcoin mining company with operations in Kazakhstan as well as Iowa and West Virginia in the United States,  Bekbauov said it’s “interested, but we are not very familiar with how it works.”

“On the technical side, we know how to build, how to supply everything, how to start these kinds of data centers,” he said. “But on the business side, we are still trying to find ways to establish deals with companies like OpenAI and offer them some of our computing power because there is a risk in terms of our business.”

“If we build everything, it requires a lot of capital for all these data centers. We have to first secure the demand side. We have to sign some kind of letter of intent with AI companies and then we can start building,” he added.

From Xive to Hive, the pivot has begun

Xive isn’t the only miner considering the move, with the similarly named Hive dropping “blockchain” from its name this week to become Hive Digital Technologies. The change was implemented “to better represent the company’s evolving focus on the revenue opportunities with our Nvidia GPU cards in cloud compute technology,” and its mission “to drive advancements in artificial intelligence applications such as ChatGPT.”

Despite considering options for diversification, bitcoin miners’ seven-day moving average revenue has increased nearly 100% this year, according to The Block’s data dashboard.

Last week, Arthur Hayes, former CEO of Bitmex and now managing a family office named Maelstrom, said bitcoin — with its inherent digital, anti-censorship and limited nature — was the ultimate currency for AI systems.

Hydro cooling and fish farms

Bekbauov delved into the latest hardware developments in bitcoin mining operations. He discussed the growing trend of hydro cooling solutions, where water is used to cool mining equipment instead of air or immersion fluid, with the resulting hot water repurposed for various heating solutions. 

Bekbauov cited examples of hydro-cooled mining farms being used to heat residential complexes, fish farms and even greenhouse projects.

“I know one of the manufacturers who are already doing some heating projects in China. They are heating some residential apartments,” Bekbauov said. 

Hydro-cooled miners are also being used to “heat a fishing farm in Norway,” Bekbauov added. “The farm is one of the top three salmon producers in the world, now using miners to heat their fish farms. It gives amazing results because if you just grow the salmon in the water with no heating, it takes five years to get big enough to be sold for commercial purposes. But if you increase the temperature of the water up to 10 degrees, then it takes only one and half years,” he continued.

Bekbauov said he had also seen some greenhouse projects that use this heated water to warm greenhouses.

While acknowledging the complexity and higher maintenance requirements of hydro cooling setups compared to traditional air cooling and other solutions, Bekbauov said the benefits derived from combining hydro mining with other businesses in terms of heat utilization.

The future of bitcoin mining

Bekbauov, who began his mining journey in 2018 with a baptism of fire heading into the bear market, acknowledged that bitcoin mining had become a game for big players with substantial capital and access to cheap electricity, especially in the U.S.

However, he added that smaller-scale mining operations, such as home miners and individual enthusiasts, still exist in regions with cheap enough electricity, noting that these miners are incentivized to continue due to their cost advantages and the ability to manage operations efficiently.

“Bitcoin will never die, even if bitcoin mining is banned everywhere. We will still have home miners,” Bekbauov said.

Bekbauov also highlighted countries like Paraguay, Argentina and the United Arab Emirates that offer comparative advantages with their affordable electricity rates, potentially attracting new mining companies.

Regulatory concerns and ETF excitement

While regulatory challenges exist, Bekbauov, who also acts as a mentor at the Founder Institute startup accelerator program in Houston, noted the lobbying efforts of mining companies and the favorable regulatory environment in countries like the U.S. where bitcoin’s decentralized nature aligned with its values of freedom.

“There is some concern because in Kazakhstan we faced some bad regulations. But in the U.S. there is a lobby of miners,” Bekbauov said. “Even Biden said he recently wanted to tax miners 30% for electricity, and there was a lot of debate around it and a lot of public mining companies made statements saying that it would destroy the local crypto economy and mean they would have to consider moving. And then [the administration] just stopped promoting it. So, in the U.S. it’s good because there are a lot of big companies who are protecting good regulations, like Coinbase.”

“In 2017, I remember my biggest fear was, what if bitcoin will be banned everywhere and the price goes to zero? That was my main concern. Now, I don’t even believe that bitcoin can ever go to zero,” Bekbauov added.

Bekbauov also pointed to more friendly regulatory environments in Hong Kong and Dubai — where Xive plans to expand next, after building out a facility in Kyrgyzstan. “Dubai and Hong Kong have already implemented very good regulations. So many companies are considering moving there, particularly to Dubai,” Bekbauov said.

Bekbauov said he was very excited about the future of bitcoin after BlackRock’s recent spot bitcoin ETF filing, having passed a period of uncertainty.

“I believe, now we have passed this uncertain period of time, where people were still thinking about what the future of bitcoin would be,” Bekbauov said. 

“I’m quite confident, the future of bitcoin is bright,” he continued. “We are in the right industry at the right time. Many people still don’t know much about bitcoin so we are still early adopters. I think we are living in a very interesting time and in the next decade we will see some kind of shift in the world financial system and bitcoin will take its honored place.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.