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Core Scientific is prepared to fight Celsius Mining’s claims that the hosting provider violated bankruptcy terms and breached their hosting agreement by failing to deploy mining machines on time and unjustly trying to pass on power charges.

The company is “seeking resolution from the bankruptcy court” and “payment of any outstanding amounts owed under the Agreement (…) as soon as practical,” it said in a document filed with the U.S. Securities and Exchange Commission on Wednesday.

Celsius owes Core Scientific approximately $5.4 million, the company has claimed in documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

Core Scientific has retained legal advisors and will “vigorously defend its interests” with respect to the case and “current difficult market conditions,” it said in the filing.

“Celsius is also using its chapter 11 proceeding to withhold payment of certain charges billed to Celsius pursuant to the Agreement,” the firm said. “An adverse or untimely ruling by the bankruptcy court that provides Celsius the benefits of the Company’s hosting services without Celsius fully paying the costs of such services would have a material effect on the Company’s business, financial condition, results of operations and cash flows.”

Meanwhile, Core Scientific has asked the court to “discuss an appropriate schedule for an evidentiary hearing,” which is currently set for Oct. 20, as well as other deadlines, as stated in a letter sent Sunday to the U.S. Bankruptcy Court for the Southern District of New York.

The company intends to file a motion for affirmative relief against Celsius Mining, seeking one or more of the following: “[R]elief from the automatic stay to allow it to terminate the Agreement, (…) compelling the Debtors to assume or reject the Agreement in short order; and (…) compelling immediate payment of Core Scientific’s administrative expense claims arising from its performance under the Agreement.”

“The false allegations the Debtors make in the Contempt Motion are harmful to Core Scientific, and the breach of contract allegations, premised on the incorrect notion that Core Scientific must subsidize the Debtors’ money-losing mining business to the tune of millions of dollars a month, immediately threatens the viability of Core Scientific’s business,” the company also said.

In its own letter the following day, Celsius Mining argued that “that Core Scientific’s request for a status conference is moot pending the parties’ efforts to resolve interim scheduling dates among themselves.”

© 2022 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.

Damien Hirst, one of the UK’s best-known modern artists, has set fire to hundreds of artworks – with plans to torch thousands more – as part of a long-running NFT project.

The experimental art project saw Hirst create thousands of artworks as part of a project called “The Currency.” Hirst created 10,000 paintings and each one had an accompanying NFT. Buyers were later given the choice: take possession of the physical artwork, or keep the NFT. For those choosing the latter option, Hirst planned to set the physical artwork aflame.

Hirst stayed true to his word and conducted an initial burn during a live stream. According to a post on his Instagram account, Hirst contended that “the value of art digital or physical which is hard to define at the best of times will not be lost it will be transferred to the NFT as soon as they are burnt.”

“Finished the burn!!!” Hirst wrote in a second post on Tuesday.

 

 

 

 

 

View this post on Instagram

 

 

 

 

 

 

 

 

 

 

 

A post shared by Damien Hirst (@damienhirst)

According to NPR, roughly 4,800 buyers opted to retain their NFTs rather than swap it out for a physical copy of the art. As such, Hirst has thousands more to burn. 

Hirst’s effort represents one of the more headline-grabbing intersections between the mainstream art world and NFTs. The market for the latter has seen a notable decline in activity since the spring, according to The Block’s Data Dashboard.

The headline-grabbing experiment comes alongside notable auction houses such as Christie’s also flirting with the NFT space as well as a plan by the Museum of Modern Art in New York to use part of a $70 million sale to fund NFT purchases. 

© 2022 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.

The crypto industry hasn’t always done a great job communicating with federal regulators, FTX CEO Sam Bankman-Fried said during an appearance in Washington, D.C., but the crypto exchange founder is on board with new rules for digital assets. 

“We are totally on board with regulation. It has to happen. It’s healthy. It’s the right thing to do. And we’d love to be helpful any way we can,” Bankman-Fried said. “I think our industry has not always done a great job at saying that. Sometimes maybe that was the intention, but it’s come out more like ‘fuck you’ and that that wasn’t as constructive a way to engage.”

Bankman-Fried spoke about crypto for an hour at the Bipartisan Policy Center on Wednesday morning. The wide-ranging conversation was moderated by center President Jason Grumet.

Earlier this month, the Financial Stability Oversight Council released a report identifying possible risks that crypto firms acting as clearing houses or broker-dealers, like FTX, could pose to the financial system. The report, part of a larger set of documents released by the Biden administration this fall, urged lawmakers to pass new crypto regulations.

“Here’s an area where, frankly, a lot of players in the crypto industry have to grapple with how to handle this right now,” Bankman-Fried said, when asked about the report. He suggested new regulatory guardrails that create more transparency, like exchange listing decisions.

If he had the opportunity to address FSOC, a super committee of financial regulators chaired by Treasury Secretary Janet Yellen, Bankman-Fried said he would advocate for regulation and steer clear of the industry’s combative tendencies.

“Let’s start with the low-hanging fruit,” Bankman-Fried said. “I use stablecoins a lot as an example because I think it’s just the cleanest – it’s just like clearly a good thing which helps reduce risk, to do this without getting in the way of legitimate finance. It’s just good. Let’s do that.”

Bankman-Fried added that there is “so much potential” to set new standards for digital assets and bolster consumer protections.

The FTX boss has appeared at several financial events in Washington this week, and his company is leading a robust lobbying push in the nation’s capital. Bankman-Fried’s comments come as regulators and lawmakers weigh new rules for the crypto industry, particularly after this summer’s market crash. Policy watchers expect a stablecoin bill will emerge from the House Financial Services Committee in the next year. 

© 2022 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.

Quick take

• Ribbon gained popularity as structured products protocol and being one of the first movers in the decentralized options vault space. 
• In the past several months, however, Ribbon has expanded their suite of products substantially. 
• Among others, Ribbon now offers exotic options vaults, undercollateralized lending, and a native options DEX which will be explored here.

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.

For the first time since 2018, crypto venture funding has fallen for its second consecutive quarter. 

This quarter, venture funding for crypto startups dropped by roughly 35% to $6.2 billion, following a 22% decline in Q2 — according to a new report released today by The Block Research.

Prior to this period, venture capitalists continued to heap cash on the sector — recording seven consecutive quarters of growth. This quarter-on-quarter drop in funding confirms that funding for the sector has receded, and investors weary of the downturn are no longer as loose with their pursestrings as in the heady bull market days of 2021. 

The last time this type of drop happened was in the latter half of 2018, during a previous bear market when the price of BTC — a key metric of the healthiness of the crypto market as a whole — hit a low below $4,000 after reaching an all-time high of more than $19,000 at the end of 2017.

Along with the amount of funding, the number of VC deals also took a sharp turn — declining by 22% quarter-on-quarter. Previously, the number of deals in the sector had increased for three consecutive quarters. 

The mid to late-stage deal flow appears to be particularly hard hit by current market conditions. There was only one late-stage deal last quarter, compared to 13 in Q2 — a 92% drop. Startups granted mid-stage deals were also similarly hard to come by, with funding dropping by approximately 63%, and with only 11 deals compared to Q2’s 30. 

Still, while every subsector saw seed-stage deals decline, infrastructure startups raising seed rounds increased by approximately 24%. Today, two infrastructure firms — SettleMint and Tatum — raised €16 million and $42 million rounds, respectively. 

Compared to previous bear markets, we are yet to see the amount of cash injected into the crypto sector plumb to pre-2021 levels. As the report points out, nearly $15.8 billion has been invested over the past two quarters. That’s more than all of the venture funding from 2017 to 2020, combined — when $15.3 billion was raised by the sector.  

© 2022 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.

Trading volumes for Yuga Labs’ NFT collections Mutant Ape Yacht Club (MAYC) and Bored Ape Yacht Club (BAYC) have soared during the last 24 hours, as both suddenly saw a spike in market activity.

MAYC NFTs recorded a transaction volume at $1.02 million with a volume increase of more than 300% across different exchanges, according to data from CryptoSlam.

A similar trend was seen for BAYC, which witnessed an 86% daily jump in trading volume at $1.8 million, data showed.

The increase in the number of MAYC and BAYC deals came shortly after it became known that Yuga Labs, the creator of the two NFT collections, was facing an investigation by the U.S. Securities and Exchange Commission into whether the firm’s offerings violated federal law.

The opening of the probe is not a foregone conclusion; Yuga Labs has not been accused of wrongdoing and the probe may not result in a legal battle. It sits within a trend of wider scrutiny by the regulator over crypto-related activities. 

The latest surge in volume on these collections may indicate “panic selling” following the new, according to Thomas Bialek, research analyst at The Block Research.

OpenSea trading records for MAYC show that of the total 37 MAYC sales made in the last one day, 24 NFTs were deals in which owners accepted bids below their quoted prices. This demonstrates a trend of potential sell-offs for the collection.

Meanwhile, there were small drops in the floor prices for BAYC and MAYC. On Wednesday, the two collections traded down 2.6% and 4.9% respectively, data from NFT Price Floor showed.

© 2022 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.

PieDAO, a DeFi yield platform, is looking to end its token emissions to liquidity providers after the program drove down the value of its native token, called dough.

The incentive program — called Doughpamine — is among a slew of liquidity mining programs created by DeFi protocols to bootstrap liquidity. These projects rent liquidity from market participants in exchange for token emissions from the protocol.

While these programs can have benefits for DeFi protocols by attracting liquidity at the start of the project, they come at a cost. Because the token emissions used to reward liquidity providers (LPs) increase the number of the protocol’s coins in circulation, this can drive down their price.

In PieDAO’s case, the project distributed 18.8 million DOUGH since the start of its liquidity mining program in April 2021. The project rewarded LPs with these tokens for providing liquidity in four incentivized pools on the platform. The arrangement with the LPs is that 20% of the rewards are immediately liquid while the other 80% are under a one-year linear vesting schedule.

An end to PieDAO liquidity mining

PieDAO says renting liquidity comes at a considerable cost to its DAO treasury. The cost of liquidity — a measure of how much the protocol pays for every $1 worth of liquidity provided — for three of PieDAO’s four pools ranges from $0.50 to $0.86. 

A high cost of liquidity is not beneficial for DeFi projects as it means that the rewards it has to pay out are almost at par with the liquidity being rented from LPs. Indeed, PieDAO stated that the cost has risen to as high as $1.52 in the past, meaning that there have been periods where the protocol was renting liquidity at a loss.

“The fact that the DAO has been overpaying for liquidity provision has certainly been contributing to the dough sell pressure, possibly inducing a resulting poor price performance,” the proposal stated.

PieDAO’s DOUGH token is down 98% since April 2020. Image: CoinGecko

PieDAO has seen its native governance token decline by over 98% from $2.14 when it started the program to $0.04 as of the time of publishing. It peaked at $6.27 in October 2020.

The DAO will hold a SnapShot vote to decide whether to halt liquidity mining for all four pools. For the vote to pass, 60% of participants have to support the motion. However, some in the community have asked that one of the pools, with a significantly lower cost of liquidity, should remain incentivized.

Mitigating the possible risks

The proposal authored by PieDAO core contributors and treasury committee members also identified some possible risks associated with ending incentivized token emissions for LPs. For one, the proposal’s authors recognize that LPs may decide to withdraw their liquidity if the project stops rewarding them. The proposal also identified the possibility that LPs may sell their remaining tokens once the vesting period ends.

To mitigate these risks, the proposal called for the DAO to institute a token buyback program. This program aims to reduce the circulating supply of dough tokens. As such, the DAO may be intending to burn the tokens.

With the pivot away from renting liquidity from LPs, the DAO will need to come up with another way to obtain liquidity. One viable option already being discussed in the community is the protocol-owned liquidity model used by the likes of OlympusDAO. In protocol-owned liquidity, the DeFi project does not rent liquidity from LPs. Instead, the protocol acquires liquidity provider tokens from market participants. In this way, the protocol has autonomy over the underlying liquidity owned by those token positions.

PieDAO is the latest DeFi protocol to consider ending its incentivized token emission scheme. Decentralized exchange aggregator ParaSwap recently announced that it was looking to reduce its native token emissions as well as move to a social escrow system.

© 2022 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.

Microsoft wants to harness the metaverse to change the experience of industrial work.

The tech giant revealed a new team internally last week, Industrial Metaverse Core, according to a report from The Information.

The team reportedly aims to create immersive software interfaces for using industrial control systems that power electrical plants, industrial robotics, and transportation networks, among other applications. 

The industrial offering will include tech built by Bonsai, which is a low-code AI development platform Microsoft acquired in 2018, the report said. At the time of the acquisition Microsoft’s Gurdeep Pall, corporate vice president and head of autonomous systems, said Bonsai would be deployed on top of the firm’s Azure public cloud.

Microsoft envisages that an industrial work-focused virtual world will be used to monitor machines or factory environments. Aircraft mechanics might use it to examine jet engines in a simulated software environment, using artificial reality or virtual reality headsets to assess the machinery.

Following the development of the Azure service, industrial engineers can use it to merge artificial intelligence with industrial equipment and processes, with no software development experience, The Information reported. 

Microsoft did not immediately respond to a request for comment from The Block.

© 2022 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.

Bitcoin miner Crusoe Energy Systems acquired the operating assets of Great American Mining (GAM).

Under the deal, Crusoe is adding over 10 megawatts and around 4,000 ASIC to its fleet, as well as a manufacturing facility in Ponchatoula, LA to be used as Crusoe’s new research and development site. Overall, it will increase Crusoe’s capacity by 9%, the company said.

“The acquisition integrates GAM’s operations into Crusoe’s DFM systems to utilize stranded and wasted energy resources to power modular data centers and enable energy-intensive computation,” it said in a statement Wednesday.

Crusoe will also benefit from the company’s commercial relationships with several large-scale energy producers in the Bakken region of North Dakota and Montana.

“We value the relationships established by Great American Mining with oil and gas producers in the Bakken oil fields, and look forward to developing these relationships to enhance and expand DFM operations wherever flaring may be a challenge,” said Crusoe co-founder and CEO, Chase Lochmiller.

The Denver-based miner operates modular data centers, using natural gas that would otherwise be flared. It recently raised $505 million in a Series C round to accelerate the growth of its mining operation. At the time, the company said that it planned to expand its workforce to 250 people by the end of the year.

Back in June, Crusoe announced the acquisition of electrical manufacturer Easter-Owens Electric Co in a bid to vertically integrate the company.

There’s been talk of consolidation in the bitcoin mining industry lately, and companies like CleanSpark already have been leveraging market conditions to scoop up thousands of mining machines at discounted prices, as well as mining sites.

After GAM’s acquisition, Crusoe will have around 125 flare gas-powered modular data centers and 300 employees.

“Our belief at Great American Mining is that bitcoin mining is an important solution to stranded gas and flaring problems – problems that have frustrated the oil & gas industry’s efforts to improve environmental performance and efficient use of Earth’s natural resources for decades,” said Todd Garland, founder and CEO of GAM, in a statement released by Crusoe.

© 2022 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.

The crypto exchange and service platform Blockchain.com gained Singapore’s approval on Wednesday to offer payment services.

The license is an “in-principle” approval under the Provision of Digital Payment Token Services to the Public, allowing the firms to provide Singaporeans regulated financial services. Coinbase received the same license earlier this week. 

The approval makes Blockchain.com the 18th crypto firm licensed to operate in Singapore, out of 180 companies that applied through the Monetary Authority Singapore central bank since 2020, according to a Reuters report.

Fifty percent of the exchange’s business comes from institutions, and 84 million wallet holders account for the other half of retail business, according to the report.

© 2022 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.