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Quick Takes

• Somnium Space is a VR-focused metaverse platform that focuses on building an NFT open world on top of the Ethereum blockchain.
• Somnium Space is the least popular blockchain-based metaverse platform among its peers – Decentraland and The Sandbox.
• It focuses on creating a new world where users can socialize with other users either through in-world activities. 
• A social system is placed in its world. It is a reward system point (known as Karma) where it encourages positive behavior, which will form a healthy culture amongst the Somnium Space residents.

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Developers for the Ethereum scaling project Optimism said Thursday that it patched a “critical bug” earlier this month.

As noted in a disclosure blog post, the team said that the bug was discovered in the project’s fork of Geth, the popular Ethereum implementation. “The bug made it possible to create ETH on Optimism by repeatedly triggering the SELFDESTRUCT opcode on a contract that held an ETH balance.”

A bug bounty of $2,000,042 was awarded to developer Jay Freeman, who penned a separate blog post about the issue after identifying the bug. The bug was reported to the Optimism team on February 2.

The team said that, according to its analysis, “the bug was not exploited” save for an accidental activation by a staffer at Ethereum data startup Etherscan.

“A fix for the issue was tested and deployed to Optimism’s Kovan and Mainnet networks (including all infrastructure providers) within hours of confirmation. We’d like to thank Infura, QuickNode, and Alchemy for their fast response times,” the team wrote. “We also alerted multiple vulnerable Optimism forks and bridge providers to the presence of the issue. These projects have all applied the required fix.”

Optimism is focused on the development of optimistic rollups, which operate at the so-called second layer and aggregate transactions outside of the Ethereum blockchain, where transactions are ultimately settled, with the goal of reducing the cost of transacting on the network. But as today’s disclosure demonstrates, layer-two protocols are subject to potentially risky security issues.

A number of optimistic rollups are in operation today, encompassing more than $5 billion in total value locked (referring to the funds contained therein). Optimism’s own rollup had roughly $530 million in locked ETH and ERC-20 tokens as of February 10, according to data collected by The Block Research.

© 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

• Each Tranchess fund has three tokenized tranches with different risk exposure.
• The BISHOP tranche enables risk-averse investors to earn passive yield without price risks, whereas the ROOK tranche provides liquidation-free leveraged exposure to risk-seeking speculators.
• CHESS, the native token of Tranchess, is used to incentivize user adoption and is by far the main driver of protocol usage.

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

New York-based Fitch Ratings has downgraded El Salvador’s long-term foreign currency issuer default rating (IDR) to “CCC” from its most recent rating of “B-.”

“In Fitch’s view, weakening of institutions and concentration of power in the presidency have increased policy unpredictability, and the adoption of bitcoin as legal tender has added uncertainty about the potential for an [International Monetary Fund] program that would unlock financing for 2022-2023,” the prominent credit agency said in a February 9 statement.

According to Fitch, El Salvador is facing “heightened financial risks” related to factors including its reliance on short-term debt, an $800 million bond maturing in January 2023, a fiscal deficit that remains high and limited financing options in the local market. Fitch said it is also concerned about El Salvador’s debt sustainability in the medium term.

The reference to the International Monetary Fund (IMF) centers on negotiations with El Salvador for a reportedly $1.3 billion loan. But the status of those talks has been called into question, especially after IMF directors recently urged El Salvador to scrap Bitcoin as legal tender following a mission to the country. 

“The government has been in extended discussions with the IMF for nearly a year for a possible USD 1.3 billion three-year program; however, there are important differences between the two sides in many key areas, in Fitch’s view,” Fitch said. “A deal would help cover the government’s financing gap and likely unlock other multilateral loans. It would also help provide more clarity on the government’s medium-term fiscal strategy.”

The downgrade announcement comes shortly after El Salvador’s finance minister Alejandro Zelaya told viewers of a local television program that the government is expecting to issue its first “bitcoin bond” next month. 

However, Fitch raised concerns about the uncertainty of external financing sources, including the bitcoin bonds. 

“There is a high degree of uncertainty surrounding other sources of external financing, such as additional multilateral funding, given doubts surrounding an IMF program, as well as the capacity to issue ‘bitcoin-backed bonds’ through new distribution channels,” Fitch wrote. It also called rates in the external bond markets “prohibitive.” 

According to Fitch’s rating scale, any rating BB or lower is considered “speculative grade,” which indicates a higher level of credit risk than “investment grade” ratings. A CCC rating signals “substantial credit risk.” 

© 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 online media giant YouTube shared in a Thursday blog post which sported a positive view of Web3 technology like blockchain and non-fungible tokens (NFTs) for content creators. 

“Web3 opens up new opportunities for creators. We believe new technologies like blockchain and NFTs can allow creators to build deeper relationships with their fans. Together, they’ll be able to collaborate on new projects and make money in ways not previously possible,” YouTube’s Chief Product Officer Neal Mohan wrote in the post. 

Potential use cases for Web3 tech on YouTube include fan verifiably and uniquely owning media such as videos, photos, art. YouTube gained over two million users in its Partner Program, a way for creators to earn income from their work. 

“There’s a lot to consider in making sure we approach these new technologies responsibly, but we think there’s incredible potential as well,” Mohan wrote. 

Owned by Google, viewers watch over 700 million hours of YouTube content daily. The video-sharing website is also the second most used search engine behind Google. Should YouTube implement NFTs, blockchain, and other Web3 tech for its creators, the firm stands to legitimize this still rather niche tech space to a broad global audience — and potentially face significant backlash for doing so in some quarters.

© 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 European Union is set to formally consider legislation around a digitized euro in 2023.

A senior official from the European Commission announced the move Wednesday, which was first reported by Politico. 

“Our goal is to table legislation in early 2023,” Mairead McGuinness, EU Commissioner for Financial Stability, Financial Services and the Capital Markets Union, told the publication. “A targeted legislative consultation in the coming weeks.”

As previously reported, the path to a digital euro is a slow one, with European officials stressing that any prospective launch is years away. Research in this area is being pursued by the European Central Bank (ECB) in conjunction with elements of the European Union’s governing apparatus.

In October, the ECB formed a 30-person advisory group focused on the digital euro, drawing from the banking and payments sector to constitute its membership. As other central banks around the world have said with respect to their own CBDC projects, officials in Europe say that any digital euro launch would require coordination with the private 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.

Chris Sununu, the governor of New Hampshire, has announced a new state commission focused on the study of cryptocurrencies, their impact, and the types of legislation the Granite State may wish to pursue.

According to a February 9 executive order, the commission will “[m]ake findings and determinations regarding the role and effectiveness of current state laws and regulations governing cryptocurrencies and other digital assets and the reasons why modifications and improvements to such laws and regulations are necessary,” among other areas.

The commission will include stakeholders from the state’s Bank Department, Attorney General’s Office, both chambers of the state legislature as well as “three public members with recognized experience with cryptocurrencies, digital assets and the provision of services to institutions or consumers with respect to digital assets.”

As noted by Sununu’s order, New Hampshire has seen a number of legislative bids related to crypto, including failed efforts to let state residents pay their tax obligations in the form of crypto. In a nod to the General Court’s work to date, the executive order contended that “this Commission will enable New Hampshire to institute comprehensive clear legislation based upon extension examination of this new landscape.”

In the coming months, the commission will prepare a report on their findings, which will then be made public. 

© 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.

Crypto exchange operator Binance is taking a $200 million stake in Forbes — the publication it once sued for defamation and then voluntarily dropped that lawsuit.

Forbes announced the news on Thursday, saying that Binance will represent half of the $400 million private investment in public equity (PIPE) announced in August. Forbes, at the time, announced the PIPE investment along with its intention to go public via Magnum Opus, a special purpose acquisition company or SPAC.

“With Binance assuming existing PIPE commitments, the overall size of the PIPE will remain at $400 million, and Binance’s investment will be according to substantially the same terms as the existing PIPE investors,” said Forbes. The deal is expected to close by March. 

The news comes a year after Binance dismissed its defamation lawsuit against Forbes. The crypto exchange sued the century-old publication in November 2020, alleging that their article made false allegations. Forbes, citing a leaked document, reported on Binance’s efforts to avoid the scrutiny of US regulators.

Binance “conceived of an elaborate corporate structure designed to intentionally deceive regulators and surreptitiously profit from crypto investors in the United States,” Forbes wrote at the time.

How does Forbes fit within Binance’s portfolio?

Binance has invested in, acquired, and taken a stake in several companies in the crypto space to date. But how does a media company fit within its portfolio?

“First and foremost, this is a financial investment in the media industry. Web2 had a profound impact on the media sector, and – at Binance – we believe that web3 may have an equally important role to play in the future of journalism and publishing,” a Binance spokesperson told The Block.

“As crypto and blockchain continue to develop and become more mainstream it will be important to build widespread consumer understanding, awareness and education of the opportunities that exist.”

Once the deal is completed, Patrick Hillmann, chief communications officer for Binance, and Bill Chin, head of Binance Labs, the exchange’s venture capital arm, will join Forbes’ board of directors.

The SPAC deal between Forbes and Magnum Opus is also expected to close by March, through which the publication will become a publicly traded company on the New York Stock Exchange and trade under the ticker symbol “FRBS.”

© 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.

What if you don’t have to pay ~ $43,000 to stack 1 Bitcoin?

If you are the owner of ~ 2,050 S19j pros (Bitcoin Miners), today you would mine 1 BTC and only pay $11,241.43 in electricity expenses (assuming a $0.075 per kWh hosting rate).

How is this calculated?

Daily revenue can be calculated by multiplying Bitcoin’s hash price by the number of TH a machine can produce. The current hash price is ~ $0.21. Hash price is determined by the price of Bitcoin and network mining difficulty. As price and mining difficulty change over time, it can significantly change how much revenue each machine generates.

Daily cost can be calculated by dividing a machine’s watts by 1,000 (kW), multiplying by the electricity rate ($/kWh), and multiplying by 24 (hours in a day).

Another thing to note is even under an extreme price drop to $15,000 or lower, the cost to mine would eventually start dropping! This would be due to inefficient old-generation miners dropping off the network resulting in network difficulty dropping.

Machine Value Over Time

While it’s important to determine whether your rigs are producing a positive cash flow, you also should consider the future appreciation or depreciation of the machines you purchase.

In the above example, ~2,050 S19j pros would be an 8-figure CapEx investment, so it’s very important to determine how the value of these machines will change over time in order to get a complete idea of future potential returns.

The value of the machine will be roughly the same as the price you purchase it at, but over time that value will change depending on the price of Bitcoin, mining difficulty, and the longevity of the machines you purchase.

In the very long run, the machine will trend to both $0 and 0 BTC. But in the short to medium term, the value of the machine could trend up in both USD and BTC terms.

The above example is the estimated historical value of an S19j as calculated by the Hashrate Index.

Astonishingly, the dollar value of an S19j has increased significantly since the beginning of 2020. Even the BTC denominated value of the rig just reached a high not seen since August 2020.

Not only will new generation machines be spitting off positive cash flow, but it’s possible they could increase in value too if the price of Bitcoin is going up.

Bitcoin Mining in Practice

While the historic and current ROI look nice, it is difficult to procure ASICs, build large mining facilities, and source cheap scalable electricity all on your own. As an institution, hedge fund, or high net worth individual, it makes sense to purchase and host ASICs with a trusted partner like Blockware Solutions.

With Bitcoin mining experience dating back to 2013, Blockware Solutions has sold over 250,000 ASICs, hosted 200+ MW of clients, and mined over 1,500 BTC from the Blockware Mining Pool.

If you are looking for a trusted partner to assist you in deploying capital to the Bitcoin mining space, Request a Quote from Blockware Solutions.

Website: https://www.blockwaresolutions.com/ 

Twitter: https://twitter.com/BlockwareTeam 

Blockware Intelligence: https://www.blockwareintelligence.com/

© 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.

Four darknet “carding” websites that accepted crypto payments have reportedly been shut down by Russian officials. The affected platforms are Trump’s Dump, Sky-Fraud forum, UAS Store, and the notorious Ferum Shop.

Carding websites offer stolen credit cards for sale that can be used to purchase items such as luxury goods or premium gift cards, which can then be traded for cash usually via person-to-person transactions. These credit cards are stolen from compromised web-based banking platforms and online store platforms.

According to a report by Elliptic on Wednesday, the four dark web platforms had made more than $263 million in popular cryptocurrencies from selling these stolen credit cards. The report also stated that buyers mostly used bitcoin (BTC), litecoin (LTC), and ether (ETH) to pay for these cards.

Ferum Shop, one of the platforms seized by officials of Russia’s Ministry of Internal Affairs, was the largest vendor for stolen credit cards. The platform reportedly amassed over $256 million from the sale of these stolen cards for crypto.

Carding websites are among a list of darknet marketplaces that utilize crypto for money laundering activities. This latest shutdown is indicative of the heat on Russia’s cybercrime world with numerous arrests announced in recent times.

In January, Russian authorities raided members of the notorious REvil ransomware gang and recovered about $5.5 million in cash and crypto.

For more breaking stories like this, make sure to subscribe to The Block on Telegram.

© 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.