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A new Ethereum ASIC miner is coming to the market but it appears to be not as attractive as it was initially thought to be.

Wuhan-headquartered chip maker InnoSilicon is now shipping the long-awaited Ethereum ASIC miner called A11 Pro after words of the specifications first came out earlier this year.

At the time, the expected performance was thought to be 2,000 megahashes per second (MH/s) with a power at 2,500 watts (W). That would translate to a mining efficiency of 1.25 W per MH/s, which could outperform the most efficient equipment on the market by 30%. 

But based on the quotes for spot stocks of A11 Pro by multiple miner distributors and brokers in China this week, the new ASIC equipment touts an average hash rate of 1,500 MH/s with a power of 2,350 W.

That means the average efficiency is at 1.56 W per MH/s. It can still outperform all the equipment on the market at the moment but is 20% less efficient than what was initially anticipated. 

The quotes from Chinese brokers and distributors are between 170,000 to 180,000 yuan, or around $27,000, per unit. 

ASIC Miner Value, a website that tracks ASIC mining equipment on all networks, also warns in a banner that at least the first batch of the A11 Pro equipment shipping in November will deliver a hash rate of 1,500 MH/s, instead of 2,000 MH/s.

A rough launch

Indeed, InnoSilicon did not have a smooth launch for the A11 series of equipment.

The firm said in a tweet in March that one of its employees conducted unauthorized sales for A11 Pro with the boasted 1.25 watt per MH/s mining efficiency and an expected delivery time between April and August this year. The employee was later fired.

“There are recent police investigation involved in some fraud A11 pre-order sales activities. Please don’t pay any account on A11 till further announcement. Bella Chen is fired and no longer with InnoSilicon,” the firm said at the time. “Be careful all sales of A11 are suspended.”

Further, the A11 Pro equipment hits the market at a time when the latest date for Ethereum to switch to proof of stake is slated for June 2022. Per ASIC Miner Value’s calculation, the averaged payback period for A11 Pro currently is around eight to 10 months based on Ethereum’s current difficulty and prices.

The firm also hosted a launch event last week to release its own desktop graphic processing unit (GPU) chips, although it didn’t give out any details on the GPU’s potential performance on Ethereum mining.

© 2021 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.

Treasury Secretary Janet Yellen has clarified that U.S. federal regulations are already in line with the Financial Action Task Force’s (FATF) crypto guidance, meaning less-than-easily categorized non-custodial entities won’t bear the burden of transaction reporting.

Yellen’s clarifications came in written responses to Sen. Pat Toomey (R-PA), who submitted questions for the secretary ahead of today’s Senate Banking Committee hearing.

Toomey’s questions included a section on the implications of the FATF’s crypto guidance, which the intergovernmental body finalized last month. Within that guidance, the FATF called on governments to hold those behind decentralized finance (DeFi) protocols accountable for anti-money laundering standards, including collecting and transmitting user information during transactions.

However, the FATF clarified that the body did not recommend software be regulated, but rather that governments should identify the people or businesses that could be held accountable. 

In light of this, Toomey asked if non-custodial services should be subject to money service business registration. The U.S. Financial Crimes Enforcement Network already has already implemented most of these standards, and like the FATF’s guidance, excludes those providing ancillary services — like hardware wallet manufacturers, unhosted wallet providers, software developers and miners — from the definition of “virtual asset service provider” and the ensuing regulatory burdens.

In her responses today, Yellen said she agrees with this treatment.

“I agree with standing FinCEN guidance on this topic, and I believe the FATF does too,” she wrote. 

To be clear, non-custodial entities may still bear the reporting burden if they act as a natural or legal person with a business interest. But those providing a tech-based non-custodial service, like securing or participating in a network, are excluded from the requirements. 

© 2021 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.

Private equity firm Thoma Bravo is building a growth investing business aimed at crypto and fintech.

The firm, which manages more than $91 billion in assets and has spent the last 40 years investing across the tech and software sector, has hired former General Atlantic vice president Christine Kang to lead the new practice, according to a LinkedIn post. 

“Excited to officially share that I’m joining Thoma Bravo to help start their growth investing practice in the magical city of Miami,” Kang wrote. 

Founded by billionaire Orlando Bravo, Thoma Bravo manages a number of private equity and credit funds. Its portfolio includes more than 50 companies that “generate over $21 billion of annual revenues,” according to its website. 

Bravo, a native of Puerto Rico, told CNBC in an interview earlier this month that the metaverse is investable and will be “very big.”

In her LinkedIn update, Kang said that Web3 and crypto are among the “most exciting sectors of innovation in today’s global economy.”

© 2021 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

• As DeFi continues to grow, exploiting smart contracts will become more and more lucrative
• While hacks are inevitable, reasonable efforts can be made to ensure that the likelihood of their occurrences is kept at a minimum
• Smart contract audit firms are facing unprecedented demand and this may eventually be a limiting factor for DeFi’s development
• Bug bounties and automated auditing software are going to play a crucial role in ensuring the security of smart contracts

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Bitcoin mining firm Griid is preparing to become the latest company in the crypto market to go public, the Ohio-based firm announced Tuesday. 

Following in the footsteps of crypto firms like exchange-operator Bullish and crypto miner Core Scientific, Griid will list shares on the New York Stock Exchange under the ticker GRDI through an acquisition by blank-check firm Adit EdTech Acquisition Corp. Bloomberg first reported talks of the deal last week. 

“We are building an American infrastructure company with the largest pipeline of committed, carbon-free power among public bitcoin miners at the lowest cost of scaled production,” CEO Trey Kelly said in a statement. “Our team has demonstrated a track record of successful execution over the past three years since starting the company, and we look forward to delivering expansion of capacity through this transaction.”

The deal would value the company at $3.3 billion, including debt. The deal would also provide Griid with a cash infusion topping $240 million. In a SPAC deal, an acquiring company — formed with the purpose of acquiring a private firm — brings a private firm public. 

Griid’s SPAC is expected to close in the first quarter of 2022. News of the SPAC deal follows headlines that Griid secured a $525 million credit facility from Blockchain.com. 

As per a press release, the credit line would help add “additional mining capacity.”

© 2021 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.

On November 30, the Department of Justice announced that Jeremy Spence pleaded guilty to commodities fraud in operating “cryptocurrency funds” that were, authorities say, Ponzi schemes that lost investors a total of $5 million.

Prosecutors charged Spence, who went by the moniker “Coin Signals,” in January, with a maximum sentence of up to 30 years. Under the terms of the current plea deal, Spence faces up to 10 years.

According to the Justice Department, Spence solicited investors into funds promising rates of return of 148% and higher. When his strategies ended up losing money, Spence locked up investors’ money while falsifying the balances that they saw on their own accounts. He also allegedly used new investments to pay out old investors.

The DOJ did not specify the date of Spence’s sentencing, which will take place in the court of the Southern District of New York. 

© 2021 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.

In the wake of the Securities and Exchange Commission’s most recent bitcoin exchange-traded fund (ETF) rejection, Grayscale is pushing back on the regulator’s arguments.

Grayscale is seeking to convert its bitcoin trust, GBTC, to an ETF, and recently put the Securities and Exchange Commission on the clock in October, when NYSE Arca filed to list the product. A decision could come as early as Dec. 24, although the agency has a history of extensions. It’s already published a notice on Nov.2 seeking comments on the proposed rule change. 

The SEC took a similar approach to VanEck’s offering, soliciting feedback in June of this year. The agency rejected that proposal earlier this month, making it the first to receive an answer in this wave of applications.

In light of those events, Grayscale sent a letter to the agency Monday night, arguing that the SEC’s repeated rejections could violate the Administrative Procedure Act (APA). The APA governs the decision-making process of federal agencies.

Grayscale claims the agency’s decisions have been “arbitrary and capricious” since the Commission has approved futures-based bitcoin ETFs, but not spot-based offerings. Since the early rumblings of bitcoin futures ETF approvals, Grayscale has been pointing out the inconsistencies in the willingness to approve a futures-based product but not one that holds the underlying.

“Bitcoin futures ETPs registered under the 1940 Act and spot Bitcoin ETPs that are not required or eligible to be so registered are the same in all relevant respects, but based on the analysis in the November 12, 2021 disapproval order, the Commission is treating them differently,” the letter stated.

VanEck’s product was proposed under the Securities Act of 1933, while the approved futures products have the additional oversight of the Investment Company Act of 1940. SEC chair Gary Gensler has previously stated his interest in approving products under the ’40 Act due to its heightened protections. While the ’33 Act is focused on disclosures, the ’40 Act empowers regulators to check up on issuers and sets consumer protection standards that issuers must meet. 

The SEC has pointed to the difference in registrations as the reason for the different treatment between futures and spot-based products, but Grayscale argues this is a departure from the market manipulation concerns the SEC has continuously cited in its rejection orders.

Some argue that if the SEC is comfortable with the lack of market manipulation in a futures market, it follows that the underlying asset market must also be sufficiently free of manipulation.

“Although the Commission cited investor protections afforded by the 1940 Act as justification for disparate treatment, the 1940 Act’s protections do not address and thus are not relevant to the concern the Commission has repeatedly invoked to deny Rule 19b-4 applications for spot Bitcoin ETPs like BTC: market manipulation and fraud in the underlying Bitcoin market,” said the letter. 

Grayscale’s VP of legal, Craig Salm, explained the firm’s argument in a post on Grayscale’s website. He argued that the protections afforded by the ’40 Act don’t actually address the concerns the SEC has repeatedly laid out in its rejection orders. The ’40 Act seeks to regulate the management of investment products, but the SEC has repeatedly expressed concerns about the lack of oversight of the venues where spot price is derived, which wouldn’t fall into the purview of the ’40 Act.

Still, the approved futures products hold bitcoin futures contracts that trade on the Chicago Mercantile Exchange, which is a federally regulated marketplace. But many of the rejected spot products plan to track CME’s indexes, which set the pricing for the futures products as well.

Grayscale argues it’s unclear why CME’s pricing mechanisms are sufficient for filtering out manipulation in the futures market, but not products tracking the spot market. 

“As it stands, the Bitcoin ETF landscape is unfair and discriminatory against GBTC shareholders and all of the other U.S. investors looking for an accessible and efficient way to gain their Bitcoin exposure,” Salm wrote. “Fortunately, the Administrative Procedure Act (APA) exists to address situations just like this one — to govern the process by which federal agencies develop and issue regulations, ultimately to protect the American investor.”

The SEC has yet to formally respond to the letter, but it is published on the agency’s database. 

© 2021 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.

David Marcus, co-creator of the Diem digital currency and current leader of the Novi unit at Meta (formerly known as Facebook), announced Tuesday that he will exit the company at the end of 2021.

In a set of tweets, Marcus wrote that “after a fulfilling seven years at Meta, I’ve made the difficult decision to step down and leave the company at the end of this year.” Bloomberg first reported on the departure. 

“While there’s still so much to do right on the heels of launching Novi — and I remain as passionate as ever about the need for change in our payments and financial systems — my entrepreneurial DNA has been nudging me for too many mornings in a row to continue ignoring it,” Marcus continued.

Stephane Kasriel, currently VP of product at Novi, will take the helm after Marcus’s exit.

“I find comfort and confidence in knowing that they will continue to execute our important mission well under @skasriel ’s leadership, and I can’t wait to witness this from the outside. I know there’s greatness ahead,” Marcus wrote.

Marcus has been the public face of Meta’s long-struggling digital currency initiative since its inception in 2019, when the announcement of what was then known as Libra was met with a mix of optimism, caution and, in the case of some policymakers, outright hostility at the notion of the social media giant operating its own form of money. Since then, core characteristics of Diem have shifted to accommodate regulator concerns, though the digital currency itself remains in a kind of limbo.

Novi, which began as a wallet project within Facebook, is said to be moving closer to launch, having struck a pilot deal with stablecoin company Paxos earlier this fall. 

© 2021 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

• Of the $10.7 billion locked in Solana’s top 10 projects, around $5 billion sits with closed-source projects. 
• But Solana’s founders are pushing for projects to open up, and the message seems to be getting through.  

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Crypto asset management firm Grayscale has launched a Solana trust product for accredited investors via private placement.

The product will offer exposure to SOL, the native token used on the Solana blockchain. The launch comes two months after Grayscale rival Osprey Funds launched a Solana trust product.

Ethereum rival Solana is getting popular among decentralized finance (DeFi) projects. The price of its native token SOL has skyrocketed in recent months from $50 to over $200 currently as the blockchain has gained traction and SOL’s demand has shot up from retail and institutional investors.

Grayscale Solana Trust is the firm’s sixteenth product in its suite of investment offerings. Its other single-asset products offer exposure to bitcoin (BTC), ether (ETH), chainlink (LINK), decentraland (MANA), filecoin (FIL) and other coins. Grayscale also offers thematic funds like Digital Large Cap Fund and DeFi Fund.

Some of Grayscale’s products are listed on the OTCQX over-the-counter (OTC) market. The firm said it might attempt to list the Solana trust and other new products on the OTC market.

© 2021 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.