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Carbonable was launched on Ethereum layer 2 scaling system StarkNet, whose parent company Starkware is also an investor.

A Crypto Rank team of analysts wrote that “despite the inherent volatility of the cryptocurrency market, venture capitalists…continue to pour significant investments into the industry.”

Crypto market maker Auros raised $17 million from new investors as it seeks to repair a balance sheet hole caused by FTX’s collapse.

High frequency trading firm Vivienne Court, Nasdaq-listed digital asset mining company Bit Digital, Trovio, Epoch Capital, Primal Capital and senior alumni from market making giant Optiver invested in the fund raise, Auros said in a statement.

Marcel Klooss, co-founder of Vivienne Court, and Hughes Ching, co-founder of Bit Digital, will join the Auros board of directors, the firm said.

The fresh capital injection will help Auros complete a provisional liquidation and restructuring process it entered late last year, co-founder Benjamin Roth said in an email response to questions from The Block. The firm ran into financial problems and missed several loan repayments after about $20 million of its assets were stuck on the FTX platform after the exchange filed for bankruptcy.

”We are also well-placed to further expand our strategic market making business and help create healthy, liquid markets for all of our partners,” Roth wrote. ”It is also important to note that the business continued to operate as usual throughout this process, and we have continued to support all of our partners this entire time.”

The latest funding round will also be used to expand the firm’s derivatives solutions and high frequency trading businesses, the Auros statement said.

© 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.

Auros Global, the trading firm that reportedly lost $20 million on FTX’s implosion, was released from provisional liquidation of British Virgin Island court after major debt restructuring and a fresh $17 million investment led by TradFi trading firm Vivienne Court and bitcoin miner Bit Digital.

The U.S. central bank is widely expected to boost the interest rate 25 basis points.

As the volume of NFT trading has continued to rise over the last four months, so has the rate of wash trading, according to a new CoinGecko study. The company reported that $580 million in phony trades were executed on the top six marketplaces in February, a 126% rise from the previous month.

NFT wash trading made up about 23% of unadjusted trading volume out of a total of $1.89 billion traded across the six biggest marketplaces, which the report said, “can be attributed to the activity of users incentivized to increase their trading volumes” by marketplaces “that offered rewards for transactions.”  

The largest offenders were X2Y2, Blur and LooksRare, which contributed $280 million (49.7%), $150 million (27.7%) and $80 million (15.1%), respectively.

What is wash trading?

A form of market manipulation, wash trading is essentially when an individual or a firm trades with itself to artificially inflate prices, generate the illusion of liquidity or make money from the incentives offered on a given platform.

A trader can buy and sell the same asset multiple times to make it appear that there’s higher demand than there really is.

Wash trading made up around 70% of all transactions on noncompliant crypto exchanges, including Binance, according to a study published by the National Bureau of Economic Research in December. Investor Mark Cuban told TheStreet he thinks the next “possible implosion” in crypto could be the discovery of wash trades on central exchanges.

In the world of NFTs, the practice is commonplace. A study published by a data analyst at Dune in December said that in January 2022, more than 80% of NFT trading volume was wash trading. 

Although the figures have declined since, the problem still is significant. As the CoinGecko study indicates, token incentives are partly responsible for the recent increase in wash trading.

$BLUR token incentives

Blur saw wash trading triple in February after it introduced its native token $BLUR and began to run airdrop campaigns, which reward users for their transaction activity, according to CoinGecko. 

With low transaction fees and token incentives, Blur has become an ideal venue for wash trading. As long as the rewards and incentives offered for increased trading activity exceed the gas fees paid for executing a trade, users could in theory continue to earn money by simply passing assets from one wallet to another.

In the first week of March, Blur captured 84% of all Ethereum-based NFT transactions, doubling its market share in less than two months.

It’s a practice that has become common on other NFT marketplaces, such as X2Y2 and LooksRare, where a user’s trading volume from the previous day is used to calculate token rewards. In the CoinGecko study, it’s estimated that wash trading represented 85% and 81% on these marketplaces, respectively. In February, Chainalysis reported that a group of 110 addresses had earned more than $8.9 million executing this strategy. 

A trend

As Blur becomes the biggest force in the NFT market, wash trading is poised to continue increasing. 

As The Block previously reported, the bidding-incentive model used on Blur has created an environment where buyers are regularly offered more than the asking price for items in collections.

While the fees tacked onto a transaction set against the rewards for listing and bidding, the incentives set up a context where reverse arbitrage can turn a profit. 

© 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.

Bitcoin miners are finally getting some good news thanks to the rally in cryptocurrencies this year.

The first three months of this year are “shaping up to be a better quarter” than the previous one, investment firm Stifel said in an analyst note on Monday.

Hashprice, which measures how much miners earn based on a number of factors, is up 36% compared to March 12, at $0.08 per terahash.

“This for us is pure gravy,” CleanSpark Executive Chairman Matthew Schultz told The Block. “When you look at the price appreciation in bitcoin, it’s essentially another $200,000 a day in free cash flow if you’re mining 20 bitcoin a day, which is about where we are.”

Bitcoin price appreciation is happening at the same miners are finally seeing a slump in power prices — essentially reversing trends that squeezed their margins last year and drove some to bankruptcy. It may be a chance for a turnaround for even the hardest-hit companies.

 

“The market has helped us a lot,” a spokesperson with Core Scientific, which filed for bankruptcy in December, said last week. “Power prices have come down dramatically. And when you’re a bitcoin miner power pricing is your primary cost input … We’re spending a lot of money on professional fees, but operationally things are going great.”

More competition

Mining is a balancing act between many factors and as overall economic conditions improve, analysts have warned that the better environment will be partially offset by an increase in mining difficulty as competition heats up.

CleanSpark’s Schultz said he’s seen an influx of machines coming online, but nothing that surpasses what had already been planned and announced by miners.

“So we haven’t seen a direct impact yet, but we certainly expect that it could have an impact not only on difficulty and mining economics from that perspective but also it’s likely to have an impact on the price of mining equipment going forward,” Schultz said.

Difficulty is expected to jump between 5% and 6% this week according to different estimates. It will be the third increase in a row, following a 9.95 % and 1.16% jump.

“We expect continued growth to the overall network hash rate in the near term as newer gen machine deliveries are installed and brought online,” said the note from Stifel.

Because rackspace for machines is scarce at the moment, “if the price of BTC goes up a lot in 2023, there will be a lag between before the difficulty goes up to an extent,” the Core Scientific spokesperson said.

Machines and investments

The market for ASIC machines started trending higher in late January for the first time since December 2021. Prices for those in the top efficiency tier have jumped 9% in the last two months, according to data from Luxor, which runs an ASIC trading desk.

Mid-generation machines are typically more sensitive to changes in mining economics than the absolute newest generation models, and “we are seeing that play out right now,” said Luxor COO Ethan Vera.

“With Bitcoin heading towards $30k it’s becoming easier for companies to raise equity capital, allowing them to deleverage their balance sheet. This deleveraging is resulting in less distressed assets coming to market and a reduction of ASIC supply,” Vera said. “Miners will look to hedge revenue and costs, take on less leverage then before. But ASIC markets will trend up with bitcoin price.”

Prices could move “pretty quickly” unless machine supply available in the markets remains “too high,” he said.

Miners have been in survival mode for the past several months — striving to deleverage themselves and clean up their balance sheets. Amid the excitement from the last bull market in 2021 and the race to deploy as fast as possible, some took on large amounts of debt to buy as many machines as possible when prices were comparatively very high.

Not so fast

In June of last year, bitcoin liquidations from miners spiked, data from TheMinerMag shows, and many companies have continued to sell a large portion of their mined bitcoin. Even miners like Marathon and Hut 8 — which historically have held on to their production — started selling off a portion of their holdings in the last couple of months.

“The debt markets are starting to show signs of life,” Schultz said. “But by and large, unless you have a rock-solid balance sheet, they’re still mostly closed. So the access to capital is pretty much restricted to either equity or the sale of Bitcoin.”

CleanSpark said during its last earnings presentation in February that it would propose to increase the number of shares authorized for issuance from 100 million to 300 million, keeping that as an option as the company builds towards its growth target this year.

In September, Hive Blockchain struck a deal to sell up to $100 million in shares, while Iris Energy agreed to sell up to the same amount in shares to B. Riley.  Terawulf said in January that it raised $32 million in equity, while also restructuring its existing debt.

© 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.

A community review will decide if the network will build its new burn-and-mint equilibrium model on the Solana blockchain.

Zero Knowledge proofs offer robust security and scaling for the latest crypto products. OpenZeppelin’s Stephen Webber writes about how developers could build more secure ZK proofs.

Several on-chain metrics highlight Camelot’s growth ahead of Arbitrum’s ARB airdrop Thursday.