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Greenidge Generation produced 195 BTC in May, a slight decrease from the 197 BTC mined the month before.

The company announced operational updates for the previous month on Wednesday.

Greenidge had had approximately 1.7 exahash per second (EH/s) of mining capacity from approximately 20,400 miners as of May 31.

About 25% of that capacity was located at Greenidge’s facility in South Carolina, which started mining in December 2021.

The company is planning to triple its data center capacity to 4.7 (EH/s) this year, “with the vast majority of the capacity expansion focused outside of the company’s original site in New York,” according to a statement from March.

Greenidge is currently waiting for a decision from New York’s ​​Department of Environmental Conservation on a permit renewal for its mining facility in the Finger Lakes region.

In regards to the proof-of-work moratorium bill recently passed by New York’s legislature, the company has said that even if signed into law by the governor it would not affect mining operations at its 106-megawatt facility.

© 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.

Ethereum scaling startup Optimism said Wednesday that an attacker interfered in a token recovery process involving Wintermute, resulting in the loss of some 20 million OP governance tokens. 

As previously reported, the OP token went live at the end of May as part of a plan by Optimism — a Layer 2 network — to decentralize how the protocol is governed. An airdrop was held on May 31, and some of the total OP tokens were set aside to provide to supportive outside parties.

According to blog posts from Optimism, “the Optimism Foundation engaged Wintermute for liquidity provisioning services in an effort to facilitate a smoother experience for users acquiring OP to participate in Collective governance. To carry out this engagement, a temporary grant of 20 million OP tokens was allocated to Wintermute from the Foundation’s Partner Fund.”

But things went awry when Wintermute mistakenly provided a multi-signature Ethereum address that had not yet been deployed on Optimism. In its own explainer post, Wintermute founder and CEO Evgeny Gaevoy said the multi-sig address was a Gnosis safe.

As the Optimism team explained in its message:

“Wintermute began a recovery operation with the goal to deploy the L1 multisig contract to the same address on L2. Unfortunately, an attacker was able to deploy the multisig to L2 with different initialization parameters before the recovery operation was completed and took control of the 20 million OP tokens. This address has since sold 1 million tokens, and can easily sell the rest.”

According to both teams, Wintermute has purchased those 1 million OP tokens and intends to purchase more as the exploiter tries to sell them. The remaining tokens are currently held in this address.

“We want to make one thing clear – the initial error is 100% Wintermute’s fault and as such we will proceed to buy OP every time the attacker sells it to make the protocol whole eventually (we did initiate buying the first million OP tokens yesterday already),” Gaevoy wrote. “We understand that it can potentially create price volatility in the token and will make best efforts to smoothen the effect.”

The Foundation has also “made a second short-term grant of 20 million OP to Wintermute so that they can continue with their work as things unfold,” per Optimism’s post. 

© 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.

At market close on Wednesday bitcoin miners’ stocks were mostly down.

Greenidge Generation, which was down -5.08%, announced Wednesday that it had mined 195 BTC in May — a very slight decrease from 197 BTC the month before.

Bit Digital mined about 30% less bitcoin in May, it said Wednesday. The company’s stock was down -1.20%.

Core Scientific, Mawson Infrastructure Group and Argo Blockchain were up by +3.52%, +1.88% and +1.81%, respectively.

Here’s how crypto mining companies performed on Wednesday, June 8:

© 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 asset custodian Entropy announced Wednesday that it has closed a $25 million seed round led by Andreessen Horowitz.

Dragonfly Capital, Ethereal Ventures, Variant, Coinbase Ventures, Robot Ventures, Inflection and the Komerabi Fund also joined the round, according to a press release.

Entropy is developing a decentralized custody platform that uses sophisticated cryptographic techniques based on multiparty computation. The firm led by a self-taught cryptographer and trans activist named Tux Pacific, who self-describes as an anti-capitalist anarchist.

The company aims to upend the standard business model of centralized crypto custodians such as Fireblocks and Coinbase. The infrastructure around custody has “remain[ed] stagnant” since the launch of multi-sigs in 2017, it argues in the funding announcement.

Entropy’s protocol will aim to allow users to implement their own rules for interacting with funds, such as imposing time-gated constraints. Pacific told Techcrunch that although Entropy doesn’t yet have a business model, the company remains confident in “building a great product before thinking through monetization.”

According to The Block Research’s 2022 Digital Asset Outlook Report, crypto custody firms focused on the institutional market experienced a significant upswing in funding in 2021, raising more than $3 billion. 

In the report, Carlos Reyes and Greg Lim noted that the space will continue to grow as “traditional financial institutions such as BBVA, BNY Mellon, and U.S. Bank among others, enter or expand their digital asset offerings, including custody, either directly or by partnering with an existing custodian.” 

© 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.

Most of the major European crypto investment vehicles closed up on Wednesday, with some products seeing a higher degree of outperformance. 

21Shares’ Cardano ETP rose the most, up 4.16% at the close. VanEck’s Tron (TRX) was the worst performer on The Block’s list, closing down -0.36% on Wednesday. 

Here is a brief look at how some of the major European crypto investment vehicles performed on Wednesday, June 8:

As this is the first daily report on ETP and ETN performance in Europe, here is a brief description of these investment vehicles. 

An Exchange Traded Product (ETP) is a type of security that tracks the performance of an underlying security, index, or financial instrument — in this case, cryptocurrency. They trade on exchanges and the share price is linked to the underlying asset they track. 

An Exchange Traded Note (ETN) on the other hand is a type of unsecured debt security that trades on exchanges. They are a variation of ETFs that don’t provide investors with ownership of the security but just pay the return on the index. As they are unsecured, there is no collateral backing these securities and they are therefore high-risk investments

© 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.

Securities and Exchange Commission Chair Gary Gensler is considering new requirements to increase order-by-order competition.

In remarks delivered at the Piper Sandler Global Exchange Conference today Gensler said he’s directed his staff to make recommendations around how to enhance order-by-order competition and mitigate conflicts that can arise when platforms use PFOF practices or rebates. That includes a potential auction practice unless investors are getting midpoint or better prices.

“The listed options exchanges have operated auctions for retail orders for many years,” said Gensler. “I’ve asked staff, in considering any recommendations for stock auctions, to draw upon lessons from the options market, focusing on assuring full competition among all market participants to provide the best prices for retail investors.”

To mitigate PFOF conflicts, Gensler has also asked his staff to consider whether exchange fees and rebates should be more transparent. 

In 2020, the SEC began requiring broker-dealers to report information related to how they route trades. The disclosures shed light on the way a number of firms utilized payment for order flow (PFOF) practices when an electronic market maker compensates a broker for client orders.

Because brokers are required to route orders according to best price for the trader rather than according to who’s paying for the order flow, the SEC has scrutinized the practice.  Firms like Robinhood made millions each quarter utilizing PFOF practices – and drew the ire of the regulator.

Robinhood settled with the SEC for $65 million for failure to disclose its PFOF activity and failure “to satisfy its duty to seek the best reasonably available terms to execute customer orders.”

An auction system would see trading firms compete to fill the orders as in the options market. The idea is that this format would increase competition and ensure retail traders receive a better price compared to when their orders are routed to a handful of large electronic trading firms that are paying the broker. 

Gensler was clear in his remarks that this is the start of the Commission’s consideration, and there’s a road of procedures and comment periods before any rule changes come. 

“In terms of payment of order flow and rebates, as I say, they present inherent conflicts to the market,” he said. “Three other jurisdictions and a fourth, a big one, Europe, is considering getting rid of them. So I continue to ask staff, ‘what should we do there?’ But as we put this all together, we’re going to put it out to notice and comment and obviously hear from the public as well.”

As the Wall Street Journal reported, Robinhood is already gearing up to push back on the SEC’s stance.

Robinhood’s Chief Legal Officer Dan Gallagher said he was concerned the SEC’s actions would “muck with” an otherwise favorable climate for retail investment that includes zero-commission trading and swift order execution. 

© 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 New York Department of Financial Services (DFS) today became the first financial regulator in the US to issue guidance outlining compliance requirements for dollar-backed stablecoins.

The guidance builds on informal policies used by the DFS since 2018, setting “baseline requirements” for any stablecoin issuer currently subject to DFS oversight, and any firm that applies to be regulated in the future. It “creates clear criteria for virtual currency companies looking to issue USD-backed stablecoins in New York,” according to Adrienne Harris, the state’s Superintendent of Financial Services.

The document has three main components. First, any stablecoin regulated by the DFS must be “fully backed” by a reserve of assets, meaning that the market value of a reserve is equal to the nominal value of a stablecoin’s outstanding units at the end of each business day. Issuers also must set clear policies for the redemption of tokens into US dollars, and fulfill redemption requests within two days, except under “extraordinary circumstances.”

Under the guidance, firms that issue USD-backed stablecoins will also need to separate their reserve assets from their proprietary assets and hold these reserves in specific asset categories, such as US treasury bills, reverse repurchase agreements fully collateralized by US treasury bills, government money-market funds and deposit accounts at US state or federally charted depository institutions.

Stablecoins will also need to be audited by an independent certified public accountant, who will attest to management’s assertions on a monthly and yearly basis. 

The guidance also specifies that fulfilling these requirements alone won’t necessarily guarantee compliance. The department said it considers a “range of potential risks” before it authorizes the issuance of a stablecoin. 

New York’s new policies come in the wake of the collapse of the popular stablecoin TerraUSD last month. US policymakers have yet to issue stablecoin-specific rules, but both the collapse of TerraUSD and stablecoin regulation more generally have been a topic of conversation in recent Congressional hearings.

© 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.

Since they first emerged, stablecoins have faced a paradox. 

At its heart, the stablecoin concept aims to bring centralized price stability to decentralized markets. Now, a group of researchers is proposing a new solution: using electricity as the backing asset.

In a peer-reviewed paper published in MIT’s Cryptoeconomic Systems , two materials scientists at Lawrence Livermore National Laboratory​ outline a system for converting electricity into a proposed crypto token — and then back again. 

“We reveal how electricity can be used to collateralize a stablecoin such that each token can be exchanged for one kilowatt-hour (KWh) of electricity and vice versa, without any centralized authorities,” the paper’s abstract explains. 

Current stablecoins depend on collateral that complicates exchange. Fiat-pegged stablecoins have faced scrutiny over their centralization, extending into doubts over whether token holders could ever redeem their stablecoins for the underlying assets. The biggest stablecoin by market cap, Tether, briefly slipped its peg last month. 

Algorithmic stablecoins seek to decentralize, eliminating trust in a central stablecoin issuer. But last month, Terra collapsed in an extremely high-profile fashion, casting doubt over whether algorithms can securely hold value. 

Inside the electricity coin

The paper’s proposal is to enable stablecoin holders to remain anonymous and convert their holdings into electricity, which is useful all around the world and, as the authors argue, has maintained a relatively stable price despite enormous efforts by “scientists, engineers, and entrepreneurs” to reduce costs over the past 50 years. 

The actual mechanism for such redemption from data to electricity is something called a Szilard engine. It’s a device that leverages information to extract useful work from ambient heat. 

As first author Maxwell Murialdo explained to The Block, Szilard engines already exist in lab applications but “scale is minimal, so they’re not practical for anything at the moment, they’re just research devices.”

Consequently, the paper is proposing a system that is impractical in the near term. However, it is a fairly revolutionary application of Szilard engines to crypto-systems, which would hypothetically link them with a fungible physical asset. 

But while electricity may be stable given a stable economy, its prices vary wildly based on geography and access to fuel sources — a disparity that leads bitcoin miners to migrate in pursuit of the cheapest power. That disparity in electricity prices would in theory motivate early adopters of the proposed system. 

“Arbitrage will at least initially be the driver of adoption,” said Muraldo. “But ultimately what we think will happen is this will help to drive electricity to a singular or at least close to singular price for the commodity.”

Lawrence Livermore National Laboratory is one of 17 national labs throughout the country. The lab operates largely based on a 20-year grant from the US Department of Energy and primarily does research for defense applications.

© 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.

Bit Digital produced 53.4 bitcoin in May, representing a 29.9% decrease from the previous month.

During the same month, the company also mined 27.0 ETH, per an announcement on Wednesday.

The company held 793.6 BTC and 316.1 ETH as of May 31, with a fair market value of roughly $25.2 million and $0.6 million, respectively.

The company owned 33,376 Bitcoin miners and 731 Ethereum miners at the end of the month — representing an estimated total hash rate of 2.17 exahash per second and 0.3 terahash per second, respectively.

Of Bit Digital’s currently owned mining fleet, 17.9% was deployed in North America as of May 31.

© 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.

Algorithmic investment adviser firm Delphia secured $60 million in a Series A funding round led by crypto venture firm Multicoin Capital.

Other participants in the round include Ribbit Capital, FTX Ventures, Valor Equity Partners, FJ Labs, Lattice Ventures, Cumberland, Thomas Bailey from Road Capital, and M13. 

The new capital will be put towards the launch of the firm’s native rewards token, as well as expand its user base and the way investors can contribute data, per an announcement Wednesday.

“Our new strategic investors and the funds from this round will enable us to share our algorithmic breakthroughs with anyone willing to contribute data or dollars, no matter how big or small,” said Delphia CEO Andrew Peek.

The firm analyzes personal data shared by members to make investment decisions. It offers actively managed investment strategies, as well as a hedge fund for accredited investors.

Delphia now plans to use its native token to reward investors who contribute their own data to the “algo-advisor,” starting this summer. Those tokens could then be traded or redeemed for membership benefits.

© 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.