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Quick Take

• The demand for talent in the crypto market is higher than it’s ever been before.
• Firms are getting creative to woo talent.
• Many crypto firms are leaning on tokens and their VC investors for help.

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The supply of the stablecoin Tether (USDT) has been flat since the beginning of this month, according to The Block’s Data Dashboard.

From June 1 to June 17, USDT’s supply has remained at $64.25 billion. No growth in USDT suggests that there is currently no demand for the stablecoin in the market and there is no new money flowing in.

Tether CTO Paolo Ardoino told The Block that USDT’s demand has been impacted because of a “significant decrease” in open interest for bitcoin futures in recent weeks. USDT is the “dominant stablecoin” on most crypto derivatives exchanges, he said.

Indeed, there has been a notable drop in the aggregate open interest of bitcoin futures since mid-May. From a peak of over $20 billion in May, the amount of open interest has declined to around $13 billion as of June 18. Open interest is the value of outstanding derivative contracts that are yet to be settled. Increasing open interest means that new money is flowing into the market and vice versa.

The recent bearish trend of the crypto market appears to be the main reason for the lower amount of open interest in the bitcoin futures market. Bitcoin has fallen from highs of $64,000 in mid-April to lows of around $36,000 currently.

Ardoino told The Block that stablecoins are issued pursuant to market conditions, and therefore the supply of them ebbs and flows.

Indeed, not only USDT but the supplies of other stablecoins have also been leveling off in June, as can be seen from the first chart above.

USDT continues to have the largest stablecoin market share, at over 60%, although its share has been declining since late last year while USDC’s share has been increasing. The total supply of dollar-pegged stablecoins rose past the $100 billion mark for the first time last month. The current total supply of stablecoins stands at nearly $106 billion.

Compared to fiat money, stablecoins allow crypto market participants to move faster between crypto exchanges as fiat money transfers can take days. Also, not all exchanges support fiat on-ramps, leaving stablecoins and other cryptocurrencies as the only ways to trade across all exchanges.

© 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.

Major Chinese bitcoin mining pools are experiencing further hash rate plunge after Sichuan ordered state-owned power grid to cut the energy supply for 26 local mining farms as an initial target.

Data from BTC.com shows that almost all the largest 15 bitcoin mining pools by real-time computing power are seeing a notable hash rate drop over the past 24 hours as of writing, with some being as much as 46%.

These mining pools, except Foundry USA, Slushpool and SBI Crypto, are either China-based pools or a subsidiary of a crypto exchange that caters China-based investors and mining customers such as Huobi, OKEx and Binance.

Of the top five bitcoin mining pools, Antpool, BTC.com and Poolin are experiencing a 10% to 22% plunge in real-time hash rate since June 18. The decline on F2Pool and ViaBTC appears to be relatively moderate with less than 5%. 1Thash, the private mining pool of Sichuan-based Valarhash, has seen a whopping 46% decline in 24 hours with now just about 1,000 petahashes per second of real-time hash rate (PH/s). When the mining firm debuted its own pool around 2019, it had more than 10,000 PH/s.

BTC.com as of 12:15 UTC time on June 19

Broader implications

The one-day average of bitcoin’s total network hashing power is now at around 111 exahashes per second (EH/s), down from the 127 EH/s level in seven-day moving average prior to the news event on Friday.

The hash rate plunge across Chinese bitcoin mining pools follows the Sichuan government’s order on June 18, which required local state-owned power grid to cut off the supply for 26 mining farms by June 20 the latest.

It also required the local power suppliers to expand their inspection and close down any other mining facilities that are using hydroelectricity supplied by the State Grid or directly from small and private power plants. 

It remains to be seen if the drop will enlarge after Sunday as June 20 is the deadline for the shutdown order on the 26 specified bitcoin mining facilities.

As The Block reported, apart from the named 26 mining facilities – most of which reside in government-sanctioned industrial parks – there are also a significant number of smaller facilities that are operating under the government’s and the State Grid’s radar by using privately generated hydroelectricity that has bypassed the State Grid as a distribution middleman.

Sichuan’s shutdown order came a little over a week after the Xinjiang government directed power plants in the Zhundong Economic Technological Development Zone to close down mining facilities there by June 9.

These measures are direct results of a high-level comment brought up during a Chinese State Council meeting last month about cracking down on bitcoin trading and mining activities.

Chinese bitcoin mining pools already saw their mining customers going offline in a significant scale since the Xinjiang order on June 9.

Bitcoin miners that until June 9 had been operating at a combined capacity of 1.9 gigawatts (GW) in the coal-dominated Xinjiang region are said to have been shut down.

Xinjiang and Sichuan have historically been the top two bitcoin mining hubs in China and worldwide due to their abundant fossil fuel and hydroelectricity energy, respectively.

© 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

• Xinjiang said to have shut down nearly two gigawatts of coal-based bitcoin miners.
• Sichuan has also ordered some miners to shut down.
• The global environmental implications for the bitcoin network depend on where China’s miners decide to move.

This feature story is available to
subscribers of The Block Daily.
You can continue reading
this Daily feature on The Block.

The slump in prices across the cryptocurrency market has hit DeFi hard. 

On this episode of The Scoop, The Block’s Mika Honkasalo walked us through The Block’s Data Dashboard to illustrate the impact of the decline in retail interest across non-custodial trading venues. 

The most notable area of weakness is demand for trading with leverage on decentralized derivatives venues such as Perpetual Protocol, which are “more reflexive versions of DEX’s themselves,” according to Honkasalo. “And this is where the trade volumes have really dropped off—almost 80 to 90 percent.”

DEX volumes on venues like Uniswap and Sushiswap have held up a bit better, but are down around 50%, according to Honkasalo. 

Still, there are some areas of growth despite the overall market doldrums. 

Lending protocols, for instance, have seen growth recently. Outstanding Aave debt has surged and clocked in fresh all-time highs earlier this month. Honkasalo ties this to a thirst for dollars in the market. 

Yearn is another example “of where the money is going,” Honkasalo added. According to the Data Dashboard, total value locked in Yearn vaults hit an all-time high above $5 billion this month. 

Looking to the future, Honkasalo said that it will be interesting to watch how technical improvements in DeFi help sustain future periods of price appreciation, noting that the most recent cycle was stunted by scaling limitations.

“Ethereum ran into this problem where no one could really use Ethereum when it was really really popular, and now that we have these layer two solutions coming up like Arbitrum and Optimism, it may be that the last time was really the last time where as soon as activity picks up it becomes immediately way too expensive for users, and that’s the path to the excitement dying down,” he said.  

Honkasalo also had this to say:

“Liquidity, mining and ICOs have really shown us that the technical innovation happens very slowly in a very sort of linearly and reasonably predictable fashion, whereas these financial incentives come on top, so they’re the ones that really maybe kick off the interest and activity properly. So these two have a mismatch and they don’t always talk to each other perfectly. So interest doesn’t grow as technology grows at the same rate. So seeing just how these cycles play out and how sort of violent they are, do they become less volatile over time? That’s something I think will be interesting to follow over the next two years.”

© 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.

John Glen, economic secretary to the Treasury and City minister, has said that the Financial Conduct Authority (FCA) has “increased considerably” the resources it has allocated to assessing applications to the cryptoasset register.

The register — announced after the FCA took over as the anti-money laundering and counter terrorist financing supervisor for crypto startups in early 2020 — has become a logjam for startups in the United Kingdom’s crypto sector.

Firms were originally told they had until January 10, 2021, to get registered or cease trading, before the FCA extended its deadline to July 9 after receiving an overwhelming number of applications. On June 3, the regulator kicked the deadline back once again — all the way to March 31 next year.

Philip Davies, Conservative member of Parliament (MP) for Shipley, West Yorkshire, put pressure on H.M. Treasury in late May by addressing a series of written questions over the delays to U.K. chancellor Rishi Sunak. Glen hit back on May 28, stating that a “significant number of firms have failed to implement appropriately robust AML control frameworks, and to employ fit and proper personnel.”

Apparently dissatisfied with that response, Davies — who has a reputation for frustrating legislation in parliament with drawn-out objections — put yet more questions to the chancellor, enquiring as to the “appropriateness” of the FCA retaining its role as supervisor of the crypto sector.

Increasing resources for handling applications

In a response published June 18, Glen stressed the need to “balance the potential risk to consumers with the ambition to foster competition and innovation in the sector,” but also conceded that the regulator is beefing up its crypto capabilities.

“The government believes that the FCA’s expertise in the regulation of financial products, its membership of the Cryptoasset Taskforce, and its experience as anti-money laundering supervisor for other asset-based financial services firms makes it the right supervisor for the cryptoasset sector,” he said. “As a result of the longer than anticipated time being taken to process applications, I can confirm that the FCA has increased considerably the resources allocated to assessing applications.”

Glen’s response also included fresh information on the length of the waiting times faced by the U.K.’s crypto startups.

The mean length of time firms have waited for the green light is 248 days (and counting, presumably). The median wait is 252 days. The longest an applicant has been made to wait for an answer from the regulator — in other words, had its application under review — is 527 days.

In the meantime, the crypto register has only five fully registered entities.

© 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.

Galaxy Digital is now serving as a liquidity provider for Goldman Sachs’ bitcoin futures block trades, a move that comes as the Wall Street investment giant ramps up its crypto-related services.

The crypto company said in a statement Friday those trades are tied to CME’s bitcoin futures offering. CNBC first reported the news.

“We are proud to be a strategic partner of Goldman and look forward to working with Max and his team to meet the increasing demand from institutions and pave the way to broader adoption of cryptocurrencies as an asset class,” Damien Vanderwilt, Galaxy’s Co-President and Head of Global Markets, said in a statement.

As previously reported, Goldman Sachs has been ramping up its cryptocurrency services in recent months. Goldman’s crypto offering dates back to 2018, but it has gained steam since the start of the year on the back of institutional interest in the market.

Bloomberg reported earlier this week that Goldman intends to offer ether futures to its clients. 

© 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.

A set of land in virtual world Decentraland has sold for a record-breaking $913,808 worth of MANA, the game’s Ethereum-based cryptocurrency. 

Digital real estate investment firm Republic Realm acquired a non-fungible token (NFT) of the virtual estate, referred to as a LAND token, for nearly 1.3 million MANA. While the sale is the highest LAND sale in dollar terms, there have been previous sales that involved a higher number of MANA, when the token wasn’t worth as much. 

“We can’t wait to announce our big plans for this estate,” the platform tweeted. “Our commitment to building and developing the metaverse is stronger than ever.”

Non-fungible tokens are collectible items that exist on the blockchain and represent different types of digital files, such as audio or video files, and even virtual land.

Investing in digital real estate

Republic Realm is a New York-based firm that invests in digital real estate in virtual worlds. According to the company’s profile on Decentraland, this isn’t the firm’s first real estate purchase on the platform. The company owns a plot of land named after itself, as well as several “parcel” properties — the smaller squares on the map. 

Launched in February 2020, Decentraland is a virtual reality game built on the Ethereum blockchain, which allows users to buy, sell and build on virtual land plots. Users can purchase land, goods and services in packages called LAND, which can be bought with MANA, an ERC-20 token. LAND ownerships are recorded in smart contracts on the Ethereum blockchain. 

With this sale, Decentraland has broken a record it established only a few weeks ago, when blockchain protocol Boson Protocol acquired one of its plots for over $700,000. 

Decentraland is one of several “play-to-earn” games, where users play to earn rewards like tokens, which they can then trade on an open marketplace. Other popular games include Sandbox and Axie Infinity, which are also Ethereum-based. 

The price of the MANA token soared during the NFT boom earlier this year, but has fallen in recent weeks, coinciding with a fall in NFT transaction volumes.

Image courtesy: Decentraland

© 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.

© 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.

Spanish banking giant BBVA’s swiss entity, BBVA Switzerland, has started offering bitcoin trading and custody services.

Announcing the news on Friday, BBVA Switzerland said the services will be available to all of its private banking clients from Monday, June 21. The launch comes six months after the bank began trialing the services in Switzerland.

“This gradual roll-out has allowed BBVA Switzerland to test the service’s operations, strengthen security and, above all, detect that there is a significant desire among investors for crypto-assets or digital assets as a way of diversifying their portfolios, despite their volatility and high risk,” said Alfonso Gomez, CEO of BBVA Switzerland.

While the bank currently only supports bitcoin, it said the aim is to also offer other cryptocurrencies in the future. As for the launch of the services in other countries, BBVA Switzerland said that would depend on maturity, demand, and regulation in those markets.

BBVA said its bitcoin services are novel as clients can manage their investments alongside traditional assets in the same portfolio. Customers willing to convert their bitcoin into fiat and vice versa can do so “without delays and without the illiquidity that affects other digital wallets or independent brokers,” said BBVA. That’s because the bank operates with several sources for converting cryptocurrencies, it said, without disclosing those sources.

BBVA’s services come as more mega-banks open up to the crypto space. In recent weeks, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, and other financial institutions have moved to provide crypto services to their clients.

© 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.