Welcome to this week’s article on the most relevant crypto news. Keeping up with the latest industry news is key to making strategic moves with your crypto assets. With this new article series, we hope to help users catch all the important information conveniently. For this edition, we will be covering all the market news you need to know in the week of 5th – 9th December 2022 including news about on-going Ethereum Staking Release, Bitcoin Mining Update, Chainlink Staking and other major industry and adoption news. Let’s dive in!
Nexo to Exit US Market Due to Regulatory Challenges
Crypto lender Nexo will immediately stop offering its Earn Interest product in eight US states and will no longer be signing up any new US customers to the product. In a blog post, Nexo said it had been in talks with both state and federal regulators in the US, but these had come to a “dead end”. The company did not provide many specifics about these discussions, but said it had shared information with the regulators and tried to “proactively modify its business” to respond to these law enforcement agencies’ concerns. The company also said it would stop offering products and services in the US in the coming months.
Nexo had already off-boarded Earn clients in New York and Vermont at those states’ regulators’ insistence. It will now suspend access to new users in Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California and Washington. Residents of these states can continue using Nexo’s other services. “It is now unfortunately clear to us that despite rhetoric to the contrary, the US refuses to provide a path forward for enabling blockchain businesses and we cannot give our customers confidence that regulators are focused on their best interests,” the blog post said.
Bitcoin Mining Difficulty Experiences Largest Drop in Over a Year as Crypto Winter Impacts Profitability
Bitcoin mining difficulty has fallen by 7.32%, with miners turning off their machines as the bear market hits profitability. Data from mining pool BTC.com indicates that the adjustment at block height 766,080 is the largest downward change since July 2021, when China banned the industry and saw hordes of miners drop off the network. The country was then the world’s biggest bitcoin mining hub.
The mining difficulty automatically adjusts according to the online hashrate, or computing power, to maintain a stable mining time for a bitcoin block. The more miners working, the higher the difficulty becomes. Bitcoin miners have been caught between a low bitcoin price, which cuts revenue, and high electricity rates, which increase costs. Leading producers including Core Scientific and Argo Blockchain are dealing with liquidity problems, while Compute North has filed for Chapter 11 bankruptcy protection.
Efficient new machines and an increase in the number of miners coming online as projects started months ago come to fruition have exacerbated the situation, driving the hashrate higher. Between early August and the last upward adjustment on 21 November, the hashrate and difficulty both rose by around a third. The hashrate started dropping around mid-November, but is still well above levels seen after China’s crackdown on the industry.
Profitability has fallen by around 20% in the past month, according to Luxor’s hashprice indicator. Even miners using energy-efficient machines need access to electricity priced lower than 8 US cents per kWh, said Jaran Mellerud, an analyst at Luxor. Although the average energy price on the network is around 5 cents per kWh, many miners are paying 7-8 cents per kWh, Mellerud added.
Goldman Sachs to Invest in Cryptocurrencies Following Market Turmoil
Goldman Sachs is reportedly looking to invest tens of millions of dollars in cryptocurrency firms, according to Reuters. The move comes following the bankruptcy of crypto exchange FTX and the troubled financial condition of several other high-profile firms in the industry. Goldman Sachs believes there is an increased need for trustworthy and established players in the market and sees an opportunity in the discounted valuations of crypto firms following the market turmoil. “We do see some really interesting opportunities, priced much more sensibly,” said Mathew McDermott, head of digital assets at Goldman Sachs.
ConsenSys to Improve MetaMask Wallet in Response to User Concerns Over Privacy
ConsenSys, the company behind the popular MetaMask crypto wallet, has announced plans to release a series of updates to the platform in response to user backlash over its data-collection practices. In a statement, ConsenSys clarified that it only collects and shares MetaMask user internet-protocol (IP) information with Infura, its “RPC (remote procedure call) service” for reading and writing data to the Ethereum blockchain, in connection with “write” requests or transactions. The company added that it does not collect wallet and IP address information for “read” requests, such as checking account balances. The changes follow concerns raised by some users that the company’s data-collection practices violated Ethereum’s privacy-focused, decentralized ethos.
Chainlink launches staking of its native token LINK, providing incentives for system growth
Chainlink, a provider of price feeds and other data to blockchains, has launched staking of its native token, LINK, on its network to help keep the protocol secure. Staking will provide incentives to help the Chainlink system to grow, according to co-founder Sergey Nazarov. Stakers will commit LINK tokens in smart contracts to back certain performance guarantees around oracle services. This first phase of Chainlink staking will help secure data feeds. The Chainlink network has enabled more than $6.6tn in transaction value this year, Nazarov said. The staking is setting the foundation for Economics 2.0, Chainlink’s vision for the protocol to scale and become more efficient by providing the right incentives as the network continues to expand.
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Ethereum Developers Plan Staked Ether Release for March 2023, With Withdrawals Available in Spring. “Proto-Danksharding” to Follow in Subsequent Hard Fork.
Ethereum developers have agreed that the network’s next hard fork, known as “Shanghai”, will have a target release time frame of March 2023. The upgrade will include EIP 4895, which will enable Beacon Chain staked ether (ETH) withdrawals. Developers also plan to address the implementation of the EVM Object Format (EOF) in Shanghai, which is a collection of Ethereum Improvement Proposals (EIPs) that upgrade the Ethereum Virtual Machine. If EOF is deemed too complicated to implement by the next All Core Developers call on 5 January, the team will push back EOF to the fall. The Shanghai hard fork will be followed by a second hard fork in the fall of 2023 to address the issue of proto-danksharding, or EIP 4844.
Coinbase Urges Users to Switch from Tether to USDC, Citing Questions About Tether Reserves.
Cryptocurrency exchange Coinbase has launched a campaign encouraging users to switch from Tether to Circle-owned US Dollar Coin (USDC) by waiving conversion fees. The move comes amid speculation about the quality of Tether’s reserves, which have reportedly been called into question by a US judge. Tether was knocked off its peg in the days following the collapse of FTX, trading as low as 93 cents. The majority of trading pairs on exchanges have since returned to $1, although data from CoinGecko shows that it continues to trade at 99 cents on some pairs at Binance. Coinbase is a co-founder of USDC, which on-chain data reveals is the third-most traded digital asset on the exchange, accounting for 5% of its volume. The company said in a blog post that it believes USDC to be a “trusted and reputable stablecoin” following recent events. In late September, Tether was ordered by a US judge in New York to produce financial records relating to the backing of its coin. Separately, the New York Supreme Court is considering a lawsuit asking the New York Attorney General to release documents it gathered in its investigation into Tether’s reserves.
We hope you enjoy this carefully curated news roundup by Moonstake, as our team strives to only bring the most relevant information for your crypto experience. See you next week!