Bitcoin hash rate accelerating, and crypto is welcoming a change in the energy narrative
THE WEEK IN REVIEW
with Jason Deane
It’s been a very noisy week in the press, but if you power through it all, you’ll find not a lot of actual substance has really happened.
Economically, however, there are a couple of things to note.
There was a surprise drop in reported UK inflation to 6.7% against the previous month of 6.8%. It’s a small drop, but most economists had actually been expecting a slight rise to around 7% due to underlying fuel prices. That significantly reduced the chances of yet another rate hike at the Thursday Bank Of England meeting, and, in fact, most of the committee did, in the end, vote to keep rates held at 5.25%
Personally, I think this was a wise move despite the concerns about rising wages and other factors. Interest rate rises are a very blunt instrument and take a very, very long time to feed through to all sectors, often a year or more. We’re probably at the point where the effects are just starting to be felt in earnest, so most of the pain, I suspect, is yet to come.
Meanwhile, while the world was distracted with Russel Brand’s alleged shenanigans, Rishi Sunak tried to put a positive spin on the green policy U-turn that may well have serious ramifications for us achieving certain climate change targets, in some cases by many years. This will almost certainly reduce the urgency of investment into the sector over time.
What I find interesting is the justification. Sunak is blaming the cost of living crisis – the one caused by excessive money printing and dubious policy by the government – as a reason to extend targets. It seems to me it may be more to do with the local election results in Uxbridge where his party managed to cling to power over one central issue – the ULEZ charge. Put simply, it’s a labour policy that wasn’t popular and what better way to grab a few votes than to extrapolate the same concept into a bigger approach?
Meanwhile, while we’re all arguing over traditional economics, the next generation of monetary power has been quietly making some inroads in terms of price and metrics. Price wise, Bitcoin visited $27,000 in a strong move, which then slowly deflated over the following days, leaving the period only very slightly up overall.
Yet, we’re still seeing hash rate reach new highs and this week’s difficulty adjustment was yet another new high with a 5.4842% increase. That number, by the way, can be a little deceiving. As the total network power increases to higher numbers, you need larger and larger additions to the network to get the same change in difficulty. 5% of hundred, for example, is only 5, 5% of 500 is 25. Deployment by miners on that basis isn’t just continuing, it’s accelerating.
Not only that, but the narrative around Bitcoin mining in the mainstream media is definitely starting to change. Even Bloomberg posted this article confirming that the industry now uses more than 50% renewable energy, with far more to come.
Meanwhile, money sent on the Bitcoin blockchain so far this year has now surpassed PayPal and Bitcoin on exchanges continues to fall, this week reaching a six year low.
Surely, it’s only a matter of time before the divergence in these two lines begins to take effect?
We’ll see, but in the meantime, have a great weekend!
JD
Yesterday’s Crypto AM Daily
In the Markets
The Bitcoin Economy
*Data can be found at https://terminal.bytetree.com/
🌅Total crypto market cap
🔵 $1.05 trillion
🔻 1.38%
What Bitcoin did yesterday
🔺 Daily high $27,155
🔻 Daily low $26,382
Bitcoin market capitalisation
🟠 BTC $520.392 billion
🟡 Gold $12.854 trillion
💳 Visa $492.1 billion
Bitcoin volume
🪣 Total spot trading volume $14.048 billion
🔺 11.23%
SP500
🔻 1.64%
FTSE/JSE Top 40
🔻 0.72%
Fear and Greed Index
Bitcoin’s market dominance
📊 50.18
Relative Strength Index (RSI)
💪 58
Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience a correction in price, while 30 or below indicates an oversold or undervalued condition.
📣 What they said yesterday
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Cautionary Notes
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