Stablecoins Demand More Trust than Fiat Currency

This article about the problem with stablecoins was written by Kevin Murcko, the CEO at cryptocurrency exchange, CoinMetro, and forex broker, FXPIG.

Stablecoins — digital coins which peg their value rigidly to the dollar, the euro, or a collage of national currencies — are all the rage right now. Tether, in particular, is on everyone’s lips. In fact, it’s one of the most heavily traded cryptos in the market right now.
Also read: Stablecoins Fetch a Premium as BTC Hits Year Low

The appeal of Tether and other stablecoins is somewhat understandable. All cryptos are nascent assets; speculation, rather than the usefulness of the technology or the underlying asset, is what’s mostly been driving price movement. That’s led to wild volatility.
Traders love volatility, but not unreasonably, some people see a problem. Volatility is broadly incompatible with the concept of a day-to-day currency and a store of value. “Stablecoins” have arrived to fix this by, ostensibly, digitizing a fixed value in terms of dollars or an equivalent.
The Use Cases for Stablecoins
Certainly, there are a handful of legitimate use cases for stablecoins.
Let’s say a liquidity provider owes me $0.5 million. Maybe I need that money immediately to be able to rebalance my book — the traditional banking system isn’t the best way to do that. Even if we’re with the same bank, it can take a while to clear that transaction.
Stablecoins are useful because I can instantly clear funds back and forth. They offer the convenience and speed of using crypto without the caveat of volatility.
As the International Monetary Fund’s Christine Lagarde pointed out in a speech this month, Central Bank Digital Currencies (CBDCs) are another intriguing opportunity. While the benefits aren’t fully understood, CBDCs have the potential to limit costs and risks to payment systems, mitigate fraud and money laundering, and potentially even boost financial inclusion throughout the developing world.
Substituting Fiat Currency

Beyond these examples, however, stablecoins really struggle to prove their worth. Front-end, business-issued stablecoins (practically all stablecoins being traded at the moment) fall flat.
Currently, these stablecoins are used as substitutes for fiat on crypto exchanges that don’t have access to central bank-issued money. It’s not that these tokens are preferential to fiat. Rather, they’re band-aid solutions for retail exchanges which, for various reasons, can’t open and maintain adequate fiat on-and-off-ramps — usually because they aren’t properly licensed to offer fiat, or because they don’t have access to the necessary banking.
Why, in most circumstances, aren’t stablecoins preferential to fiat? It ultimately comes down to trust.
As we all know, crypto was originally intended to be trustless. The Bitcoin whitepaper laid out a vision to escape “to transact directly with each other without the need for a trusted third party.”
What stablecoins represent, in many ways, is the antithesis of that idea. The crypto community now uses privately issued tokens or coins that are pegged to the very currencies they originally wanted to pull away from. That’s problematic for a number of reasons.
Stablecoins require you to have confidence, not only in the government, but in an undependable, easily corruptible private company. We have to place our faith outside of the chain and in these companies’ ability to self-regulate supply and demand.
The Collateralization Problem
That’s a tall order. Stablecoins can be split into three states of collateralization, or the extent to which the coin is backed one-to-one by fiat. Some coins are fully collateralized, others are partly collateralized, and others are entirely uncollateralized. Unfortunately, all provide insufficient mechanics to properly regulate price.
For noncollateralized tokens, value is essentially suppressed by “printing” digital money. That’s all well and good, but when the price drops, it’s not possible to un-issue what’s already in circulation.
Here’s the snag. If the smart contract can’t keep the price at $1, then the algorithm is forced to issue bonds, promising users an entitlement to coins in the future. The bonds are then redeemed, and the price returns to $1.
That’s the theory, at least. The issue is, these bonds can only really be serviced if the platform is in an overall state of growth. The headache arises when the price keeps on dropping, and increasing numbers of bonds have to be issued until this price returns to trading level or above par. Bonds can’t be issued indefinitely.
The Fundamental Flaw: Artificial Inflation

Partial collateralization presents a minor improvement over the complete lack of reserve assets, but it still has a fundamental flaw: If confidence in the platform dips, then the company has to artificially inflate the price of its token by drawing on a finite pool of fiat reserves, preventing the price from plummeting. This, of course, has a limit. A company can only buy back so much of its own currency.
Presumably then, “fully collateralized” models like Tether are therefore reliable? Not really.
Even if we take the company for its word (there’s some uncertainty as to whether their assets are fully collateralized), it still doesn’t make much sense to abandon the relatively safe greenback for an inconvenient crypto that doesn’t always have fiat parity, provides no consumer protections, and is vulnerable to hacking.
Stablecoins: An Awful Idea
Central banks may not be the ideal institutions to trust, but many have stood resolutely for decades with the primary goal of maintaining our trust in their money. If privately backed stablecoins are designed to replace our reliance on these central banks with a reliance on a combination of both central banks and their loosely regulated businesses, then this seems like an awful deal to say the least.
Let’s not confuse lack of volatility with stability. That’s a dangerous mistake to make. Yes, many stablecoins do have relatively “stable” prices, but “stability” — in another sense of the word — is also about reliability, and that’s one thing that can’t be said of stablecoins, which demand far more trust than the original fiat.
Do you agree that stablecoins are overhyped? Can stablecoins solve the problem of volatility? What is the future of the stablecoin? 

Images courtesy of Shutterstock

OP-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
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Asian Investors Should Invest in Crypto Despite Volatility Claims Founder of SuperNode Community

Asian Investors Should Invest in Crypto Despite Volatility Claims Founder of SuperNode Community

Across the world, countries are looking into regulating cryptocurrencies. Each space is handling regulation a little differently, with Asian markets leading the way towards adoption.

Despite the volatility and lack of a regulatory framework, investors are getting involved in the world of digital assets. It’s because of consumer interest that groups such as the Hong Kong Securities and Futures Commission (SFC) are planning to monitor the trading of cryptocurrencies.

Making Headway

Via a post on CryptoSlate, the Founder of SuperNode Community Bing Lin discussed countries’ current approach and why Asian investors should get investing sooner rather than later.

Lin portrays volatility as a long-time factor of the financial market. He compares the unpredictability to a quote by Charles Mackay from 1841:

“Many individuals grew suddenly rich…one after another, they rushed to the tulip marts, like flies around the honey-pot…At last, however, the more prudent began to see that this folly could not last forever. Rich People no longer bought the flowers to keep them in their gardens, but to sell them again at cent percent profit. It was seen that somebody must lose fearfully in the end. As this conviction spread, price fell, and never rose again.”

Essentially, cryptocurrencies are like the early stages of Tulip-mania, a scenario widely regarded as the first financial bubble. During that time, the rich were flocking to buy tulips. However, over time, some of the buyers realized that people wouldn’t crowd towards tulips forever. These buyers then became sellers themselves, which created the bubble. As more rich people caught on, the prices hit a peak and evened out for good.

In describing these temporary “upward price movements,” Lin credits the price-to-price feedback theory, stating that price hikes bring “successes for some investors, attract public attention, promote word-of-mouth enthusiasm, and heighten expectation for a future price increase.“ At least, they keep people engaged until the price can’t realistically raise any more.

In spite of this description of volatility, Lin says not to approach crypto with the Tulip-mania viewpoint. Because cryptocurrencies are essential to blockchain technology, the founder expects these digital assets to “capture a significant portion of economic value in the digital future.” Also, Bitcoin (BTC) and other digital assets provide investors with a brand new way to diversify their portfolios.

That said, the volatility is still something to consider, just not as an end-all. Crypto’s unpredictability means potential for experienced institutional investors. Chinese markets have embraced this with exchanges such as Binance, OKEx, and Huboi claims Lin.

Finally, Lin predicts the future of cryptocurrencies with three developments. First, the Supernode head claims that investors will eventually balance out crypto supply and demand. Second, that additional capital will come along and create more innovative blockchain-based startups and apps. Third, as more institutional investors come along, volatility will decline.

According to Lin, Asian markets are ahead of the rest of the world regarding regulation — Hong Kong especially. That framework means now is the perfect time to get involved with digital assets, especially before the rest of the world moves in to adopt. For Lin, crypto adoption isn’t a question of if, it’s when.

About SuperNode

SuperNode is a “decentralized venture capital ecosystem.” The network is run by 21 SuperNodes who provide funding to different blockchain projects. Lin’s goal is to be the ideal space for blockchain startups to gain ground via its “democratized ecosystem.”

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KuCoin Exchange Receives Investments from Neo Global Capital, IDG, and Matrix Partners

KuCoin Exchange Receives Investments from Neo Global Capital, IDG, and Matrix Partners

KuCoin, a major Singapore-based exchange, has announced that it has received funding from three major investment firms: Neo Global Capital, IDG Capital, and Matrix Partners. The combined investments from the three firms total $20 million dollars, a sum that will allow KuCoin to expand its services dramatically.

After just over a year of operation, KuCoin has become the 50th-largest exchange by daily trading volume, circulating about $30 million each day. At the moment, it is based out of Singapore, a major crypto hotspot, and it already serves several other countries.

This investment, however, will allow the exchange to expand into several more locations. KuCoin plans to serve over 100 different countries in the coming years. Beginning in the fourth quarter of 2018, KuCoin will begin to enter Vietnam, Turkey, Italy, Russia, and every Spanish-speaking country.

KuCoin will also use the investment to develop an enhanced trading platform, provide more customer support, and increase staff training. The company will also perform research in order to identify and provide the best blockchain investments. KuCoin’s CEO, Michael Gan, has said:

“The [investors’] combined forces … will help KuCoin grow substantially, expand understanding and adoption of cryptocurrency for millions of potential users, and help these users more efficiently find the best products available in the crypto-world no matter where on the planet they may exist.”

Suggested Reading Look at our picks for the best crypto exchanges in 2018.

KuCoin’s Investors

Neo Global Capital (NGC)’s investment in KuCoin is undoubtedly of interest to the crypto community. The group is the investment vehicle of NEO, a leading cryptocurrency. Apart from backing NEO itself, NGC has also funded several other noteworthy crypto projects such as Ontology and Zilliqa.

In other words, NGC has expanded the blockchain ecosystem significantly, and the support of such a major crypto group could be a sign of success for KuCoin. Meanwhile, IDG Capital is known for its investments in Ripple, Coinbase, and Bitmain, while Matrix Partners has invested in a number of smaller blockchain startups.

In addition to their investments, IDG Capital will contribute to KuCoin’s marketing efforts, and Matrix Partners will provide Kucoin with support and resources. In all, this group of investors and partners is an impressive achievement for KuCoin.

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‘WebCobra’ Mining Malware is Scooping Up Zcash and Monero

‘WebCobra’ Mining Malware is Scooping Up Zcash and Monero

McAfee Labs has reported the existence of a new strain of mining malware called WebCobra. This type of software hijacks a victim’s computer resources in order to mine cryptocurrency surreptitiously. In this case, the malware mines Zcash and Monero and sends the earnings to the attacker.

These two cryptocurrencies provide significant advantages to the attackers: both Zcash and Monero are privacy coins, which encrypt transaction details and are therefore untraceable, allowing the attacker to operate secretly.

Additionally, Monero is designed to be efficiently mined on basic consumer systems — allowing CPU and GPU miners to bring in maximum profits. Monero in particular has become a go-to choice for cryptojackers.

Line of Attack

Despite its similarity to past cryptojacking campaigns, WebCobra makes some changes to the default line of attack. WebCobra, unlike previous malware, is able to choose between different mining options depending on the infected system’s architecture.

x86 systems are forced to mine Monero with the Cryptonight miner, while x64 systems are made to mine Zcash with the Claymore miner. Both Cryptonight and Claymore are legitimate mining applications, but they can be easily adapted for malicious purposes, as this case shows.

Suggested Reading : Take a look at the best Monero wallets in 2018.

Detecting the Problem

Like most cryptojacking malware, WebCobra is hard to detect, and one of the few indications that a computer is infected is reduced performance.

“Once a machine is compromised, a malicious app runs silently in the background with just one sign: performance degradation,” McAfee says.

The malware can also leave victims with a hefty electricity bill due to its constant and intensive use of the system — another potential sign of infection. Of course, an up-to-date virus scanner is useful in preventing and finding infections as well.

This is far from the first wave of cryptojacking attacks: similar malware has been distributed via Adobe updates and Steam games over the past year. In fact, the number of cryptojacking instances recently surpassed the number of ransomware instances, making cryptojacking an increasingly serious problem.

Some are attributing the rise of cryptojacking to the leak of EternalBlue, which rendered Windows vulnerable to a variety of attacks. However, crypto market prices may also influence the trend and dictate whether these attacks are profitable to attackers.

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Coinbase-Backed Startup Releases Home Cryptocurrency Miner

A startup backed by Coinbase and Arrington Ventures has launched a cryptocurrency miner for domestic use. The new device, however, won’t be powerful enough to mine Bitcoin (BTC).


Mass-Market Appeal

Coinmine — a startup ran by computer scientist Farb Nivi and industrial designer Justin Lambert — has taken the challenge to bring cryptocurrency mining to the masses. They’re set to release a new mining device called Coinmine One, which is supposedly easy to use and shouldn’t use up more electricity than a vacuum cleaner.

As they prepare it for the market, its price is set at $799. The device is supposed to use regular GPU chips and it won’t be powerful enough to mine Bitcoin (BTC) 00. However, according to the official website, it will mine four other cryptocurrencies, namely Ethereum Classic (29 Mh/s), Ethereum (29 Mh/s), Zcash (290 sols/s), and Monero (800 h/s).

It also has its own operating system which will supposedly allow owners to add other cryptocurrencies in the future.

The startup has managed to raise $2 million from recognized names such as Coinbase Ventures, Arrington Ventures, and the CTO at Coinbase, Balaji Srinivasan. According to the latter, the device presents a pure money-making opportunity:

It’s a pretty cool idea to be able to plug a device into the wall that makes money for you while you sleep. As a purely economic proposition, you’d have to balance the cost of power and the hardware device itself with the cost of the coin or token that you’d be mining. There are so many assets now that there is probably always an arbitrage somewhere.

Two-Fold Appeal

However, according to the CEO of the company Farb Nivi, the new home miner has a two-fold appeal for cryptocurrency enthusiasts:

With automatic updates, MineOS also gives access to new crypto networks like Bitcoin Lightning, Grin, Dfinity, and Filecoin. This feature ensures users do not miss out on powering the next important crypto network.

However, Coinmine will be collecting the currency on behalf of the user and storing it in wallets on its corporate servers, taking a 5% cut for the service.

It’s worth noting, though, that Coinmine One is not the first device intended for simple domestic cryptocurrency mining.

In August, BitcoinLinux reported that mining company Canaan launched a bitcoin mining television set dubbed the “AvalonMiner Inside.” The device can supposedly process 2.8 trillion hashes per second at 100W/T. , which is undoubtedly a decent power output for… a TV.

What do you think of Coinmine One? Don’t hesitate to let us know in the comments below!


Images courtesy of Fortune, Shutterstock.

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Japanese Regulator Unveils Plan to Regulate Wallet Services

Japan’s top financial regulator, the Financial Services Agency, has unveiled a plan to regulate cryptocurrency wallet services. The regulator has put forward a number of regulatory measures as well as proposing how to implement them.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
The Plan
The Financial Services Agency (FSA) held its ninth cryptocurrency study group meeting on Monday. According to the agency’s published meeting materials, one of the main topics on the agenda was a plan to regulate crypto wallet services and their providers.
Currently, Japan’s fund settlement law requires businesses conducting cryptocurrency-related activities in the country, such as buying and selling, to register as crypto exchanges with the FSA.
“Wallets are like bank accounts that store virtual currencies,” Itmedia publication elaborated. While wallet service providers “handle large amounts of virtual currencies like exchange companies,” the publication noted that “they are not targeted by laws and regulations.”
The FSA explained that the current law does not apply to wallet service providers since they do not buy or sell cryptocurrencies — they merely manage and transfer them for customers. However, since they manage payments, the agency believes that financial regulation is necessary.
The plan unveiled at the meeting focuses on service providers — not software wallet developers or hardware wallet manufacturers. Many wallets exist only as code and are without identified leadership or companies behind them.
The regulations for wallet services will be in line with the international standards for preventing money laundering and terrorism financing set by the Financial Action Task Force (FATF), the FSA detailed. The agency wrote that the “revised FATF standards” must be imposed, including their recommendations relating to crypto exchanges, wallet service providers, and initial coin offering issuers.
The Implementation
The group proceeded to discuss the risks associated with wallet services, such as stolen funds during cyber attacks, wallet failures, money laundering, and other risks shared by crypto exchanges.
Possible regulatory measures include the maintenance of internal control systems, separate management of cryptocurrencies belonging to the service providers and customers, audits of financial statements, publication of policies in the event of stolen funds in a hack and retaining funds to repay customers.
The transition period for introducing wallet regulations was also discussed. During this time, service providers would not be able to add new businesses, customers, or coins supported. In addition, they must post notices on their websites regarding their registration status. Those refusing to register must declare on their websites and “indicate that the business will be abolished,” according to the meeting document.
What do you think of Japan planning to regulate crypto wallet services? Let us know in the comments section below.

Images courtesy of Shutterstock.

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Japanese Regulator Unveils Plan to Regulate Cryptocurrency Wallet Services

Japan’s top financial regulator, the Financial Services Agency, has unveiled a plan to regulate cryptocurrency wallet services. The regulator has put forward a number of regulatory measures as well as proposing how to implement them.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
The Plan
The Financial Services Agency (FSA) held its ninth cryptocurrency study group meeting on Monday. According to the agency’s published meeting materials, one of the main topics on the agenda was a plan to regulate crypto wallet services and their providers.
Currently, Japan’s fund settlement law requires businesses conducting cryptocurrency-related activities in the country, such as buying and selling, to register as crypto exchanges with the FSA.
“Wallets are like bank accounts that store virtual currencies,” Itmedia publication elaborated. While wallet service providers “handle large amounts of virtual currencies like exchange companies,” the publication noted that “they are not targeted by laws and regulations.”
The FSA explained that the current law does not apply to wallet service providers since they do not buy or sell cryptocurrencies — they merely manage and transfer them for customers. However, since they manage payments, the agency believes that financial regulation is necessary.
The plan unveiled at the meeting focuses on service providers — not software wallet developers or hardware wallet manufacturers. Many wallets exist only as code and are without identified leadership or companies behind them.
The regulations for wallet services will be in line with the international standards for preventing money laundering and terrorism financing set by the Financial Action Task Force (FATF), the FSA detailed. The agency wrote that the “revised FATF standards” must be imposed, including their recommendations relating to crypto exchanges, wallet service providers, and initial coin offering issuers.
The Implementation
The group proceeded to discuss the risks associated with wallet services, such as stolen funds during cyber attacks, wallet failures, money laundering, and other risks shared by crypto exchanges.
Possible regulatory measures include the maintenance of internal control systems, separate management of cryptocurrencies belonging to the service providers and customers, audits of financial statements, publication of policies in the event of stolen funds in a hack and retaining funds to repay customers.
The transition period for introducing wallet regulations was also discussed. During this time, service providers would not be able to add new businesses, customers, or coins supported. In addition, they must post notices on their websites regarding their registration status. Those refusing to register must declare on their websites and “indicate that the business will be abolished,” according to the meeting document.
What do you think of Japan planning to regulate crypto wallet services? Let us know in the comments section below.

Images courtesy of Shutterstock.

Need to calculate your bitcoin holdings? Check our tools section.
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French Financial Markets Regulator Estimates ICOs Have Raised $21.9B Globally Since 2014

France’s financial markets regulator, the Autorité des marchés financiers (AMF), has published a report examining trends relating to initial coin offerings. The AMF describes ICOs as a “marginal” method of financing, estimating that the global ICO industry has raised €19.4 billion ($21.9 billion) since 2014.
Also Read: Russian Developers to Help Iran Build Its Crypto-Economy
Significant Centralization of Capital
The AMF report notes an “acceleration” in ICOs over the last two years. It estimates that €5.6 billion ($6.3 million) was raised via ICOs in 2017, equating to 1.6 percent of global equity financing for that year. Throughout 2018, the regulator estimates that ICOs have raised €13.4 billion ($15.1 billion) so far, accounting for 69 percent of the total raised by all ICOs since 2014.
The AMF report also points to a significant centralization of capital within the ICO sector. It estimates that just 17 ICOs have raised approximately 40 percent of the total sum generated by the industry thus far.
French ICOs Grab ‘Modest Share’ of Global Sector
The AMF describes French ICOs as “accounting for a modest share of this new type of financing.” The report estimates that a total of 15 ICOs have collectively raised €89 million ($100.5 million), meaning that French token sales have represented just 0.46 percent of the total sum raised by the global ICO industry.
While the majority of ICOs have focused on “blockchain or trading applications,” the AMF believes that projects are now increasingly “diversifying into other sectors.” It also notes that “most of the upcoming ICO projects” have previously raised financing through “traditional funding channels.” In addition, the AMF reports that the majority of ICOs thus far have taken place in the United States.
AMF Advocates International Regulatory Cooperation
The AMF argues that the key “success factors of an ICO” include the need for robust and transparent anti-money laundering procedures. The report also emphasizes the need for “appropriate regulation” to guide the ICO industry. The AMF claims that “given the cross-border nature of these projects, the diversity of regulatory approaches at the international level is a point of vigilance.” It adds that “in this context, international and European cooperation is essential” in the identification of fraud and the development of coherent regulatory frameworks.
Do you think that ICOs have reached their peak this year? Or is more growth in sight? Share your thoughts in the comments section below!

Images courtesy of Shutterstock, Wikipedia

At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.
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Bitcoin Price Analysis: Yearly Support Breaks as Bitcoin Tests Underlying Demand

After months and months of consolidation, the yearly support finally broke and now bitcoin has found itself in the lower $5000s for the first time since 2017:Figure 1: BTC-USD, Daily Candles, Broken SupportBitcoin managed to drop a staggering 16% yesterday as the market sliced through the long held support like a knife through butter. The high volume and wide candle spread does not bode well for the bulls as we are currently witnessing an excess of supply in the market. We have blown through two levels of support and haven’t seen a significant retest just yet:Figure 2: BTC-USD, Daily Candles, Support Levels (shown in blue)Figure 2 shows the next levels of support below us, but it seems for now we are content to consolidate at the $5400 level. The $5400 is pretty interesting because that is when the market went from being parabolic to *super* parabolic as the market took off on what’s referred to as a “hypodermic trend.” It’s when the market experiences parabolic blow-off toward the end of its parabolic cycle and the market actually breaks north of its parabolic curve. Almost one year to the day, we have found ourselves positioned at the exact same price it was previously. It was this time last year that we saw the major leaps and bounds in price as the market accelerated upward, following a strong round of media coverage over the winter holiday season.Something quite alarming for the bitcoin bulls is this massive descending triangle that broke downward yesterday:Figure 3: BTC-USD, Daily Candles, Descending Triangle (shown in red)Over the entirety of 2018, the market consolidated in a pattern called a “descending triangle.” Typically, if a triangle breaks downward, it will be seen as a trend continuation to most traders and they are likely to short the asset. In our case, the trend continuation would be a downward continuation. It’s unclear where the actual market will lead, but the blue levels outlined in Figure 2 and the 78% Fibonacci retracement shown above are likely to entice some of the more patient bulls that sat out most of 2018. It’s still very early to tell whether the market will see a strong continuation or if the market is just attempting to find its floor. We will know more with the weekly close.Summary:The yearly support finally broke down as bitcoin shoved down a staggering 16% in one day.The move is still fresh, but the market is attempting to test support as the bulls decide whether they want to start a strong round of buying. One thing is clear though: Supply is very present.The breakdown of the descending triangle shown in Figure 3 is a sell signal for traders, as it typically is a sign of a trend continuation. The breakout is still fresh, so we will need to check back on the market to gather further insight.Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on BitcoinLinux and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on BitcoinLinux.

Miner Abandons Swedish County, Leaves $1.5M in Unpaid Electricity Bills

Two mining companies with operations in Sweden have reportedly abandoned their facilities in the country’s northernmost county of Norrbotten. One of the companies, U.S. miner NGDC, appears to have suddenly fled from the area, leaving $1.55 million in unpaid electricity bills in its wake.
Also Read: Seba Crypto Eyes Swiss Bank License, Independent Reserve Integrates Tax Tool
US-Based NGDC Bails on $1.55M Power Bill
According to Sveriges Radio, Miami-based NGDC ceased operations in the municipality of Älvsbyn after having its power cut by Swedish electricity supplier Vattenfall. NGDC owes 14 million Swedish kronor ($1.55 million) to Vattenfall, with the company’s lawyer, Fredrik Sundin, stating that the utility is actively pursuing the matter. “In all judgments, the prospect does not seem so brilliant, but we will do what we can of course,” Sundin said.
Helena Ohlund of the Älvsbyn municipal council stated that the local authorities have been unsuccessful in their attempts to contact NGDC.
Increasing Power Costs Drive Mining Exodus
Another mining company, Chasqui Tech, has reportedly abandoned its plans to establish a bitcoin mining farm in Kalix, Norrbotten county. The municipality is now seeking half a million Swedish kronor ($55,000) in unpaid rental fees from the company.
Patrik Ohlund, the chief executive officer of The Node Pole, a data center development hub in Sweden, said that he believes several factors could be driving these sudden departures. He has speculated that the cryptocurrency bear market and a jump in Swedish electricity prices — partly caused by the past summer’s drought — have created “problems” for a number of mining companies with operations in the country.
However, Ohlund remains upbeat about the future prospects of Sweden’s cryptocurrency mining industry. He said that he “would not be surprised to see a doubling” in the number of data centers operating in Sweden. He estimated that there are already roughly 50 such facilities in the country at present.
Last month, London-based MGT Capital Investments also announced that it had entered into a hosting agreement that would see the company relocate approximately 6,300 S9 Antminers that are currently housed in Sweden to a facility in Colorado Springs. Stephen Schaeffer, the chief operating officer of MGT Capital Investments, stated that the company hopes to complete the move and recommence mining at full capacity “before the end of December.”
Do you think that mining companies will continue to leave Sweden? Share your thoughts in the comments section below!

Images courtesy of Shutterstock

At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.
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