Week in review: China turns on Bitcoin and mining, Elon Musk faces fresh criticism

Bitcoin extended its fall as mining difficulty fell by 16%, the community criticised Elon Musk’s “green” initiative, Circle attracted $440 million, and other events of the week.

Bitcoin price continued to fall, the Fear and Greed index hit a new low

Bitcoin price managed briefly to rise above the $40,000 mark, but soon the price resumed its decline.

The cryptocurrency’s market capitalisation, often referred to as digital gold, briefly rose above $1.8 trillion, but by the end of the week the figure had fallen to $1.6 trillion.

At time of writing, the top ten by market capitalisation looked as follows:

The biggest falls over the past seven days were Dogecoin and Internet Computer — -12.1% and -26.4% respectively. In the same period Cardano (+12.6%) and Binance Coin (+9.9%) gained notably.

The market capitalisation of the first cryptocurrency stands at $667 billion with a dominance index of 41.7%, according to CoinGecko.

In talks with ForkLog, most experts linked the Bitcoin correction to market overheating.

Against a backdrop of uncertainty and a sideways movement around $35,000, the crypto Fear and Greed index fell to 10.

Using Glassnode data, Morgan Creek Digital co-founder Anthony Pompliano noted that whales bought almost 122 600 BTC amid the market downturn. Major players were most active in the United States, as evidenced by a $3,000 premium on Coinbase relative to other crypto exchanges during the rebound.

Experts from Chainalysis concluded that large investors bought 77 000 BTC amid the Bitcoin price drop.

Bitcoin mining difficulty fell by 16%

Following the latest recalculation, the mining difficulty of the first cryptocurrency fell to 21.05 T. Compared with the record high reached on May 13, the metric has declined by 16%.

BTC.com forecasts a further drop of almost 16% — to about 17.72 T.

Большую часть текущего месяца хешрейт сети биткоина демонстрирует негативную динамику. Со второй половины мая интервал между блоками стабильно превышает 10 минут.

Примечательно, что падение хешрейта началось за неделю до появления новостей о намерении Китая принять жесткие меры в отношении майнинга криптовалют и торговли ими.

“Some miners began migrating from northern Chinese provinces to the hydro-powered Sichuan. Power plants in Sichuan began restricting supplies to energy-intensive sectors, including mining, due to the late rainy season this year,” commented Wolfie Zhao of The Block.

Measures to combat illegal mining in Inner Mongolia have been announced

The Inner Mongolia Reform and Development Commission presented a list of measures to combat illegal mining in relation to various organisations operating in the autonomous region.

Industrial parks and data centres will be required to curb energy use. Telecommunication companies will be barred from dealing with miners — violators may have their licenses revoked.

Criminal prosecutions will threaten miners who connect to the grid without authorisation. There will also be crackdowns on money-laundering and illicit funding involving crypto assets. Internet cafes will be shut down if mining activity is detected on their premises.

Mining-related companies and responsible personnel will be listed as unreliable. State authorities tasked with enforcing the law will target officials who support illicit activity.

Comments on the document outlining the measures will be collected until 1 June.

Miners turned to Kazakhstan

Against a backdrop of tightening in China, some miners and manufacturers began seeking alternative ways to do business:

• BIT Mining Limited invested more than $9 million in a mining centre in Kazakhstan;

• Chinese ASIC miner manufacturers announced plans to increase shipments to Kazakhstan and Canada.

Edward Evenson of Braiins told of major movements of Bitcoin mining equipment out of China.

Elon Musk faces fresh criticism

During a meeting with Elon Musk, North American mining companies decided to form the Bitcoin Mining Council. It is tasked with reducing greenhouse gas emissions by the industry.

The meeting was organised by MicroStrategy founder Michael Saylor. Attending the discussion with the Tesla founder were leaders from Argo Blockchain, Blockcap, Core Scientific, Galaxy Digital, HIVE Blockchain, Hut8 Mining, Marathon and Riot Blockchain.

According to Musk, the companies agreed to disclose data on the use of renewable energy in their operations, and to share their plans in this area. The billionaire added that they committed to urging other miners to do the same.

Many Bitcoin supporters criticised the initiative. Industry expert Ragnar Lifthrasir even called it harmful for the industry because it could enable censorship of blocks mined without using “green” energy.

Vitalik Buterin pointed out flaws in Elon Musk’s plan to scale Dogecoin

Ethereum co-founder Vitalik Buterin criticised Elon Musk for remarks about increasing Dogecoin’s scalability and reducing its network fees.

On May 16, Musk stated that Dogecoin could easily overtake Bitcoin if, in theory, it increased block production speed and block size by 10x and reduced fees by 100x.

Buterin noted that dramatically increasing scalability and throughput without sacrificing decentralisation is an extremely difficult task.

According to the Ethereum co-founder, decentralisation is necessary to avoid a single point of failure and to protect against coordinated attacks.

Almost 50 investors filed a suit against Telegram Open Network

Investors from the Disruptive Era Fund, managed by Da Vinci Capital, filed suit against companies linked to Pavel Durov’s Telegram Open Network.

A Da Vinci Capital spokesperson cited “difficult communications moments” which made it very hard for investors to decide whether to withdraw their money or convert it into a loan.

According to him, Telegram’s offer to return funds invested in TON arrived roughly 24 hours before the deadline.

PayPal and Robinhood will allow crypto withdrawals to external wallets

According to PayPal vice-president Jose Fernandez da Ponte, the ability to withdraw digital assets is under development. He did not specify when exactly it will appear on the platform.

The Robinhood chief operating officer Christine Brown said that a similar feature is under development.

Circle attracted $440 million from FTX, DCG, Fidelity and other investors

The cryptocurrency company Circle closed a $440 million funding round. Investments were provided by FTX, Digital Currency Group, Fidelity Management, Valor Capital Group and other venture firms.

The funds will be used to accelerate growth and expand the team at the issuer of the USD Coin (USDC).

Ray Dalio spoke about personal investments in Bitcoin

Bridgewater Associates founder Ray Dalio has invested in Bitcoin as the U.S. dollar loses value, creating attractive conditions for crypto investment. He noted that, in inflationary conditions, he would prefer digital gold to bonds. He did not disclose the amount.

Another billionaire, Carl Icahn, said he is prepared to invest more than $1.5 billion in cryptocurrencies. In the past, the Bitcoin sceptic noted that he views digital gold as a store of value and Ethereum — among other things — as a payments system.

JPMorgan chief Jamie Dimon urged investors to steer clear of Bitcoin

JPMorgan CEO Jamie Dimon reiterated his scepticism about digital assets during a testimony before the United States Congress’ House Committee on Financial Services.

“My personal advice to people: stay away from cryptocurrencies. That doesn’t mean JPMorgan clients won’t be able to invest in Bitcoin. I don’t smoke marijuana, but if it’s legalized at the national level, I won’t stand in anyone’s way,” Dimon said.

Hacker stole $6.2 million from Belt Finance, and BurgerSwap lost $7.2 million

A hacker stole $6.2 million from Belt Finance, a DeFi protocol built on the Binance Smart Chain (BSC). According to The Block researcher Igor Igamberdiev, the attacker used flash loans on PancakeSwap.

In total the hacker executed eight transactions. The proceeds were subsequently swapped on 1inch v3 into 2680 anyETH worth $6 million. Some funds were moved to Ethereum.

Representatives of Belt Finance said they are investigating the incident and drafting a plan to compensate victims. Asset withdrawals from BSC stores are paused until the smart contract is updated.

Two other DeFi protocols on BSC — BurgerSwap and Julswap — also came under attack using flash loans. BurgerSwap’s team said that in 14 transactions the attacker withdrew $7.2 million.

ForkLog also reported:

What else to read and watch

ForkLog explored whether Bitcoin’s network operation harms the environment, and whether ecologists and other critics of digital gold are right.

ForkLog editor-in-chief Nikita Shteringard conducted an interview with Binance founder Changpeng “CZ” Zhao. The head of Binance spoke about his unsuccessful startup from the early days, attitudes to COVID-19 vaccination, an earlier-unknown co-founder of the company and much more.

ForkLog presented a special project “Heir to Telegram Open Network: how Free TON works one year after the mainnet launch.”

The most notable recent events in the fields of artificial intelligence and the world of cybersecurity are collected in traditional summaries. An overview of the most important developments in corporate blockchain solutions covers a longer period.

On Monday, May 17, in a live stream, crypto enthusiast Vladimir Poni mayushchiy explained what it means to be a validator and how to become one, where the strongest community resides, what lies ahead for the DeFi sector, and what to expect from Ethereum 2.0.

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