Welcome to Around the Blockchain, Huobi Learn’s daily rundown of the crypto markets.
Residents of Svaneti, Georgia, have reportedly been made to take a holy oath not to mine cryptocurrency, in order to curb energy shortages attributed to Bitcoin mining. In the face of COVID-19 driving down tourism spending (the main contributor to Svaneti’s economy), hundreds of residents started mining crypto to get by. Free electricity in some parts of the mountainous northwest region made this avenue particularly attractive but crypto mining has allegedly caused severe electrical supply disruption. Subsequently, on 30 Dec 2021, miners were seen filling a church in Svaneti to pledge a holy oath — considered an unbreakable bond — to St. George to stop mining crypto.
Microsoft is acquiring gaming giant Activision Blizzard Inc. for $69 billion as part of a plan to ramp up its gaming and Metaverse plans. The deal, which will close in the 2023 fiscal year, will make Microsoft the third-largest gaming company by revenue, behind Tencent and Sony. It will also support the expansion of the firm’s services across mobile, PC, console and cloud gaming. The acquisition will see Activision Blizzard CEO Bobby Kotick remain in charge until the deal closes, after which Microsoft Gaming CEO Phil Spencer will take over.
Miami-based fintech startup Milo is introducing what it claims to be world’s first “crypto mortgage”, which will entail the digital bank letting crypto investors leverage their digital assets to buy real estate in the US. Currently, only customers using Bitcoin (BTC) as collateral can qualify for Milo’s 30-year mortgage loan, though it’s unclear how much BTC is needed to secure a loan. Milo states on its website: “Instead of selling your crypto for a down payment to qualify for a mortgage, a crypto mortgage lets you leverage your crypto to invest in real estate.” The company said it has already approved several loans in its early access stage, and expects most applicants on its waiting list to be able to use the service this year.
The UK government has announced plans to implement new rules — to be enforced by the Financial Conduct Authority (FCA) — on cryptocurrency advertising to “protect consumers from misleading claims”. The government said in its announcement that the promotion of qualifying crypto assets “will be subject to FCA rules, in line with the same high standards that other financial promotions such as stocks, shares, and insurance products are held to”. As it is, businesses in the UK are not permitted to promote any financial product unless authorized by the FCA or Prudential Regulation Authority (PRA), or unless a firm authorized by the FCA or PRA approves the content of such a promotion.
Despite the sharp sell-off in crypto prices, Bitcoin miners are still generating significant profits, according to Christopher Brendler, an analyst from Wall Street investment firm DA Davidson. He wrote that while hash price ($/TH/day) had fallen from above $0.40 to $0.22 since the late Oct peak, “gross margins remain quite healthy, around 85% down from 91% at peak”. He also noted that a dip in bitcoin prices, along with investors’ sudden change in risk appetite, had caused the sell-off in the mining stocks, but he remains bullish on the miners as he believes their fundamentals are still “excellent” even as their valuations have overcorrected. He further said that weakness in bitcoin price should drive inefficient miners out of the market.
Show me the money
According to data from Huobi Global, BTC rebounded strongly overnight but with stronger pressure above 42,700, it did not manage an effective breakthrough and is now near 42,400, with daily charts showing signs of a downward trend. ETH rallied overnight to settle near 3,180 and like BTC, daily charts show signs of a down-trend.
Huobi Futures data showed that in terms of contracts, BTC futures saw a slight increase in open interest (OI), with stable volume and a somewhat inactive contract market. ETH futures, on the other hand, saw a slight decrease in OI. Like BTC futures, however, volume remained stable and the contract market relatively inactive.