Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
You can access both of our platforms from a single Saxo account.
Crypto Update: ETH mining at the edge
Jacob Pouncey
Cryptocurrency analyst, Saxo Bank
Summary: ETH mining profitability heads to zero; central banks discuss digital currencies; Bitcoin Cash is facing a hard fork.
This week the entire crypto market cap fell by 6 % to around $200 billion. Additionally, Ethereum fell 8% after briefly touching $220. Bitcoin fell less than the market with a decline of 4 %.
No profits in mining ETH
According to a recent Susquehanna research report, the profitability of Ethereum mining using graphics cards produced by chipmakers such as AMD and Nvidia has reached null. Profitability has been on the decline since the beginning of this year. Also, the network hash rate has been decreasing since August of this year, demonstrating that more miners are leaving the network than joining. Profitability combined with the decline in hash rate could indicate the approach of capitulation for the Ethereum market. Additionally, the decline in profitability could mean that the downtrend in revenue from selling graphics cards to cryptocurrency miners is approaching a bottom for chip manufacturers going forward.
Central banks mull issuing digital currencies
Central banks are increasingly exploring the implications of issuing a central bank digital currency, or CBDC, that would have certain characteristics of cryptocurrencies combined with the centrally-planned characteristics of fiat money. The Swedish Riksbank released a report detailing the implications of creating an e-krona, considering the total cash in circulation is dropping below 1% of GDP. Additionally, the Bank of Korea and the Bank of Israel have released reports, with the former more open to issuing a CDBC than the latter. Despite the range of opinions from central banks, one thing that all of them agree on is that a CBDC will have far-reaching implications for the banking sector that no one fully understands yet.
Bitcoin cash fork
There is an upcoming hard fork or network split on the Bitcoin Cash blockchain, which itself is a hard fork of the main Bitcoin blockchain. This split is particularly interesting because on one side there are nodes, which are computers that run the software, making it more robust against outages. On the other side there are miners, who make the network more secure against attacks.
Once the network splits, the market will have the first real-world test on whether it is nodes or miners that give the most value to a network. Currently in pre-market trading, investors are valuing the network split with the most nodes (users) at a 30% premium. All eyes are watching as the fork is scheduled to take place tomorrow, November 15.
No profits in mining ETH
According to a recent Susquehanna research report, the profitability of Ethereum mining using graphics cards produced by chipmakers such as AMD and Nvidia has reached null. Profitability has been on the decline since the beginning of this year. Also, the network hash rate has been decreasing since August of this year, demonstrating that more miners are leaving the network than joining. Profitability combined with the decline in hash rate could indicate the approach of capitulation for the Ethereum market. Additionally, the decline in profitability could mean that the downtrend in revenue from selling graphics cards to cryptocurrency miners is approaching a bottom for chip manufacturers going forward.
Central banks mull issuing digital currencies
Central banks are increasingly exploring the implications of issuing a central bank digital currency, or CBDC, that would have certain characteristics of cryptocurrencies combined with the centrally-planned characteristics of fiat money. The Swedish Riksbank released a report detailing the implications of creating an e-krona, considering the total cash in circulation is dropping below 1% of GDP. Additionally, the Bank of Korea and the Bank of Israel have released reports, with the former more open to issuing a CDBC than the latter. Despite the range of opinions from central banks, one thing that all of them agree on is that a CBDC will have far-reaching implications for the banking sector that no one fully understands yet.
Bitcoin cash fork
There is an upcoming hard fork or network split on the Bitcoin Cash blockchain, which itself is a hard fork of the main Bitcoin blockchain. This split is particularly interesting because on one side there are nodes, which are computers that run the software, making it more robust against outages. On the other side there are miners, who make the network more secure against attacks.
Once the network splits, the market will have the first real-world test on whether it is nodes or miners that give the most value to a network. Currently in pre-market trading, investors are valuing the network split with the most nodes (users) at a 30% premium. All eyes are watching as the fork is scheduled to take place tomorrow, November 15.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.
Disclaimer