back
Details Cookies
Hong Kong S.A.R
Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

Crypto Weekly: Global chip shortage and new applications for a Bitcoin ETF Crypto Weekly: Global chip shortage and new applications for a Bitcoin ETF Crypto Weekly: Global chip shortage and new applications for a Bitcoin ETF

Crypto Weekly: Global chip shortage and new applications for a Bitcoin ETF

Summary:  The Bitcoin price surge has contributed to multiple new applications for a Bitcoin ETF in the US. At the same time, miners are having a hard-time receiving enough mining rigs - and those having spare time are fighting against an update on the Ethereum-network.


Global chip shortage influences the Bitcoin mining industry

Over the past couple of weeks, German carmakers have reported a shortage of essential chips used in their cars, which has led to factory shutdowns and fewer cars being produced across Germany. Bitcoin and cryptocurrency miners are also reporting that the chip shortage is starting to influence them as they are a fundamental part of the mining rigs used in their operation. To make matters worse, the demand for mining rigs has surged over the past months due to the surge in cryptocurrency prices, making the shortage of mining rigs even worse. The shortage contributes to slowing down the growth in hash rate – a term used for how much computer power is used to mine cryptocurrencies. Furthermore, it makes it more difficult for smaller miners to operate, leading to a concentration of the mining power on fewer hands over time. In theory, making the network less decentralized.

Miners against the Ethereum developers

A lot is going on concerning the further development of Ethereum with the ETH 2.0 launch. However, before the network experiences the full effect of ETH 2.0, another update is in the pipeline. The update is called EIP 1559. Its purpose is to change the way users are paying miners for transactions. Going from a solely bidding model to a fixed fee – with the option to tip miners, the idea is to make the fees more predictable and less expensive. Furthermore, some of the fees will automatically be burned. The burning mechanism of transaction fees will help keep inflation at a minimum. As miners are being compensated the fees in return for processing transactions, they are – naturally – not keen on the update. One of the third-biggest pools, called Ethermine, accounting for close to 20% of the hash rate on the network, has joined several other minor pools against the update. One of the other bigger miners on the network, F2Pool, is on the other hand, voting for the update. If the miners against the update attract 51% of the hash rate to the movement, they are, in theory, able to cancel the update. It will most likely not go that far, but my main concern stretches further to ETH 2.0. If a notable group of miners are greatly against this update, what about ETH 2.0 then? ETH 2.0 will, over time, make miners completely unnecessary, not only reducing their compensation. Therefore, as we get closer, we may experience miners trying to fork Ethereum – which means copying the cryptocurrency to form a new version, just like Bitcoin Cash is a fork of Bitcoin - and by that, contribute to chaos in the community. Or will they go with the flow and let ETH 2.0 happen without any problems? Only time will tell.

The ongoing question on a potential Bitcoin ETF continues

For years, it has been a topic among cryptocurrency enthusiasts whether an American-based Bitcoin ETF would be approved or not, as many investors are preferring investing in an ETF. So far, the luck has not been with the ones hoping for this to come into effect as no ETF has been approved by the SEC, even though many firms have tried. Many firms are still hopefully submitting their application to the SEC for a Bitcoin ETF. Several companies have submitted their application last week – including a Texas-based family investment fund. However, yesterday Ark Investment Management’s CEO, Cathie Wood, said that she doubts the SEC will approve an ETF before the cryptocurrency’s market capitalization hits $2 trillion. The current market capitalization is slightly below $600 billion. Ark Investment Management is currently having over $10 billion under its management.

BTC against USD. Source: CoinMarketCap.
ETH against USD. Source: CoinMarketCap.
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.