Crypto Update: ETH mining at the edge

Cryptocurrencies 7 minutes to read

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. 
XBTUSD
Source: Coinmarketcap.com

Saxo Bank A/S - Representative Office
Boulevard Plaza - Tower 1
30th floor, office 3002
Dubai Downtown, Burj Khalifa area
Dubai
UAE

UAE

Trade responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.