In today’s bitcoin and cryptocurrency news, learn more about the Second largest cryptocurrency, Ether (ETH), was also trading a little higher at $1,195. It is connected to the Ethereum blockchain. The price of a dogecoin today is down around 1% to $0.06, while the value of a Shiba Inu has dropped to $0.000008. Meanwhile, Certik, a blockchain security firm, reports that the number of exit scams, hacks, and code attacks involving cryptocurrencies was at its lowest monthly total of 2022 in December. In the time period covered by the events, Certik said that $62.2 million was “lost to exploits, hacks, and scams.” Lastly, two large crypto lending businesses that also mined bitcoin just went out of business, and their failure can teach us a few things.
Bitcoin and Ether Make Slight Progress, but Dogecoin and Shiba Inu Lose Ground
Original Source: Cryptocurrency prices today: Bitcoin, ether gain marginally; dogecoin, Shiba Inu fall
Bitcoin surged to $16,566 today, the world’s most popular cryptocurrency. According to CoinGecko, the global cryptocurrency market valuation stayed steady at $828 billion in the previous 24 hours, remaining below $1 trillion.
Ether, the second largest cryptocurrency and tied to the ethereum blockchain, was also trading higher at $1,195. Shiba Inu gained was down at $0.000008, while dogecoin was down 1% at $0.06.
Tether, Stellar, XRP, Cardano, Litecoin, Polkadot, Uniswap, Solana, ApeCoin, Chainlink, Avalance, Polygon, and Tron values were mixed today.
As the Federal Reserve and other major central banks around the world hiked interest rates to battle record inflation, digital assets were buffeted by everything from the Fed’s policy tightening to the collapses of the Terra/Luna ecosystem, hedge funds Three Arrows Capital and exchange FTX.
The high-profile crashes of Terra/Luna and FTX sent shockwaves across the sector and emptied more than $2 trillion from the overall crypto market cap all-time high from November 2021, making 2022 the cryptocurrency winter season.
Bitcoin’s second-worst year was 2022, when it dropped over 60%. Ether dropped around 70%, while an index of the 100 biggest coins dropped 65%.
MicroStrategy Inc., the enterprise-software company that has been the largest corporate buyer of Bitcoin in recent years, disclosed a series of transactions last week, including its first token sale. MicroStrategy owns 132,500 Bitcoin worth almost $4 billion as of December 27, 2022, according to Bloomberg.
Crypto Incidents in December 2022 Reach Record Low, According to Certik
Original Source: Crypto Incidents Involving Exit Scams, Hacks, and Code Exploits Reach Record Low in December 2022 According to Certik
The amount of cryptocurrency occurrences including exit scams, hacks, and code flaws in December 2022 was the lowest of the year, according to blockchain security company Certik. Certik reported $62.2 million “lost to exploits, hackers, and scams” from the occurrences.
Cyber Attacks in December 2022 Were Record Low, Costing $62.2 Million.
Certik tweeted on December 31, 2022, that exploits, hacks, and frauds were at their lowest. Certik called it the “lowest monthly amount” of the year, with all occurrences totaling $62.2 million.
Certik reported $15.5 million in exit scams and $7.6 million in flashloan assaults. Defrost Finance was the greatest exit fraud, while Lodestar was the largest flashloan assault.
On Jan. 1, 2023, Certik reported the vulnerabilities, hacks, and scams from the previous month were caused by “23 significant assaults.” The Helio Protocol and stablecoin assault caused the most damage.
In November 2022, Certik reported “36 big assaults” that cost $595 million. The FTX breach, which occurred the day the business filed for Chapter 11 bankruptcy, was the biggest event of November 2022.
Deribit’s $28 million loss in November 2022 was second only to the FTX hack’s $477 million. Many were relieved by the decline in December 2022 after a record number of cyberattacks in 2022.
The major hacks were the FTX compromise in November 2022, Binance Smart Chain’s token hub exploit, the Ronin bridge breach, and the Wormhole exploit.
Elliptic said that $2.7 billion was stolen through decentralized finance (DeFi) protocols on December 15, 2022. In 2021, defi protocols lost $1.55 billion, according to blockchain security startup Peckshield.
Lenders Should Avoid Bitcoin Mining to Avoid Crypto Contagion
Original Source: CRYPTO CONTAGION LESSON FOR LENDERS: STAY OUT OF BITCOIN MINING
Two massive crypto loan companies that mined bitcoin collapsed, teaching us a few things.
After last year’s crypto crash, “contagion” became the most prevalent word. Investors are painfully realizing how interconnected the bitcoin business is. Incinerated hundreds of billions of dollars.
Bitcoin mining businesses have not totally avoided this. A unique mining enterprise failed spectacularly, which might teach future entrepreneurs. BlockFi and Celsius showed how crypto financing and mining may work together. Bankruptcies have occurred at both firms. How did it go?
This page discusses both organizations’ history, failures, and lessons.
Mining interests of crypto lending firms
Even the most casual crypto viewer would be aware with the two industry-leading crypto loan enterprises that went bankrupt in 2022. Both firms have large bitcoin mining operations, which may not be well recognized. BlockFi and Celsius were the leading centralized crypto lenders and bitcoin miners. Both firms and their mining teams went under.
In May 2021, BlockFi announced a cooperation with Blockstream and its mining team to start mining. Blockstream has not stated how much hash rate it manages for BlockFi, nor has it released the status of BlockFi’s hash rate at Blockstream facilities. The loan business said it saw mining as a supplement to its financial services.
As of November 2021, Celsius invested $500 million on bitcoin mining. Former Celsius CEO Alex Mashinsky stated in an older interview that the business maintained 22,000 mining equipment, majority of which were Antminer S19 variants. Mashinsky, like BlockFi, regarded his company’s mining operations as strategic.
BlockFi and Celsius were not the only startups combining mining with loans. Mining companies frequently lend their coins to trading businesses and other institutional market players. It’s logical to imagine other, smaller lending businesses have mining exposure too. But BlockFi and Celsius were unmatched in financing and mining size. Both firms went bankrupt due to FTX’s shocking collapse.
Tale of Two Bankruptcies
Celsius and BlockFi have declared bankruptcy.
Celsius halted withdrawals in June 2022. The firm declared Chapter 11 bankruptcy the following month. Machinsky unexpectedly quit in the middle of bankruptcy proceedings after taking $10 million.
Celsius Mining went bankrupt months after announcing its public offering. The corporation defended its plans to mine during bankruptcy. Celsius attributed its reorganization to its mining operations. It’s expensive to mine. According to The Wall Street Journal, Celsius Mining lost $40 million in its first two weeks of bankruptcy mining. Celsius Mining told the court it anticipated profitability by January 2023.
BlockFi filed for bankruptcy just after Thanksgiving. Its bitcoin mining efforts have not been as significant as Celsius’. No reports for this article suggest that Blockstream’s partnership with BlockFi has been terminated.
Its mining issues were not limited to BlockFi-hosted mining. The corporation loaned to other mining companies and hashed for itself. One month before filing for bankruptcy, BlockFi’s corporate account addressed this issue on Twitter. According to some accounts, BlockFi’s exposure to Core Scientific cost it up to $80 million.
WHY MINE AND LEND?
Answering why a loan firm wants to mine bitcoin is important. One such motive is: Institutions like BlockFi have low exposure to bitcoin’s parabolic upside by lending bitcoin (and other cryptocurrencies) to retail and institutional counterparties. However, its borrower clients were fully exposed to market volatility. Lenders might take on more risk and make more money by starting a mining enterprise.
But the loan industry, especially considering how certain crypto financial institutions run their books, involves significant counterparty risk and operational complexity, one would assume. Even in the best market conditions, new entrants are at a huge disadvantage in the mining industry. Since company complexity scales dramatically, running both a mining unit and a core loan operation is more harder. It’s conceivable to create a combination lending/mining firm, but an unskilled or risk-averse entrepreneur won’t succeed.
After a decade of institutionalized mining expansion, there are good reasons why most mining firms are merely mining corporations. As indicated, some miners act as lenders in restricted situations. Their main business is mining. Anything else is usually too much.
Don’t rinse and repeat.
2022 was a tough year for “crypto,” especially miners and lenders. Both famous corporations that merged the two businesses failed. Unfortunately, the “crypto” business has a goldfish-like memory and is more likely to repeat similar mistakes than learn from them. However, lenders’ methods should change and well-managed, bear-market-hardened mining businesses should rebound. If not, the anguish and suffering of the 2022 bear market was for naught.
Summary of today’s bitcoin and cryptocurrency news
To put it simply, as the largest corporate buyer of Bitcoin in recent years, enterprise software company MicroStrategy Inc. recently revealed a series of transactions, including its first-ever sale of the asset, although the company is still a net buyer. According to Bloomberg data, as of December 27, 2022, MicroStrategy had amassed a Bitcoin reserve of around 132,500 coins valued at more than $4 billion.
Meanwhile, data suggests that the greatest breaches, after the FTX attack in November 2022, were the Binance Smart Chain token hub exploit, which resulted in a loss of $569 million; the Ronin bridge breach, which resulted in a loss of $540 million; and the Wormhole exploit, which resulted in a loss of $326 million. Elliptic reported on December 15, 2022, that $2.72 billion was stolen from DeFi (decentralized financial information) systems. Peckshield, a blockchain security company, predicted that $1.55 billion will be stolen using DEFI protocols in 2021.
Lastly, “Crypto” suffered in 2022, notably miners and lenders. Both high-profile firms that merged the businesses went bankrupt. Unfortunately, the “crypto” business has a goldfish-like memory and tends to repeat mistakes. However, well-managed, bear-market-hardened mining businesses should rebound, and lenders should change their methods. Otherwise, the 2022 bear market agony was pointless.