Tuesday, September 27, 2022

Bitcoin Mining: Proof of Work Still Controversial in the EU and the United States

Lina Eldeeb, is a research associate at 21.co, a crypto asset manager from Switzerland. In this guest post she looks at The Merge of Ethereum, Proof of Work, and further developments in NFT and DeFi.

The crypto assets market was already developing better thanks to today’s scheduled merger. You can follow the current situation here and read more about the impact in our in-depth guide.

on-chain indicator

Figure 1: Bitcoin Mining Difficulty

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Quayle: Glassnode

Since August 29, bitcoin mining difficulty, or “difficulty” in technical jargon, has risen nearly 10%. This is the highest jump in the network since May 2022. While this indicator is not directly proportional to the cryptocurrency’s returns, an increasing difficulty indicates that the bitcoin network is attracting more miners, thereby becoming stronger and more secure in terms of computing power.

Will proof of work be banned in the EU?

unemployment rate in America rose to 3.7 percent in August, indicating a normalization in the US job market after unusual macroeconomic factors such as the impact of COVID-19 and Russia’s invasion of Ukraine.

In addition, declared himself China The Russian gas company is willing to pay Gazprom in rubles and yuan for future natural gas transactions. As Europe buys as much Russian oil as possible to stock up ahead of an import ban that goes into effect in December, talks about proof-of-work mining are heating up:

The European Union

French legislators are taking action against proof-of-work mining, arguing that it is a waste of energy. The EU meeting apparently took place in Brussels on Monday. Although not much was revealed about the outcome of this meeting, the POW story may be in rough times – especially if proof-of-stake mining has proven itself in practice.


Based on an executive order from President Joe Biden, the White House has released a report on crypto mining. As a result, energy consumption and environmental standards set by authorities such as the Environmental Protection Agency and the Department of Energy must be disclosed. The report could have been more comprehensive if it mentioned improvements to mining hardware that could increase energy efficiency and reduce consumption, noise and water waste. Additionally, the report failed to differentiate between proof-of-work mining of Bitcoin and Ethereum. The latter runs on an ASIC-resistant network, which means it consumes about 200 percent less power. (ASIC refers to hardware that was built specifically for crypto mining, which supports mining monopolies)


Meanwhile, Iran is licensing crypto miners in its jurisdiction under a new regulatory framework. With this license, the country allows miners to use its mined cryptocurrency to pay for imports. The rulebook also provides for the crypto mining industry to be powered by renewable energy. According to the Cambridge Center for Alternative Finance, Iran accounts for just 0.12 percent of the world’s hash rate, due to sanctions as well as political reluctance to mine cryptocurrencies. However, it is worth noting that Iran is the world’s third largest producer of natural gas. The country covers most of its energy supply and generates additional surpluses that could potentially power a larger hash rate.

potential risks of merger

Figure 2: The roadmap for merging the Ethereum blockchain

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Quayle: @trent_vanepps (Twitter)

transition to ethereum proof of stake (PoS) and the resulting change in a sustainable blockchain crypto history. In the first phase, ETH developers did the third final testnet merge of the Shadow Fork without any problems, paving the way for changes to Proof-of-Stake. After several initial updates – including the Bellatrix update, the Paris upgrade, which both worked to merge the Ethereum mainnet and the Beacon chain – the official final phase, which took place this morning, turned Ethereum into a Proof of Stake consensus.

The excitement about the major upgrade of the network was felt immediately. This made it particularly clear Binance: The crypto exchange also offered a six percent refund for the ETH stake in the retail sector. crypto-friendly swiss SEBA-BANK However, they launched their own staking service for their institutional clients. At the same time, there is a potential risk in the event that price oracles (automated suppliers of externals, i.e. data generated off-chain) could pull data from the wrong blockchain during the transition. liquefaction In DeFi space. Crypto financial services provider Hodlnote has recognized this risk and is considering it. sales To limit the downside to your already struggling assets, reduce your current position on the deposit.

ethereum competition never sleeps

The merger does not prevent other L1 network development from proceeding at full speed.

resigned earlier Binance (token BNB) announced that it will introduce the ZK-rollup architecture to its own blockchain in early 2023 and also plans to launch a related testnet in November. The upgrade is expected to reduce gas charges and increase network capacity while processing 5-10K Txs/sec. Raise.

that close to protocol announced that it will introduce Phase II of Nightshade, a PoS mechanism with good scalability, from mid- to late September. Introducing 200 to 300 pure chunk producers (small chunks of blocks created by sharding) to link together 200 to 300 pure chunk producers in the network. This will lead to further decentralization of the network.

is in the end algorando made its latest upgrade, which now hosts stat proof. These proofs are important for improving cross-chain communication and networks from 1.5K to 6K Tx/sec.

finally learned Luna Classic a massive increase of 150 percent after 1.5 percent Discount was introduced on every on-chain transaction. The ill-fated blockchain project’s decision aims to ease the severely increased circulating supply resulting from the collapse of Terra’s UST stablecoin in May.

DeFi – Web3 . decentralized finance of

Figure 3: Weekly Performance of the Top 10 DeFi Assets

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He: Coingecko

stable coins

Binance has recently taken vigorous steps to strengthen its operations. A recent decision by the crypto exchange involves automatically converting the balances of the three major stablecoins (USDC, USDP, TUSD) into their stablecoin BUSD, while allowing withdrawals in the stablecoin of choice. The move, designed to encourage more liquidity, could lead to less volatility by matching more quickly, which may have helped BUSD’s market cap recently surpassed $20 billion. Similarly, USDT is now natively supported on the Near protocol. Finally, Coinbase proposed that MakerDAO deposit its unused USDC into its top-tier vault, which generates an additional $24 million in revenue for the protocol, with a 1.5 percent annualized return.

Attempts to obtain convergence – Fraxlend. launch of

However, the most significant recent event within the DeFi industry is the launch of the forex money market platform. Dubbed FraxLend, the protocol is a permissionless lending and lending dApp that allows the use of any token issued by Chainlink’s value oracle. The entry into the money market space by native algorithmic stablecoin issuers represents a broader trend among the industry’s biggest players to consolidate all their related economic activities in a single ecosystem to achieve the greatest value. For example, additional cash flows generated by lending stablecoin FRAX currency to other DeFi projects in conjunction with the protocol’s FraxSwap will be used to buy back more shares of FXS tokens. A move that reflects decentralized lending platform MakerDAO’s strategy to burn its MKR tokens through stablecoin fees. Frakes isn’t the first to take such action. Leading currency market Aave has also entered the stablecoin space with the launch of GHO. At the same time, the leading DEX[विकेंद्रीकृत विनिमय]stables[CRV]announced that it may launch its own stablecoin before the end of September. This approach is critical for DeFi projects to develop sustainable business models that are less dependent on the issuance of new tokens and consequently better able to withstand prolonged declines on the foundations of an ever-increasing financial base.

Non-Fungible Tokens (NFTs) and Metaverse

Figure 4: NFT Trading Volume Per Series

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Source: Cryptoslam, TheBlock

New partnership with Sandbox and Ronin Networks

Sandbox made headlines when the gaming project brought the first company from Singapore into its metaverse. Singapore’s largest bank DBS will acquire land in Metaverse to develop new services for its customers. Renault South Korea also announced a partnership with Sandbox to offer its users an innovative automotive experience in the virtual world. Ford Motors also enters the metaverse with 19 trademark filings; The announcement came a month after the company cut staff drastically, aimed at slashing expenses.

Ronin Networks announced that its parent company Skymavis has partnered with Google Cloud. Google Cloud will thus become a validator of the Ethereum-linked Ronin sidechain, which runs the NFT gaming project Axi Infinity. After losing $625 million to an exploit on the Ronin Bridge in March, the partnership aims to enhance security and protect assets under management by monitoring validator uptime.

Nation World News Desk
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