Casey Wagner

After months of delays due to an alleged lack of cosponsors, Sens. Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan., have reintroduced their crypto anti-money laundering bill.



This time, the bill features an even greater emphasis on targeting individual industry members, such as miners and validators.&nbsp;



The Digital Asset Anti-Money Laundering Act of 2023 aims to bring “crypto participants” — defined in the bill as wallet providers, miners and validators — under compliance requirements for financial institutions. If the bill passes, these entities will have to file reports for any transactions exceeding $10,000 and report any activity that could signify money laundering or tax evasion.&nbsp;



Opponents of the <a href="https://www.warren.senate.gov/imo/media/doc/Digital%20Asset%20Anti-Money%20Laundering%20Act%20of%202023.pdf">bill</a> argue that these players are not equipped to follow such requirements and doing so would hinder their ability to conduct business.&nbsp;



“Treating these entities commensurate with the largest banks, hedge funds, and money transmitters would weigh them down with unnecessary compliance, stifle innovation, hinder industry growth, and force activity offshore to jurisdictions with less adequate security and oversight,” the Chamber of Digital Commerce wrote in a <a href="https://digitalchamber.org/statement-on-digital-asset-aml-act/">statement</a> opposing the legislation.&nbsp;



The bill also requires anyone in the US with more than $10,000 in crypto held in accounts outside of the US to report this to the Financial Crimes Enforcement Network (FinCEN).&nbsp;



Warren and Marshall first <a href="https://www.congress.gov/bill/117th-congress/senate-bill/5267/committees">introduced</a> a version of the bill late last Congressional session, but the text never made it to committee markup. The two <a href="https://blockworks.co/news/warren-crypto-bill-delayed">recruited Sens. Joe Manchin, D-W.V., and Lindsey Graham, R-S.C.</a>, as cosponsors on the revamped bill.&nbsp;



The Digital Asset Anti-Money Laundering Act of 2023 is similar to the Crypto Asset National Security Enhancement Act of 2023, <a href="https://blockworks.co/news/bipartisan-bill-defi-project-controllers">introduced in the Senate earlier in July</a>. The latter bill also enjoys bipartisan support, sponsored by Sens. Jack Reed, D-R.I., Mark Warner, D-Va., Mike Rounds, R-S.D., and Mitt Romney, R-Utah.&nbsp;



Reed’s bill puts a greater emphasis on DeFi and bringing the industry under existing Bank Secrecy Act and sanctions requirements. Warren and Marshall’s effort focuses on redefining “financial institutions” and bringing crypto under this umbrella.&nbsp;



Both bills have been referred to the Senate Committee on Banking, Housing and Urban Affairs, although neither has been scheduled for a markup.



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Dueling crypto anti-money laundering bills face off in the Senate

Sebastian Sinclair

The majority of crypto-related equities finished up in positive territory last week, with US-traded mining firms gaining distance from historical lows set at the end of last year.



Bitcoin is also pushing for further gains on the day after closing the session roughly 3.2% higher to $23,800 Sunday, while its market capitalization also leaped 3.3% to $458.6 million.



Ether clocked a higher daily close above $1,645, gaining 4.5% alongside a $10 billion uplift to its market value. Bitcoin and ether are now up 43.9% and 37.6% year-to-date respectively.



Bitcoin miners continue to rise alongside market sentiment, witnessed by the positive jump in spot prices for digital assets as the beleaguered sector takes stock of a shifting risk-on attitude.



Hong Kong-based Bit Mining (BTCM), listed on the New York Stock Exchange, posted a Friday close of 7.6% to $3.55 while Chinese miner SOS ADR, also listed in New York, rose almost 2%.



NASDAQ-listed mining firms Bitfarms, Stronghold Digital, Cipher Mining, Cleanspark and Bit Digital rose between 2.8% and 16.6% on Friday.



Marathon Digital and Iris Energy were the US’s main outliers in the bitcoin mining category, shedding 8.3% to $8 and 4.3% to $2.10 respectively by the end of last week’s closing bell.&nbsp;



Greenidge Generation Holdings, which also fell 0.8% on Friday, has begun to reverse prior losses, with a 2.6% gain in after-hours trading to $0.90.



Prices for most US-traded miners have more than doubled this year, following daily lows set at the end of 2022. It comes as the average mining difficulty for bitcoin hit a new all-time high beginning Jan. 18 — now 41% greater than a year ago, <a href="https://ycharts.com/indicators/bitcoin_average_difficulty#:~:text=Bitcoin%20Average%20Difficulty%20is%20at,41.09%25%20from%20one%20year%20ago.">data from YCharts</a> show.



Global hashrate — a measure of bitcoin network security — hit a fresh all-time high on Friday at 316 exahashes per second (EH/s), while miners have until Feb. 11 before the next <a href="https://www.coinwarz.com/mining/bitcoin/difficulty-chart">difficulty adjustment</a> will make it an estimated 4.3% harder to mine.



Both a rise in the price of bitcoin and <a href="https://www.reuters.com/business/energy/us-wholesale-power-prices-broadly-expected-fall-this-year-2023-01-10/" target="_blank" rel="noreferrer noopener">anticipation</a> of cheaper power prices this year are beginning to erase previous sector sell-offs that had begun amid last year’s Q2 market rout.



Read more: <a href="https://blockworks.co/news/bitcoin-mining-nuclear-energy">Going Nuclear: Bitcoin Mining’s Potential Energy Future</a>



Other sectors across the industry also posted positive gains Friday, with exchanges Coinbase (COIN) and Robin Hood (HOOD) up 15.7% and 7.8% respectively. COIN has <a href="https://blockworks.co/news/coinbase-stock-soaring">continued to outperform</a> both the broader tech sector and bitcoin, up an eye-watering 80% since the new year began.



<a href="https://twitter.com/MacroAlf/status/1619380322004766721" target="_blank" rel="noreferrer noopener">Analyst fears</a> over a global recession remain firmly entrenched, with several leading indicators now pointing to declining economic growth in the second quarter of this year.



The impact for risk-on assets, such as crypto, would likely result in further market sell-offs as traders seek to book profits and allocate capital into cash, large market cap equities and gold.



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Bitcoin Price Boosts Miners, as Hashrate Climbs

David Canellis

Bitcoin miners are facing a tough few weeks ahead as meager prices threaten to render the network service unfeasible for anyone but the largest operators.



After shedding a quarter of its value throughout the FTX saga, the price of bitcoin is hovering around $16,300, down 66% year to date. Electricity prices —- which directly impact bitcoin mining profitability — in the US have jumped by about 13% in that time.



Bitcoin fading as electricity rates spike is obviously bad for miners: It can turn bitcoin mining into a loser’s game. One calculator offered by <a href="https://insights.braiins.com/en/cost-to-mine" target="_blank" rel="noreferrer noopener">Braiins</a> shows the cost of producing 1 BTC with a top-of-the-line Bitmain Antminer S19j is currently $34,732 — more than double bitcoin’s price.&nbsp;



And that’s based on electricity prices at $0.06 per kilowatt hour; the US Bureau of Labor Statistics <a href="https://www.bls.gov/regions/midwest/data/averageenergyprices_selectedareas_table.htm" target="_blank" rel="noreferrer noopener">reported</a> a national average at $0.166 last month. Data visualization portal <a href="https://en.macromicro.me/charts/29435/bitcoin-production-total-cost" target="_blank" rel="noreferrer noopener">MacroMicro</a> shows a lower global average cost, around $22,300, still 37% above bitcoin’s current price.&nbsp;



Although, some large scale mining operations are vertically integrated. Firms like Greenidge control their own power sources, which makes the whole process significantly cheaper.&nbsp;



Still, margins are thin across the board; one indicator built by investment unit Capriole <a href="https://twitter.com/caprioleio/status/1594671729917714437" target="_blank" rel="noreferrer noopener">measures</a> the ratio of bitcoin sold from miner reserves to their overall balance — it has jumped 500% in the past month, now at its highest reading in years.



“Higher equals more selling. We also sum the miner output over 30 days and compare it to average miner reserves held over the last 30 days, we think it highlights high miner selling very well,” Charles Edwards, founder at Capriole, told Blockworks.



Bitcoin miners have indeed been selling regularly, but the total sum of their treasuries has more-or-less held steady this year. In fact, miners together hold 8,184 more bitcoins than at the start of 2022, per CryptoQuant.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="988" height="546" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg" alt="" class="wp-image-39902" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=988 988w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/bitcoin-miner-reserve-cryptoquant.jpg?w=50 50w" sizes="(max-width: 988px) 100vw, 988px" /><figcaption>Source: <a href="https://cryptoquant.com/" target="_blank" rel="noreferrer noopener">CryptoQuant</a></figcaption></figure>



Capriole’s indicator may be picking up a round of dumps, just as crypto reckoned with the impending collapse of FTX and its ensuing contagion. Bitcoin miners collectively sold 4,502 BTC between Nov. 7 and Nov. 8, according to CryptoQuant, a haul potentially worth up to $93 million.



Bitcoin’s price collapsed 24% around the same, dropping from $20,600 to under $15,800. Measuring miners’ direct impact on that move is difficult, but it’s clear that capital preservation is front-of-mind.



Bitcoin miners still hold more than 1.85 million BTC worth about $30.5 billion, representing almost 10% of the supply.&nbsp;



Loans backed by bitcoin miners to buy more bitcoin miners



Another spanner: A raft of major operators took out <a href="https://blockworks.co/news/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage" target="_blank" rel="noreferrer noopener">high-interest loans</a> — in many cases backed by mining rig inventories — at the peak of the bull market last year. Sky-high prices made it en vogue to acquire as many mining rigs as possible, as quickly as possible.&nbsp;



Those inventories have since been delivered and are now mining away in hopes of actually paying for them — giving us the unusual mix of record high hashrate and crumpled prices.&nbsp;



Indeed, Bitcoin’s current thunderous hashrate is fueled by a fiscal need to generate revenue as soon as possible to pay back decisions made more than one year ago. This has driven mining difficulty (which impacts the odds of successfully mining bitcoin) through the roof while vaporizing operational margins.



Bitcoin miners have faced the grim reality of paying back those loans in a bear market for months now. Core Scientific, one of the largest miners in the industry by hashrate, <a href="https://www.cnbc.com/2022/10/27/bitcoin-miner-core-scientific-warns-it-might-go-bankrupt-stock-plunges.html" target="_blank" rel="noreferrer noopener">warned the SEC</a> last month that it would not be able to meet its loan obligations and could go bankrupt.



Core Scientific is now selling more bitcoin than it creates to stay afloat, having cashed in most of its bitcoin stash over the past few months. The firm has reported $435 million lost in the year’s third quarter, bringing its year-to-date damage to $1.7 billion​​ and share prices losses to 98%.



Iris Energy, a smaller but sizable operation, <a href="https://www.sec.gov/Archives/edgar/data/1878848/000114036122042419/ny20005141x6_6k.htm" target="_blank" rel="noreferrer noopener">disclosed</a> default on loans worth $108 million this week. The firm has switched off mining rigs it used as collateral for expansion loans, similarly on the brink of bankruptcy.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" src="https://flo.uri.sh/visualisation/11930341/embed#?secret=42JEnL4ykK" data-secret="42JEnL4ykK" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption>Bitcoin’s hashrate often falls when the price does. Not this time.</figcaption></figure>



Even diamond-handed Marathon <a href="https://ir.marathondh.com/news-events/press-releases/detail/1288/marathon-digital-holdings-announces-bitcoin-production-and#:~:text=The%20Company%20has%20not%20sold,to%20fund%20monthly%20operating%20costs." target="_blank" rel="noreferrer noopener">warned</a> shareholders earlier this year that it might start selling its mighty bitcoin stash, having historically projected intentions to hold indefinitely. The firm has mostly financed itself on stock sales and other debt raises, <a href="https://markets.businessinsider.com/news/currencies/marathon-digital-stock-price-bitcoin-bond-sale-proceeds-sec-subpeona-2021-11" target="_blank" rel="noreferrer noopener">including</a> a $500 million bond sale last November, as bitcoin was retreating from all-time high.



Todd Esse, co-founder at mining investment firm HashWorks Digital Industries, expressed to Blockworks that the next 30 days will prove critical for bitcoin miners just holding on.



“I think we’re getting to a point where we’re going to start seeing a lot of rings dropping off over the next 30 days, if we stay down at this level or go even lower,” Esse said, adding that he sees room for only two large mining outfits to retain the bulk of their bitcoin.



Falling energy prices could offer bitcoin miners a glimmer of profitability, albeit distant. “The market is being very selective about who can fit in right now, and it’s very tight.”



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Bitcoin Price Drop Tests Miners’ Diamond Hands

Ben Strack

<div id="highlights-block_6369589c19e80" class="highlights">
 
</div>



A range of bitcoin miners are set to report third quarter results in the coming days as several companies in the mining sector are struggling to cope with financial pressures. 



Marathon Digital, Stronghold Digital Mining and Hut 8 Mining are among the companies in the space set to host earnings calls this week.&nbsp;



While analysts are not necessarily expecting big pronouncements of bankruptcies or acquisitions during industry players’ upcoming calls, they will be listening for how mining executives intend to navigate the current environment.



“I’m always listening for cues on expectations — company-specific and industry-specific — and specific companies’ moves to address their expectations,” Kevin Dede, senior technology analyst at HC Wainwright &amp; Co. told Blockworks.



<a href="https://cms.blockworks.co/crypto-miner-consolidation-imminent-as-some-industry-players-struggle/" target="_blank" rel="noreferrer noopener">Industry watchers told Blockworks</a> earlier this month that miner consolidation is imminent, as some of the larger miners in the space could look to scoop up struggling companies and their assets. 



But Lucas Pipes, managing director at B. Riley Securities, said miners in a solid financial situation are still likely to take a wait-and-see approach.&nbsp;



“They want to make sure they’re all secured and shored up and build that treasure chest to the extent they can,” he said. “Are you going to have exceptions to this rule? Yeah, you might.”



<h3 class="wp-block-heading">Keeping bitcoin mining rigs humming during crypto winter </h3>



Core Scientific revealed in <a href="https://d18rn0p25nwr6d.cloudfront.net/CIK-0001839341/5d07f815-c426-4db9-b79a-a38d616cf35a.pdf" target="_blank" rel="noreferrer noopener">filings</a> last month <a href="https://cms.blockworks.co/core-scientific-stock-price-plummets-70-as-it-considers-bankruptcy/" target="_blank" rel="noreferrer noopener">it was considering bankruptcy</a>, and Argo Blockchain followed by saying a potential capital injection of $27 million it was expecting <a href="https://cms.blockworks.co/crypto-miner-consolidation-imminent-as-some-industry-players-struggle/" target="_blank" rel="noreferrer noopener">had fallen through</a>. 



“The space is distressed,” Pipes said. “There’s no other way of putting it.”&nbsp;



Dede added that as it becomes harder to raise money in public markets, miners are being forced to purge assets.&nbsp;



Core Scientific said Monday that it sold 2,285 bitcoins at an average price of $19,639, as proceeds totaled roughly $45 million. The company held 62 BTC and about $32 million in cash, as of Oct. 31.



Core Scientific and Argo Blockchain have not yet listed earnings call dates.&nbsp;



Iris Energy is <a href="https://cms.blockworks.co/bitcoin-miner-iris-energy-says-its-bad-debt-contained-in-rotten-arms/" target="_blank" rel="noreferrer noopener">also in financial distress</a>. The Australia-based bitcoin miner said in an SEC filing last week that it can generate $2 million in monthly gross profit by mining bitcoin, while monthly principal and interest repayments on its debt stands at $7 million.



Bom Shin, vice president of corporate finance at Iris Energy, told Blockworks last week that the company’s debt is structured within a number of special-purpose vehicles (SPVs), which had a market value worth about 35% less than its principal loans outstanding as of September’s end.



The company was engaged in ongoing discussions with its unnamed lender, Shin added.



Iris Energy said that if it is unable to restructure the loans, two of its SPVs would have to default on the loans, which would likely result in the lenders foreclosing on the mining rig collateral, according to a Nov. 3 research note by Compass Point Research and Research analysts Chase White and Joe Flynn.



The analysts added that while Iris Energy’s stock price dropped following the news — and that the company may have a hard time getting equipment-backed financing in the future — they believe the company will be in a better financial situation after its negotiations with its lenders.



“We believe the market misunderstands the implications of the situation, which we see as a potentially significant positive for [Iris] that will allow it to continue to operate without the burden of expensive debt,” White and Flynn said.&nbsp;



In addition to the more recent struggles in the space, crypto mining data center operator <a href="https://cms.blockworks.co/compute-norths-business-goes-south/" target="_blank" rel="noreferrer noopener">Compute North filed for bankruptcy</a> in Texas in September.



Dede said he expects it will take a bit more pressure before more bankruptcies and consolidation take shape.



“You can expect to see some suffering for a while, I think,” he added. “I’m in no position to say how long this bear market lasts, but people who are running these companies should position themselves to endure a lengthy one.”



<h3 class="wp-block-heading">The space’s potential acquirers could wait to buy&nbsp;</h3>



Marathon Digital posted <a href="https://cms.blockworks.co/crypto-miner-marathon-digital-posts-192m-net-loss-in-q2/" target="_blank" rel="noreferrer noopener">a net loss of $192 million</a> during the second quarter and is set to report its third quarter earnings on Tuesday at 4:30 p.m. ET. 



The company said on Nov. 2 that it added about 32,000 miners last month to raise its hashrate to roughly 7 exahashes per second (EH/s). It also produced a record 615 bitcoins in October, increasing its total holdings to 11,285 BTC.



Marathon seeks to hit roughly 13 EH/s by the end of 2022 and 23 EH/s by mid-2023, Marathon CEO Fred Thiel told Blockworks.



Thiel said last month that Marathon would keep an eye on cheap assets from struggling miners. He noted that the company could look to purchase a hosting site, for example, if such a buy made strategic sense.



Riot Blockchain is another company that has expressed interest in acquisitions, as CEO Jason Les called his firm <a href="https://cms.blockworks.co/riot-blockchain-ceo-firm-is-one-of-mining-spaces-best-positioned-acquirers/" target="_blank" rel="noreferrer noopener">one of the segment’s “best-positioned acquirers.”</a>



The company produced 509 bitcoins in October and held 6,825 BTC, as of Oct. 31. It seeks to reach 12.5 EH/s during the first quarter of 2023. Riot has a special meeting of stockholders set for Nov. 17.



Frank Holmes, executive chair of HIVE Blockchain Technologies, <a href="https://cms.blockworks.co/ex-eth-miner-hive-blockchain-eyes-buying-opportunities-post-merge/" target="_blank" rel="noreferrer noopener">told Blockworks</a> in September that his firm would be evaluating buys of equipment, and potentially mining firms, over the next six months. 



Cleanspark said on Nov. 1 that it acquired 3,843 units of Antminer S19J Pro bitcoin mining machines for $5.9 million. The machines appeared to have come from Argo Blockchain, which reported selling the same number of S19J Pro units last week.&nbsp;



Pipes said though he believes “we’re getting close” to seeing more mergers and acquisitions in the space, there are often relatively few operational synergies to take advantage of.&nbsp;



He added that Riot is likely in the best financial situation of any miner, while Marathon is also in a position to take advantage of opportunities. But, he noted, those companies may want to focus on their ambitious hashrate targets.



“I think it’s first things first — execute on the existing growth plan before you take precious capital to add in more growth that may not be as attractive as what you have planned for anyways” Pipes said.&nbsp;



<h3 class="wp-block-heading">Other miners to keep an eye on</h3>



After Marathon’s earnings call on Tuesday, Stronghold Mining and Hut 8 Mining are scheduled to host their own on Wednesday at 5:00 p.m. ET and Thursday at 10:00 a.m. ET, respectively.&nbsp;



Canada-based miner Bitfarms is set to report its third quarter results on Nov. 14 at 11 a.m. ET



Stronghold said last week that it eliminated all outstanding principal — totaling about $67 million — under its equipment financing agreements with NYDIG and The Provident Bank.&nbsp;



Stronghold CEO Greg Beard said in a statement that the company was rapidly deleveraging its balance sheet and enhancing liquidity to pursue acquisitions of bitcoin miners at attractive prices. Stronghold had roughly $30 million of liquidity in cash and bitcoin, as of Nov. 1.



Meanwhile, Hut 8 Mining produced 299 bitcoins in October to raise its holdings total to 8,687 BTC. Its installed hashrate capacity was 3.07 EH/s at the end of the month.



Hut 8 CEO Jaime Leverton said during Blockworks’ Digital Asset Summit in September that acquisitions are not necessarily the best thing in the current market environment, as the company can buy new machines at attractive prices.



Bitfarms, <a href="https://cms.blockworks.co/crypto-miner-bitfarms-sells-half-its-bitcoin-to-reduce-debt-boost-liquidity/">which resorted to selling bitcoin</a> earlier this year, mined 486 BTC in October and sold all of it.



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What To Expect on Miners’ Q3 Earnings Calls As Industry Remains ‘Distressed’

Shalini Nagarajan

<div id="highlights-block_632d78358acb9" class="highlights">
 <ul>
 <li>Low bitcoin prices and rising energy costs have hurt mining companies</li>
 <li>Daily revenue for bitcoin miners has fallen 70% since the peak of November 2021, Arcana Research data showed</li>
 </ul>
 
</div>



Crypto mining data center operator Compute North filed for bankruptcy in Texas, marking the latest victim of the bear market environment marred by a steep drop in bitcoin prices and rising power costs.



The <a href="https://www.scribd.com/document/596161089/178148591946#from_embed" target="_blank" rel="noreferrer noopener">petition</a> was filed on Thursday in the Southern District of Texas US bankruptcy court.



According to the filing, the Minnesota-based firm owes as much as $500 million to a minimum of 200 creditors. Its assets are worth between $100 million to $500 million.&nbsp;



Under its estimation of available funds, Compute North stated that it would have no capital to distribute to unsecured creditors after payment of administrative expenses.&nbsp;



Compute North began in 2017 as a crypto mining firm, but changed its focus to providing co-location hosting services in 2018.&nbsp; In March, it grew to 100 employees and in April, it launched a 300-megawatt data center in Granbury, Texas, its website shows.



The firm last raised <a href="https://www.crunchbase.com/organization/compute-north" target="_blank" rel="noreferrer noopener">$385 million</a> in debt financing in February, according to Crunchbase data. Mercuria, National Grid Partners and Generate Capital are among its investors.&nbsp;



Faltering bitcoin prices and increasing power costs have hurt crypto miners’ profitability, with many <a href="https://cms.blockworks.co/the-days-of-lucrative-bitcoin-mining-at-home-are-over/" target="_blank" rel="noreferrer noopener">at-home miners</a> who once minted money from their own garages finding they’re now struggling.&nbsp;



<a href="https://arcane.no/research/bitcoin-mining-profitability-falls-to-2020-levels?utm_source=substack&amp;utm_medium=email" target="_blank" rel="noreferrer noopener">Arcane Research</a> noted that daily revenue for bitcoin miners fell over 10% in the last week, generating $17.9 million per day — the lowest level since November 2020. That’s down from revenues of $62 million a day at the peak of the crypto bull market in November 2021.



Delays caused by Compute North’s energy provider prevented one of its biggest clients, Marathon Digital, from activating its mining machines for months, earlier this year. Marathon held about <a href="https://ir.marathondh.com/news-events/press-releases/detail/1292/marathon-digital-holdings-reports-second-quarter-2022" target="_blank" rel="noreferrer noopener">40,000 mining machines</a> in the firm’s West Texas facility, which had a 280-megawatt bitcoin mining facility.



Compute North and Marathon Digital didn’t return Blockworks’ request for comment by press time.



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Compute North’s Business Goes South

<div id="highlights-block_6319cf930ce42" class="highlights">
 <ul>
 <li>Amplify Investments’ Transformational Data Sharing ETF (BLOK) is down roughly 50% year to date</li>
 <li>Though Defiance is bullish on crypto long-term, CEO says being short crypto firms will provide the best downside protection in the current environment</li>
 </ul>
 
</div>



ETF provider Defiance has launched a fund that bets against the blockchain industry by holding short positions in the largest blockchain ETF in the US.



As the industry grapples with the downturn in crypto and traditional markets, the Defiance Daily Short Digital Economy ETF (IBIT) seeks daily inverse returns of Amplify ETFs’ Transformational Data Sharing ETF (BLOK).



The fund group <a href="https://cms.blockworks.co/defiance-plans-etf-that-bets-against-crypto-industry/" target="_blank" rel="noreferrer noopener">had revealed plans</a> to launch IBIT in April.&nbsp;



The new fund enters short positions of the actively managed BLOK fund, which includes top holdings Core Scientific, Silvergate, Accenture, IBM and Overstock.com, as of Wednesday.



BLOK has returned about 26% since its inception in 2018, but the fund is down roughly 50% year to date and about 15% in the past month. The ETF has about $540 million in assets.



Though Defiance remains bullish on the growth of crypto over the next few years, CEO Sylvia Jablonski said in a statement, the executive pointed to the recent layoffs and revenue losses around the industry.



<blockquote class="wp-block-quote">“We believe shorting positions such as Coinbase, Galaxy and Robinhood, along with those involved in the metaverse — like Meta and Roblox — will provide the best downside protection in the current environment,” she added.</blockquote>



Coinbase is down about 73% year to date, while Galaxy Digital and Robinhood’s stock price has dropped roughly 70% and 47%, respectively, so far in 2022.



When the Federal Reserve stops hiking interest rates and inflation starts to wane, investors are likely to dip their toes back into crypto, Jablonski told Blockworks.



“Investors are taught to have well diversified portfolios, a barbell approach, or hedges for tough times,” she said in an email. “Having a product available to cover the crypto space in this same spirit could be very advantageous to traders and investors alike.”



Defiance has seven ETFs trading in the US with roughly $1.2 billion in combined assets, according to ETF.com. Its largest is its Next Gen Connectivity ETF (FIVG), which has gathered nearly $1 billion in assets since its March 2019 launch.



The firm in December launched the <a href="https://www.defianceetfs.com/nftz/" target="_blank" rel="noreferrer noopener">Defiance Digital Revolution ETF</a> (NFTZ), which invests in companies with exposure to NFTs, blockchain and cryptocurrency. Like BLOK, NFTZ has Silvergate as a top-five holding, alongside Marathon Digital, Draftkings, Cloudflare and Robinhood.&nbsp;



NFTZ, which has gathered just $6 million in assets during its time on the market, is down about 63% so far this year.



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Defiance Debuts ETF To Short Blockchain Companies

<div id="highlights-block_62cd3f5c96f4f" class="highlights">
 <ul>
 <li>Portfolio manager Steve Russell said he believes banks with crypto and blockchain-related plans are currently oversold</li>
 <li>Fund has decreased positions in miners “significantly” since the beginning of the year</li>
 </ul>
 
</div>



Community banks and other financial services companies are not halting plans to delve deeper into the blockchain and crypto spaces despite ongoing volatility in the sector, according to co-portfolio manager of Emerald Mutual Funds’<a href="https://www.emeraldmutualfunds.com/emerald-finance-banking-innovation-fund" target="_blank" rel="noreferrer noopener"> Finance and Banking Innovation Fund</a> (HSSAX).



As funds with exposure to crypto-focused companies and others with plans in the space grapple with cryptoassets’ latest downturn, Steve Russell and his team have discovered finance firms looking to use distributed ledger tech for payments, support the Lightning Network or have a presence in the metaverse.&nbsp;&nbsp;



HSSAX launched in 1997 and had about $116 million in assets under management as of June 30. Russell noted that the fund targets banks that are lending to crypto or blockchain companies, or ones that are creating their own tokens.



It also focuses on banks using blockchain-based real time payments platform Tassat to offer customers instantaneous and secure payments. Customers Bank and Tassat <a href="https://www.customersbank.com/investor-relations/press-releases/press-release/6b0dbbb4-fa4c-4721-8b0c-3ace54fec043/" target="_blank" rel="noreferrer noopener">launched</a> the Customers Bank Instant Token (CBIT), on TassatPay last October, for example.



“Not all of them have necessarily turned their whole business plan towards utilizing distributed ledger technology or being involved in cryptocurrencies for payments, but are certainly aware of it and moving in that direction ahead of their peers,” Russell said of the companies in the portfolio.



The portfolio manager noted that the mutual fund’s objective makes it unique from many of the ETFs that focus primarily on the same crypto stocks, such as miners and exchanges. Though the fund holds such companies, Russell said, the firm has decreased its positions in miners “significantly” since the beginning of the year.



The Emerald Finance and Banking Innovation Fund’s <a href="https://www.emeraldmutualfunds.com/holdings/emerald-finance-banking-innovation-fund" target="_blank" rel="noreferrer noopener">top holdings</a>, as of May 31, were Customers Bancorp, Coastal Financial, Triumph Bancorp, Bancorp Inc. and Finwise Bancorp. 



It also had crypto-centric investments, including miners Marathon Digital Holdings and Riot Blockchain, Silvergate Capital, the Grayscale Bitcoin Trust (GBTC), Galaxy Digital, Coinbase, and Voyager Digital, which <a href="https://cms.blockworks.co/voyager-files-for-bankruptcy-days-after-freezing-withdrawals/" target="_blank" rel="noreferrer noopener">filed for Chapter 11 bankruptcy</a> last week after suspending trading and withdrawals on its network.



Though Russell declined to comment on specific companies, he noted that the continued fallout from the crash of TerraUSD (UST) and LUNA, as well as <a href="https://cms.blockworks.co/3ac-files-for-bankruptcy-as-co-founders-location-unknown/" target="_blank" rel="noreferrer noopener">Three Arrows Capital filing for bankruptcy</a>, will likely lead to the fund continuing to exit or adjust certain positions.



Though roughly 70% of the smaller community banks Russell and his team speak to do not have plans within, or even knowledge about, crypto or blockchain, many banks remain interested in exploring the space even as crypto market remains volatile. 



Russell expects more banks to get involved in blockchain for mortgage-related activities. Figure Lending and Apollo <a href="https://www.prnewswire.com/news-releases/figure-and-apollo-execute-mortgage-transactions-using-blockchain-technology-to-transfer-ownership-301504772.html" target="_blank" rel="noreferrer noopener">completed a transaction in March</a> involving the origination of digital mortgage loans and transfer of ownership via blockchain technology.



“They’re never going to be the leader in introducing technology,” he said of banks. “They want to follow somebody.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Read on for more excerpts from Blockworks’ interview with Russell:&nbsp;



Blockworks: How does the current turmoil in crypto markets impact how you think about managing banks with indirect exposure to the sector? The crypto-focused firms?



Russell: Those companies that were just getting started in the space…they’re moving forward with their plans. The market reacts to a lot of these names as if their earnings are based off of the price of bitcoin, which has nothing to do with their earnings and how they generate revenue.



We think a lot of these banks have been oversold…so we think there are some attractive entry points into some of these names.



Obviously, something like the exchanges that are out there, those have traded down for good reason. The quarter-over-quarter and even month-over-month trading volumes, you’ve seen them down 30%. That’s going to obviously affect their bottom line, so as those fundamentals weaken, it makes sense that people sell those names.



But it does get to a point where you have to decide when you’re looking at your valuation to start slowly going back into those names because some of the valuations are very attractive.&nbsp;



Obviously the Three Arrows situation, what we’ve seen with Terra Luna and how much bitcoin was used as collateral to leverage that trade up in the market obviously has created fall-out for several firms across the board and created some bankruptcies and firms that will close. I don’t think we’ve seen the full results of how bad that is.



Blockworks: What about crypto miners? How are you evaluating them right now?



Russell: You’re going to have a shakeout here we believe over the next year or 18 months, closer to the halving in 2024 where it’s a decision of miners with better balance sheets and positioned strategically well on whether they acquire.



It’s an interesting time for miners and we think it’ll be a smaller amount of players that really end up coming out on the back end of this. It’s all about do you have your energy cost locked in? Can you finance this growth? Everyone put out these great growth numbers. Half of them are never going to come close to that.



It reminds me a lot of investing during the dot-com days. While there were a lot of losers during the dot-com bubble, there were certainly winners, and it was our job then to find more winners than losers.”



We thought the profitability would be deteriorating here for a little bit, so we’ll reduce those positions as necessary. Already there are a couple miners that have gotten to pretty attractive valuations and we may start to increase [exposure to those] a little bit. But we want to get a little more clarity on where we’re going with some of the pricing and profitability in the sector.



Blockworks: What sort of conversations are you having with banks?



Russell: They talk about their future exposure to the metaverse and wanting to have a presence in the metaverse. They talk about payments and utilizing distributed ledger technology. They talk about being able to offer trading to their clients on the institutional side as well as the retail side.



They talk about how transactions will be settling utilizing blockchain and distributed ledger technology. They’re aware of the Lightning Network and they talk about how they can become a part of providing that infrastructure to help the Lightning Network succeed.



Those discussions and that research we do is really key. It’s not like you’re just going to be able to look at someone’s 10-K [disclosure form] or someone’s quarterly report and say hey, these guys are focused on the space.



Blockworks:&nbsp; What sort of regulation do you have your eye on?



Russell: We’re always trying to go where we think the puck is going. We think the best way to get adoption in this sector of blockchain and cryptocurrencies comes with regulation. We think a lot of that regulation is going to be geared towards banks and financial services companies that already have regulators in place.



We think the first things banks understand are stablecoins. So if you get clarity on stablecoins, I think that these early adopters will roll out various payment products, accounts receivable, accounts payable products for their customers and their commercial industrial borrowers.



They’re already trying to understand <a href="https://www.frbservices.org/financial-services/fednow/about.html" target="_blank" rel="noreferrer noopener">FedNow</a>, but FedNow is not the technology that gets them to where stablecoins can. They understand payments and the need for efficient transactions, and then we think they’ll start to understand smart contracts that can utilize stablecoins and be able to implement frictionless transactions that can happen 24/7, 365. &nbsp;



Blockworks: As a fund that owns GBTC, what do you make of the SEC denying Grayscale’s attempt to convert its bitcoin trust into an ETF?



Russell: We try to be long-term investors with three- to five-year investment horizons. When I look at GBTC, I think it eventually becomes an ETF and the discount to [net asset value] is attractive. It’s like owning a closed-end fund. They always trade at a discount, so that’s not unusual in the space.



It would just be nice if the SEC was consistent with how they are examining a spot ETF for bitcoin with how they examine or look at proposals of spot ETFs for other commodities. If you said this is a commodity, which they have, then why isn’t it treated like any other spot ETF proposal for any other commodity?



This interview has been edited for length and clarity.



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Q&A: Community Banks Moving Forward With Crypto Plans Despite Downturn, Portfolio Manager Says

<div id="highlights-block_62bcde198fccc" class="highlights">
 <ul>
 <li>The crypto miner said it would miss its annual filings deadline by more than two weeks</li>
 <li>As a result of the delay, HIVE has asked securities regulators across Canada to bar certain employees from trading in its stock</li>
 </ul>
 
</div>



Publicly traded crypto miner HIVE Blockchain Technologies on Wednesday asked securities watchdogs in Canada to bar executives from trading in the company&#8217;s stock due to a delay in its financial statements.



HIVE — a&nbsp;crypto mining firm utilizing hydroelectric power across Canada, Sweden and Iceland — is expected to file its annual filings for the fiscal year by July 15 instead of the originally expected date of June 29.



Audited financial statements, chief executive and chief financial officer certifications and management discussion, as well as analysis, make up the majority of HIVE&#8217;s annual filings.



As a result of the delay, HIVE is asking regulators across all provinces and territories of Canada to issue a temporary order inhibiting directors, officers and insiders from trading in HIVE equities. Once the filings are finalized, the prohibition against company employees is expected to lift.



HIVE&#8217;s share price has since tumbled more than 10% on the day from 4.42 Canadian dollars ($3.43) to $4.01 Canadian dollars, exchange data show.



The firm is blaming a &#8220;combination of factors,&#8221; including a shorter filing deadline for non-venture issuers, a rapid increase in the company’s growth and an increase in the number of transactions resulting from that growth.



&#8220;The company does not anticipate such difficulties with future filings and has made arrangements to satisfy the shorter filing periods for future year-ends, including hiring additional finance staff,&#8221; HIVE said in a statement.



Founded in 2013, HIVE went public in 2017 via the Toronto Stock Exchange, and, at the time, touted itself as the first crypto mining company with a &#8220;green energy and ESG strategy&#8221; to do so. The company recently sold roughly 10,000 ether in a bid to scoop up Intel&#8217;s bitcoin mining rigs amid <a href="https://cms.blockworks.co/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage/" target="_blank" rel="noreferrer noopener">declining prices</a> in a contracting crypto market.



HIVE said it intends to provide updates on a bi-weekly basis, in accordance with national policy, until the filings are completed.



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Blockchain Miner HIVE Asks Canada Regulators To Bar Execs From Trading Stock

<div id="highlights-block_6201855325a4b" class="highlights">
 <ul>
 <li>Firm’s upcoming ETF to follow launches of its Bitcoin Strategy ETF (BTF) and Balance Sheet Opportunities ETF (VBB)</li>
 <li>The fund is set to have Argo Blockchain and Bitfarms as its top two holdings</li>
 </ul>
 
</div>



Valkyrie Investments is set to launch an ETF focused on bitcoin mining operators with an emphasis on sustainability.



The Valkyrie Bitcoin Miners ETF (WGMI) will begin trading Tuesday on the Nasdaq. It invests in publicly traded miners using renewable energy as their primary energy source and carries an expense ratio of 75 basis points. WGMI is short for “WAGMI,” crypto nomenclature for “we’re all gonna make it.”



Roughly 77% of the energy consumed by the companies in the ETF — on a portfolio-weighted basis — is from renewable energy sources such as solar, wind, hydropower and geothermal. Most are US-based businesses, although some are headquartered in Canada and the UK.



“We have found that mining companies that went the extra step here, versus carbon-neutral pledges or other initiatives, tend to maintain a lower overhead because renewable energy often costs less than other sources,” Valkyrie Funds CEO Leah Wald told Blockworks. “This tends to raise profitability.”



Registered investment advisors (RIAs), financial advisors and other market participants are looking to invest in pockets of the digital assets industry “in a climate-conscious manager,” Wald said.



“We believe that bitcoin miners are leading the green energy revolution and that providing more access to people seeking opportunities to align with environmentally friendly companies can only serve to help make the environment cleaner,” she said.



Argo Blockchain and Bitfarms are set to be the top holdings in WGMI with a 10% portfolio weighting. Other top holdings include Cleanspark, Hive Blockchain Technologies and Stronghold Digital Mining.



Argo and Bitfarms mined 172 bitcoin and 301 bitcoin, respectively, in January.



Based in London, Argo Blockchain last year committed to being “climate positive” by 2030.



“We’re pleased to see another crypto mining ETF approved, especially one that has a sustainability focus,” Argo Blockchain CEO Peter Wall told Blockworks in an email. “We think there is a strong market for investors in the sector as a whole, but especially for environmentally focused miners.”



Bitfarms has five facilities in Quebec and acquired a 24-megawatt (MW) hydropower farm in Washington in November. It also began operating a 10-MW farm in Paraguay last month. Each facility is powered with 99% hydropower.



Valkyrie’s new product follows <a href="https://cms.blockworks.co/viridi-launches-first-us-clean-energy-crypto-mining-etf/" target="_blank" rel="noreferrer noopener">the launch</a> of Viridi Funds’ Cleaner Energy Crypto-Mining &amp; Semiconductor ETF (RIGZ) in July. The fund costs 90 bps and has $11 million of assets.



RIGZ has Bitfarms and Argo Blockchain as its third- and fourth-largest holdings, allocating about 8.8% and 6.6%, respectively to the miners, as of Feb. 7. Investments in Marathon Digital and Hut 8 Mining account for a combined 20% of the portfolio.



The WGMI launch comes after Valkyrie <a href="https://cms.blockworks.co/valkyrie-bitcoin-futures-etf-launch-confirmed-for-friday/" target="_blank" rel="noreferrer noopener">launched its Bitcoin Strategy ETF</a> (BTF) — primarily investing in bitcoin futures contracts — in October. The fund group also brought to market its Balance Sheet Opportunities ETF (VBB) in December. The offering invests in the stocks of companies with exposure to bitcoin.



BTF has about $40 million assets under management, while VBB has less than $1 million.



The Securities and Exchange Commission denied Valkyrie’s proposal to launch an ETF that would invest in bitcoin directly in December. The agency has rejected the applications from a handful of other issuers, <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">leaving uncertainty</a> around when it will OK such a product.



“We have a number of ideas we are currently exploring based on feedback from stakeholders, investors and other partners,” Wald said, declining to comment further.



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Valkyrie To Roll Out Green Bitcoin Mining ETF on Nasdaq

Sam Martin

<div id="highlights-block_617725d07bf3f" class="highlights">
 <ul>
 <li>Bitcoin miners are accumulating BTC at record pace</li>
 <li>Perpetual funding rates remain neutral despite increase in exchange leverage ratio</li>
 </ul>
 
</div>



Bitcoin was last trading near $51,500, up over 10% over the last seven days according to data from <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">Coingecko</a>.



Bitcoin miners are accumulating BTC at a record pace.



Some BTC metrics signal that caution is warranted at current price levels. 



Perpetual funding rates are neutral, implying no bias toward the upside or downside. 



<h3 class="wp-block-heading">Latest in Macro:</h3>



<ul><li>S&amp;P 500: 4,791, +1.38%</li><li>NASDAQ: 15,871, +1.39%</li><li>Gold: $1,812, +0.15%</li><li>WTI Crude Oil: $76.01, +3.01%</li><li>10-Year Treasury: 1.477%, -0.016%</li></ul>



<h3 class="wp-block-heading">Latest in Crypto:</h3>



<ul><li>BTC: $51,134, -0.40%</li><li>ETH: $4,070, -0.80%</li><li>ETH/BTC: 0.0796, -0.66%</li><li>BTC.D: 40.00%, -0.22%</li></ul>



<h3 class="wp-block-heading">Bitcoin miners are confident</h3>



Bitcoin was last trading near $51,500, up over 10% over the last seven days according to data from <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">Coingecko</a>.



&#8220;Miner Reserves, Mean Coin Age, and the Hashrate continued trending higher as BTC price fell. This is a very bullish signal indicating older coins and miners are not aggressively distributing during the sell off. The increasing Hashrate is a sign of Miner’s confidence in the network. Even with a 39% pullback over a month, Miners continued to add hash further securing the network,&#8221; <a href="https://cryptoquant.com/quicktake/61c5f3fb1924fb052c763cb9-Onchain-and-Technical-Bullish-Divergence-Suggest-Bottom-Likely-In?utm_source=twitter&amp;utm_medium=sns&amp;utm_campaign=Quicktake&amp;utm_content=DanBTC916" target="_blank" rel="noreferrer noopener">wrote</a> @DanBTC916, an Analyst at CryptoQuant.



Noelle Acheson, head of market insights at Genesis, took to <a href="https://twitter.com/NoelleInMadrid/status/1475549438970052609?s=20" target="_blank" rel="noreferrer noopener">Twitter</a> noting similar observations: &#8220;We’ve seen a flurry of announcements recently about BTC miners’ plans to increase capacity *significantly* over the coming months. An often-overlooked detail is that this is being done with bank- or market-based financing.&#8221;



Noelle continued, &#8220;Miners turning to financing vehicles for expansion means that they don’t need to sell their BTC. Indeed, miner unspent supply (new BTC held rather than sold in the market) last week reached an all-time high.&#8221;



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png" alt="" class="wp-image-13183" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/miner-activity-1024x576.png?w=1800 1800w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Glassnode</figcaption></figure></div>



<h3 class="wp-block-heading">Signs that caution is warranted</h3>



The BTC:all exchanges estimated leverage ratio, which is the amount of open interest across all exchanges divided by their BTC reserves, is hovering near annual highs. This suggests that there could be one last flush out of leveraged players before BTC can make another run.



<a href="https://cryptoquant.com/quicktake/61c5bfbec96eb030c8ad50f0-Close-to-a-bull-trap-before-pushing-up-again?utm_source=twitter&amp;utm_medium=sns&amp;utm_campaign=Quicktake&amp;utm_content=DELOREANKT" target="_blank" rel="noreferrer noopener">According</a> to CryptoQuant analyst, Marc Deloreankt, we have two bad signals near the corner:



<ul><li>1st: Big leverage ratio. The biggest one in two years. So soon, we probably will have a drop, or long liquidation to clear retail investors in next days.</li><li>2nd: No big bank outflows since last drop on May &#8217;21. This is not normal and this is another bad sign.</li></ul>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="488" height="490" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png" alt="" class="wp-image-13189" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png?w=488 488w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png?w=256 256w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png?w=260 260w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png?w=218 218w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-2.59.51-PM.png?w=80 80w" sizes="(max-width: 488px) 100vw, 488px" /><figcaption>Source: CryptoQuant</figcaption></figure></div>



On a positive note for the bulls, perpetual funding rates are essentially neutral which signals little bias towards the upside or downside on BTC.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="626" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg" alt="" class="wp-image-13190" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=420 420w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=427 427w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=358 358w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/funding-rates-1024x626.jpg?w=1106 1106w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: @eliasimos</figcaption></figure>



<h3 class="wp-block-heading">Google search interest for Bitcoin</h3>



Jameson <a href="https://cms.blockworks.co/jameson-lopp-doesnt-want-to-be-found/" target="_blank" rel="noreferrer noopener">Lopp</a>, co-founder and CTO at Casa Hodl, <a href="https://twitter.com/lopp/status/1474796466304659457?s=20" target="_blank" rel="noreferrer noopener">wrote</a>, &#8220;Countries with the highest relative search interest for Bitcoin have changed significantly from 2020 to 2021! While it&#8217;s no surprise to see El Salvador at #1, it&#8217;s notable that it wasn&#8217;t even on the list of 66 countries for which Google logged search interest in 2020. El Salvador surged from 150th to 1st place for relative Bitcoin search interest in 2021.&#8221;



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="411" height="262" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/google-trends.png" alt="" class="wp-image-13194" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/google-trends.png?w=411 411w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/google-trends.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/google-trends.png?w=403 403w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/google-trends.png?w=409 409w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/google-trends.png?w=344 344w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/google-trends.png?w=80 80w" sizes="(max-width: 411px) 100vw, 411px" /><figcaption>Source: Google Trends</figcaption></figure></div>



<h3 class="wp-block-heading">NFTs</h3>



Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found below:



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="401" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png" alt="" class="wp-image-13195" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.00-PM-1024x401.png?w=1227 1227w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="338" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png" alt="" class="wp-image-13196" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-27-at-4.56.08-PM-1024x338.png?w=1247 1247w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure></div>



If you made it this far, thanks for reading! I am looking forward to catching up tomorrow.



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Bitcoin Climbs Higher: Markets Wrap

<div id="highlights-block_61c4e71ea46b2" class="highlights">
 <ul>
 <li>The returns of Amplify Investments’ Transformational Data Sharing ETF (BLOK) total about 35% in the trailing year, while bitcoin’s price is up 115% over that time</li>
 <li>The stock prices of companies NVIDIA and Silvergate have both surged by about 130% in the past 12 months, according to Google Finance data</li>
 </ul>
 
</div>



With no ETFs available in the US that invest directly in cryptocurrencies, some investors have sought exposure to digital assets through funds holding stocks considered to be correlated to the crypto and blockchain spaces. 



But how did the returns of such ETFs &#8211; and the companies they hold &#8211; compare to bitcoin itself?



Bitcoin’s price has increased by about 115% in the past 12 months, as of 3:30 pm ET on Dec. 23, according to CoinGecko. It stood at about $51,150 at that time.



Amplify Investments’ Transformational Data Sharing ETF <a href="https://amplifyetfs.com/blok.html">(BLOK)</a>, which has more than $1.3 billion assets, primarily invests in companies developing and using blockchain technologies. 



BLOK’s top 10 holdings are NVIDIA Corporation, Coinbase, Silvergate, CME Group, SBI Holdings, MicroStrategy, Galaxy Digital, PayPal Holdings, Hut 8 Mining Corp and Hive Blockchain Technologies.&nbsp;



The fund has returned nearly 35% in the trailing 12 months, as of Dec. 22, according to FactSet data.&nbsp;



Amplify’s offering launched in January 2018, just days before two competing funds: the Siren Nasdaq NexGen Economy ETF (BLCN) and the First Trust Indxx Innovative Transaction and Process ETF (LEGR). 



BLOK’s year-to-date returns compare favorably to BLCN and LEGR, which have roughly $260 million and $145 million assets under management, respectively. BLCN has returned 8.1% over the last year, while LEGR’s returns over that span total about 19.6%.



Nate Geraci, president of The ETF Store, told Blockworks that <a href="https://cms.blockworks.co/gap-wide-between-best-and-worst-performing-blockchain-etfs/" target="_blank" rel="noreferrer noopener">the performance of various blockchain ETFs</a> has been “a mixed bag,” but called the returns of such products disappointing overall.



“The universe of blockchain ETFs has mostly underperformed the spot price of bitcoin, in some cases rather significantly,” Geraci said. “Unfortunately, the SEC has allowed these products to proliferate instead of approving a spot bitcoin ETF – a disservice to investors seeking bitcoin price exposure in their existing brokerage and retirement accounts.”



More recently launched ETFs that hold crypto-related stocks include Bitwise Asset Management’s Crypto Industry Innovators ETF (BITQ), which launched in May, and Invesco’s Alerian Galaxy Crypto Economy ETF (SATO), which began trading in October.



BITQ, which has roughly $125 million in assets, has returned -24% in the last month, while SATO, which has about $10 million assets, has returned -22%. Bitcoin’s price is down about 10% from 30 days ago, Coingecko data shows.



<h3 class="wp-block-heading">Individual stocks </h3>



California-based NVIDIA is a technology company that sells crypto mining products. The company’s stock price, which has a roughly 5% weighting in BLOK’s portfolio, was up 128% from 12 months ago, as of Thursday afternoon, according to Google Finance data.&nbsp;



Like NVIDIA, Silvergate has also seen its stock price rise more than bitcoin over the past year, surging by 134%. Bitcoin mining companies Marathon Digital and Hut 8 Mining have seen their stock prices increase by 250% and 244%, respectively, from 12 months ago.



The stock prices of CME Group, SBI Holdings and MicroStrategy have increased by about 37%, 2%, and 74%, respectively, over the span.



MicroStrategy held about 121,000 bitcoin, <a href="https://cms.blockworks.co/microstrategy-announces-new-414-4m-bitcoin-buy/" target="_blank" rel="noreferrer noopener">as of the end of November.</a>



Coinbase <a href="https://cms.blockworks.co/coinbase-direct-listing-shares-are-limited-demand-is-high/" target="_blank" rel="noreferrer noopener">went public in April</a>, becoming the first cryptocurrency exchange platform to do so. Its stock price is up roughly 16% in the last six months, according to Google Finance, while bitcoin’s price is up about 60% over that period. 



Bill Miller, the founder, chairman and chief investment officer of Miller Value Partners, said during a conversation with author William Green in October that Coinbase <a href="https://cms.blockworks.co/bill-miller-is-willing-to-go-over-the-waterfall-with-bitcoin/" target="_blank" rel="noreferrer noopener">could be “the default position for growth investors”</a> that want exposure to the crypto market without investing directly in crypto assets. 



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