SOMETHING’S BREWING.
The Merge continues shaking the industry which waits for it in anticipation. Celsius Network is facing even more financial troubles. Bitcoin miners are having a bad time.
It’s that time of the day - the time for I, the one and only Crypto Owl, to break the world’s speed records of arriving at your mailboxes. The hottest crypto info is here; let’s dive straight into it.
On Today’s Menu:
🍲 BOWL OF RAMEN: Coinbase to temporarily halt Ethereum deposits and withdrawals
🍝 RAVIOLI: Celsius gets approval to sell Mined Bitcoin
🍹 ICE TEA: Largest Bitcoin miners not having a good time
🧁 LOVELY CUPCAKE: Top crypto news
COINBASE TO TEMPORARILY SUSPEND ETH
In an official announcement, Coinbase stated how they plan on temporarily suspending Ethereum-based (ETH and ERC-20 token) deposits and withdrawals “as a precautionary measure” during the Merge. Although Coinbase reassures that the Merge ‘is expected to be seamless from a user perspective, they still believe such measures are necessary to avoid unexpected troubles that may or may not affect Coinbase’s systems.
For those who may find this worrisome, Coinbase says that “your assets will be safe and secure during this period, and no action is required to upgrade on your part.”
What does this mean in practical terms?
Essentially, trading services will remain as they were, except ETH and ERC-20 tokens will be off the table. And since everything is changing in the crypto world, the date of when the Merge is expected to take place has also changed - but instead of being delayed, today, it’s expected to take place around September 15th. Until then, customers will have to wait for updates that Coinbase will announce “on our Twitter and Statuspage as more information becomes available.”
There must be something that people don’t like about this
Of course, there is. One ‘minor’ detail about Coinbase implementing such ‘pauses’ is the fact that those customers who have staked their ETH on Coinbase won’t be able to un-stake their ETH assets until early 2023. Well, this means that… the supposedly ‘decentralized’ crypto is again being handled by a third party - the centralized crypto exchange company. Therefore if you go on Twitter, it won’t take long until you’ll find people ranting about “Coinbase holding people’s ETH hostage”. Because what if… Did someone want to sell their ETH right after the Merge? Un-stake it, and then sell it. Well, not on Coinbase, not anymore.
CELSIUS TO SELL MINED BITCOIN
In one of the most notable cases of crypto downfalls in 2022, the crypto lender Celsius Network is making headlines again. The bankrupt company has some updates. They just disclosed that they’re running out of money… But they received several cash-injection proposals and won approval from a judge to sell bitcoin that they mine themselves. What does this mean?
First of all, Celsius got notorious after they froze withdrawals. This was explained to be a response to extreme market conditions.’ Nevertheless, it turned out that, in reality, they ran out of cash and jumped straight into a liquidity crisis. Today, it’s being reported that they’re almost $3B in debt.
After all this stuff came to light, Celsius sold their bitcoin reserves to help fund and allow their operations to continue. But the money gained by selling those BTC was not endless, and today they’re announcing that by October 2022, they’re very likely to run out of cash. So that’s why this update made the news. Judge allowing them to continue selling newly-mined bitcoin will (probably) help them continue with their operations and, potentially, save the crypto world from witnessing a considerable mess getting even messier.
TROUBLE IN BITCOIN MINING PARADISE
The news broke out about how the U.S. largest bitcoin miners felt during the 2022 crypto crash. Spoiler alert: it wasn’t a pleasant experience for them. It’s reported that the top 3 US publicly traded BTC miners lost over $1 billion in the second quarter of 2022. The companies in question are:
Marathon Digital Holdings Inc. (net losses of $192 million)
Riot Blockchain Inc. (net losses of $366 million)
Core Scientific Inc. (net losses of $862 million)
Now, these are painful numbers. Yet this is not too unexpected. This situation is just an indifferent reflection of reality in the wake of bitcoin losing almost 60% of its value during the turbulent months. The industry bleeds, and the industry giants suffer blood loss. Sounds grotesque, but it kinda makes sense, doesn’t it?
Many of these mining pools became prominent thanks to loans, which they then used to install all the required machinery. Yet after the price of bitcoin fell… the loans did not. And because of the general downfalls climate, these companies continued mining bitcoin, but the newly-extracted bitcoins were not enough when valued in dollars.
This translates to the fact that repaying debts got way more complicated. And all the equipment they use also needs maintenance and constant updating, which does not come for free. So, having added up all these different variables, the result you get is a loss of over $1 billion.
Quite obviously, losses like this are unsustainable. Therefore seeing such headlines like ‘Bitcoin Miners Are in Distress’ is not surprising. If things don’t change… this will result not only in a hit but in a K.O for these giants.
NOT EVERYONE KNOWS ABOUT THIS
There are those who like to read. And then there are those who like to watch. Watch Youtube videos. Like the latest light bulb from IKEA, an idea popped into our collective mind. Maybe some of our newsletter’s subscribers happen to be Youtube people as well?
Because what we’re trying to say here is that we’ve got an entire Youtube channel dedicated to analyzing, commenting and discussing various crypto-related topics. From NFTs to A.I., from art history to stagflation, you’re sure to find something for your tastes there. So, from now on, you’ll know - Crypto Owl is not only a writer, but it’s also a video-making machine!
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Disclaimer: This newsletter is strictly educational. None of this information is intended to be financial advice. Always do your research and act responsibly with your profits.