Bullish optimism is brimming in the Bitcoin world. Bitcoin price has been on a tear recently. Everybody and their grandmother want a piece of the limited supply.
After price quickly spiked to high $12ks, it looks more likely than ever that the ~$14k high of Q2 2019 can be reclaimed. If this is reclaimed, speculators will certainly be eyeing up all-time highs.
Expect a lot of leverage to enter the market if $14k is reclaimed with volatile movements naturally accompanying such leverage. We recently launched our market analysis series with an exploration of how demand-supply dynamics in Bitcoin are shaping up.
In our inaugural release, we revisit the entry of significant demand-side players like Square and MicroStrategy. We compare this to the supply-side and consider if more publicly-listed firms will enter the market.
Read more: Bitcoin Demand-Side Strengthens as MicroStrategy and Square Enter Market
Market Movements – Miner Margins Widen as Price Increases Outsize Difficulty Growth
Since the Sunday open, Bitcoin price has increased by roughly 14%. With the latest difficulty adjustment on Saturday increasing by 3.62%, miner margins will have significantly widened with the price increase vastly outsizing difficulty growth.
The price rise was dominantly driven by healthy spot market buying pressure which can be observed by perpetual futures trading in backwardation. However, as price breached both $12k and $12.5k on the 21st of October, speculators in the derivatives market played a more important role in the further price increases as perp prices rose above spot.
The value of hashrate has increased by roughly 20% over the past seven days highlighting that efficient miners outperform holders in times of price rises. With the next difficulty adjustment currently estimating a decline of ~6.8%, miners could be in store for an extremely lucrative spell.
Industry Developments – Stone Ridge, Galaxy Digital, Bitfarms, and Marathon Group
Asset manager Stone Ridge with $10 billion AUM reveals ownership of 10,000 Bitcoin. We mentioned the entry of Square and MicroStrategy as significant demand-side players in the Bitcoin market. However, these are not the only institutional players with significant exposure to Bitcoin. Last Friday, Stone Ridge Asset Management revealed that it owned 10,000 Bitcoin which is under custody in its partially-owned subsidiary New York Digital Investment Group.
New-York based Galaxy Digital is building out a financial services shop for Bitcoin miners. The services offered will include financing, advisory, and liquidity services. Ian Taylor – a Galaxy executive – anticipates more hashrate migrating to North America. Taylor noted that this was a driver behind Galaxy growing their services to the mining industry. Amanda Fabiano will lead the venture.
Bitfarms enters into a lease agreement with Blockfills for 1,000 Whatminer M31S mining rigs. The rigs will add roughly 72 PH to Bitfarm’s hashrate capacity and are expected to be installed by the end of November. The Canadian publicly-listed firm intends to exceed 3 EH/s of hashrate output by the end of 2021.
Marathon Patent Group partners with an energy company to secure $0.028 per kWh electricity. Nasdaq-listed Marathon has announced a joint venture with Beowulf Energy LLC. Marathon will co-locate its mining operations in a facility close to a 105 MW power plant owned by Beowulf Energy in Montana. Marathon will retain 100% of the Bitcoin mining output at the facility while Beowulf receives shares in Marathon.
HASHR8 Podcast
BitRiver CEO Igor Runets joined the HASHR8 podcast and clarified how regulation treats the cryptocurrency and Bitcoin mining industry in Russia. While a recently passed legislation is harsh for retail cryptocurrency users in the country, institutions can mine if they set up their operations in the correct way. Institutions need to use a foreign-owned operating entity and also must use overseas mining pools and exchanges.
Listen here: Russian regulations for Bitcoin mining with Igor Runets
Read the summary: Is Bitcoin mining legal in Russia?