Section 3: Blockchain industry players


Market growth and profitability Overall, the trend in the increasing hash rate is continuing, with, for the moment, continued mining profitability. Since November 2018, when the hash rate decreased, reflecting the crash in the BTC price, the growth has resumed, thanks to the material improvement of ASICs and new BTC investments. However, at the current price of Bitcoin, the curve suggests that mining activity is again reaching its limit. In November 2019, the mining difficulty decreased, similar to what happened at the end of 2018 (but online hashing power has since doubled), showing that some facilities have hit their mining operating costs.

A quote by Max Keiser expresses the point of view of miners quite well: “Price follows hashrate, and the hashrate chart continues its 9-year bull market.”



New special-purpose equipment continues to be released to the market, each time with improved technical capabilities. To quote an order of magnitude, a mining rig typically costs 3000 euros, capable of 70THash/s, consuming ~3000W of electricity.

Monero was upgraded again to counter the use of specially-built mining equipment. But note, despite the efforts to keep the protocol immune from specific hardware usage, ASIC-resistant chains have also been prone to 51% attacks.

The concentration of hash power

On September 23rd, 2019, the BTC hash rate crashed by 40% without any apparent reason, just a few days after reaching an all-time high of 102 quintillion hashes per second.

The biggest pool of miners is currently claiming 20% of the produced blocks, with a few other pools claiming 10-15%.


Environmental issue – electricity consumption

Still, on the subject of orders of magnitudes, Bitcoin mining currently consumes over 50 TWh per year. For, say, 650,000 BTC to be produced, ~75MWh is required per bitcoin. So, approximately 4,000 euros worth of wholesale power is consumed per bitcoin (depending to a large extent on the geographic location of the mining facility).



Decentralized exchanges (DEX)

One of the main factors often quoted in favor of more decentralized exchanges is the potential to circumvent fiat currency. Since no control whatsoever is placed on them (which is the point…), convincing someone to take your assets in exchange for hard fiat is likely to be difficult; in particular, no bank is going to be keen to do that. So, the use of fungible stablecoins looks like the most promising way to go.


















Off-chain crypto exchange platforms

Binance, Bitfinex Poloniex, and others are implementing geographybased blocking to prevent citizens of specified countries from accessing their services (especially for US residents). This approach is quite dubious: by using a VPN, anyone can pretend to be located in another country, not to mention the possibility of people traveling abroad. So, this is only a partial measure at best, and cannot be satisfactory from regulators, and cannot be seen as fair from the users’ perspective. This is another paradox, to say the least, of trying to force cryptos into the existing frameworks of financial controls.

























Legacy exchanges

The Chicago Mercantile Exchange (CME), which is already the first offer of Bitcoin futures, has announced that it intends to launch Bitcoin options as soon as January 2020.


Simultaneously (if not before), the crypto assets custody sector has to build the management of financial titles on the blockchain before it can go mainstream, as the management of these assets for the public at large cannot rely just on private keys.


When professional custodians step into this space, we can expect that the loss of Bitcoin and other cryptocurrencies to be significantly reduced.




















With depressed prices of cryptocurrencies and technical struggles, it comes as no surprise that more and more start-ups, especially those that initially raised millions on ICO-platform models, are closing their doors. The legal obligations they have to investors who own their tokens are not under the spotlight – yet. However, this may have to resolve, at least by the larger ICOs, and particularly those that scammed investors.
So, the crypto-winter continues for cryptoentrepreneurs. Weak and poor projects continue to die, exhausting their “war chest” of Ether and Bitcoin from their capital raising if they still any left before they terminate business.



A few “whale movements” continue to be detected now and then, “from an unknown account to another unknown account.”


A recent one-billion USD movement was thoroughly discussed and analyzed after 94,504 Bitcoins were moved in early September. Questions remain as to who has paid who through this transaction. Was it weapons, drugs, a ransom, or just tons of cocoa beans? A mystery. Analysts of on-chain data have tried to track down the source of the coins. It turns out that they originated mostly from several Huobi accounts, leading observers to suggest that someone instructed a team to buy that many bitcoins via several accounts, and then to withdraw them discretely and mass them at one single address before making the transfer. The rest is left to your imagination.

Casual holders

At the time of writing, there are indications that most private individuals have withdrawn from actively trading the crypto market. This is likely to be directly related to the hype around the Bitcoin blockchain being down, and price movements being, not dull, but let’s say, uninteresting.


The influence of casual holders is now almost insignificant, as prices now tend to move only when volumes increase. Control is now totally out of the hands of small individuals.



[Nothing new to report in this section this quarter.]

Private bankers and classical investment/ hedge funds

During the 2019 BlockShow Asia conference, a panel discussed “Unlocking Yield in Cryptocurrency Assets – Encouraging Institutions to Enter the Industry.” A number of crypto leaders shared their thoughts on how to make emerging fintech accessible to mainstream financial entities. Speakers talked about what they believe is needed to onboard institutional players: “Custody, liquidity, and regulations are the top three petitions from institutional investors jumping into crypto.”

Overall, the so-called institutional money is not pouring into cryptocurrencies – far from it. The only thing that has occurred in this respect is that a few clients are asking their private bankers to put some of their money into Bitcoin, and maybe a few experiments by maverick investment funds seeking to test the waters, but no further. Right now, there is no reason for this to change. Only when wider adoption has occurred will the large banks dare to look further. And not to forget, they will be under intense scrutiny and pressure from governments as soon as they decide to engage in this.



With the inception of distributed ledgers, an entirely new financial ecosystem was born. Data available on exchanges is a source of interest for data miners from many fields, who search for and extract patterns in various ways.


  • Data services gather data from various platforms, compiling volumes and prices from across the globe. The most well-known is, of course, CoinMarketCap. com, but competition exists.

  • The distinct value-added options likely to be offered will be similar to the services that have been provided for decades by, for example, Bloomberg and Yahoo Finance regarding company information and stock prices. (Interestingly, Yahoo Finance just concluded a partnership with CoinMarketCap to add cryptocurrencies to the list of assets presented). For crypto assets, some websites are now providing data sheets on crypto characteristics and project information for investors, even including an assessment of the respective technical teams, DLT performances, etc. Coming up with crypto indices is the next frontier in this respect.

  • Finally, and more specifically, some services are offering on-chain data exploration and analysis. The ledgers are often public, and pseudonymization allows for research to be done to link activities with types of accounts; this kind of exploitation of the information on distributed platforms can provide an insight, for instance, on the origin of assets, a service that is currently sold mainly to exchanges and cryptocurrency custodians to make sure their clients are not involved in frauds – this is an area in which KYC can be extended.



Recent press reports provide almost no indication that university courses are being launched, as was reported in our previous Quarterly. While this does not mean that universities have disengaged or that classes have been canceled, it does indicate that the popularity of the topic among students and academics appears to have declined.

Universities prepare the workforce to satisfy commercial requirements, and when industries boom, there is an immediate demand for skills, while the opposite situation leads to a moderation in academic engagement. Currently, the indications are that blockchain technology is going through a period of consolidation.



While the signals are still favorable for blockchainintensive talent, which companies still are in search of and are hiring, the dynamic is clearly down compared with recent months. Having said that, Consensys, which has laid off staff in last months, is reportedly hiring again: times are hard, but all is not doom and gloom.

Notably, crypto exchanges are heavyweights in the crypto job market. They are the ones making money, so no surprise there!


The current adverse climate can be explained by either over-optimistic expectations or too many pilots that delivered disappointing outcomes. Either way, this is another indication, in line with others, that the hype surrounding blockchain technology is plumbing new depths.



This quarter again, it is quite challenging to identify the money that is flowing in and out of crypto ecosystems.


ICOed start-ups are running out of the BTC and ETH they raised. Miners are supposed to be waiting for the halving, to sell their holdings at a more favorable price. Exchanges are seeing lower volumes. All these factors combine to indicate a relative stabilization of outflowing cash.


Most market actors currently have a wait-and-see attitude, with individual investors, in particular, having no influence on price action. Institutional investors are still not involved at all, and one can doubt the kinetics with which they might join.

© 2020

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