The sender was Mt. Gox. A decade ago, I bought a bitcoin for $12. I was intrigued. The blockchain and bitcoin’s shadowy architect, Satoshi Nakamoto, were fascinating. It felt mysterious, somewhat rebellious and was a technological marvel. I bought more. I was interested in how trading worked.
Unlike the unconventional story of Mt. Gox, there may be no reimbursement for those who lost funds ever at FTX. Be careful.
Mt. Gox, the cryptocurrency exchange in Tokyo, was king. It felt wild and exciting: Buying private keys for cash wired to Japan, which are then sent by open-source software. At one time, I had 300 bitcoins.
I had no expectation of making money. The fact I did was purely by accident. I just wanted to learn how bitcoin worked. The best way to do that was by trading, seeing how confirmations worked and experimenting. In 2013, the value shot up. My wife and I were expecting. Bitcoin continued to rise and I realised, “Whoa, people are actually buying this. Crazy.”
But anyone who’s seriously looked at bitcoin and cryptocurrency know it’s impractical and difficult to secure. As a transactional system, bitcoin is slow. And where to store it? Hold it on your own computer? What if the hard drive crashes? What if you forget your password? Hold it at an exchange? That’s where my bitcoins were in February 2014. On Mt. Gox.
Mt. Gox: A Lost Lottery Ticket
Then, Mt. Gox crashed and burned. A security flaw allowed hackers over three years to slowly steal bitcoins: 850K bitcoins worth $460 million. It was the biggest bank robbery, ever. Mt. Gox entered administration. I had 13 bitcoins at Mt. Gox at the time, worth about US$540 each. It was pure profit. A week before, I planned to sell the bitcoins for cash. We needed baby things, a clothes dryer. Then Gox collapsed. I felt dumb. I wasn’t hurt as bad as others. But the money would have helped.
A month later, Mt. Gox found 200,000 missing bitcoins in a cold wallet. There was hope. Over the years, the value of those bitcoins rose tremendously. The bankruptcy case became one of the strangest ever, one in which the remaining assets of a collapsed business actually increased in value.
After many years, Japan’s courts worked out an unprecedented and complicated deal: Creditors would get cash, bitcoin or a mix of both. I’ll get a couple of bitcoins and some cash. It’s like finding a lottery ticket from years ago in the couch cushions.
Our nine-month-old baby is now 9 years old, and we had another one as well. Instead of baby things to buy, now there are kid things. Will I sell both of the bitcoins? Well. Maybe just one. The point of my tale is tale is that cryptocurrency is impractical, risky and as FTX shows, the cycle of steep loss continues.
And unlike the unconventional story of Mt. Gox, there may be no reimbursement for those who lost funds ever. Be careful.
That’s driven lots of new interest to some of the earliest decentralized players. Dan Gunsberg, creator of Solana-based derivatives exchange Hxro, said that in recent weeks he’s seen a boom in interest for his trading platform, which he claims cannot fall prey to the same pain points that felled FTX and its sister company, Alameda.
While bitcoin prices have been lower than the estimated cost of bitcoin production, the network’s hashrate has dropped a great deal since mid-November. Presently, the total hashrate dedicated to the Bitcoin network is coasting along at 236 exahash per second (EH/s) after dropping below the 200 EH/s range six days ago.
Bitcoin’s Hashrate Slips Lower
The first week of November 2022 was brutal for digital currency prices as FTX’s collapse rippled across the entire industry in a negative fashion. Prior to the FTX fallout, bitcoin was trading above the $20K zone and the network’s total hashrate was coasting along at roughly 270 to 290 exahash per second (EH/s) before the blowout.
There was a quick burst of increased hashrate the day after FTX filed for bankruptcy and BTC’s total hashrate tapped an all-time high on Nov. 12, 2022. At block height 762,845, bitcoin miners managed to get the hashrate to briefly rise to a whopping 347.16 EH/s. Since then, the hashrate has divebombed and slid below the 200 EH/s range on Nov. 26.
Presently, bitcoin miners have managed to rise above the 200 EH/s region, to the current 236 EH/s recorded at 10:15 a.m. (ET) on Dec. 2, 2022. The drop in hashrate indicates that unprofitable mining entities have been forced to shut down machines, while only the strong operators survive.
At the time of writing, the estimated cost of bitcoin production ($16,956) is awfully close to the leading crypto asset’s spot market value ($16,897). Previously, the cost of bitcoin production was $18,313 on Nov. 30, which was significantly higher than BTC’s spot market value. With a drop in BTC production costs, it makes it easier for current operators to survive.
Bitcoin miners are also expecting a large mining difficulty reduction between 6.56% to 7.9% lower than today’s difficulty rating on or around Dec. 5, 2022. Presently, the estimated mining difficulty reduction could be the largest difficulty drop the network has seen in 2022. Since Nov. 30, up until Dec. 2, 2022, roughly 80 exahash of hashpower has been removed from the network’s total hashrate.
What do you think about the current state of Bitcoin’s hashrate? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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