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Bitcoin miners flocked to upstate New York for cheap energy, then it got complicated

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After grappling with a myriad of problems caused by a cryptocurrency mining frenzy, the former mayor of Plattsburgh, New York, questioned the economic benefits of miners settling in a region on Thursday.

“Counties and cities are drawn to all of these job creation promises that – if you look at this, and I have – just won’t happen,” Colin Read said on CNBC’s The Exchange.

“We had one of the largest Bitcoin operators in the world here and only created a handful of jobs,” said Read, who was elected in 2016 and served a four-year term. He is Professor of Economics and Finance at SUNY Plattsburgh.

Bitcoin mining is an energy-intensive process that generates new bitcoins when miners use powerful computers to solve arithmetic puzzles to verify transactions over the blockchain network.

Some politicians like Miami Mayor Francis Suarez have been pushing to lure bitcoin miners into their cities or states, especially after China recently took steps to restrict miners’ operations in the country.

But when a few years ago bitcoin miners flocked to Plattsburgh, a small town of about 19,000 people in upstate New York, to get cheap power from the Niagara River, it wasn’t long before the town saw a huge spike in the numbers Electricity prices.

After the crypto miners began to consume the energy quota – which Read said was 1.9 cents per kilowatt at an hourly rate in the industry – he said it “put the ingredients in an absolute turmoil due to the much higher electricity costs” . Once that quota ran out, Read said Plattsburgh would have to pay the entire city bill for the difference.

In 2018, the city passed a moratorium on new commercial cryptocurrency mining operations after residents complained about their bills. The ban ended the following year.

“We only have to transport a certain amount of electricity,” Read told CNBC. “If you start using 10%, 15% of your supply as if we were switching to Bitcoin, it will very quickly increase prices everywhere for everyone and also put a lot of pressure on the network.”

Read said he was a fan of cryptocurrencies and called them “the wave of the future”. At the same time, he said he believes other places can learn from Plattsburgh’s experience with an influx of bitcoin miners.

“We have put in place a whole bunch of building and safety regulations,” Read said, highlighting a sustainability policy where some of the heat generated by the breakdown process is recycled for other purposes.

“Perhaps with good planning, you can avoid some of the problems we had to solve ourselves,” said Read. He acknowledged that the city’s rules had severely limited the interest of new businesses in starting mining operations in Plattsburgh.

“Before that, we had a number of applicants every week trying to break our door down to get in,” he said.

With China’s recent restrictions on cryptocurrencies, Bitcoin mining in other places could become easier and more profitable. Crypto experts previously told CNBC that if more Bitcoin miners go offline after crackdown, the share of other miners on the Bitcoin network will increase, which could make mining even more lucrative. However, the value of Bitcoin has seen volatile changes over the past few months, which has affected miners’ profits.

“We will certainly see nations and central banks embarking on this, but it just has to be done right,” Read said, referring to the introduction of cryptocurrencies. “It’s not that we should do it, it’s how we should do it well, and we’re just not doing it very well yet.”

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Cryptocurrency

The Washington Nationals loved Terra. Then the cryptocurrency struck out.

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Last week, the Washington Nationals posted a tweet that read: “Crypto 101. You have questions. We’ve got answers.”

An accompanying video included frequently asked questions about cryptocurrency, asked and answered over a baseball highlight reel. One big problem, though, was that cryptocurrency was in free fall, spurred by the collapse of Terra, the sponsor of the social media posts and the Nationals’ most visible brand partner in 2022.

Fans quickly expressed anger with their favorite team pushing a plummeting cryptocurrency to its Twitter following of more than 780,000. The tweet was scheduled in advance, according to multiple people inside the organization, who also said that Terra’s collapse is stirring tension about how to proceed with the partnership.

The Nationals signed a five-year, $38.15 million deal this winter to promote Terra and received all the money up front. The internal debate, according to multiple people with knowledge of the discussions, is centered on whether the organization should honor its agreement with Terra and keep the company’s name on its luxury club behind home plate, where “Terra” is stripped across every seat, and elsewhere in the stadium.

As the fallout from Terra’s crash continues, the Nationals’ predicament highlights the potential pitfalls for athletes, teams and leagues that have tethered their brands to the volatile digital currency.

The terms of the Nationals’ contract with Terra include naming rights to its premier club, signage around Nationals Park, big-screen advertisements and continued promotion on the Nationals’ official social media accounts. In announcing what they called a “groundbreaking partnership” with Terra in February, the Nationals said Terra “has experienced a meteoric rise as a market leader through its blockchain and DeFi [decentralized finance] ecosystem.” The team called itself a “leading innovator in Major League Baseball.”

But that was when TerraUSD was trading at $1. By Friday, it had fallen to less than seven cents, in what crypto market analysts call an irreversible implosion. A spokeswoman for the Nationals, whose owners are exploring a sale, declined to comment on the partnership or the ill-timed tweet. Terra did not respond to a request for comment.

Terra marketed itself as offering a new form of digital cash, supported by its own financial ecosystem that would make it faster and cheaper than traditional payment options. The project revolved around a TerraUSD, a type of token known as a stablecoin because it aimed to keep its price at $1. Unlike other stablecoins that maintain reserves of dollars and other real-world assets to back up their tokens, TerraUSD — also known by its ticker, UST — relied on complex financial engineering to keep its price steady.

But Terra began unraveling May 7. For reasons not yet entirely clear, crypto traders started dumping UST, driving its price down to 99 cents. Instead of the trading mechanism behind the stablecoin restoring its price to a dollar, the sell-off became self-reinforcing, sending both UST and an associated crypto called Luna into what traders call a death spiral, as confidence in the coins evaporated. By Friday, UST was trading at less than seven cents, and Luna was priced at a fraction of a penny. Some major crypto exchanges have delisted the coins.

The collapse helped accelerate a broader plunge in the crypto market that erased roughly $500 billion in global value over the past two weeks. Top financial regulators, including Treasury Secretary Janet L. Yellen, are citing Terra’s implosion in highlighting the urgency for federal watchdogs to develop rules for the industry. Meanwhile, everyday investors who plowed money into the project are sorting through the wreckage. A Reddit subforum dedicated to Terra directs readers to suicide prevention hotlines.

“The fallout, if something is fraudulent or illegal or a gruesomely bad investment, could be more severe if we’re talking not just naming rights,” said Alexa Roberts, a law professor at the University of New Hampshire who specializes in trademark and false advertising. “Because now we’re saying we took some meetings, and we were enthusiastically pitching this company to our fans or followers.”

Other naming rights deals have gone bust for teams over the years, none more famous than Enron Field, which was home of the Houston Astros when the energy company collapsed. But the recent volatility of the crypto market has caused some teams and leagues to be more cautious about partnerships in cryptocurrency and non-fungible tokens (NFTs), said Tim Mangnall, CEO of Capital Sports Media & Capital Block, a sports consulting firm based in the United Kingdom.

Few teams are fully versed in the industry, Mangnall explained, meaning they often don’t fully grasp the risks or rewards of investing in cryptocurrency. He added that teams also have an obligation to their supporters. Mangnall pointed to soccer teams as a more responsible example.

“They’re gaining an understanding that they actually need to protect their fans,” Mangnall said. “And not just take the biggest check from an exchange platform or trying to push NFTs on them.”

As cryptocurrency boomed in recent years, sports has been one of its favorite targets for advertising. Dozens of companies, including the three largest trading platforms, spent hundreds of millions of dollars looking to turn sports fans into new customers. No league has been more receptive than the NBA.

Crypto.com inked a 20-year, $700 million naming rights deal for the former Staples Center in Los Angeles, home of the Lakers and Clippers, and is the jersey sponsor of the Philadelphia 76ers. The Miami Heat’s arena is now called FTX Arena. Coinbase is the exclusive crypto sponsor of the NBA and WNBA.

Plenty of the most well-known athletes have become pitchmen, too, including NFL stars Trevor Lawrence and Odell Beckham Jr., two-way baseball phenom Shoehei Ohtani and Stephen Curry of the Golden State Warriors. When the Nationals and Terra announced their partnership, Do Kwon, the founder of Terraform Labs, said in a statement that the “first-of-its-kind partnership between a DAO [decentralized autonomous organization] and a sports franchise opens a new world of opportunities for bringing crypto and DeFi to the masses.”

“The deal would have helped Terra not only from a marketing and branding perspective. It could have helped stabilize the coin because it would have given it a source of demand beyond speculators,” said Columbia Business School professor Omid Malekan, a crypto expert. “Terra needed people to want to use it. And while the volume at the Nats ballpark would have been purely symbolic, if it worked, they could have pointed to it as a pilot as they shopped this around to other companies.”

“A lot of people got hurt in this,” Malekan added, “and there are going to be severe legal and regulatory consequences.” While he did not expect those consequences to reach the Nats, Malekan said he would advise the team to donate some of the sponsorship money to a charitable cause.

The team had announced that, as soon as the 2023 season, TerraUSD could be used for purchases at Nationals Park. But those plans have been replaced by the uncertainty surrounding Terra and what’s ahead for this partnership. For a reminder, as the last-place club returns home next week, fans can look anywhere around the stadium.

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Crypto Crash Latest Update (May 19): Bitcoin, Ethereum, Solana, ADA, BNB to DOGE, MATIC – Top Cryptocurrencies lose upto 12%

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Crypto Crash News and Top Cryptocurrency Prices Today in India (May 19, 2022): The global crypto market cap continued to shrink further in the last 24 hours amid a prevailing sentiment of “extreme fear”. At the time of writing, global crypto market cap dropped to $1.24 trillion from the $1.29 trillion recorded on Wednesday, as per data on CoinMarketCap. Bitcoin price has also crashed to below $29,000 level.

The global cryptocurrency market volume over the last 24 hours increased by 3.44% to $80.00 billion. The total volume in DeFi was $7.31 billion, which is 9.12% of the total crypto market 24-hour volume. Stable coins volume was $70.33 billion, which is 87.68% of the total crypto market 24-hour volume.

Bitcoin price dropped below the $29,000 level, falling 3.35 percent in the last 24 hours.

Crypto Crash Update (May 18): Bitcoin, Solana, Ethereum, Cardano, DOGE, DOT crash up to 9 percent!

bitcoin price analyzers and prediction

Bitcoin price prediction: One reason why BTC market may bounce back from $30,000 level soon

crypto crash news may 18

Crypto Crash Latest Update: Bitcoin, Solana, Ethereum, Cardano, DOGE, DOT, AVAX prices crash up to 9 percent!

Bitcoin dominance rises

What is happening to Bitcoin amid global crypto market crash?

ALSO READ | What is happening to Bitcoin amid global crypto market crash?

More investors to sell Bitcoin?

Altcoins are performing worse than Bitcoin in the current market crash, indicating a lower appetite for risk among crypto traders.

Experts say that a spike in the number of Bitcoins on exchanges has been noticed, indicating there might be further sell off of the top crypto.

“BTC’s price dropped below the $29,000 level, while ETH’s price slid below $2000 over the last day. Alongside this dip, data revealed a spike in the supply of Bitcoin on exchanges. Usually, investors send their Crypto holdings to exchanges with the intention of selling,” Darshan Bathija, CEO and Co-Founder of Vauld, told FE Online.

ALSO READ | Crypto crash update on May 18

Explaining the reason behind current market crash, he said, “The effects of US Federal Reserve Chair Jerome Powell’s latest comments on adding pressure and taking ‘aggressive’ measures to address inflation were seen in the markets. Just a day after his comments, S&P 500 and Nasdaq indexes had dropped. As the traditional markets priced in the scenario, a risk-off sentiment took hold of the markets. Owing to BTC’s high correlation with the S&P, the cyryptomarkets slide down the charts, in lockstep with the equities markets.”

Top Crypto Prices

Meanwhile, many of the top crypto prices fell further in the last 24 hours. Take a look:

Ethereum (ETH): Ethereum price decreased by 5.29% to $1957 in the last 24 hours. In the last 7 days, ETH price has decreased by 3.55%. It is currently ranked second largest crypto asset in terms of market capitalization.

Binance (BNB): Binance coin’s price decreased by 2.95% to $295 in the last 24 hours. In the last 7 days, BNB price has increased by 13.2%. It is currently ranked as fifth biggest crypto asset in terms of market capitalization.

XRP: XRP coin’s price decreased by 2.53% to $0.4085 in the last 24 hours. In the last 7 days, XRP price has increased by 4.45%. It is currently ranked as 6th biggest crypto asset in terms of market capitalization.

Solana (SOL): Solana price decreased by 10.15% to $50 in the last 24 hours. In the last 7 days, SOL price has increased by 6.21%. It is currently ranked as 9th biggest crypto asset in terms of market capitalization.

Cardano (ADA): Cardano token’s price decreased by 8% to $0.5209 in the last 24 hours. In the last 7 days, ADA price has increased by 7.47%. It is currently ranked as 8th biggest crypto asset in terms of market capitalization.

Popular memecoin Dogecoin’s (DOGE) price dropped by 6.23% in the last 24 hours. DOGE is currently ranked 10th in terms of market capitalization. The price of DOGE at the time of this report was $0.08376.

Meanwhile, prices of Polkadot (DOT) and Avalanche (AVAX) declined by 9.26 and 11.87 per cent in the last 24 hours respectively. DOT and AVAX are currently ranked 11th and 13th on CoinMarketCap. Polygon (Matic( price crashed by over 10% to 0.6377 in the last 24 hours. It is currently ranked 17th on CoinMarketCap.

(Cryptos and other virtual digital assets are unregulated in India. They are considered extremely risky for investment. Please consult your financial advisor before making any investment decision)

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Robinhood to allow users hold their own crypto and NFTs

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Robinhood is handing over the keys to some of its customers’ crypto.

The trading and investing company announced Tuesday it will let users hold and custody their own cryptocurrencies and NFTs in a separate, stand-alone app. It’s the latest move in the digital asset space for Robinhood as it reaches for growth beyond stock trading. The company shares are off more than 70% since its IPO.

The new app will put Robinhood squarely in competition with Coinbase and start-ups like MetaMask. Coinbase CEO Brian Armstrong called his company’s product the most downloaded, mobile self-custody wallet in the US in a tweet Monday.

Vlad Tenev, CEO and co-founder Robinhood Markets, Inc., is displayed on a screen during his company’s IPO at the Nasdaq Market site in Times Square in New York City, US, July 29, 2021.

Brendan McDermid | Reuters

The app will let users store non-fungible tokens, and connect to NFT marketplaces and “decentralized” stock exchanges. It will also let users earn yield through other platforms and access a “variety” of crypto assets on other exchanges, Robinhood said.

Who holds, or “custodies,” someone’s cryptocurrency has become a contentious question in the industry, fueling the viral phrase “not your keys, not your coins.” Some fear of storing assets on an exchange makes them more vulnerable to hacks, or censorship.

Robinhood, which topped last year’s CNBC Disruptor 50 list, made its name by offering commission-free stock trading. Its value and user base soared during the pandemic as it ushered in a new generation of traders. The company also became the center of the meme-stock saga after restricting trading in GameStop, the highly shorted name Reddit traders bought in defiance of Wall Street short sellers.

The trading business has slowed significantly over the past year. For the three months ended March 31, Robinhood’s revenue fell 43% from a year ago. Since its public debut in August, shares have plummeted more than 70% and are more than 88% off of the all-time high.

In an effort to spur revenue and user growth, Robinhood has been adding more cryptocurrency products and features, and in late March it added extended stock trading hours. It launched an earlier version crypto of wallets to customers in April, which will still be available within the core Robinhood app.

“We believe that crypto is more than just an asset class,” Vlad Tenev, Robinhood’s co-founder and CEO said in a press release. “By offering the same low cost and great design that people have come to expect from Robinhood, our web3 wallet will make it easier for everyone to hold their own keys and experience all the opportunities that the open financial system has to offer.”

Robinhood said the new wallet will roll out with a waitlist first and will be available internationally.

The new app notably won’t charge network fees, despite Ethereum and bitcoin fees running at $70 in some cases. A Robinhood spokesperson said the crypto product will rely on third-party liquidity providers “competing” for customers’ transactions behind the scenes, in order to offset those network fees.

Robinhood makes most of its revenue off of transaction fees in its core trading business, through a brokerage-industry practice called payment for order flow.

— CNBC’s Jesse Pound contributed reporting.

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