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Welcome to The Node! This is Marc Hochstein to take you through the latest crypto news. In today's news: Bull market reset?; SEC's dreaded SAB 121 survives a House vote; Compound compromised (the front end, not the protocol); and BNB Chain retains the dubious honor of the most common blockchain for rug pulls. The Takeaway: CoinDesk senior analyst George Kaloudis wonders why why AI's energy ⚡ use isn't demonized 👿 like Bitcoin's. Read more below. 👇 |
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Bull markets often stall during periods of excessive optimism, only to resume after the speculative froth has been cleared. Capriole Investment's crypto speculation index shows that the speculative excesses prevalent during the first quarter have dissipated, indicating a potential for a renewed bullish price action in market bellwether bitcoin. The speculation index, which measures the percentage of alternative cryptocurrencies (altcoins) with 90-day returns greater than bitcoin, has stabilized below 10%, down significantly from the January high of nearly 60%. Bitcoin hit new record highs above $70,000 in the first quarter and has since cooled to $58,000. More than 14,800 altcoins exist, according to data source Coingecko. Most of these coins are illiquid and struggle to prove their use cases. Hence, altcoins are generally seen as speculative instruments, with volumes closely tied to Google Trends, an indicator of retail investor interest, and altcoin outperformance relative to BTC is seen as a sign of speculative mania. Read more. |
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This week CoinDesk is publishing a "theme week" devoted to the emerging field of GameFi - or the fusion of Web3 gaming with decentralized finance. Here, to start off, is an interview with Catizen's Tim Wong about the runaway success of that game on TON and a second article about gaming on TON. (Note: Catizen is also the sponsor of the week). We'll have continuing coverage throughout the week. How Memes and Gamification Are Changing Finance As We Know It As social, finance, gaming, messaging become folded in single “super apps,” memes transmit subtle but powerful cultural meaning in a digitally-native way, says Ray Chan, CEO of Memeland. Welcome to the Meme Age. Catizen’s Tim Wong: 'We Are Here to Build a Business Ecosystem' The Chairman of the Catizen Foundation explains how the team behind the Web3 game attracted 23 million players, and how it hopes to build a lasting franchise. |
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Decentralized finance giant Compound Finance's frontend was compromised earlier on Thursday and now hosts a phishing site, developers said in an X post. Phishing attacks are a major concern across the cryptocurrency market, with over $104 million stolen from unsuspecting users in the first two months of 2024 alone. The compound(.)finance site leads to the "compound-finance.app" as of European morning hours Thursday. Security researcher Michael Lewellen noted that the latter is a draining tool that will empty funds if a user interacts with it. As such, the actual Compound protocol remains unaffected, and all existing user deposits are safe. Read more. |
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BNB Chain retains the dubious honor of "preferred target for rugpulls," according to a report by bug bounty platform Immunefi. More than $1.6 billion has been lost to hacks and rug pulls on BNB chain since its inception, Immunefi said. Of that, $1.27 billion has been attributed to hacks with the rest linked to rug pulls. A rug pull is a type of fraud that involves a bad actor creating a project with the sole purpose of stealing deposited funds and abandoning the project. In total the report tallies 228 specific rug pull cases on BNB that account for $368 million, the largest of which was the $40 million DeFiAI rug pull. By comparison, Ethereum, the second-largest blockchain and the most popular smart-contract platform, has racked up losses of $3.6 billion, but just 4.4% of that is due to rug pulls, the report added. The primary reason BNB Chain is the most common blockchain for rug pulls – a title it's held for more than a year – is developers using forked code, Immunefi said. It also claimed that the BNB Chain community are often lured in by "quick ways to make money." Read more. |
Reviled SEC Accounting Policy Survives |
A strong majority of the U.S. House of Representatives voted against President Joe Biden's defense of the Securities and Exchange Commission's contentious crypto accounting policy, but the turnout fell well short of the two-thirds of the House needed to override the president's recent veto. Biden had vetoed Congress' earlier bipartisan effort to erase the securities regulator's policy known as Staff Accounting Bulletin 121 (SAB 121), which 21 Democrats joined a majority of Republicans in supporting in May. The same number of Democrats joined the opposition in a Thursday vote seeking to negate the president's intervention. It had been expected to fall short, but the crypto industry hoped for further proof of widespread support among U.S. lawmakers. Only 228 lawmakers voted in favor of the bill, against 184 nays. One Republican joined the dissent. SAB 121 advised public companies – most notably banks – that customers' crypto assets in banks should be held on the banks' own balance sheets. That put digital assets in a unique custody category, and SEC Chair Gary Gensler has said it was an agency reaction to the industry turmoil that saw customers' assets get locked into crypto companies' bankruptcies. But the policy also threatened banks with higher capital demands if they handle customers' cryptocurrency. The debate over this policy nearly became moot this week, according to Rep. Maxine Waters (D-Calif.), who said the SEC has been negotiating with banking industry representatives about "targeted modifications" to the policy and "may be close to reaching an agreement." But she noted that "Republicans are pushing ahead anyway with this blunt and overly broad approach" that she said would undermine the regulator. Read more.
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The Takeaway: AI, BTC and Energy Outrage |
By George Kaloudis, senior analyst at CoinDesk Last month, bitcoin mining company Core Scientific (CORZ) signed a 200 megawatt (MW) artificial intelligence (AI) deal with cloud computing firm CoreWeave, the former agreeing to modify some of its existing infrastructure to host the latter’s GPUs for high performance computing operations. Miners, bitcoiners, and technologists have been talking about the overlap of AI and Bitcoin for a while and this Core-to-Core deal marked the official collision of these two (potentially) over-hyped and over-frothed industries. The union makes perfect sense: Bitcoin miners have built out robust data centers, complete with attractive energy contracts, and as bitcoin mining trends towards lower profitability, providing AI companies with infrastructure is an obvious and straightforward way to bridge the gap (until things get better). That said, just like with Bitcoin, not everyone is totally psyched about AI. And AI detractors have valid concerns: bias, transparency, privacy, safety, validity, and (worst of all) stealing my bad art to make even worse art. But to someone who has at one time or another been in the throes of bitcoin reportage, there’s something very obvious mostly missing from the AI hysteria which was Bitcoin’s political Achilles heel: energy use. AI, if it is to grow as proponents believe it should, will require a lot more energy to power the data centers which make AI possible. Investment bank Goldman Sachs predicted that data centers will use 8% of the U.S.’s total power supply by 2030 (up from 3% in 2022), of which AI is a strong driving force. Additional research from French energy company Schneider Electric suggests that AI’s share of data center energy demand will rise to 15% -20% by 2028 (up from an estimated 8% in 2023). There are countless other projections and estimates out there and none that I’ve found suggest anything except more. Now whether this energy demand is “worth it” is a decent question for another day, but why is it that there are mountains and mountains of articles and thought pieces about Bitcoin using an “XYZ-country’s amount of energy” and not for AI? I have some ideas.... Read the rest here. |
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Liquidated Long, Literally |
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