Digital Asset Digest: Volume 7

Almost three weeks ago, we provided our readers with a pre-halvening market analysis. Now, with the halvening in the rearview mirror, it is time to present our post-halvening findings relating to miner revenue, hash rate, and price swings! 

Today’s edition of the Digital Asset Digest will be dedicated to bitcoin’s halvening as we dive into several key metrics including trading volume, mining revenues, and hash rates, amongst other trends. 

hash rate

On May 11th, bitcoin underwent its third halving, paving a new era as its block reward was cut from 12.5 BTC to 6.25 BTC. The event was widely anticipated across the crypto market, and in a time when interest in Bitcoin seemed to be waning by the day, the halvening was a much-needed reminder to investors about its long term potential and the truly disruptive nature of blockchain and decentralization.

Since the BitMEX incident on March 12th, bitcoin has been steadily on the rise. In fact, since the low of $4,107 YTD, bitcoin is up over 135%, dwarfing the returns of the equity market so often reported by the media.

bitcoin performance

Let’s start with mining. During our pre-halvening newsletter, we pointed out that the total hash rate on the network tends to fall drastically post-halvening as marginally profitable miners are pushed out of the network. The halving this year was no different, as we saw mining activity fall to late-April levels.

hash rates

Miner Revenue & Hash Rate

Also as expected, miner’s revenue sharply fell post-halvening given the lower block reward. Interestingly, miner’s revenue also took a dive after BitMEX’s DDoS attack on March 12 and only recovered to March levels before plunging again after the halvening. In the chart above, you can see how miner activity dramatically increased in the week prior to the halvening as miners were racing to earn the last few 12.5 BTC blocks before the reward sum was irreversibly halved.

Unlike the hash rate, you’ll notice in the graph below that miners’ revenue tends to recover much more slowly than the hash rate. This is because although the block reward is reduced, the major miners will continue to mine as long as it’s profitable, propping up the hash rate. On the other hand, the number of blocks mined per day is determined by difficulty, which is adjusted every 2,016 blocks. This means that total revenue from mining is also more or less fixed, leaving transaction fees as the main driver of miners revenue.

After the second halving, it took around eight months for the total revenue from miners to return to their pre-halving level. Driving this was a massive rally in BTC, which boosted profitability for miners on the network. We forecast that this halving will be no different. Unless we see a massive surge in BTC as we did in 2018, we expect miner’s revenue not to return to this year’s level until the end of 2020/early 2021.

As we mentioned in our pre-halvening Digital Asset Digest, now that mining only returns 6.5 BTC per block, hobbyist miners can no longer expect to mine profitably. Mining pools and institutional players are now the dominant force in bitcoin mining. Due to the monopolization of the mining sector, we expect concerns surrounding a potential 51% attack to become a much more common narrative in the coming years.

On the trading side, we saw increased volumes across the board as the halvening approached. However, we note that the increase in trading activity was particularly close to the BitMEX DDoS attack in mid-March.

trading volume

Which brings us to the key question: Was BTC’s rally really caused by the halvening? Or was it a natural recovery from the damage of the BitMEX attack? Based on volume, it would certainly seem like the DDoS attack in March had a much greater impact than the halvening. However, both events occurred suspiciously close to one another, so we are reluctant to definitively attribute the increase in trading volume to either situation until more data becomes available.

While we wait for the market to continue adjusting to a post-halvening environment, we will keep a particular eye on how large mining operations and institutions will adjust their strategies. Since bitcoin’s supply has been irreversibly diminished, this presents a lucrative opportunity for the firms who are not sleeping behind the wheel and are ready to act. 


Yes, after much hype, the infamous bitcoin halvening has come and gone. The next 210,000 blocks will now yield 6.25 bitcoins per block reward.

Does this call for a hooray? Not Yet. Before we get too excited, we need to see how this will impact the market, and only time will tell.

Our analysts will be glued to their monitors sifting through the candlesticks to find new trends to bring to you. So make sure you tune in next week for our post-halvening analysis. Until then, enjoy this week’s volume 6 of ‘The Digital Asset Digest’. As always, we will be touching on all things crypto. Enjoy!

market summary

Bitcoin – Bitcoin closed at $9,895 on Friday morning, up 12.4% for the week just days before the third halving. The surge seemed to have been constrained to Bitcoin alone as opposed to the cryptocurrency market as a whole. Ether was completely unmoved for the week and XRP closed down 0.18%.

Indices – The S&P 500 was up 3.5% for the week as increased optimism surrounding the coronavirus and U.S. – China trade relations drove returns. These returns were largely driven by gains in energy and information technology, with WTI futures rebounding a stellar 25.1%.

Commodities – Gold was up slightly, again crossing the $1,700/oz mark. Silver, on the other hand, boasted an impressive 5.9% return.

Bonds – Treasury yields were more or less unmoved for the weekend, with the 10-year yield rising 5 bps for the week. Despite the rally in equity markets, fear continues to be the prevalent sentiment, and the market will be watching coronavirus figures closely as the U.S. and countries in the EU begin to lift lockdown restrictions.

Billionaire Paul Tudor Jones: ‘My bet is it will be bitcoin’ as the best inflation hedge
Source: MarketWatch

“Billionaire investor Paul Tudor Jones made a prescient call on bullion in 2019; now he’s saying that bitcoin, the controversial digital currency, reminds him of gold in the 1970s, and may be the best hedge against inflation in the age of coronavirus. The famed hedge-fund investor, writing in a recent research note, cited unprecedented money-printing and stimulus measures by the Federal Reserve and the U.S. government amid the COVID-19 pandemic as key reasons behind his newfound appetite for the world’s most prominent cryptocurrency.”

Bitcoin mining markets heat up: Ebang’s $41M deficit, Bitmain’s alleged 2020 revenue
Source: Bitcoin.com

“Bitcoin mining is feverishly hot these days, especially just before the great Bitcoin reward halving that will take place on or around May 12, 2020. During the last six months, there’s only a handful of ASIC mining rig manufacturers and all of them stem from China. This includes companies like Bitmain, Ebang, Strongu, Innosilicon, Microbt, and Canaan. There are a few other manufacturers, but the firms are not nearly as sizable as these six businesses. Just recently, the company Ebang filed for a $100 million initial public offering (IPO) in the U.S. and the company will await a decision from the SEC. Although, the firm’s prospectus shows that Ebang suffered from some losses in 2019, and it may reflect the IPO’s initial raise.”

Bitcoin miners sell BTC months after halving, on-chain data suggests
Source: CoinTelegraph

“Bitcoin’s third halving is less than a day away and the cryptocurrency community remains divided on whether the price will rise or drop after the event. Interestingly, on-chain data from previous halvings suggests that after the halving Bitcoin price may not see an immediate drop. Google Trends data shows that searches for the halving have already surpassed previous all-time highs, and the crypto community has been issuing a variety of price estimates for the post halving price.

ExtStock is a cryptocurrency exchange based in the U.K. founded in 2018. The company boasts over 20,000 traders and claims that its API can process up to 1,000 applications per second, making it a useful platform for high-frequency traders and scalpers. XT is ExtStock’s proprietary cryptocurrency that fuels the exchange. It’s an ERC-20 token whose main use is to pay for trading commissions on ExtStock. ExtStock also pays 100XT for every trader that registers through a referral link after passing KYC verification.

XT went through the first stage of its IEO on January 15, where it sold 100 million XT tokens in less than a minute. The token went through the second stage of its IEO in March, although they were unable to offload all of its tokens (92% of tokens offered were sold). The company claims that this was caused by a sharp collapse of quotes. A third and final stage is in the works, although for the time being, it has been postponed indefinitely.

Despite the success of its token, the company suffers from several allegations of fraudulent activity. No record of a founder can be found on its website, nor can any employees be traced on LinkedIn. Lisk reported in a tweet that several of its users had issues withdrawing funds from the exchange and cautioned users to be cautious. ExtStock has also been accused of inflating volume by quoting a higher price on BTC to induce transfers from users. In May, Cointelligence reviewed the exchange and rated it a scam.

XT currently trades at $0.27 with a market cap of $164.9 million. Please note that these token highlights are not a recommendation. We highly encourage readers to engage in their own due diligence before purchasing tokens.

Top Gainers

Top Losers

Cryptocurrency Weekly Market Performance

Indices and Commodities

The Security Trilemma and the Future of Bitcoin
Source: CoinDesk

“The imminent halving of the “block subsidy” exposes a fundamental threat to Bitcoin. Whenever a new block is added to the blockchain, a quantum of new bitcoins is created and paid to the miner adding the block. As miners compete for this subsidy, they drive up the system’s difficulty, making it harder for so-called 51% attacks to succeed. But the subsidy is set to diminish over time, halving very soon to 6.25 bitcoins per block, so that the total supply of coins will eventually reach 21 million. And as the subsidy shrinks, Bitcoin could fall victim to 51% attacks, just as smaller cryptocurrencies already have.”

Technical Review and Market Summary

Indicators are pointing towards a bearish continuation this week. During last week’s Technical Review, we forecasted that indicators were pointing towards a bearish reversal and cautioned traders to watch for when BTC’s RSI crossed below 70. On Saturday, RSI finally crossed, triggering our prediction. Optimism surrounding the halving was clearly short-lived, as traders pushed BTC down from 9.5K to almost 8K in the span of a single day. Now that Bitcoin is in freefall, we predict that it’ll be a while before BTC finds support. In the meantime, we are bearish and will be sitting on the sidelines until a more positive signal starts to emerge.

Finally, a week of sustained gains in the non-crypto markets! Last week we said it was comfortable to see traders adjusting to operating in a COVID-19 world. Now, after last week’s market performance, I think they might be getting more than comfortable. However, the bearish sentiment towards Bitcoin, even in the midst of the halvening is troubling. Is the market truly disinterested, or are retailers just slow to react? 

Make sure to check out our post-halvening analysis next week to find out!