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Aside from the macro landscape, bitcoin mining had several headlines over the course of February. One big story is that oil and gas (O&G) major ConocoPhillips announced its rerouting its excess natural gas to a third-party bitcoin mining operation. While this strategy of mining bitcoin with stranded/excess natural gas (that would otherwise be wasted or flared into the environment) from onshore oil wells has been running for a couple of years with smaller companies, having a company the size of ConocoPhillips join legitimizes the space for other majors. This strategy of using excess natural gas can enable oil companies to decrease their waste/emissions AND increase their profits. It truly is a win-win that will most likely be copied by more and more O&G operators.
Another big mining headline in February came from Intel as they unveiled their new bitcoin mining chip and rig. Intel revealed its first-generation “Bonanza Mine'' (BMZ1) blockchain accelerator chip and a new 3,600-watt mining rig comprising 300 BMZ1 chips. While Intel’s rig compares modestly to the current rigs on the market (image below), it still improves the space overall by having more competition and hardware availability in the market.
BTC on Ethereum
While DeFi on Bitcoin has grown over the years with the build-out of projects like Rootstock (RSK), Stacks, Sovryn, and others, BTC DeFi still remains a fraction of what BTC on Ethereum has become. Currently, there is 10x more BTC locked into Ethereum DeFi protocols (~262,000 BTC) via wBTC and renBTC bridges than in Bitcoin DeFi protocols. A majority of the locked BTC is being used as collateral on DeFi lending protocols such as Curve, , Aave, and Compound
While the numbers are impressive, it’s important to understand the security tradeoffs when wrapping/bridging BTC onto another chain. wBTC, the leading wrapped Bitcoin implementation on Ethereum by a large margin (80%), is incredibly centralized. , a centralized custodial service, holds all the actual BTC. This means when a user “bridges” their BTC onto Ethereum, they no longer have control of their actual BTC. Users are at the mercy of a centralized exchange in order to participate in DeFi. Pretty ironic, huh?
Quick Bites
- ~32 OPENSEA userswere victims of a phishing scam resulting in ~250 NFTS worth $1.6 million being lost. A hacker posed as OpenSea and sent out fraudulent emails with a link that directed the user to a phishing website requesting them to sign into the newly upgraded OpenSea smart contract. However, users were actually signing the hacker's smart contract that allowed the hacker to move NFTs into or out of their private wallets for 0 ETH.
- Ethereum L2 ZK-Rollup StarkNet fully launches, enabling general projects to begin building upon it. StarkNet is the permissionless version of StarkEx—also created by StarkWare—which is currently used by crypto projects DeversiFi, Immutable, and dYdX. The project also looks to launch a token “in the second half of the year.”
- FTX launches blockchain gaming wing FTX Gaming
- Laura Shin releases a new Ethereum book and in it claims she discovered the identity of the infamous DAO hack in 2016 that resulted in ETH fork Ethereum Class (ETC)
- Reserves attestation shows Tether cut commercial paper holdings by , allocating most of its reserves to short-term government bonds (~$35 billion).
