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Bitcoin Halving History: Harsh Rate as a Clue to What Will Happen

Bitcoin Halving History: Harsh Rate as a Clue to What Will Happen

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Bitcoin halvings are nothing new, but plenty has changed since 2016. Can the previous network dynamics provide a clue for 2020?

With Bitcoin off on an upward rally, many are pointing to the upcoming halving, due on May 12, as the underlying reason. Not unfairly, either. Precedent demonstrates that Bitcoin’s (BTC) price usually ends up higher after a halving, even if it takes several months. 

The halving was programmed into Bitcoin’s source code from the very beginning as Satoshi Nakamoto specified that there would only ever be 21 million BTC issued. Every 210,000 blocks, the block reward is cut in half. Therefore, at the genesis block in 2009, miners received 50 BTC as a reward. This was reduced to 25 BTC in 2012, and again to 12.5 BTC in 2016. Now, miners will see their rewards cut in half once again. 

After the first halving, the price rose from $12 in November 2012 to a peak of $1,100 in November 2013. Similarly, the second halving saw a sharp increase 11 months later, rising from around $650 in July 2016 to over $2,500 in May 2017. The most straightforward interpretation of this is that the halving introduces a constraint on supply, driving demand.

However, the last halving was in 2016, before the initial coin offering mania, before the evolution of cryptocurrency derivatives, and a long time before the coronavirus started disrupting the global economy. Thus, because Bitcoin’s price is rumored to strongly correlate with the hash rate of the network, can the previous halvings be an indication of what to expect from the next one?

Downward pressure on mining profitability

The hash rate is an indicator that’s worth watching in the period around a halving. A higher hash rate indicates more computing power in the network — or, in other words, high participation from miners.

Hash rates around previous halvings tended to show similar trends to price. For example, in the 2016 halving, the hash rate showed a steeper increase a year later, indicating that more miners were attracted by the increase in Bitcoin’s price. 

However, from the chart above, it’s evident that there was no significant drop off in the hash rate after the 2016 halving. In fact, the hash rate stayed steady immediately post halving despite the obvious drop in mining profitability. 

Mining rewards are only one component of overall mining profitability. Transaction fees are another way that miners generate income, and looking at transaction fees around the last halving, there was also no significant change following the event. Like price and hash rate, transaction fees went up 11 months after the last mining event in 2016.

Related: Past Halvings in Review: Case for an Immediate Bitcoin Upsurge Is Flawed

Lennix Lai, the director of financial markets at OKEx, told Cointelegraph that miners may be put off by the prospect of diminishing rewards and only earning income from transaction fees:

“With the expected cut in block rewards, I think the industry would start by questioning the basic assumption of halving — whether or not the transaction fees alone would be sufficient to sustain the entire Bitcoin network.”

Is Bitcoin’s hash rate the key indicator? 

There are more immediate precedents for halvings as Bitcoin Cash (BCH) and Bitcoin SV (BSV) both recently underwent halving events — and both saw a drop-off in hash rate immediately afterward. Diego Gutierrez Zaldivar, the CEO of IOVlabs, which operates the RSK network, told Cointelegraph that there’s an explanation for this: 

“These networks share the hashing algorithm with Bitcoin, so hashing power continuously migrates among them. When the two minor networks reduce their mining subsidies, miners likely moved to BTC, looking for more profitable grounds. When the Bitcoin halving occurs, no such alternative network exists, so we will likely see miners whose operating costs are higher than the price of BTC drop off altogether.”

Does this mean that contrary to the previous halvings, a drop in the Bitcoin network hash rate post-halving is on the table? Zaldivar doesn’t believe so, elaborating: “Bitcoin has around 50 times the economic security of Bitcoin Cash and around times the economic security of Bitcoin SV, so even in the case of a big drop in hashing power, Bitcoin will remain the safest decentralized network in the world.” Joel Edgerton, the COO at bitFlyer, agreed that there’s a risk to smaller miners: 

“I expect the miners will have a tough time with weaker, less capitalized miners exiting the business. Their revenue mix will move more to transaction fees, which could have an interesting impact and open up possibilities for firms using Bitcoin to compete based on transaction processing speed.”

Related: Miner Survivability Post-Halving: A Hash Rate Comparison

The Bitcoin halving is unlikely to follow the BCH and BSV examples. As Zaldivar pointed out, the Bitcoin network is far more secure, to begin with. Secondly, many of the experts Cointelegraph spoke to believe that the unprecedented nature of the current economic conditions puts Bitcoin into a stable position right now. 

Central banks are now using quantitative easing to pump fiat money into their economies, which will ultimately cause inflation. Edgerton pointed out to Cointelegraph that many bought into Bitcoin during the recent crash, and so the drivers for the current halving may be different:

“The critical differentiator in this halving is that coincides with a massive increase in money supply as governments react to the economic fallout from the COVID-19 health crisis. Since Bitcoin was born from the fallout of the last economic crisis, this plays very well to its strengths as a store of value.”

Samson Mow, the chief strategy officer of Blockstream, agreed, telling Cointelegraph: “This Bitcoin halving is unique because of the unprecedented amount of money being printed. It’s very bullish for Bitcoin.” He went on to say: 

“I think we’ve yet to see the full extent of economic uncertainty and COVID-19 impacting Bitcoin. The average person is only just starting to realize that Bitcoin is the only real safe haven for their money.”

Aside from COVID-19, there are other influences at play here, too. Bitcoin differs from many other cryptocurrencies due to the vast market for derivatives. Meltem Demirors, the chief strategy officer of Coinshares, has previously warned that this ability to speculate on Bitcoin’s price without touching the underlying asset indicates this halving will be different from the others. 

A Journey into the Unknown

On balance, there are too many other factors at play with this halving to make a fair comparison with the previous two events, as almost all variables have changed, even for the miners and the hash rate they output. The presence of derivatives and the vastly inflated size of the Bitcoin market and network since 2016 are significant enough. 

However, the black swan of the COVID-19 crisis and all the economic uncertainty it brings is unprecedented for all assets, including Bitcoin. Overall, most experts seem to agree that the outlook for the network and the ecosystem, in general, is bullish. Therefore, it seems that the best advice for this halving is to sit back and enjoy the ride.

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

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By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

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Spread & Containment

Another beloved brewery files Chapter 11 bankruptcy

The beer industry has been devastated by covid, changing tastes, and maybe fallout from the Bud Light scandal.

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Before the covid pandemic, craft beer was having a moment. Most cities had multiple breweries and taprooms with some having so many that people put together the brewery version of a pub crawl.

It was a period where beer snobbery ruled the day and it was not uncommon to hear bar patrons discuss the makeup of the beer the beer they were drinking. This boom period always seemed destined for failure, or at least a retraction as many markets seemed to have more craft breweries than they could support.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

The pandemic, however, hastened that downfall. Many of these local and regional craft breweries counted on in-person sales to drive their business. 

And while many had local and regional distribution, selling through a third party comes with much lower margins. Direct sales drove their business and the pandemic forced many breweries to shut down their taprooms during the period where social distancing rules were in effect.

During those months the breweries still had rent and employees to pay while little money was coming in. That led to a number of popular beermakers including San Francisco's nationally-known Anchor Brewing as well as many regional favorites including Chicago’s Metropolitan Brewing, New Jersey’s Flying Fish, Denver’s Joyride Brewing, Tampa’s Zydeco Brew Werks, and Cleveland’s Terrestrial Brewing filing bankruptcy.

Some of these brands hope to survive, but others, including Anchor Brewing, fell into Chapter 7 liquidation. Now, another domino has fallen as a popular regional brewery has filed for Chapter 11 bankruptcy protection.

Overall beer sales have fallen.

Image source: Shutterstock

Covid is not the only reason for brewery bankruptcies

While covid deserves some of the blame for brewery failures, it's not the only reason why so many have filed for bankruptcy protection. Overall beer sales have fallen driven by younger people embracing non-alcoholic cocktails, and the rise in popularity of non-beer alcoholic offerings,

Beer sales have fallen to their lowest levels since 1999 and some industry analysts

"Sales declined by more than 5% in the first nine months of the year, dragged down not only by the backlash and boycotts against Anheuser-Busch-owned Bud Light but the changing habits of younger drinkers," according to data from Beer Marketer’s Insights published by the New York Post.

Bud Light parent Anheuser Busch InBev (BUD) faced massive boycotts after it partnered with transgender social media influencer Dylan Mulvaney. It was a very small partnership but it led to a right-wing backlash spurred on by Kid Rock, who posted a video on social media where he chastised the company before shooting up cases of Bud Light with an automatic weapon.

Another brewery files Chapter 11 bankruptcy

Gizmo Brew Works, which does business under the name Roth Brewing Company LLC, filed for Chapter 11 bankruptcy protection on March 8. In its filing, the company checked the box that indicates that its debts are less than $7.5 million and it chooses to proceed under Subchapter V of Chapter 11. 

"Both small business and subchapter V cases are treated differently than a traditional chapter 11 case primarily due to accelerated deadlines and the speed with which the plan is confirmed," USCourts.gov explained. 

Roth Brewing/Gizmo Brew Works shared that it has 50-99 creditors and assets $100,000 and $500,000. The filing noted that the company does expect to have funds available for unsecured creditors. 

The popular brewery operates three taprooms and sells its beer to go at those locations.

"Join us at Gizmo Brew Works Craft Brewery and Taprooms located in Raleigh, Durham, and Chapel Hill, North Carolina. Find us for entertainment, live music, food trucks, beer specials, and most importantly, great-tasting craft beer by Gizmo Brew Works," the company shared on its website.

The company estimates that it has between $1 and $10 million in liabilities (a broad range as the bankruptcy form does not provide a space to be more specific).

Gizmo Brew Works/Roth Brewing did not share a reorganization or funding plan in its bankruptcy filing. An email request for comment sent through the company's contact page was not immediately returned.

 

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