Catastrophic Disruption or Healthy Rebalancing? How The Halving Will Impact Miners

Catastrophic Disruption or Healthy Rebalancing? How The Halving Will Impact Miners

With the Bitcoin halving set to transpire in just a few days, analysts are predicting significant disruptions to mining operations.

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With Bitcoin (BTC) block rewards expected to halve during the early hours of May 12, many analysts are starting to weigh in on what the event will mean for the crypto markets and mining community.

Cointelegraph spoke to three analysts to get their unique takes on whether the halving is likely to comprise a “healthy rebalance”, or a catalyst for migrating hash power and rising fees. 

Analysts discuss impacts of halving on miners

Johnson Xu, the chief analyst at TokenInsight, predicts the halving will have a significant impact on miners.

“A large percentage of older generation miners such as S9s will be shut down in the short term, and phase-out from the network permanently in a few months post-halving,” Ji stated. 

“The bitcoin halving will result in the network in short term chaos, however, once the difficulty adjustment kicks in and self-adjust to an equilibrium state, we will see the bitcoin network back to a stable position quickly. The halving is positive to the industry in the long run.”

“Bitcoin halving is a healthy rebalance to force the network to re-adjust itself into an efficient network where miners can make sufficient margin,” Ji concluded.

Halving to impact miners

While Zach Resnick, managing partner at Bitcoin SV (BSV)-focussed investment firm, Unbounded Capital, agrees that the halving will disrupt mining operation, he predicts the event will comprise anything but a healthy rebalance.

Resnick argues that the halving will wreak havoc on BTC miners and drive a migration of hash power to rival chains such as BSV or Bitcoin Cash (BCH) alongside heavy price losses.

“At the moment of the halving, many miners will become unprofitable, and some will likely move to mining BCH and BSV,” said Resnick. “As miners fall off the BTC network, block times will lengthen. If price falls, then more miners will fall off the network.” 

“If transaction volume increases, fees could quickly spike to unusually high levels since block space will be more scarce due to the longer block times. High fees can make headlines that see prices continue to fall, block times continue to lengthen, and fees continue to rise.” 

“Because we don’t believe there is a fundamental reason for prices to increase, we think it is somewhat likely that speculators waiting for a price surge will cut bait if price is stagnant, and very likely speculators will sell if prices are dropping quickly.” 

“Many miners are also highly leveraged and may seek to front-run an exit if they no longer believe that a price surge is imminent,” he added.”

Will prices rise after the halving?

By contrast, NEM Ventures’ head of trading, Nicholas Pelecanos, stated that the halving “has historically signaled the start of Bitcoin’s most tremendous bull runs.” 

However, Pelecanos notes that the reduction in block rewards usually triggers “a brief sell-off” alongside an immediate decline in hashing power.

“The 2012 halving was followed by an immediate 10% sell-off and the 2016 sell-off witnessed an extended 38% decline. Both halvings were followed by an approximate 50-day decline in the hashrate.”

Pelecanos predicts that the disruptions to miners may be temporary, stating: “If history were to repeat itself and bitcoin entered into a decline post halving, high operating cost miners may have to shut down their rigs until bitcoin reaches a sustainable price.”

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With the Bitcoin halving set to transpire in just a few days, analysts are predicting significant disruptions to mining operations.

Ripple Funds Blockchain’s Disruption of the Legal Industry

Ripple Funds Blockchain’s Disruption of the Legal Industry

Cointelegraph spoke to the Australian National University’s Scott Chamberlain on it’s law school’s new blockchain course

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A new blockchain course offered by the Australian National University (ANU)’s law school commenced this year with support from Ripple’s University Blockchain Research Initiative (UBRI).

Cointelegraph spoke to Lauren Weymouth, the senior manager of the UBRI’s University Partnerships Program, and Scott Chamberlain, the academic running the curriculum, to find out more about how blockchain can disrupt the legal industry and the partnership between the ANU and UBRI.

Chamberlain will be working alongside the developer behind the Toast XRPL Wallet, Richard Holland, to develop and deliver the course.

ANU law school launches blockchain course

Chamberlain states that the first unit will explore legal issues and theory surrounding distributed ledger technologies (DLT) and smart contracts. “The real fun begins in semester two,” Chamberlain states, continuing: 

“Students take what they have learned and develop a whitepaper outlining how they would use the ‘Lex Automagica’ technologies to deliver a ‘Justice Dividend’ — a significant and sustainable improvement in the ability for a large number of people to know and enforce their legal rights and obligations in an affordable, timely, and consistent way.”

‘Lex Automagica’ is the name that Chamberlain gave to “the concept of using a combination of technologies to automate law and regulation — to remove the middlemen as far as possible.” The project is run out of the ANU’s law school in Canberra.

UBRI provides $1 million in funding to ANU and Lex Automagica

In 2018, Chamberlain reached out to UBRI to explore implementing Lex Automagica using Codius — Ripple’s platform for hosting smart contracts and programs. Lex Automagica would become part of UBRI’s initial intake. In February 2019, UBRI pledged $1 million toward research and developing courses examining the implications and applications of blockchain technologies for law.

Laren Weymouth of UBRI states that the program “first connected with Scott in May 2018, when he reached out to Ripple’s business development department to start discussions about a leading Australian university that was developing legal apps for the XRP Ledger using Codius. His timing perfectly coincided with Ripple launching UBRI, and we officially welcomed Australian National University (ANU) into the program shortly after.” 

“ANU is among the few partners researching the application of blockchain in law, so we look forward to watching their progress unfold to help address the pain points that exist in legal processes today,” she adds.”

Ripple believes DLT can fix ‘broken processes’ in legal system

Weymouth states that UBRI believes “blockchain has the potential to help simplify the broken processes that exist in the legal system today.” 

“For example, imagine a world in which legal disputes could be resolved without having to engage the courts? This could be achieved through the advancement of smart contracts, which ANU and other law schools we partner with – such as UPenn Law, Rutgers Law, and Berkeley Law – are looking into, alongside policy and regulation.“

UBRI to expand global footprint

Weymouth states that since launching in 2018, the UBRI has come to include more than 35 university partners and distribute more than $50 million in funding. 

She describes the initiative’s funding as “strictly philanthropic and unrestricted,” emphasizing that “there are no strings attached” and university partners “are free to allocate the funds however they see fit.” 

“Our only requirement is they pursue research and innovation in blockchain, which can be applied across a variety of subject matter areas including law,” she adds.

Weymouth states that UBRI is looking to expand its global footprint, noting partnerships inked in 2019 with Kyoto University and the University of Tokyo in Japan, as well as the National University of Singapore. 

Looking forward, the initiative hopes to engage institutions in Thailand, Peru, Abu Dhabi, South Africa, and Canada.

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Cointelegraph spoke to the Australian National University’s Scott Chamberlain on it’s law school’s new blockchain course

Riot Blockchain Cites COVID-19 Disruption Risks on SEC Form 10-K

Riot Blockchain Cites COVID-19 Disruption Risks on SEC Form 10-K

Riot Blockchain says that COVID-19 will affect its cryptocurrency mining business in its annual report to the SEC

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Nasdaq-listed cryptocurrency mining firm, Riot Blockchain, filed its Form 10-K annual report to the United States Securities and Exchange Commission (SEC), March 25.

Among a long list of other potential risk factors to the business, the report assesses the potential disruptions due to the COVID-19 pandemic.

COVID-19 will affect cryptocurrency mining business

As part of the Form 10-K a company must include information about any significant risks to its business. Riot further subdivides these risks into several sections, although interestingly lists the risks from COVID-19 as a cryptocurrency-related risk, rather than a general risk:

“Our business will be adversely impacted by the effects of the novel Coronavirus (COVID-19). In addition to global macroeconomic effects, the novel Coronavirus (COVID-19) outbreak and any other related adverse public health developments will cause disruption to the activities of our international suppliers and, potentially, our mining activities.”

The report goes on to state that the company already has and will experience further disruptions to operations, due to quarantines, self isolation and other restrictions of movement, preventing employees from performing their jobs.

According to the report, Riot has six full-time employees, with activities relying on three consultants to manage and maintain mining rigs.

Biggest risk to third-party supply chain

While the risk of the new coronavirus to six employees and a warehouse full of Antminers may be limited, the effect on third-party offices and factories, border closures and supply chains could prove more drastic.

Riot cites the fact that replacements for obsolete mining rigs or spare parts to repair existing machines may no longer be available. However, as Cointelegraph reported, the company recently received 4,000 new S17 Antminer Pro machines, initially ordered at the end of last year.

Finally, the report states that a wider lockdown, including mandatory business closures, would adversely affect operations. Regulators have not designated cryptocurrency an essential industry.

Lowering expectations in advance?

COVID-19 is by far not the only risk cited by Riot in its annual report. In fact a full 18 pages of the 48-page document is devoted to risk factors.

The report also notes that the company is not profitable and has incurred losses since inception. It expects to continue incurring losses for the foreseeable future, which may increase as the company develops its business. Mining costs currently outpace mining revenues.

The report also cites previous failures of the company in the animal health and life-sciences industries, and suggests that there is no guarantee that its pivot to a cryptocurrency mining strategy will be any more successful.

Riot was one of a number of companies who took advantage of the cryptocurrency boom in 2017, by changing its name to include the word ‘blockchain’ to see its share price rocket from $8 to over $40.

It has since made cryptocurrency mining its core business, although it also launched a cryptocurrency exchange in 2019, which it has since given up on.

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Riot Blockchain says that COVID-19 will affect its cryptocurrency mining business in its annual report to the SEC

Discovering Insuretech: Blockchain Disruption of the Insurance Sector

Discovering Insuretech: Blockchain Disruption of the Insurance Sector

Wide implementation of blockchain can make insurance premiums plummet

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The business of insurance is enormously complex: The process of evaluating and managing a variety of risks that individuals and organizations face every day inevitably involves coordination of the multiple parties’ efforts and reconciliation of extensive records. Both aspects make the insurance sector an appealing ground for blockchain-based optimization — and indeed, distributed ledger technology is a prominent feature of a rising tide of technological innovations, collectively known as insuretech, that seek to bring new efficiencies into the industry.

As Cointelegraph previously reported, research firm MarketsandMarkets in 2018 projected that the value of blockchain components in the insurance market will see a compound annual growth rate of 84.9%, reaching $1.4 billion by the end of 2023. A 2019 insuretech-specific report by KPMG noted that blockchain was not a “buzzword” or “future innovation” for the insurance space but that it is already operational in flight delay and lost baggage claims systems and is expected to improve other risk domains such as shipping and, somewhat more remotely, health care.

A 2018 World Insuretech Report put together by a consulting firm Capgemini and fintech industry association Efma named blockchain one of the technologies set to disrupt the insurance business, alongside artificial intelligence (AI), drones, wearables and robotic process automation. The document cited enhanced information exchange, increased trust and efficiency of smart contracts as major improvements that the technology offers.

Hartford’s Insuretech Trends report observed that insurance companies already utilize blockchain technology to “streamline processes, provide transparency, and enhance security,” as well as for data management and protection, reducing administrative costs and boosting consumer trust and loyalty. All in all, there seems to be a host of actual and potential improvements associated with blockchain implementation in the insurance industry. Here is a more detailed look at some of the major areas of optimization.

Automating processes

Verifying the authenticity of claims is a huge part of an insurance company’s workflow. Legacy systems that rely on standalone databases and paper records are slow and expensive: Manual approval of a claim may drag for days and even weeks, and the process still leaves room for error or abuse. Making these procedures fully automated — through a combination of a tamper-proof ledger and self-executing smart contracts — could dramatically lower insurers’ operational costs, resulting in lower premiums for their customers.

One example of such optimization, reported by Cointelegraph in late May 2019, is a pilot blockchain-based platform that the United States insurance powerhouse State Farm is jointly testing with the United Services Automobile Association (USAA), a military-affiliated financial services group. The solution is designed to speed up the auto claims subrogation — the last stage of a claim’s processing when the insurer retrieves the costs it had paid to its wronged customer from the at-fault party’s insurer.

Another successful optimization case is openIDL, an IBM blockchain-based network maintained by the American Association of Insurance Services (AAIS). Because insurance companies are subject to tight regulatory oversight, the paperwork related to compliance eats up a good share of companies’ resources. OpenIDL helps automate regulatory reporting, making things easier for both insurers and authorities.

Fraud prevention

Insurance fraud, facilitated by the lack of interoperability between the industry participants’ databases and general complexity of paperwork that accompanies claim settlement, is very common in developed countries. In the U.S. alone, estimates of aggregate losses from this type of offence is estimated at anywhere between $40 billion and $80 billion every year. While it is insurance companies that sustain direct losses, the burden ultimately gets equally shared between all the households that use their services, in the form of increased premiums.

According to the analysts from CB Insights, the fundamental improvement that blockchain technology could bring to the area of combating fraud lies in the potential consolidation of insurers’ databases. When all claims are stored on a distributed ledger, wrongdoers are left with a very slim chance to, for example, file multiple claims on a single insured event with different companies. A unified transparent database of claims would also enable interested parties to track claimants’ suspicious behavior and identify patterns that might suggest abuse.

While the vision of a universal distributed database accessible to everyone in the industry remains a somewhat distant one, standalone blockchain verification systems are already getting rolling. One example is the global insurance broker Marsh, which is reportedly poised to unveil its Hyperledger-based proof of insurance platform. Recently, fintech startup BlockClaim has procured 500,000 British pounds ($627,000) of venture capital toward its blockchain/AI solution designed to automate the processing of insurance claims. The firm reports faster settlements, reduced claim costs and successful implementation of AI-based features for fraud detection.

Health care

One particular domain in which the arrival of operational blockchain solutions will change the game entirely is health care insurance. Right now, efficiently managing and coordinating patient data between doctors and medical institutions while preserving patients’ confidentiality is a major stumbling block for the sector. According to a CB Insights report, sparsity of data often leads to claim denials, costing medical care providers some $262 billion each year.

Related: How Blockchain Improves Daily Health Care Routine, Explained

One of blockchain’s great promises is its potential to enable actors to exchange data securely while precisely customizing who is allowed access to which information. Once such a comprehensive distributed medical database is up and running, patients will be empowered to decide which parts of their medical history to share with a certain doctor or clinic. In turn, medical professionals and administrators will see a major efficiency boost from having instant access to their customers’ blockchain-verified health records.

Although creating a universal ledger of medical records is an enormous task that will require industry-wide cooperation, there are viable transitionary solutions capable of optimizing industry record-keeping in the short run. One of them is MedRec, an MIT Media Lab project. The Ethereum-based system is designed to store not the records themselves but hosts smart contract-enabled permissions that nodes on the network — i.e., patients or medical institutions — can configure to authorize other participants’ access to the database.

Life insurance

Health records also play a significant part in determining the premiums that holders of life insurance policies have to pay. Once all patients have their medical histories moved onto a secure medical database running on a blockchain, it will become possible for life insurers to calculate premiums and issue policies automatically.

According to Ignite Outsourcing, finding a beneficiary upon the insured’s death is sometimes problematic due to both family dynamics and flaws in record-keeping. The practical effect is that, currently, $7.4 billion of unclaimed life insurance money is sitting in carriers’ bank accounts. With smart contracts triggered automatically in the event of a policyholder’s death, this may become much less of an issue — given that the order of potential beneficiaries is spelled out clearly in the policy.

The authors of the report also note a little-known fact that nothing prevents the owners of life insurance policies from selling them to third parties. Whereas such deals are quite uncommon now, they could become more convenient when policies run on a blockchain. A startup called fidentiaX, branding itself as a marketplace for tradable insurance policies, seeks to expand this niche by offering a platform for buying and selling tokenized insurance contracts.

Property titles

Title insurance is a $15 billion market that is projected to keep growing steadily over the next few years. This type of contract is different from most “traditional” insurance areas in that it protects not from future losses but against claims on something that had allegedly happened in the past — for example, a previous owner’s tax lien. A title policy will come into play if a challenge arises to the legality of the new owner’s or lender’s property right.

Insuring title rights requires the ability to verify that these rights are well-substantiated by the appropriate records. In this sense, the disruption that blockchain will bring to the title insurance business is just another facet of a more general disruption of the entire title record-keeping process. Storing titles on an immutable ledger will minimize the risks associated with loss or forgery of records, allowing legitimate property owners to easily prove the validity of their claims.

Several months ago, two major players in the U.S. market, First American Financial and Old Republic Title Insurance, joined forces to create a blockchain-based network of title insurance underwriters designed to enable industry participants to exchange previous insurance records.


Insurers also need their risks hedged. If a major disaster occurs, a company may get flooded with claims that will drain its reserves too quickly and threaten its solvency. To guard against dire scenarios like this one, insurers purchase coverage from reinsurers or participate in consortium-style intra-industry agreements.

Currently, underwriting reinsurance and negotiating policy conditions is an inefficient and lengthy process. Insurance firms typically rely on several reinsurers at once, creating the need for multiparty data exchange — fertile soil for blockchain to step in and streamline the complex web of interactions.

In October 2016, five major European insurers teamed up to form the Blockchain Insurance Industry Initiative, or B3i. They have since been joined by an additional dozen of big industry players representing Europe, Asia and North America. The global consortium has since been at work developing and testing a shared smart contract system that provides reinsurance for natural disaster insurance. The system, whose working prototype was rolled out in 2017, is capable of automatically processing data from the affected parties and determining the size of payouts. The arrival of the fully operational system is expected in 2019.

Peer-to-Peer Insurance

Peer-to-peer (P2P) insurance is a model that predates blockchain, although it is remarkably consonant with the ideology of decentralization that permeates the crypto space. The idea is that, instead of relying on a central insurer and an underwriter, a group of individuals pool their resources together to create a safety net for whoever from their ranks incurs a loss as a result of an unforeseen event. Participating in such an arrangement, usually comprised of the people whom one knows personally, is generally more affordable than purchasing a corporate-sourced policy — and arguably offers a more pleasant experience.

However, for all the transparency and convenience of such friend pools, they can only scale up to a certain point before the need for professional, centralized management arises. Here enters  blockchain to save the day. The whole P2P transactional structure of these “horizontal” risk pools closely resembles a decentralized autonomous organization (DAO). As PwC analysts have it, DAOs are known for their “capacity to manage complex rules among a significant number of stakeholders,” which is a perfect recipe for projecting the peer-to-peer insurance model to a new level of efficiency and scalability.

Going forward

With all the potential efficiencies blockchain is set to bring to the table, many of the most impressive insurance-related use cases are still aspirational. The bulk of the technology’s disruptive promise resides in the domain of coordination enhancement. In order to fully capitalize on this potential, the industry will have to rally behind the idea of aligning standards of information exchange, shared data pools and broad cooperation. Initiatives like B3i will have to encompass the majority of industry stakeholders, which is a gargantuan task, given the sector’s size and inertia.

Regulation also remains a potential impediment for blockchain’s explosive expansion. Insurance companies are subject to heightened regulatory scrutiny and so is distributed ledger technology. Bringing both together will require cutting through a lot of red tape, as well as the creation of new rules to guide the symbiosis.

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Wide implementation of blockchain can make insurance premiums plummet