Unchained - Bitcoin Miners Going Bankrupt? Here's How Crypto Winter Is Impacting the Industry - Ep. 415

Starting point is 00:00:00 Hey everyone, just a quick note before we begin. Unchained is doing its annual survey. Head to surveymonkey.com slash R slash Unchained 2020 to tell us how you think we're doing and how we could improve, whether it be on the podcast, in the newsletter, or in our premium offering. Looking forward to hearing your thoughts. Again, the link is surveymonkey.com slash R slash unchained 2022. And you can also check out the show notes for the link. And now on to the show. Hi, everyone. Welcome to Unchained. You're a no-hype resource for all things Crypto. I'm your host, Laura Shin, other of the Cryptopians. I started covering crypto seven years ago, and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the November 4th, 2022 episode of Unchained. Want to know what you missed in the last 24 hours in crypto? Unchained's daily news bits are now on YouTube and TikTok, with the biggest headlines in 60 seconds or less. DefiSaver is an all-in-one management app with unique automation options for top lending protocols such as AVE, Maker, Liquity, and Compound. Check them out on Ethereum Mainnet, Arbitrum, and Optimism. Avalanche was built to provide a robust Web3 infrastructure with flexible tools, so you can build anything you want, any way you want.

Starting point is 00:01:21 Visit avox.network to discover how you can. With the Crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code Laura. Link in the description. Today's guest is Nick Hansen, co-founder and CEO of Luxor Technologies, a mining software services company. Welcome, Nick. Hi, thanks for having me on.

Starting point is 00:01:43 This week, there's been a slew of mostly negative news about Bitcoin miners. And it even goes back to September when crypto mining data center operator compute North filed for bankruptcy. Mining firm Argo Blockchain attempted to raise $27 million, but that fell through. through and that sent its stock price plunging. And Core Scientific, the largest miner by hash rate, has said that it may have to file for bankruptcy. Still, at the same time, it actually looks like a few companies are weathering the storm.

Starting point is 00:02:11 But why don't you just give us the general overview? How would you describe the state of affairs for Bitcoin mining right now? Yeah. Thanks for the question. So right now we're seeing, in my view, the lowest margin environment that we've ever seen for Bitcoin miners to date. And there's a couple of reasons for that. One, the metric of their output is called hash price.

Starting point is 00:02:34 And hash price is now at the lowest we've seen since 2020, which was just after the most recent having. And what that means is miners' revenues are as low as they've ever been as of right now. The other end of that equation is their inputs, which is generally just electricity cost. But we're seeing high electricity costs across the board. So if your inputs are the most expensive they've ever been and your outputs are the lowest they've ever been, that means the amount that you can make in the middle, the margin is the lowest it's ever been. And so that's what's really pressuring miners right now is just the reduced margin that they have to operate under currently. That is compounded by the fact that we saw a trend start around 18 to 24 months ago where miners were taking out loans to finance future.

Starting point is 00:03:25 or hash rate effectively leveraging up. And the amortization schedule of that debt over the, generally a pretty aggressive term around 24 months or less is causing them to be cash flow negative. So some of them generate net profit, but they don't generate enough free cash flow to pay for their debts. And that's the situation that we're in right now. We've seen that with many of the miners that have gone under. So that's the super high level of where we're at. in Bitcoin mining and why all of these companies are feeling the pressure, more pressure than they probably ever felt. Yeah, one thing I also want to ask about was that I read at this moment that in the U.S. alone, more than a quarter million of brand new mining rigs are still sitting

Starting point is 00:04:12 unused. And the exact number of unused rigs isn't totally clear, but in a coin desk article about this, they wrote, whatever the exact number is, this much is clear. The economics at the core of crypto are completely out of whack. So how did this end up happening? So the number of machines sitting latent is due to a confluence of events. We've seen, again, increasing prices. So there isn't that immediacy by miners to get machines turned on. So right now they're seeing, okay, well, if I can't get a good deal for my hosting rate or I can't get a good deal for my power costs, I'd rather just let these miners sit and maybe wait for a better time to plug them in. And then there's also the other end, there's actually not a lot of hosting space available. So even if miners did happen to say,

Starting point is 00:05:04 okay, I'm willing to take the risk and operate in this super low margin environment, they may not even be able to find somewhere to plug in. You know, the big bull run up to 65K of actually around this time last year, the hosting space hasn't caught up with that quite yet. And so, you know, we've seen, you know, compute North was going to be potentially the largest host in North America. And they, you know, they succumb to the, to the bear market. And I think we're starting to see that that hosting space is continuing to be constrained. So that means miners just aren't getting plugged in. And that may continue, especially as we see this lower margin environment where there just isn't the,

Starting point is 00:05:44 the urgency to plug in machines. So can you walk us through the calculus? that miners have to make when it comes to determining whether their efforts will be profitable. You mentioned a few of these things like energy and the hosting and all that. So, you know, just, yeah, walk people through. Yeah. So that machine behind me is called an S9. It's very old.

Starting point is 00:06:07 I use it for testing. That produces around 10 terahash per second. The hash price today is about seven cents, which means seven cents per terah hash per second, which means that that thing will produce around 70 cents per day. If we take, and if we look back at this time last year, hash price was around 40 cents. So that thing would be producing significantly more than it is now. So the problem, so what we're seeing now, so it'll be about $4 a day. So that is the revenue that miners make.

Starting point is 00:06:38 And so since we're in this very low, low hash price environment, I'm not as incentivized to plug in machines if I'm only going to make seven cents per tarahash per second right now. in 2020 that we did see hash price this low or close to this low in 2020. But the main difference was the energy price was significantly lower across the board. And so that was my, you know, at that time it was still worth it to get machines plugged in. That's why we didn't see as many machines sitting unused. Now, the calculus that you would use to determine whether I should plug in a machine or not is you take, you know, take your input costs, subtract them from your revenues, your potential revenues, and determine what's your market. would be and decide if that makes sense for your business model.

Starting point is 00:07:23 Traditional wisdom would indicate the miners are looking for somewhere between a two-year and 30-month payback period. But right now we're seeing payback periods much, much longer than that, which means that miners, if they make an investment today, aren't going to be in the green or in the black for probably close to five years, which given traditional wisdom would indicate that you should not deploy right now. So that's where we're at right now, unless you have some crazy low power rate or you've got an innovative way of reducing your input costs. That's going to be the calculus until hash price turns around.

Starting point is 00:08:02 So traditionally, miners have been able to relocate to seek out cheaper electricity fees. I haven't seen much talk about that. Why is that not something people are pursuing? So we're at much different scale this cycle as well. This cycle, we're seeing individual miners with individual mining companies with hundreds of thousands of machines. Moving that is an operational overhead is massively operationally intensive. Going and physically unplugging 100,000 machines, putting them in boxes, paying for the shipping to put them somewhere else. It's very intensive. So a lot of folks or a lot of companies would prefer to just sit on that inventory at their hosted site. There's also not anywhere for them to go right now either. Generally, they would go to other places around the world, but energy prices across the globe are high, except for in some countries, which are now sanctioned and you can't really do business with them anymore. So that's the reason minors right now are most likely not, they're not going to be able to, they're not moving

Starting point is 00:09:06 currently and they're probably not going to be able to move just because there isn't anywhere to go. Wow. Okay. And, you know, one of the bigger pieces of news that I referenced at the beginning was the possibility that Core Scientific would file for bankruptcy. Obviously, that is the largest minor at the moment. So what impact do you think that could have on the wider sector? So there's a multitude of events that could occur from CoreSai going under. One, they are also the biggest host. And so there's many companies that are with Core Scientific that are potentially not, going to be able to continue to operate. So we can see disruption. We can see second order disruptions from this event. Of course, I also has a lot of machines themselves. A lot of them are under secured by or they are undermining debt. So they're under debt. And so those those loans require the lender to take those as collateral. And most likely, if I had to guess, those lenders are

Starting point is 00:10:05 going to liquidate those machines rather than hold them or mine them themselves. And And I would bet if they do start to liquidate those machines, we could see a cascading event where the value of mining machines drop significantly over the next three to six months as those liquidations occur. Wow. Okay. Yeah. So we'll see what happens with that. It'll probably all play out over the next couple of months before the years end. So in a moment, we're going to talk more about potential solutions to what ails Bitcoin miners. but first a quick word from the sponsors who make this show possible. DefySaver is an all-in-one management app for the top lending protocols on Ethereum, including AVE, Maker, Liquity, and Compound.

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Starting point is 00:11:44 reliable blockchains. To learn more about Avalanche, visit Avox.network or follow on Twitter at Avalanche Avox. Explore the platform millions are using for its speed, stability, and scalability. Avalanche, create without limits. Back to my conversation with Nick. One interesting development I saw was the creation of a lending pool created by Maple Finance to help struggling miners. This is one of the DFI protocols. And they're already helping 10 miners and they're another 25 on the list. I was curious what you thought of this effort. So that has been a trend we've seen over the last couple of months is these so-called distressed mining funds coming to market to potentially aid and provide liquidity to miners. Now, they're certainly not doing this out

Starting point is 00:12:33 of the goodness of their heart. So there is going to be a, you know, there's going to be a premium for that capital. And right now, since there is such a demand for $4 for new capital, I haven't seen what the deal terms look like for these yet, but I have to imagine that they're very much in favor of the lender. Yeah, I did see the interest rate was around 18 to 20 percent and these loans are being offered on what's called a full recourse basis. Could you explain that? I think I sort of understand, But so, well, of course, so the 18% is, is actually a little bit higher than we would have expected to see in the, around this time last year. So most of the loans that were issued to big miners were on the order of 12 to 14, maybe 15%. It looks like they're adding on some more of risk premium.

Starting point is 00:13:23 We did see a few of those types of loans go out last year, but those were for smaller, more nation minors that were trying to lever up more, you know, in a risk. gear away. And then, of course, full recourse, meaning they'll be able to take, you know, not just the entity, but I believe that they can take the entire business. So they, sorry, they won't be able to take, not just the machines, but they'll be able to take the entire business. In that case is especially concerning if you are a minor, you're not going to, you're putting up the, you're putting up your entire business, not just the collateral for the loans. It's kind of like saying, when I go, when I go buy a car, If I use a full recourse loan for my car, not only can they repo my car, if I don't make my payments, they can repo my house or my boat or anything else that you, any other assets, your 401k, any other assets you might have to make themselves whole.

Starting point is 00:14:16 So certainly that's the most lender-friendly term that we've ever seen in mining loans. But there are certainly, and there are more of these distressed funds coming to bear. We've seen finance launched a $500 million. They had a $500 million pool of capital. Bit Deer put up $250 million in capital. And there's probably close to a billion dollars worth of, or more even of capital available to miners, but they are going to come at these exceptionally lender-friendly terms and rates. Is your sense that these are helpful or not helpful? It is yet to be seen. I'm certain anybody that's in a situation that needs capital would find them to be helpful. One of the

Starting point is 00:15:00 the reasons that most of these miners are in the situation of wayshuing that they're in is because they've already taken debt that had more favorable terms. And so I imagine packing on more debt with less favorable terms. I can't see how that turns out well, but there may be situations where it makes sense. Well, let's talk about some of the brighter spots in the market. Marathon, for instance, which is also publicly listed mined 650 Bitcoin on October, which was the highest monthly total it had ever seen. I think it was like roughly what it had mined. in all of Q3. Stronghold Digital was able to eliminate more than $67 million in debt and also restructure some debt. Bitcoin Minor CleanSpark bought almost 4,000 new machines. Canadian Minor

Starting point is 00:15:42 Digihost announced that it was debt-free and cash flow positive. What do you think separates these firms from their competition? So Marathon, they all have their own, they all have their own very specific reasons for being exceptionally well positioned, but it all mostly boil. down to being very liquid and having plenty of capital at the right time in the market. So they effectively timed the market correctly. Marathon has raised the most money of all of the publicly traded miners and they were able to keep a nice stash of that capital available on the sidelines and are able to deploy continually. Same with CleanSpark. They are buying sites and buying machines in a distressed environment, which means they're getting the best pricing that anybody's ever gotten.

Starting point is 00:16:28 So the marathon machines, those are machines that they purchased around this time last year and are starting to get turned on. And that's really exciting and great to see that they're able to operate that way. They didn't mention the, they do have exposure to compute North and they didn't mention that in the filing. So it's uncertain if the, you know, what their roadmap will be. We'll have to see what they're earning. They'll probably expand more during the earnings release. And so the miners that have done really well, really the common thread, is that they have cash on the balance sheet ready to deploy. They have low debt, low incumbrance,

Starting point is 00:17:05 and you have positive free cash flow, which means that they can continue to weather the storm without having too much dilution. There's always been talk about how Bitcoin mining could be combined with producing renewable energy. And I did see that there was one new startup, Aspen Creek Digital, which raised $8 million in a series A that is focused on that. Do you see this bear market as a good time for Bitcoin miners to kind of try alternative methods for, you know, I mean, really any aspect of their business? You know, I hold personally that the Bitcoin mining is going to revolutionize many parts of our lives. And specifically, Bitcoin mining will revolutionize the energy, the green energy transition. Certainly, Luxor is an investor in Aspen Creek.

Starting point is 00:17:51 We work very closely with them and really like the team there. And I view that type of investment really accelerate. Right now, as cash is king, most of the investments are, most investments are probably going to come, you know, be a little bit slower. But I do think that as Bitcoin miners continue to monetize latent or stranded energy and continue to provide that demand response service to the grid, will continue to see new investment made, you know, into Bitcoin miners specifically through the lens of energy innovation. And I think that that's going to be the trend of the next five years. I actually have been writing some pieces specifically on this because I think that's

Starting point is 00:18:31 one of the most exciting parts of the Bitcoin mining industry. Talk a little bit more about that. When you say that you think this will be the trend of the next five years, like where do you see that going? So I think right now we'll see Bitcoin miners get co-located very closely to sustainable generation sources. So let's be a little bit more tangible. So Bitcoin miners will be co-located next to most like wind farms and solar farms. A wind farm, it's very hard to predict. You could maybe predict what tomorrow's generation is going to look like, but it's very impossible to predict what December 12th generation is going to look like for a wind farm. And there are costs associated with curtailing, meaning reducing the amount of energy produced

Starting point is 00:19:13 by a wind farm because you have to like turn on the brakes and all that stuff. It's much easier to just spin up some sort of load resource like a Bitcoin mine underneath. So on energy grids, there's this thing called the demand curve delta, which is the amount of demand at the peak and the amount of demand at the trough of the day. You know, around the U.S., that delta is somewhere around 200 gigawatts on any given day. If you could produce some way to raise the trough and lower the top and basically reduce that delta, it would reduce the amount of loss and improve the efficiency of the grid across the board. So I think that Bitcoin mining comes in and makes a really compelling argument as to why it should be used for providing this consistent base load. As we continue to progress towards a renewable energy future, our generation assets become more and more intermittent. And so there needs to be extra capacity to provide all of the energy for all of the demand that there is at different times.

Starting point is 00:20:15 So we also need to also invest in nuclear energy. And we've seen miners getting collocated with nuclear energy assets as well. So lots of reasons why Bitcoin mining will continue to incentivize and lead the green energy revolution. And I think we're just getting started. And that's been creak is a great example of that. So last quick question, you know, obviously at this moment, I don't really know what is going to catalyze the Bitcoin price to go higher. So we could continue to see a trade in this sort of low $20,000 range for quite a bit. And I was just wondering, assuming that this sort of shakeup in Bitcoin mining continues,

Starting point is 00:20:56 what do you see is happening on the other side, aside from what you mentioned in terms of this green revolution shakeup? Do you see the industry changing in other ways as well? There's a couple things. One, we've never had a real return on cash throughout the existence of Bitcoin's life, meaning there's never been a real interest rate. There's actually an interest right now that can be generated on cash. And now this is the first time any crypto, Bitcoin, any of them, have had to compete with that environment.

Starting point is 00:21:27 So investors are going to remain less risky as there is this real return on cash. And we'll see how that affects the overall ecosystem. The ecosystem never existed when there was real returns on cash. Now, as for as for Bitcoin mining specifically, again, the miners are capital intensive. They require a lot of capital to get up and running. And so that capital is going to come at a higher cost. And so we may see slower expansion. You know, the investment into Bitcoin mining may become a bit muted over the next three to five years as this, you know, this washout occurs.

Starting point is 00:22:02 You know, I would imagine that over the next three to five years, it will be a slow growth. But there will certainly be another run. just like there is in every commodity's market. It's just a matter of being well positioned. So miners that are able to build now like Marathon and Clean Spark are probably going to be the best position for taking advantage of that next run. All right.

Starting point is 00:22:24 Well, this has been a super informative interview. Thank you so much for coming on Unchained. Great. Thank you for having me. I really appreciate it. You can follow Luxor at Luxor Tech Team or you can follow me at Hashbender on Twitter. Very active there.

Starting point is 00:22:38 And if you have any other. questions or would like to know more, I'm happy to answer. Perfect. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. Join over 10 million people using crypto.com. The easiest place to buy, earn, and spend over 150 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 8% cash back instantly. Plus, 100% rebates for your Netflix, Spotify, and Amazon. Prime subscriptions. Download the Crypto.com app now and get $25 with the code Laura. Link in the description. Thanks for tuning in to this week's news recap. Elon Musk's purchase of Twitter has

Starting point is 00:23:26 repercussions for crypto. Elon Musk's acquisition of Twitter has firmly grabbed the attention of the crypto community. The billionaire founder of Tesla announced plans to charge $20 a month for the Twitter blue checkmark, which Twitter has long used to verify public figures on the social media platform. But that move attracted a lot of criticism, most prominently from horror writer Stephen King. Musk later lowered the price to $8 a month and added a few additional benefits. The crypto community still wasn't happy. Batalik Boutteran tweeted Musk's idea could damage the blue checkmark's anti-scam role. Indeed, for a while, scammers would take over verified accounts and use them to nefarious purposes. However, Musk's purchase of Twitter will have a more tangible impact on specific players in crypto. The

Starting point is 00:24:11 Block reported that FtX founder Sam Bankman-Fritz stake in Twitter would give him the right to receive $50 million to $100 million based on Musk's purchase price. Speaking of crypto exchange CEOs, Binances Changpeng Xiao, who is a minority investor in Twitter, said he would join Twitter's board if invited by Musk, though he mentioned that he is not dying to take up the opportunity. Coinbase misses revenue estimates but increases interest income. Coinbase, the largest crypto exchange in the U.S. by trading volume announced its Q3 earnings late Thursday. The company reported a decline in monthly

Starting point is 00:24:47 trading users, but the number came in higher than expected. Additionally, analysts were projecting quarterly revenue of $641 million, but the exchange reported revenue of only $590 million. One notable item in its earnings was the interest income. Jeff Roberts, the editor of Fortune crypto, pointed out that the interest income from USDC tripled since the last quarter, surpassing the $100 million level. USDC is a stable coin that Coinbase owns through a consortium with Circle, the issue of the token. As users deposit U.S. dollars to mint U.S.D.C., the two companies use those dollars to buy highly liquid interest-bearing assets, like treasury bills. Roberts highlighted that the income derived from U.S.D., especially in a rising interest rates environment, could help Coinbase navigate the crypto winter.

Starting point is 00:25:35 Following the earnings release, the company's stock, coin, first dropped by, 4%, but then recuperated the losses to trade at 3.5% higher than the closing price. Alameda's balance sheet stirs unease. Alameda Research, Sam McMahon-Freid's trading shop, held $14.6 billion worth of assets as of June 30th, according to a private document reviewed by CoinDesk. It's unclear if this represents all of the company's assets or just a portion. However, if it is a complete representation, the largest asset on the company's balance sheet is unlocked FTT, the token issued by Bankman Freed's crypto exchange, FTX.

Starting point is 00:26:14 CoinTust reported that Alameda holds $3.66 billion worth of unlocked FTT and $2.16 billion worth of FTT collateral. That so much of Alameda's holdings were issued by its sister company raised as concerns. Corey Clifston, the CEO of Investment Platform Swan Bitcoin, said, it's fascinating to see that the majority of the net equity in the Alameda business is actually FtX's own centrally controlled and printed out of thin air token. Surrogit Chatterjee steps down as Coinbase's chief product officer. Coinbase's chief product officer Surrogit Chatterjee is stepping down during the company's

Starting point is 00:26:53 latest restructuring. Chatterjee will be leaving on November 30th but will continue to advise the crypto exchange until February 2023. In a filing, Coinbase said that it is grateful for Mr. Chatterjee's contributions throughout his employment at Coinbase. Jeff Roberts, author of Kings of Crypto, and Book on Coinbase, tweeted, This guy was hired for $646 million, exclamation point, and most memorable thing he did was Bungle Coinbase's NFT launch. Cryptolender Hodlnought reveals a $190 million loss in TerraUSD. Bloomberg reported that in battle Cryptolender Hodlnott lost about $190 million when Doe Kwan's

Starting point is 00:27:34 Terra ecosystem collapsed in May. According to Bloomberg, officials appointed by the Singapore High Court claimed that Hodel Nats directors downplayed the extent of the group's exposure to Terra and Luna around the time of the coins collapse. Speaking of troubled lenders, the creditors committee for bankrupt firm Celsius Network is investigating whether the crypto lender was a Ponzi scheme after customers raised concerns about how the company had used their money. A lawyer for the committee said that it hadn't determined whether the company was a pawnsy scheme,

Starting point is 00:28:06 Ponzi, but noted flags that came up. Doe Kwan said to be living illegally in Europe as investors Sue. KBS, the South Korean national broadcaster, reported that prosecutors obtained a chat log in which Kwan directed an employee to manipulate the price of terra. A prosecutor's office official told KBS, I can't reveal the details, but it was a conversation history where CEO Kwan specifically ordered price manipulation. Prosecutors have also ascertained that he is living in Europe as an illegal immigrant, but because his passport has been invalidated, he cannot legally travel between countries. Additionally, the Wall Street Journal reported that a group of 350 Terra investors who lost $57 million when the stable coin imploded are suing the founder of Terraform labs.

Starting point is 00:28:54 The lawsuit claims that Kwan made fraudulent misrepresentations about the stability of UST. The group, working with a top Singaporean law firm, wants Kwan to reimburse them for their losses, plus pay aggravated damages. Whether Kwan was responsible for Terra's collapses still hotly debated. Some argue that the Korean co-founder committed fraud, but others say that he's not guilty because the code was open source and everything was public. Vatolik shares his opinion on crypto regulation. In recent weeks, Sam Bankman-Fried sparked a heated debate after he suggested that regulations apply to defy front ends or websites. Vatolic Boudarin, the creator of Ethereum, tweeted, especially at this time, regulation that leaves the crypto space free to act internally, but makes it harder for crypto projects

Starting point is 00:29:40 to reach the mainstream, is much less bad than regulation that intrudes on how crypto works internally. While the debate rages on within the industry, Securities and Exchange Commission Chair Gary Gensler defended the agency's actions against crypto companies during a speech in New York City. Speaking about the cases against Coinbase and BlockFi's savings accounts, Gensler said that companies that fail to properly register a security or register, as investment companies violate the securities laws, regardless of the form or name of the securities involved. The SEC is getting some pushback from big names in the crypto industry over its case against Ripple Labs over an alleged sale of unregistered securities. This week, industry lobbying

Starting point is 00:30:22 group, the Blockchain Association, filed a letter to the court in support of Ripple. Coinbase, the largest crypto exchange in the U.S., asked the court if it could file a similar brief. Coinbase is not alone in supporting cases in the crypto ecosystem, also this week, major venture capital firm A16Z, said that it is looking to join the ongoing Commodity Futures Trading Commission or CFTC lawsuit against Uki Dow. The VC firm says the CFTC should serve individual members of a Dow rather than targeting the Dow as a whole. Instagram to become an NFT marketplace.

Starting point is 00:30:59 Social media platform Instagram announced it will support a Polygon-owned NFT marketplace that lets creators mint and sell NFTs within the platform. Disclosure, I write a newsletter from Meta's bulletin. Initially, this new end-to-end toolkit will be tested among a limited number of creators, including artist Amber Vittoria and photographer Drifter Shoots, among others. Furthermore, Meta, Facebook, and others partnered with RWeave, a decentralized storage network to store the digital collectibles from creators on Instagram. RWeave's token jumped 50% following the announcement and is trading at around $15.

Starting point is 00:31:39 Fidelity expands crypto offering to retail investors. Fidelity investments, the third largest asset management company in the United States, has opened a waiting list for Fidelity crypto, the firm's retail product. The offering will enable no commission trading of BTC and ETH, but there will be a 1% spread in the trade execution price, according to the block. The move, in combination with the recently announced crypto offering for its institutional clients shows Fidelity's increasing interest in cryptocurrencies. Moreover, Digital Asset Platform backed holdings announced it would acquire

Starting point is 00:32:13 Apex Crypto for up to $200 million to bolster BACC cryptocurrency product offering. Apex crypto offers regulatory, execution, settlement, and custody solutions. Backed will initially pay $55 million in cash and an additional $145 million in stock and seller notes, depending on financial metrics. Goldman Sachs is on a similar path to fidelity. The banking giant partnered with index provider MSCI and crypto data firm Coin Metrics to develop a crypto classification service

Starting point is 00:32:44 to help create an easier framework for institutional investors. Web3 companies struggle to maintain their employees. Popular Web3 studio, Deborah Labs, laid off 22% of its staff, citing market conditions. Roham Garraghouselu, founder and CEO of the company, said,

Starting point is 00:33:02 are the last thing we want to do, but they are necessary for the long-term health of our business and communities. While recognizing that Web3 and Crypto represent the future, he acknowledged that the macroeconomic environment doesn't allow them to be in control of the timing. Mike Novagrath says Galaxy Digital could also reduce the size of its team by 15% to 20%, according to a Bloomberg report. As the company has 350 employees, this reduction would mean approximately Sony 5 lost jobs. Over 1,000 Salana validators go offline. Cloud service provider Hetsner blocked all Solana network activity on its servers on Wednesday, resulting in over 1,000 validators of the Salana blockchain going offline. As a consequence, more than a fifth of Salana stakers stopped

Starting point is 00:33:46 earning rewards. Anatoly Yakovenko, co-founder of Salana Labs, the entity behind the blockchain, urged users to move their stake to validators that don't use Hetzner as a service provider. The issue raised concerns not only Solana, but other blockchains as well. Hedzner is a provider for validators on other networks such as Cosmos, Ethereum, and Cardano. On Monday, Crypto derivatives exchange, Deribit, suffered a $28 million attack. Hackers obtained access to Deribet's hot wallet, stealing $28 million for the crypto assets, but the company did not disclose the compromise until Wednesday. Deribate assured that all user funds were safe and that it still has solid financial ground.

Starting point is 00:34:25 On a related note, the hacker behind the exploit on Defi Protocol Team Finance returned $13.4 million from the $15.8 million they stole, keeping $1.4 million as a bug bounty. Time for fun bits. What's on Alameda's balance sheet? While people were processing just how illiquid Alameda's balance sheet was, leave it to Jordan Fish, aka Kobe, to comment on just how shit-coignee it was. Screenshoting a bit of the Coin-Dest article on Alameda's holdings, he tweeted, The funniest part of this to me is not the insanity of Alameda owning almost all of the float of FTT, but it's that significant assets on their balance sheet include MAPs, Oxy, and FIDA.

Starting point is 00:35:09 Thanks so much for joining us today. To learn more about Bitcoin mining, Nick and Luxor, check out of the show notes for this episode. Unchained is produced by me, Laura Shin, without from Anthony Yoon, Matt Pilchard, Juan Urvanovich, Sam Shri-Ram, Pamajimdar, Shashank, and CLK transcription. Thanks for listening.

Unchained - Bitcoin Miners Going Bankrupt? Here's How Crypto Winter Is Impacting the Industry - Ep. 415

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