Concerns about the Liquidity of USDT Lead Tether to Release a Report on Its Reserves

Alexander Salazar
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Concerns about the Liquidity of USDT Lead Tether to Release a Report on Its Reserves

Tether’s current consolidated total assets are greater than those in December 2021 and now exceed its liabilities. The company had USD 30.8 billion in commercial paper but has reduced its holdings by 35% over the last year.

The recent collapse of TerraUST (UST) caused a panic in the ecosystem of stablecoins. The transparency of some platforms, such as USDC and BUSD, kept investors calm. However, mistrust toward the reserves of USDN, DEI, and USDT put users under much pressure.

As Tether (USDT) is one of the most popular stablecoins, it should be able to survive the market turmoil without problems. However, the confrontations of Tether with major regulatory institutions like the SEC have led some to distrust USDT.

That situation has worsened since Tether made it public that it holds large reserves of commercial paper. Those short-term debt instruments are difficult to trade if there is a financial crisis, causing a lack of liquidity.

Tether has had to release its reserve report to reassure investors about the tense situation in the stablecoin ecosystem. Those users are worried that their funds invested in USDT will disintegrate, as with UST.

What the Report on the Reserves of Tether Reflects

The latest reserves report released by Tether reflects a 17% decline in its commercial paper. It went from USD 24.16 billion in the previous quarter to USD 20.09 billion today. Cayman Islands-based accounting firm MHA Cayman conducted the quarterly report on the reserves of Tether.

The report indicates that the total consolidated assets of Tether are USD 82.424 million, compared to USD 78.6 billion in December. In addition, the consolidated assets of the firm exceed its consolidated liabilities.

The report also reflects an increase in its investments in US Treasury bonds. They went from USD 34.5 billion to USD 39.2 billion, representing more than 13%.

The cryptocurrency reserves of Tether exceed USD 4.9 billion, while its reserves of corporate bonds are USD 3.729 million. In addition, their reserves in guaranteed loans are around USD 3,100 million.

Paolo Ardoino, CTO of Tether, also said that the above situation proves the strength and resilience of the firm. The report details the complete funding of the USDT stablecoin and the strong, conservative, and liquid composition of its reserves.

Tether Reduces 17% of its Holdings in Commercial Paper

Tether announced the reduction of its holdings in commercial paper by 17% compared to the previous quarter to improve the quality of its reserves.

In June 2021, Tether had USD 30.8 billion worth of commercial paper and deposit certificates in its reserves, 49% of its total assets. Tether has reduced its holdings in those short-term debt instruments by 35% over the last year.

The report on the reserves of Tether was part of an agreement with the New York Attorney General in February 2021. Tether had to publish quarterly certifications of its assets and liabilities to show transparency about what backs USDT.

Finally, the report stated that Tether had seen a further 20% reduction in its commercial paper since April. However, there will be further details in its following 2022 quarterly report on that data.

By Alexander Salazar

A Programmer Marks the Start of the Bitcoin Economy with the Purchase of Two Pizzas

Alexander Salazar
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A Programmer Marks the Start of the Bitcoin Economy with the Purchase of Two Pizzas

Laszlo made that offer of 10,000 BTC for two pizzas to boost the use of Bitcoin as a medium of exchange. He repeated that purchase eight years later, but he did it through the Lightning network.

Bitcoin (BTC) allows people to save and protect money safely and without losing value over time. Although many experts encourage holders not to sell their bitcoins even if the price drops, its first use case was transactional.

The programmer Laszlo Hanyecz made the first transaction with that cryptocurrency on May 22nd, 2010. He bought two pizzas for 10,000 BTC, currently equivalent to about USD 300 million.

As Hanyecz was one of the first miners on the Bitcoin network, he could accumulate many coins daily. However, the abundance of bitcoins at the time was not what prompted him to spend them.

Laszlo made that offer of 10,000 BTC for two pizzas to boost the use of Bitcoin as a medium of exchange. In 2018, he repeated that purchase, but he did it through the Lightning network.

Programmer Laszlo Hanyecz Helps Bitcoin While Buying Pizza

In 2010, it was easy to mine the Bitcoin network with a CPU or desktop computer. Doing it better every day aroused the curiosity and ingenuity of Laszlo and other programmers.

Laszlo implemented graphics processing units (GPUs) for mining because they had more power for Proof of Work (PoW). After the equipment became obsolete, Bitcoin switched to ASICs, highly specialized and energy-intensive hardware.

The purchase of those pizzas became more popular than he expected, so he kept doing it as many times as possible. As the mining difficulty increased to match the hash rate, he did not spend all the coins he had mined.

The programmer released the first GPU miner in May 2010, contributing to the hash rate by then. He believes that he was helping to develop an open-source project while buying pizza with his code.

The Purchase of Two Pizzas Is the Start of the Bitcoin Economy

The first miners accumulated thousands of Bitcoin with their CPUs, but the increasing difficulty left their equipment obsolete. In contrast, there is currently an enormous industry around that activity.

Miners do not need to accumulate Bitcoin to sustain their operations but deal with lenders and energy providers and outsource their services instead.

That activity started domestically for those who used Bitcoin in its early years. However, it now has large industrial structures and publicly-traded companies.

However, the desire to encourage individual responsibility continues, as many miners have brought Bitcoin mining back to their homes.

What Laszlo dreamed of has come true, as Bitcoin is a payment network with a global reach. The cryptocurrency has become a powerful financial tool for financially isolated countries to allow transactions without restrictions or censorship.

Bitcoin is trading at around USD 29,299 and has accumulated a 2.9% loss over the last 24 hours. While its daily trading volume is above USD 25.35 billion, its market capitalization is about USD 557.72 billion, according to CoinGecko.

By Alexander Salazar

According to Latin American Bitcoin Users, We must “de-Dramatize the Fall of Bitcoin”

Jenson Nunez
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According to Latin American Bitcoin Users, We must “de-Dramatize the Fall of Bitcoin”

Iván Tello, from the Decrypto exchange, thinks that weak projects could go bankrupt in winter. These bitcoiners suggested that investors “become aware” of how bitcoin operates.

The bear market of bitcoin and digital assets has also extended to the traditional market. This expansion happens because the help managed to hack the conventional system and get in, becoming the one who takes total power over part of that volatility that those assets are having.

These ideas got exposed by Ivan Tello, who took part in a virtual activity named “How to survive the crypto winter,” led by the Alianza Blockchain Iberoamérica this May 20. The meeting got hosted by Mauricio Tovar from the Colombian Blockchain Association.

It also had the voice of Rodolfo Andragnes from the NGO Bitcoin Argentina; and Matías Bari, the current leader of SatoshiTango.

The executives expressed their memories concerning the bear markets that bitcoin has gone through during its history. Tello explained that it is essential to “de-dramatize” the crash of bitcoin and said that this Friday, May 20, the shares of the MercadoLibre Company crumbled down more than BTC itself.

In that sense, all the panelists recognized having suffered from previous bearish stages and had lost considerable amounts of money until they realized how the market behaves.

According to Tello, whoever is uncomfortable” today because of the market’s current position is because he over-leveraged or over-sold. On the other hand, the representative also highlighted that exchanges are responsible for the lack of training they give users.

All panelists advise investors to “become aware” of bitcoin and the market to carry out its activities comfortably.

Andragnes and Bari recalled that the cryptocurrency went through many winters that have lasted up to a year. All recognized having struggled with severe difficulties, those which cause capitulation.

Winter was Unavoidable

Winter, for market purposes, refers to a long bearish period. In that sense, Tello highlighted that he is “a believer in cycles and winter is one, it was going to come anyway.”

For Bari, it is vital to understand market cycles and get ready with both fits firmly on the ground to resist the complex parts of these periods.

In that sense, Tello said that this weak project could have been the stablecoin terra USD (UST) and Terra (LUNA). Tello pointed at Terra precisely because it was one of the projects that fell sharply in recent days.

Terra recently crashed due to decoupling in the price of the UST stablecoin concerning the US asset, absorbing the rest of the market down and prolonging the well-known winter in the crypto sector.

The topic of the UST stablecoin was appropriate for the Decrypto co-founder to highlight that, although the market continues to register a fall, he observes a vital adoption of this type of digital asset.

This vital adoption gets primarily done by entities headquartered in Argentina and Peru, nations where the exchange he runs has the most significant operations.

By: Jenson Nuñez

An Ethereum Miner Said he Would be Shutting Down the Rigs Soon

Jenson Nunez
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An Ethereum Miner Said he Would be Shutting Down the Rigs Soon

Joaquín Leal, an Ethereum miner, suggested acquiring crypto instead of mining right now. Ethereum mining difficulty is reaching 14.50 P.

The profitability of Ethereum (ETH) mining is going through hard times due to the impact of the red market in the last two weeks. Some miners are seriously considering turning off their rigs since they gain just over USD 15 per active day, which is not enough money to gather profits.

Joaquin Leal, a bitcoin alternative cryptocurrency (BTC) miner, has been active making the crypto business for over a year. He registered his experience in videos that he constantly uploads to his YouTube channel. In the most recent video explanation, he alerted that he was reaching the “endpoint” of his mining activities.

Leal, who has his rigs based in his garage, is currently achieving about $50 monthly from mining Ethereum.

If the electricity costs get subtracted from that income, there is a daily profit registered at USD 17 on average or about USD 527 monthly.

Leal highlights that the current situation of his operation is enough for him to “survive.” He started his current status as critical, too critical for him to continue this activity. He says $17 a day is nothing for him because of the electricity cost. Some are in the same situation or worse.

More Difficulty + Price Drop

Leal relies on the profitability crisis on the rise in difficulty and the low costs faced by all digital assets, which have already been in the red for several weeks.

According to data registered by 2Miners, the difficulty of Ethereum mining is 14.56. And the hash rate, which is the computing power of that platform, is at 1.06 PH/s, close to its all-time high. These numbers represent high participation in the chain.

On the other hand, the second most significant asset y by valuation is getting closer to its migration. Video card (GPU) mining will end this year on Ethereum as it will become part of the Proof-of-Stake (PoS) consensus algorithm.

While this situation is taking effect, ether, the native digital currency of that network, is struggling to stay alive and well, at USD 2,063, after a 1.60% rebound compared to CoinMarketCap reports.

But cryptocurrency mining today is terrible; the difficulty does not stop its expansion. Leal said that Ethereum threats keep coming to them.

Leal’s profit is reminiscent of what can be made mining altcoins in Chile, where an AMD RX 6600 XT graphics card (GPU) could drop $15 or $16 in daily profits.

How do we Get Rid of this Situation?

Although he shows disagreements with the current profitability of his mining activities, Leal stresses that he will not stop mining, even if profits fall to USD 1 per day. However, he recommends purchasing digital assets instead of mining them. He said It was time to gather support.

By: Jenson Nuñez

The Networks that Bring Interest in Bitcoins Now Pay Less

Jenson Nunez
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The Networks that Bring Interest in Bitcoins Now Pay Less

Institutional investors find incentives not to borrow. This situation affects the earning potential of retail users.

Currently, lending bitcoins and other digital assets to some platforms to create interest with them is not as advantageous as it was some months ago. This variation has connections with specific market conditions, mainly related to institutional investors, which force these spaces to readjust their users’ incomes.

The institutional demand for loans is decaying, and that forces the platforms to minimize the interest they give to their users. This situation means that the most prominent actors, companies, in this case, do not find the right conditions to invest by borrowing funds from the customers of these spaces.

Consequently, they do not get profits from lending funds to institutional investors, which forces them to set a reduction on interest for users who lend their cryptocurrencies.

According to The Block portal, the interest given by centralized networks such as BlockFi, Celsius, and Ledn has approached their minimum in more than a year. For example, in the case of BlockFi, the annual interest for holders of more than one bitcoin (BTC) went from 6.25% to 1-3% up to 0.35 BTC, plus 0.1% for more principal amounts.

The other two networks executed similar cuts. Additionally, interest rates for stablecoin deposits have also crumbled down by about one percentage point.

According to the quoted source, this situation takes effect after two years of the significant increase in this type of service, which already gathers millions of clients. As of March 2021, these three entities managed USD 12 billion and 20 billion.

Interest Rates Crumble Down

The cryptocurrency market has closed for many days with crashes. This bear market could be driving the decadence in demand for borrowed funds from huge investors.

On this point, a report highlighted by the Len lending platform in early May details that bitcoin futures contracts got currently priced lower than the current market value of the digital asset. This situation reduces the possibility of making profits by acquiring a bitcoin at one price ($30,000, for example) and then trading a future at a higher price.

Due to this low profit, big investors do not find much use in borrowing funds to invest in this type of investment. On the other hand, Ledn highlighted a lower volume of arbitration between exchanges, which in turn minimizes the demand for market makers or market creators.

The role of market makers is to borrow crypto assets to take control over price differences between exchanges. That is, purchasing on one exchange at one price and selling it on another where the digital asset trades at a higher value.

However, Ledn explains that the return generated by acquiring $1 million worth of bitcoin on exchanges Coinbase and FTX has fallen 50% in the last three months, from 0.16% to 0.08%.

By: Jenson Nuñez

Norwegian Parliament Rejected a Proposal to Prohibit Bitcoin Mining

Jenson Nunez
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0
Norwegian Parliament Rejected a Proposal to Prohibit Bitcoin Mining

The Norwegian Parliament had a vote that favored Bitcoin mining activities.

Since November of last year, the Norwegian administration has been analyzing the possibility of blocking Bitcoin mining activities. The country’s local government and regional development minister, Bjørn Arild Gram, had highlighted earlier that month that the Scandinavian region was thinking about possible procedures to handle challenges linked to crypto mining. It is hard to justify the excessive use of renewable energy to carry out activities such as bitcoin mining.

Then, in March, the Red Party had proposed legislation to Parliament that would ban Bitcoin mining. This proposal was a subject of study. But a few days ago, the Norwegian Parliament voted against the proposal banning mining activities in the crypto sector.

According to a report issued by CoinTelegraph, the proposal got rejected by a parliamentary vote. The ban garnered no political support outside of members of the Socialist Left Party, the Red Party, and the Green Party of Norway and ultimately got taken down.

Disappointments

Sofie Marhaug of the Red Party expressed her disappointment about the majority vote and said that her party would work harder to win the support of citizens in the short term. She highlighted that the nation must “prioritize” the responsible use of energy sources, aiming their critics against the energy-intensive use of mining in the crypto sector and the negative impact on climate change.

Jaran Mellerud, an expert working at Arcane Research, told Cointelegraph that the vote meant a decisive victory for large-scale Bitcoin mining:

According to the analyst, these political parties will probably try to raise the energy tax specifically for miners, which is now the only thing left on their schedule to make operations harder for bitcoin miners.

Mellerud explained that political parties showing hostility to Bitcoin have been trying to force miners out of Norway through the execution of a higher energy tax rate. She called the government’s decision to nullify the proposal the final nail in the coffin for attempts to free Norway from the crypto space.

Green Mining Heaven

The report also shows that Norway represents a “green oasis” for Bitcoin mining, with abundant hydropower and cheap energy costs. According to a world report led by the University of Cambridge, Norwegian miners contribute just 0.7% to the global hash rate of Bitcoin. According to the media, a considerable part of the energy they implement is entirely renewable.

Norwegian miners’ contribution to world mining is minimal compared to other European nations. Germany brings 3% of the hash rate and Ireland 1.9%. However, it is much more prominent than other European regions that barely give 0.2% or less.

But the overall contribution of the entire old continent is negligible if we compare it with the United States of America, which gives 37.84%, or China, with 21.11%.

By: Jenson Nuñez

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