The Raven’s Dispatch – Bitcoin Mining Crash and Burn – 11 January 2019

The Ruthless Bitcoin Mining Industry

And here we thought 2019 was going to bring us riches and glory. It’s OK, nobody is blaming you for sipping on the hopium, it’s only 11 days into the new year. Plenty of time to recover, get things straight and keep on that resolution list (LOL).

But mining looks like it’s taken a turn for the worse. Remember the days when being a Bitcoin miner was about solidarity? About taking it to the man, the system? About being an outsider trying to find a new, better, and more open way to share assets? Ya fuck that. In this world it’s all about the benjamins….errr yuan….errr euro…errrr Bitcoin. Anywho bitcoin mining is now a cutthroat business that is crashing and burning.

So the new year has brought us some sideways movement, which I think we can all agree is welcome. Whatever you call it, it sure as hell beats 2018. Fuck 2018.

Top 5 Crypto

Throughout the first week of the year, most of the coins in the top twenty category according to market capitalization saw green on price analysis charts as investor confidence continued improving in the post fork period.

For a more detailed analysis check out Dennis’s weekly cryptocurrency analysis here.


So much content, where to start. Oh I know:

Crypto 2019 – What to Expect – There’s no denying it – 2018 was a rough year for crypto in many respects. Despite the incredible leaps forward made in the technology, much of the mainstream media coverage focused on the price action of Bitcoin only, detailing the dramatic crash from an ATH of around $20,000 to under $4,000 today.

Crash and Burn: The Ruthless Bitcoin Mining Industry – Put it this way – the Bitcoin mining is not for the faint of heart.

Western Union open to Cryptocurrency adoption – two years ago this news would have excited me. I’m so jaded. Global cash transfer giant Western Union has revealed that it is evaluating options for the integration of blockchain technology and Cryptocurrency services to its platform.

Alipay partners with Malaysian bank to enable cross border Blockchain transactions – Alipay is  abig deal in Asia, right? Right?

How Decentralized is Bitcoin Core? – Bitcoin, Bitcoin Core, whatever. When it comes to talking Bitcoin forks, people tend to get heated. It’s a controversial subject in the cryptocurrency space

Are People Still Flocking to Blockchain Jobs – Even amid the so-called “crypto winter”  blockchain has seen rapid growth as an industry, viewed as exciting and innovative by many onlookers.

South African Finance minister announces push for cryptocurrency regulation – South Africa hopped onto the push for a regulated space for cryptocurrency in her economy.

Abkhazia cuts off power supply to 15 crypto-mining farms – We posted a while back how crypto mining was overwhelming Abkhazia’s electrical network. Well, eff those miners.

Will Bakkt Pump Bitcoin? – Lots has been said about BAKKT, but will it really have a positive effect? Bakkt, the futures market for Bitcoin being rolled out by New York Stock Exchange owner ICE, is close to approval from the US government and could change the cryptocurrency landscape in a major way.

BitMex to take over Exchanger cementing grip on the Crypto-industry – Madison Group Holdings, a Japanese wine-manufacturing giant, has teamed up with BitMex, a Japanese cryptocurrency exchanger to acquire majority shareholding in BitOcean- a leading crypto assets exchanger in Japan.

Zilliqa Denies Facebook Rumors – The cryptocurrency community has been quite enthusiastic about a particular piece of news, as it appears as though Facebook might be developing its own cryptocurrency.

InfoSys Exec Believes In Blockchain – Recently, in an interview, the Senior Vice President (SVP) at Infosys, a world-renowned IT company, praised blockchain, and spoke about how 2019 will be a great year for blockchain adoption.

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BitMex to take over Exchanger cementing grip on the Crypto-industry

Madison Group Holdings, a Japanese wine-manufacturing giant, has teamed up with BitMex, a Japanese cryptocurrency exchanger to acquire majority shareholding in BitOcean- a leading crypto assets exchanger in Japan.

Every day running of the crypto assets exchange business

Madison Group is a Hong Kong based parent company engaged in the retail and wholesale trade of various wine products and has a market capitalization of over $500 Million. If the deal goes through, Madison Group, through one of its subsidiaries- Madison lab, will control 67% of the cryptocurrency exchanger in liaison with BitMex. The latter was brought on board as a qualified partner to help Madison group with the everyday technical running of the crypto assets exchange business.

Despite not having commenced exchange services officially, BitOcean is among the 16 crypto assets licensed to provide crypto currency exchange services in Japan. This licensing requirement is granted by the country’s primary financial regulator- the Financial Services Agency (FSA).

67.2% share capital acquired

Details regarding the deal were filled at the Stock Exchange of Hong Kong (SEHK) according to a press release from the South China Morning Post. The Madison Group stated in the report filled that it was planning to acquire 67.2% stake in BitOcean through its subsidiary, Madison lab. The value of the acquisition is reportedly estimated at 1.68 Billion Japanese Yen (close to $15.12 Million). On top of that there are added on business related fees amounting to around $15 Million.

Additionally, market rumor in Hong Kong has it that the deal would enjoin HDR Cadenza Management, a subsidiary of HDR Trading Global (Seychelles based). The latter company owns giant crypto derivative trading forums such as BitMEX. The rumor mill has it that HDR global might be in cohorts with Madison Labs to acquire 51% stake in a joint venture. The deal will be reportedly worth around $17.12 Million although it is still under review and yet to be finalized.

Diversifying the company’s scope

Commenting on the deal, Madison group Chair, Raymond Ting Pang-Wan said that the acquisition of interest in a crypto assets company was in line with the company’s goals of diversification. He added that the partnership with BitMEX was also important in steering forward the company’s grip on the cryptocurrency industry. CRYPTO IS COMING!

Bitmex CEO Believes $200 Is Coming For Ethereum

The cryptocurrency world constantly is attempting to predict prices, especially when it comes to Bitcoin and Ethereum, two of the most well-known cryptocurrency projects in the world, and two of the largest cryptocurrencies in the world by market capitalization.

Of course, this often means that many individuals are wrong in their predictions. In one of the most obvious examples, Tom Lee of Fundstrat Global Advisors, has been overly optimistic regarding Bitcoin’s price. Specifically, Lee stated that the price of Bitcoin was going over $50,000 in 2017. In a later CNBC appearance, Lee said that he believed Bitcoin would reach $25,000 by the end of 2018. Given the fact that it is already several days from the year’s end, the prediction is way off – considering that the price of Bitcoin is under $4,000 (as of press time). Here is Lee’s aforementioned CNBC appearance:

Bitmex CEO Prediction

For those who are unaware, Bitmex is a Hong-Kong based cryptocurrency trading platform that is one of the largest by volume. It’s also known for its margin trading, and many view the platform as controversial.

Regardless, Arthur Hayes, the CEO of Bitmex, pointed out that Ethereum would bounce back after the initial coin offering (ICO) market is revived. Specifically, he stated: “The use case for Ether is primarily ICOs. That market is dead right now. Once there are new issues, then Ether will rebound aggressively. When the ICO market returns, Ether will quickly test $200. The timing of the ICO rebirth is 12 to 18 months out.”

Crypto Trends

Hayes also pointed out that he believes there will be two particularly hot trends regarding cryptocurrency that might lead to more investments than others. For example, it’s no secret that many investors have turned to stablecoins because of the lack of interest in ICOs as of present time.

He also believes that security tokens will gain traction as well. For those who are unaware, security token offerings (STOs) have been much discussed as the “new ICO”, as well. Hayes also believes that investors will flock to security tokens, as well.

He stated: “Security tokens and stablecoins will prove attractive sirens for investors in 2019. While their fundamental raison d’etre is flawed, investors in this time of pain will latch onto anything they believe will be their ticket to easy riches.”

Perpertual Swaps vs Futures Trading

Crypyo trading is all the rage these days. From those dreaming of their lambos or desiring to become the next crypto billionaire. Depending on a trader’s style, there are different types of trading. There is scalping for those looking to make quick gains, day trading for those looking to profit over the course of a trading day, position trading for those looking to HODL long term, and several others. What’s important is looking for a style one that matches the trader’s personality.

With this in mind, cryptocurrency exchanges have been popping up all over the place. Everything from altcoin trading to futures trading and soon…security tokens? Most exchanges cater to the simple needs of traders who just want to buy low, sell high. But there are a few who meet the advanced needs of professional traders. Here they dabble in derivatives, trading futures and perpetual swaps. This article is aimed at a comparison between these types of products. The exchanges in question will be BitMex and Deribit.

In finance, derivatives are securities with a value that is derived from another asset. For cryptocurrency derivatives, the underlying value is usually bitcoin. Futures contracts are derivatives written with a speculative price, expected to happen in the future. Traders place a bet (position) speculating what the price of Bitcoin will be at a specific date in the future. Positions are usually settled within 30 minutes, depending on the exchange, which uses average prices close to the speculative price. Once average price is gotten, the position is paid off, that is, settled. A position that is settled is deemed gone or closed.

Ever in search for profit, traders did not like the fact that their positions are time sensitive, that is having expiry. The solution to this was the launch of perpetual swaps by exchanges. As the name implies, perpetual means lasting forever in the same condition, so perpetual swaps are futures contracts that keep renewing continuously.

On BitMex, perpetual swaps have an 8 hour cycle. A trader who wishes to keep their position open must be ready to pay rent (interest rate) every 8 hours. The higher the trader’s leverage, the higher the rent that would be charged. Funding rate (interest rate) is calculated every minute, based on the actual (premium) or discount price of the perpetual swap contract and value of the underlying BTC in the last 8 hours. Position value multiplied by funding rate becomes the funding payment to be made by trader.

There are two types of funding rates: negative funding rate and positive funding rate. Negative Funding Rate is when shorts pay longs. Here, it means in the last 8 hour, perpetual swaps contracts were trading at a discount compared to the value of the underlying BTC, necessitating traders who were shorting to pay for their position. Perhaps, a good thing about negative funding rate is that a trader who decides to trade against the trend gets rewarded. Positive Funding Rate is the direct opposite of the above, when longs (traders betting on prices going up) pay for shorts (traders betting price is going down).

Although they are both types of derivatives, there are some differences between perpetual swaps and futures contracts. Most notable difference between both derivatives is that one has an expiry date while the other (perpetual swaps) has no expiry date. Perpetual swaps “mimic a margin-based spot market and hence trade close to the underlying reference Index Price,” while futures contracts may trade at significantly different prices due to basis.”

Both types of derivatives are risky and meant for advanced traders. However, there is no denying the huge profit one can get from trading crypto derivatives.

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Bitmex Review: A Haven for Pro Traders?

Almost a decade after Satoshi’s middle finger to banks and government, through the creation of a peer-to-peer digital currency which does not need intermediaries to function, bitcoin has inspired the creation of more trading exchanges than seen in traditional markets. Today we’ll focus on Bitmex, a bitcoin futures trading exchange. This will be a review on what the exchange offers, its security status, team behind the spotlight, and pros & cons.

First things first, Bitmex is short for Bitcoin Mercantile Exchange. It’s an advanced platform best suited for pro traders. Beginners in crypto trading would do well to garner experience from other simpler platforms. One distinguishing factor between Bitmex and other crypto exchanges is that the former only offers bitcoin futures trading services. Thus, traders are actually not trading bitcoin and other cryptos, but trading contracts/ derivatives with bitcoin as the underlying value. Bitmex also allows margin trading, also known as leverage trading. Records shows the exchange has a trading volume of over 35,000 BTC daily, with not less than $34 billion worth of BTC being traded since first transaction.

Let’s backpedal a bit, to explain some terms. Derivatives are contracts whose value is based on an underlying asset. Derivative contracts can be written on virtually anything, including bitcoin. Margin trading, or leverage trading is simply trading with borrowed funds, using the initial balance as collateral. For instance, a trader needs $5000 for a trade, but has $2500, he can then proceed with his trade via a 2:1 leverage. This means he gets to borrow an extra $1 for every $1 he has.

How it Works

Only BTC is allowed for deposits and withdrawals on the exchange. Although, on the exchange, there are trading contracts featuring other cryptos like Bitcoin Cash, Litecoin, Dash, Ripple, Zcash and a few others. Traders from the US are not allowed on the platform. But of course, some US based traders utilize VPN in order to bypass the IP checks. Contracts are valued in USD and two other fiat currencies: Japanese Yen and Chinese Yuan.

To get started, all that is required is a functioning email to which the account opening verification link will be sent to. Anonymous names are allowed, meaning there is no KYC. However, the complicated nature of the platform, coupled with the high risks involved in margin and derivatives trading, means those able to trade on the platform, are likely to be pros.

Once registered, one can begin trading, of course after depositing into the Bitmex account. Trading through the Market Order button means it is an instant trade using the current market price. Trading through the Limit Order button means the trade will be initiated once it is triggered by the market getting to the given price. As explained in details in a different article, Bitmex offers two types of leverage accounts on their platform. Futures account which has an expiry date, sometime in the future and perpetual account which is continuously being renewed. Leveraging on Bitmex allows for up to 100x leverage.

Fee Schedule BitMEX

Unknowing to many, Bitmex’s fees are actually on the high side. But at least, they are straightforward and not hidden nor subtle. Fees depend on the type of contract or the product. From as high as 5% for margin and maintenance, to as low as -0.25% for maker fees. No fees are deducted for deposits and withdrawals. Although, there is a minimum withdrawal amount and a minimum fee to be paid for blockchain load. Trading on Bitmex can only be done on a PC, as there is currently no mobile version, nor an app for the platform.

The Team

HDR Global Trading Limited is the holding company for Bitmex. HDR itself was founded by the trio Arthur Hayes, Ben Delo and Samuel Reed, former banker, trader and web developer. Yes, HDR happens to be an acronym for the first letters of their surnames. The trio registered the trading platform Bitmex in Seychelles in 2014, but currently operate out of Hong Kong.

Having such an experienced and skilled team behind the platform presupposes there is a strong security framework in place. This is a fact, considering there are security protocols in place such as multi-signature deposits and withdrawals process, text messages, emails and two-factor authentication features, and also, hardware tokens. Written in kdb+, a database and toolset used by major banks involved in high volume trading, Bitmex has held its ground and has never been hacked.

In today’s era of automated responses and chatbots, Bitmex customer support appears to be able to attend to traders within an hour. Feedback on their customer support is good. They also have other on site help like FAQs and trading guides.

All in all, Bitmex has several advantages, with the major disadvantage being that anyone considering braving Bitmex must be a pro trader, a beginner is likely to get rekt, if not careful. The platform’s trading sophistication is better suited for persons familiar with crypto trading. For those who like referral programs, Bitmex pays out millions of dollars annually to referrers.

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