Crypto this week

Instead of Bitcoin-to-the-moon refrain, buyers turn defensive

Crypto investors are turning to defensive plays during the surge in geopolitical turmoil and global volatility. Instead of doubling down on Bitcoin after its almost 45 per cent fall from record highs or loading up on more Dogecoin, crypto fund managers are buying the normally stranded native tokens of some of the leading digital-asset exchanges.

"Fundamentally, who benefits from the volatility?" said Jeff Dorman, chief investment officer at Los Angeles-based digital asset fund manager Arca. "The exchanges. Exchange (tokens) should outperform because their volume and revenues go up." Prices of exchange tokens such as Binance's BNB went up to record highs after the US-based exchange Coinbase Global went public last year. Most recently, with another US$400 million funding round in January, crypto exchange FTX also saw its token FTT outperforming most of the crypto market. BLOOMBERG

Sotheby's NFT sale, expected to hit US$30 million, suddenly cancelled

At Sotheby's on Wednesday night (Feb 23), a single lot of non-fungible tokens (NFTs) - 104 digital art assets known as CryptoPunks - was expected to sell for as much as US$30 million. But after a delay of 25 minutes past the auction's expected start time, the sale was off. The consignor had withdrawn the pixellated collectibles and posted a meme on Twitter mocking the auction house.

The evening began with people drinking champagne and ended with a stunned shuffle back home.

Sotheby's said in a statement Wednesday night that "the lot was withdrawn prior to the sale following discussions with the consignor".

Larva Labs created the CryptoPunks in 2017 as a generative project consisting of 10,000 pixellated characters. Dozens of these early NFTs have each sold for more than US$1 million in Ethereum cryptocurrency, with overall sales totalling more than US$2 billion, said the Larva Labs website. Sotheby's said that the 104 CryptoPunks were bought in a single blockchain transaction by an anonymous collector who goes by 0x650d online.

On Twitter, 0x650d posted two cryptic messages about the auction. A first post declared the decision to "hodl" - crypto-speak for holding onto digital assets. Then they shared a meme featuring the musician Drake, claiming that they were "taking punks mainstream by rugging Sotheby's". In the crypto industry, rug-pulls are when developers intentionally siphon an investor's funds and run away from the project. NYTIMES

Crypto got dirtier after China kicked out miners, study finds

The planet-warming emissions created by crypto mining rose after China outlawed the industry last year and miners lost access to the country's clean hydropower, a new study says.

The share of renewable electricity used to power the Bitcoin network dropped from more than 40 per cent in 2020 to about 25 per cent in August 2021, showed estimates from a study published in energy research journal Joule. Miners that fled China were more likely to power operations with natural gas, doubling its share of the electricity mix to about 31 per cent. And while Chinese miners also burned coal to power operations, the miners that moved to Kazakhstan began using a type of coal with an even higher carbon content, the study said.

"After the Bitcoin miners got kicked out of China, they were forced to migrate to countries like the US and Kazakhstan and unfortunately that has led to a reduction in the use of renewable energy sources in the network," Alex de Vries, one of the authors of the peer-reviewed study, said in a phone interview Friday (Feb 25). "Bottom line is the carbon intensity of the network has gone up." BLOOMBERG