As Bitcoin and cryptocurrencies gain more and more media coverage, investors who have never been involved in crypto are increasingly asking the question of whether cryptocurrencies could provide meaningful portfolio diversification to the traditional portfolio asset allocation.
In order to answer this question one must look both backwards and forwards: backward looking to determine past correlations and risk-reward profile; and forward looking to understand the real risk of central bank policy mistakes and government debasement of fiat currencies.
Diversification of portfolio focuses on how the volatility of an underlying security plus their correlation with core market assets impacts a portfolio’s risk-return characteristics over the long-term or during periods of extreme macroeconomic or market stress.
The main reasons why Bitcoin provides portfolio diversification are: investability, politico- economic features, correlation of returns, and risk-reward profile.
Google will ban all cryptocurrency-related advertising of all types in June 2018, according to a recent update to their Financial Services policy.
The news of a crypto ad ban comes just days after crypto advertisers using Google Adwords noticed a drastic drop in the number of views of their advertisements, according to posts on the Adwords support pages. However, Google Adwords had at that time denied any change in their Financial Services regulations that would block cryptocurrency or Initial Coin Offering (ICO) related advertisements.
Under Google’s newly updated financial products policy, no advertisements for “cryptocurrencies and related content (including but not limited to initial coin offerings, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice),” will be accepted.
A state employee at Florida’s Department of Citrus (FDoC) has been arrested for allegedly using official computers to mine cryptocurrencies.
According to the Tampa Bay Times, the Florida Department of Law Enforcement (FDLE) has jailed Matthew McDermott, IT manager for the state government agency that oversees Florida’s citrus industry. He is reportedly being held pending trial, with bail set at $5,000.
The FDLE alleges that McDermott used computers in the department to mine cryptocurrencies including bitcoin and litecoin, and has charged him with grand theft and official misconduct, according to the report.
An investigation further indicated that the utility bill of the department had surged by over 40 percent from October 2017 to January 2018, as cryptocurrency mining requires significant amounts of electricity due to its high processing demands.
This evening I attended an interesting lecture on Blockchain at the University of Northampton, presented by Drs Ali Al-Sherbaz and Scott Turner. It covered the basics of blockchain, include hashing, mining, signing, creating blocks, and so on.
It then covered particular examples of blockchain projects within the University, including one on social interactions and one on network activity logging. Apparently Blockchain is one of the key topics the University will be addressing in its future development strategy.
What wasn’t covered, however, was Bitcoin and in general most comments were dismissive of cryptocurrency. I think that will prove to be shortsighted. Most of the criticisms and limitations levelled at Bitcoin and other cryptocurrencies during the event were demonstrably false or at least incomplete and a more detailed discussion would have demonstrated that.
Personally I think cryptocurrencies are here to stay, with Bitcoin taking the role of the reserve cryptocurrency, and their positions will get stronger and stronger over time. Whether they will eventually replace fiat currencies is less clear, but I certainly wouldn’t dismiss the possibility.
Proof of Work (PoW) mining operations, like Bitcoin and Ethereum, use a tremendous amount of energy and generate a tremendous amount of waste heat.
Qarnot is one of a number of growing companies that has found a way to turn that waste heat into controlled heating for the home or office.
The new Qarnot QC-1 “crypto heater” takes advantage of an obvious synergy: It makes use of the waste heat generated by mining crypto in the guise of an attractive space heater.
Spec wise, the QC-1 contains two GPUs: NITRO+ RADEON RX 580 8G 60 MH/s at 650W. Local electrical costs and climate are key determining factors with regard to recouping costs and making a profit; for example, if you are in a cold northern environment with cheap electricity like Quebec, then your costs to run it should be low enough (about $0.03 KWh USD) that the mining revenue should pay for the device in a few years.
The device mines Ethereum by default but can be configured to mine various other PoW-based cryptocurrencies such as Litecoin. A mobile app is available to monitor your account and configure the unit. The lack of fans or hard drives leads Qarnot to claim the system is “perfectly noiseless.”
The Australian Federal Police (AFP) are investigating two employees at the Bureau of Meteorology for allegedly using the bureau’s computers to mine cryptocurrencies, the Australian Broadcasting Corporation (ABC) reports today, March 8.
The AFP appeared at the Bureau of Meteorology last week, Feb. 28, with a search warrant and questioned two IT employees, one of whom has since gone on leave. ABC reports that no charges have yet been filed, and both the AFP and the Bureau of Meteorology have declined to comment pending the ongoing investigation.
I was right about the Bitcoin Dip – and have made a tidy profit. I bought half a Bitcoin at £5500.
Of course, it should have cost me £2750 but I bought it through Coinbase with my debit card which is a pricey, though convenient, way to do it. Coinbase charged me 4%, so about £110, making the total £2850.
Bitcoin was been rising in value since as I predicted, though in its usual erratic way. I had intended to take my money out when it passed £8000 and, as I watched it last night, it did just that.
I was hesitant to sell it directly through Coinbase again because of its fees. However, I had come across some advice about selling through Coinbase’s exchange, GDAX, instead at lower fees. Here’s an example video from the excellent Coin Mastery:
I followed the advice and it worked like a charm.
This is the process if you want to save a stack on Coinbase fees:
Create a GDAX account if you don’t already have one (I already did).
Transfer the Bitcoin to GDAX – on GDAX click the DEPOSIT button, then in the form choose your Coinbase Account -> BTC Wallet and set the amount. Click Deposit Funds. It will appear almost immediately on GDAX and there is no charge.
Select LIMIT then SELL, then set the amount. Here you need to be a bit careful and set the correct price you are prepared to sell at (double check it, because if you set it low it will sell low). At the time Bitcoin was selling for about £8010. I wanted to make sure that, if there were fees, I would clear £4000 on my 0.5 BTC so I set the value to £8050.
Since the price is volatile your price will likely be hit very quickly so long as you didn’t set it too high (mine too less than a minute).
The BTC sells, the money appears in your GDAX wallet – and there’s no fee!
Transfer the money back to Coinbase using the WITHDRAW button, set the amount and the destination (e.g. GBP Wallet) and click WITHDRAW FUNDS. It goes back to Coinbase – no charge.
So I have proved to my own satisfaction you can sell BTC, i.e. convert it to pounds sterling, for no charge this way – and at a price slightly higher than the current market rate
Note that selling Bitcoin is called a ‘Maker’ transaction since you are putting Bitcoin into the market. Note that moving in the opposite direction has a ‘Taker’ fee of 0.25%, still not a bad deal.
I sold my 0.5BTC at £8050 so I received £4025, and that’s all now sitting in my Coinbase account.
Since I only paid £2870 for the Bitcoin less than a month ago (a profit of about £1100), I’m rather pleased with that.
After my initial experiments into mining for cryptocurrency with my own PC’s GPU and CPU, and even before acquiring my improved GPU, it was clear that good mining results were only possible with specialised and up-to-date hardware. Therefore about Christmas I ordered a new PC with a view to designing it for use in cryptocurrency mining.
We needed a new family PC for occasional use anyway (for children’s homework, etc.) as our previous one was old and had slowed down to the point it was almost useless. At the same time I knew it would be idle most of the time, when it could be used as a dedicated mining machine.
I took some time investigating the options before deciding on the specification I wanted. Although all our previous PCs had come from Dell, this time I ordered through Scan PC to get exactly what I wanted at an acceptable price:
A gaming motherboard with twin high speed GPU slots
A large, clear-airflow case with sound insulation
Two top-end GPUs – the NVidia GTX 1070 Ti
A high power (850W) power supply
In discussions with Scan I changed the spec a couple of times after ordering (e.g. increasing the memory) and was pretty happy with their service. It arrived in January and so far has shown itself to be a very powerful machine. It cost an eye-watering £2500, but then the two graphics cards alone were about £650 each.
I’ll blog about how I got on with it, including its mining capability, in the next few posts.
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