Crypto wunderkind’s tokens surge to top of best-performing list

Crypto wunderkind’s tokens surge to top of best-performing list

Bloomberg

$LUNA snd $SOL trade like they want to go higher. Good horses to ride. This year betting on the ecosystems of… https://t.co/q03S02ruEf — Mike Novogratz (@novogratz) 1619290638000

Cryptocurrency FOMO is playing out in real time for just about any token associated with Sam Bankman-Fried , head of the trading firm Alameda Research and the FTX derivatives exchange.In the past week, Solana – or SOL – has jumped more than 40%, making it the top performing large coin among those tracked by CoinMarketCap .com, and increasing its market value to about $11.6 billion. Serum, a token used on the new decentralized derivatives exchange created by FTX, has seen its market value jump to $494 million from $51 million this year. And the price chart for the FTT coin used on FTX looks like a hockey-stick as well, with its value jumping to $5 billion from $539 million since December.Bankman-Fried started to attract attention a few years ago when Alameda began regularly appearing at the top of a leader board of trading performance on the BitMex exchange. Alameda soon become one of the biggest crypto traders worldwide by focusing on arbitrage and other strategies that often profited from pricing discrepancies. After seeing his net worth soar, Bankman-Fried even became one of Joe Biden’s biggest donors during the presidential election.“I’m always happy when people focus more on the products, but I’m also honored by a lot of the support that I and our team have been getting recently,” Bankman-Fried, who is based in Hong Kong, wrote in an email.Bankman-Fried’s ability to stand out during a time when virtually all things crypto are having a moment is in itself head-turning. With Bitcoin surging more than 600% in the past year and Ether hitting record highs, crypto investors are again searching for the next big thing among so-called alternative coins.The SOL token is used on the Solana blockchain, which is being promoted as the latest network to take on Ethereum in a race to become a new capital of decentralized finance.“Sam is an extremely talented entrepreneur and has had staggering success with FTX, so it doesn’t surprise me that people are indirectly backing him by betting on his associated tokens,” said Nic Carter, co-founder of researcher Coin Metrics.Even billionaire crypto investor Mike Novogratz is betting on Bankman-Fried-backed tokens.Launched in the spring of 2019, the FTX derivatives exchange gives holders of the FTT token rebates on trades. The exchange recently did $14.7 billion in daily volume, and is now the world’s fifth-biggest Bitcoin futures exchange, according to Skew.com. Meanwhile, Serum has surpassed $2 billion in trading volume to date.“The SOL rally is partially a delayed reaction to the work that’s been put into the ecosystem over the last year, and the need to find scalable solutions for DeFi as the ecosystem grows,” Bankman-Fried said.He dove into crypto after finishing a three-year stint at the quantitative-trading firm Jane Street Capital. He started Alameda in his Berkeley, California, apartment in late 2017 with his own money and funds borrowed from family and friends. He then recruited former classmates from the Massachusetts Institute of Technology, where he majored in physics, and friends from Wall Street to create an automated trading system tracking crypto prices worldwide.“He works U.S. and Asia hours,” said Kyle Samani, co-founder of Multicoin Capital, which is an investor in Serum, as well as one of the largest holders of SOL. “His work ethic is insane.”In taking on Ethereum, Solana has plenty of competition: Cardano, Binance Smart Chain and Polkadot among them. The Binance cryptocurrency exchange holds a minority stake in FTX.More than 150 different apps have been built for Solana already, and apps like the messaging service Kin moved users over, said Raj Gokal, chief operating officer of Solana Labs, which is building software for the blockchain.Solana is already doing 10 times more in daily transactions that Ethereum, Samani estimated.“Solana is a promising competitor in a crowded space,” said crypto investor Aaron Brown, who writes for Bloomberg Opinion. “It’s been going up because it’s a good blockchain that seemed to be gaining ground recently, but there are lots of good blockchains and (as everyone knows) the sector is volatile and prone to short-term enthusiasms.”

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Crypto Climate Accord: Bitcoin greenwashing or game-changer?

Some cryptocurrency players are trying to shrink crypto’s carbon footprint with a self-regulating accord, but critics say it distracts from more effective government regulation.

An earlier version of this article stated that Argo Blockchain had joined the CAA last week. The company is in discussions with the CAA about joining the pact. This is reflected in the current version.

In a banner year for cryptocurrencies (so far), not all of the news is going to be good.

As Bitcoin and other digital coins have soared in value since January, the toll they are taking on planet Earth has garnered far more attention.

High-profile Bitcoin supporters have come out in force to defend their favourite cryptocurrency. A report published last week – sponsored by Tesla Inc’s Elon Musk, Square Inc’s Jack Dorsey, and ARK’s Cathie Wood, one of Wall Street’s hottest investment pros – depicts Bitcoin as an “ideal” part of renewable energy projects involving solar, wind and battery storage technology.

Meanwhile, a coalition of crypto firms and organisations earlier this month announced the Crypto Climate Accord (CCA), an industry-driven pact in which signatories vow to switch to renewable energy sources to power operations by 2025 and go completely net-zero – eliminating greenhouse gas emissions altogether – by 2040.

But in an age in which previously unrepentant big polluters are suddenly finding a green conscience, questions abound as to whether the accord is a game-changer or simply a greenwash of a growing problem.

Bitcoin mining – in which powerful computer rigs around the world race to verify transactions in the hope of winning new Bitcoins – consumes as much electricity annually as the entire country of Argentina, researchers at the University of Cambridge estimate.

Supporters of the accord say that massive carbon footprint – rather than the growing public outcry over it – is motivating them to roll their sleeves up and get down to business.

We recognise that crypto does use a lot of energy, so let’s make it 100-percent green. Jesse Morris, chief commercial officer at Energy Web Foundation

CCA is led by three nonprofit groups: the Rocky Mountain Institute, a sustainability non-profit; the Alliance for Innovative Regulation, which advocates for a fair financial system; and Energy Web Foundation, which focuses on open-source technologies to accelerate the low-carbon transition.

“We recognise that crypto does use a lot of energy, so let’s make it 100-percent green,” Jesse Morris, chief commercial officer at Energy Web, told Al Jazeera.

Rather than “a political handshaking thing,” Morris says the accord is a “tool box for action” that aims to generate a critical mass of crypto firms following a decarbonisation plan.

“If you are a Bitcoin miner building out applications, we want you,” he said.

But critics charge that a self-regulated accord could get in the way of more effective government policies for reining in crypto emissions.

A brake on effective regulation?

The accord has picked up plenty of high-profile supporters ranging from French electric utility Engie and billionaire former US Presidential hopeful Tom Steyer to the entities behind the cryptocurrency XRP, often referred to as “Ripple”.

Monica Long, the general manager of the RippleX payment platform, told Al Jazeera that her company plans to become carbon neutral by 2030, aligning it with other members of the accord.

On that front, Ripple has something of a leg up.

Bitcoin has such a massive carbon footprint because it relies on something known as a proof of work (PoW) consensus to validate transactions and create and distribute new coins. The most competitive “mining rigs” that race to verify transactions for the reward of new Bitcoins are often comprised of thousands of computers labouring in unison and eating up massive amounts of energy.

By contrast, Ripple does not reward mining activities with new coins. Instead, it uses a less energy-intensive consensus protocol to validate account balances and transactions in the system.

Other lesser-known cryptocurrencies use proof of stake (PoS) – also a far less energy-intensive method of verifying transactions because mining power is not determined by how many computers are crunching numbers at once, but by how many coins the miner currently owns.

To stop the climate disaster that Bitcoin is causing, governments need to ban PoW mining. Pete Howson, environmental researcher at Northumbria University

“We’re bullish on crypto generally,” Long said. “But I really do believe it’s going to be a multi-chain future.”

That suggests that energy-sucking PoW isn’t going to go away anytime soon.

Given that around 60 percent of Bitcoin mining globally is powered by fossil fuels, and about 65 percent of mining is located in China where coal-fired power does the majority of the heavy lifting, some observers say the accord could get in the way of more effective government-driven solutions to crypto’s carbon problem.

“To stop the climate disaster that Bitcoin is causing, governments need to ban PoW mining,” Pete Howson, an environmental researcher at Northumbria University, told Al Jazeera. “The Crypto Climate Accord, by representing the interests of Bitcoin miners, puts the brakes on that sort of effective regulation.”

Howson also believes that the relatively small-scale mining startups that have joined the CCA represent “a drop in the ocean” given the scale of the problem.

“Even if new Bitcoin mining ventures open up and commit to using only leftover renewables, miners in other parts of the world – where renewable infrastructure doesn’t exist – have to work harder, buying more servers and burning more fossil fuels,” he added.

‘Need to get it right’

Argo Blockchain, which went public on the London Stock Exchange in 2018, is in discussions with the CCA about joining.

The firm first set up mining facilities in Quebec with cheap hydropower, Argo CEO Peter Wall told Al Jazeera.

“It’s important for me as an individual, and as a company, not to be using fossil fuels, particularly coal, to mine Bitcoin,” he said. “If Bitcoin is the reserve asset of the future, it needs to be created with the power source of the future: clean energy.”

An Argo mining facility in Baie Comeau, Quebec, Canada [Courtesy of Argo Blockchain] Argo expanded into the United States in early 2020, with plans to build out its flagship 200-megawatt mining facility on 130 hectares (320 acres) in Texas. The draw: cheap wind power nearby.

Wall – whose company earns 90 percent of its revenues from Bitcoin – differentiates dirty, conventional Bitcoin from legitimately green Bitcoin.

The accord aims to do that too by developing an open-source accounting standard for gauging emissions.

Consumers and investors vote with their wallets for companies that are responsible citizens. Dan Tolhurst, co-founder Gryphon Digital Mining

But measuring polluters could still prove highly challenging for an industry often shrouded in anonymity, especially where traceability and verification are concerned.

“We need to get it right, to make sure [mining operations] are in line with other standards and avoid the appearance of greenwashing or astroturfing,” said Wall.

Another mining company that has been in discussions with CCA organisers about joining is Gryphon Digital Mining, which uses only uses low-cost, off-grid hydroelectric power from upstate New York for its operations.

Billing itself as the first Bitcoin mining company committed to 100-percent renewables, Gryphon is hoping it can indeed prove that there does not have to be a trade-off between financial success and the climate.

“These are the early days for crypto,” Dan Tolhurst, Gryphon’s co-founder, told Al Jazeera. “Consumers and investors vote with their wallets for companies that are responsible citizens.”