Hello and welcome to this week’s Overbit News. First up in today’s news is a year-end round up taking a look at the past year of DeFi growth, most notably, some of the surrounding exploits.
This time last year, so-called “decentralised exchanges” were still very much an excellent product and community. Uniswap had exploded in popularity over the summer of 2020, and the popular fork on BSC, PancakeSwap, had launched only a short time before during September of 2020.
Now, a year later, this industry has blossomed into a community with millions of daily active users and billions & billions of dollars locked away into the respective protocols. Despite all this positive growth, there is one unseemly side to the growing world of “DeFi” – an increasing number of exploits.
According to recent research from blockchain analytics startup Chainalysis, over $7.7 billion was lost in Bitcoin scams throughout the world in 2021.
Rug pulls, a sort of fraud in which developers abandon a project and walk away with investors’ money, have become the “Go-to scam” of the DeFi ecosystem, according to Chainalysis. Rug pulls accounted for nearly $2.8 billion in stolen funds in 2021, accounting for 37% of total Bitcoin scam earnings, up 1% in 2020.
Cryptocurrencies undeniably open up access to financial markets worldwide, but stories like these serve as a potent reminder that this system is also equally open to scammers and bad actors. That being said, make sure to backup and protect your keys, and always do your research before buying into any project.
We close out this week’s edition with a report by Bitcoin Magazine that points to a growing ‘underground’ network of Bitcoin miners still operating in mainland China.
According to a CNBC report, Bitcoin miners have discovered methods to continue functioning in China despite the country’s extensive efforts to crack down on the business.
China used to be the country with the most significant amount of hashrate. However, Chinese officials began to tighten down on Bitcoin and Bitcoin mining in May. Increased governmental scrutiny had a noticeable impact on BTC miners and exchangers, who started to curtail or cease their operations. The Chinese crackdown caused ASIC producer Bitmain to halt sales, a dramatic drop in Bitcoin’s overall hash rate, and an “ASIC exodus” as the Bitcoin mining environment began to shift in less than a month.
By September, China had outlawed Bitcoin completely. Despite the ban, roughly 145 Bitcoin nodes remained active in the Chinese mainland after a few days. There are presently 125 nodes in the Asian country, according to Bitrawr.com statistics. Similarly, not all Bitcoin miners appear to have escaped China.
Ben, a Chinese miner, told CNBC that he went underground and dispersed his mining equipment over numerous places to avoid being detected on China’s electricity grid. He’s also gone around the metre, drawing electricity from modest power sources that aren’t connected to the country’s primary grid, to hide his digital geographical trace.
According to the research, up to 20% of the world’s Bitcoin miners are still based in China, with installations identical to Ben’s strewn around the country. It quoted research from Chinese cybersecurity firm Qihoo 360 in November, which estimated that 109,000 Bitcoin mining IP addresses are active in China daily. However, according to a Cambridge University study, there are no more miners in the Asian country.
While major miners could rapidly and successfully relocate to Kazakhstan and the United States, medium-sized miners found themselves with their hands bound. According to the study, “they couldn’t sell their equipment to recuperate their losses, and they couldn’t mine at full capacity again since their electrical footprint is simple to see.” On the other hand, smaller miners may spread their activities throughout China’s tiny power networks and keep a portion of their operations running.
“Mining is no longer a big business” in China; another Bitcoin miner told CNBC. Instead, the miner said the activity is now scattered across the country, with “a couple thousand miners here, a couple of thousand miners there. It’s more like a sort of band-aid to make money to help move the miners out of the country.”
This concludes this week’s edition of Overbit News!