Category: Virtual Money News

  • Nvidia Shares Plummet Due to Enduring ‘Crypto Hangover’

    Nvidia Shares Plummet Due to Enduring ‘Crypto Hangover’

    Chipmaker Nvidia saw its shares plunge yesterday upon releasing its Q3 earnings report. The company cites dwindling demand for its GPUs (graphics processing units) from cryptocurrency miners as the main cause for missing its revenue forecasts. Demand from crypto miners has, in fact, all but dried up.

    Nvidia reported earnings of $3.18 billion, still up by 21% YOY but missing the predicted target of $3.24 billion. Chief executive Jensen Huang cited the “crypto hangover” as the key culprit for the stockpile of unsold inventory.

    In the company’s Q3 earnings report, Huang said that Nvidia’s:

    “Near-term results reflect excess channel inventory post the cryptocurrency boom, which will be corrected.”

    In other words, like plenty of other companies and individuals who saw profits and demands boom in the crypto bull run, the company was able to charge a high price for its graphics cards. However, now that demand has all but petered out, the prices are too high to attract enough customers who are turning to more affordable cardmakers.

    Nvidia Q3 Earnings Report Reflects ‘Crypto Hangover’

    The high-end chipmaker also said that it expected to record revenues of $2.7 billion this quarter, far short of Refinitiv estimates of $3.4 billion. This marks a drop of almost 30% in the company’s PC gaming business that supplies chips for gamers and cryptocurrency miners.

    Huang told Reuters:

    “The crypto hangover lasted longer than we expected. We thought we had done a better job managing the cryptocurrency dynamics.”

    Adjusting Prices in a Fierce Bear Market

    The GPU division saw a dent in its bottom line of $57 million as a direct decline from crypto miners for its chips, reflecting the fierce bear market conditions all around. Huang admitted:

    “This is surely a setback and I wish I had seen it earlier.”

    As the company starts to provide resellers with a new range of “Turing” processors for high-end gamers, supplies of its previous stock remain unsold. Mr. Huang stated that the company had been slow to reduce the prices and that they had some 12 week’s worth of inventory unsold. However, now that their price correction is more in line with demand, he was hopeful that customers would return.

    Given the current slump in crypto markets, though, it’s unlikely that the chipmaker will be seeing a rise in demand from miners ay time soon.

    The slump in its gaming division will also force the company to seek growth in its other areas. such as cloud computing and customers that use its chips in machine learning.

    nvidia
    Source: Google

    In the most recent quarter, Nvidia said that it earned $1.23 billion ($1.97 per share) compared to $838 million ($1.33 per share) the same time last year. That wasn’t enough to placate investors though and Nvidia shares fell by 16% in after-hours trading.

    Featured image from Shutterstock.

  • Coinbase CEO Brian Armstrong Becomes Latest Crypto Billionaire

    Coinbase CEO Brian Armstrong Becomes Latest Crypto Billionaire

    The cryptocurrency market, it seems, is still a lucrative one for some–even despite the almost year-long bear market and the recent crash that reduced the crypto market cap to below $200 billion for the first time.

    Owners and CEOs of some cryptocurrency businesses (most notably, exchanges) have still made a profit despite the harsh conditions. And the latest of these visionaries to be smiling is Brian Armstrong.

    The 35-year-old graduate of Rice University currently serves as co-founder and CEO of Coinbase, the largest cryptocurrency exchange in the United States.

    With the company recently securing a $300 million funding round (which was led by Tiger Global Management), its value has hit an all-time high of $8 billion. This means that Armstrong has joined some of his compatriots in the “two comma club,” with his net worth skyrocketing to $1.3 billion, up from the estimated value between $900 million and $1 billion earlier this year.

    Who Is Brian Armstrong?

    Born and raised in San Jose, California, Armstrong always lived a comfortable, yet relatively confined life. Both his parents were successful engineers, and they provided him with all he needed while growing up as well as an environment that enhanced his intellect.

    However, while he saw the Internet as a tool that could bring about change to society, he always had a feeling that he was too late to play an essential role in the Internet revolution.

    When he came across the Bitcoin whitepaper written by Satoshi Nakamoto, Armstrong became increasingly drawn to the idea of a digital currency that was decentralized and beyond the reach of governments and central banking institutions.

    He believed in the possibility of a financial system that would eliminate the politics that had undermined the strength, effectiveness, and reliability of the traditional currency and economic systems.

    Armstrong eventually left his job at Airbnb to begin working at Coinbase, designing it as a means of allowing people to purchase cryptocurrencies with bank transfers and cards.

    While the dip in crypto prices this week will definitely not wipe out Armstrong’s holdings, he will likely feel it a bit.

    Featured image from Fortune.

  • Is Tokens.net a New Potential Crypto Exchange Success Story?

    Is Tokens.net a New Potential Crypto Exchange Success Story?

    Bitcoin exchange Bitstamp founded by Slovenes Nejc Kodrič and Damian Merlak has a new owner–the Belgian investment company NXMH.

    Up until now, they had many potential buyers, but Bitstamp was acquired by Belgium-based investment company NXMH. This is how Nejc Kodrič announced the news:

    “Bitstamp has been acquired by NXMH, a Belgium-based investment company. Our team, leadership, and vision remain all the same. We believe this is the logical next step on our mission to be the most trusted digital currency exchange on the market.”

    He ensured that after the takeover, customers don’t have to worry about their accounts or the company’s performance.

    Kodrič expects that the acquisition will strengthen Bitstamp’s growth position, which will bring opportunities for better customer service. The amount Bitstamp was purchased for is unknown, as the management of both companies didn’t want to disclose this information.

    According to an Older Rumor, the Price Was Set at $400 Million

    A South Korean investor was ready to offer $400 million for Bitstamp in April this year. This information is not confirmed, but it came from the well-known technology journalist of The New York Times, Nathaniel Popper.

    Nexon Korea CEO denied rumors of acquiring Bitstamp in April.

    Nejc Kodrič remains as a 10% owner of Bitstamp after the deal with the Belgian company and will continue as CEO. Prior to that, his ownership share was 32%, which was the same as the ownership share of the other co-founder Damian Merlak.

    Is Tokens.net a New Potential Success Story?

    tokens.net
    tokens.net 

    Merlak has designed a second exchange platform without his co-founder of Bitstamp Nejc Kodrič called Tokens.net. In an interview with MoneyMakers he explained:

    “I am an innovator, I like new things, Bitstamp is licensed and therefore there’s no more room for rapid development,”

    The crypto exchange Tokens.net is live and users can exchange cryptocurrencies and crypto tokens on the platform.

    “We’re not like most ICO projects that haven’t yet delivered any product… the money collected from the ICO is used exclusively for the development of the platform. We listen to the community and stakeholders and deliver upon the requests which are in line with our vision for the platform.”

    Although Bitstamp and Tokens.net are both classified as crypto exchanges, Tokens.net’s difference is that it doesn’t enable FIAT to crypto trading.

    Tokens.net seeks to bridge the gap between ICOs and crypto exchanges by giving carefully selected ICOs a place to be traded. The company has already 11 employees. Merlak says:

    “Tokens.net has a very bright future ahead and you will hear more about it soon.”

    Featured image Twitter.

  • Crypto Investors Should Check out This Obscure Tax Loophole

    Crypto Investors Should Check out This Obscure Tax Loophole

    With the end of the year approaching, crypto investors have some planning to do. It’s typically a time for businesses to buy up tax-deductible expenses, pumping up their losses to take the sting out of taxes in April. But for crypto investors, the rules are still pretty unclear.

    The IRS has only released one notice, in 2014, which CNN this year called the:

    “first and only guidance on how tax principles apply to transactions using cryptocurrency.”

    What Crypto Looks Like to the IRS

    We do know that crypto assets are considered “property” and not currency, for tax purposes. If you bought bitcoin and didn’t sell, you have no gains or losses to report. Coin-to-coin trades are generally considered taxable events. Beyond that, things are less than clear.

    Tax attorney and founder of Attorney IO Alexander Stern says:

    “Bitcoin looks a lot more like a commodity. The latest ICO often looks a lot more like a security… Ultimately, one token could be regulated as both a security and a commodity.”

    While people have been trying to figure out how to fulfill tax obligations regarding crypto, a strange loophole has appeared that’s allowing some investors to buy up crypto assets and count them as business losses.

    Andrew Rossow, attorney and cryptocurrency contributor for Forbes says:

    “From a legal perspective, we are watching regulatory agencies and institutions try to unpack the complexities of digital assets… With each ruling or advisory opinion, we are starting to see the molding of ‘boundaries’ on a scale that is still developing and expanding outward.”

    Here’s What Happened

    The Pareto Network is an investment research platform that offers a subscription package for premium-level investors. Those who qualify for the platform’s subscription services do so based on a score, and investors can build up their scores by accumulating tokens native to the platform, called PARETO.

    Any money you put towards these tokens qualifies as a business loss, as it’s paying for the expense of the subscription service. You can deduct all that money as losses, and you still have your tokens as assets since you don’t need to spend them to access the research platform.

    PARETO tokens have a market value and can be subsequently traded on various markets. Rossow continues:

    “I’m not a tax expert, but I’ve always said that we’re all in this together as we define systems related to blockchain technology. What we are witnessing here are use cases, some inadvertently, as indicated here, and watching how they fit within the legal, tax, and ethical boundaries of what we know to be well-founded today.”

    Through the way the Pareto Network set up their subscription package, they accidentally created a tax-deductible asset, allowing investors to buy up crypto assets and classify them as losses.

    Crypto Investors – Keep Your Transaction Volume Low

    Building up losses can be a powerful way to ease your tax burden and reinforce your business. But there are other strategies to keep your crypto more lightly taxed.

    Take the advice of Patrick Camuso, a CPA with a special focus on crypto. He says that investors dealing in fewer transactions will have a much easier situation come tax time. On the other hand:

    “when you have a high volume of trades, it does create a compliance burden… Day traders and algorithmic traders usually have the most unpleasant time around tax season from my experiences so far.”

    He notes that when the value of your coin goes up and down, it’s not important for tax purposes. But when you trade it for another coin, the IRS wants to know.

    “You need to track portfolios and for each trade you’re required to report it to the IRS. It’s a taxable event, it’s a reporting event.”

    The intersection of crypto investment and taxation is still under exploration, and that, we can speculate, is a large part of the IRS’s lack of guidance. They’re just as new to it as investors, CPAs, and the CEOs of trading platforms.

    While there isn’t much point stressing about the aspects we don’t have specific guidance on, crypto investors can at least enjoy the loopholes while they last.

    Featured image from Shutterstock.

  • Number of Crypto Billionaires Grows in China Despite Crypto Ban

    Number of Crypto Billionaires Grows in China Despite Crypto Ban

    China, a country known for its hardline approach on cryptocurrencies, is witnessing a surge in crypto billionaires within the country. This is due to the huge success of crypto companies such as Bitmain and Binance.

    The latest list of Hurun China Rich 2018 List includes Founders, CEO and Vice President of Bitmain who all has a combined total wealth of total $9 billion and Binance CEO Chanpeng Zhao.

    Jihan Wu, Co-founder of Bitmain, who usually gets the most media attention for Bitmain’s success is not actually the richest crypto billionaire in the country. It’s the other co-founder and Bitmain’s technical mastermind, Ketuan Zhan, who keeps a low profile but has the biggest stake in the company at 36.85%. Jihan Wu and another co-founder Zhaofeng Zhao owns 20.25% and 6.26% respectively.

    According to the Hurun Rich 2018 List, Ketuan Zhan’s net worth is RMB 29.5 Bn ($4.2 Bn), Jihan Wu’s net worth is RMB 16.5 Bn ($2.39 Bn) and Zhaofeng Zhao with other colleagues Yuesheng Ge (VP) and Yishuo Hu all come under the $1 billion mark.

    Bitmain can be termed as the crypto unicorn due to its huge success amid the weak crypto market. It is in the process of going public and plans to list its shares in the Hong Kong Stock Exchange.

    Bitmain recently disclosed its financial statements and affairs of the company for the first time following an audit from KPMG. In 2017, it hit a sales revenue of $2.5 billion, an impressive growth of 328% from the 2015 levels at $137.3 million.

    In the first quarter of 2018, it managed to surpass Nvidia in terms of profit margin by double points, generating $1.1 billion in total net profits. It expects to close 2018 with a revenue of around $10 billion.

    Bitmain, founded in 2013, has a complete monopoly over ASIC mining chips market and a market dominance of over 75%. Since 2017, it has raised nearly $800 million in funding from several venture capitalists.

    Chinese Crypto Billionaires

    Other personalities who have made to the Hurun China Rich List are Binance CEO Changpeng Zhao with a total net worth of RMB 15 or $2.17 billion. Binance was founded in China but due to stringent regulatory conditions imposed by the Chinese government, it shifted its operations to Malta.

    Binance Head
    Binance Head, Changpeng Zhao / Forbes

    The next billionaire is Bitmain’s rival company, Ebang International Holding’s founder Nanjing Zhang with a total net worth of RMB 3.5 billion or $0.51 billion.

    The explosive surge in prices of cryptocurrencies in late 2017 helped many early-stage large investors in Bitcoin or Bitcoin whales to become billionaires. Recently, Ripple co-founder Chris Larsen made it to the list of Forbes 400 rich list with a total net worth of around $2.1 billion, entirely made from cryptocurrencies.

    Featured image of Ketuan Zhan from Cryptonetix.

  • Massive Bitcoin Price Surge Fueled by Tether Sell-Off

    Massive Bitcoin Price Surge Fueled by Tether Sell-Off

    After a pretty much year-long bearish trend, the naysayers predicting Bitcoin’s demise seemed to be gaining ground. Yesterday, October 14, bitcoin price saw an abrupt increase from $6,300 to $6,410 within minutes. This caused a short-lived stir among the Bitcoin community since analysts had previously predicted that bitcoin would recover.

    The partying on the streets soon ended with the price falling below the $6,300 mark to around $6,220. Until just a few hours ago.

    October 15 just experienced a massive Bitcoin price surge from $6,300 to $7,500 in a matter of hours. This pushed up the market cap from $116.40B to $119.86B.

    Bitcoin price
    Bitcoin price /  https://www.tradingview.com/x/8C9aFKmS/

    What’s behind the massive uptick that will have HODLers around the world waking up smiling?

    The Bitcoin Price Surge Is Highest on Bitfinex

    The price of Bitcoin have often been influenced by movements in stablecoin Tether (USDT). So, amid the news over the weekend of heavy Tether selloffs, it’s hardly surprising that Bitfinex, the cryptocurrency exchange behind Tether LLC is leading the charge.

    All exchanges that have USDT integrated, including Huobi and OKEx, are seeing Bitcoin traded at a premium price, as traders continue to spark the largest selloff of USDT so far.

    How Stable Is the Most Popular Stablecoin?

    Tether has suffered a lot of negative press. It’s never sat well with people that the stablecoin is centralized and overseen by Bitfinex. Then there was the outright accusation in December 2017 that there weren’t actually enough dollars backing Tether, throwing its 1:1 parity into question.

    Insult was added to injury with Bitfinex’s reluctance to open up its books. And while much of the community simply desist from buying Tether, USDT is still extremely influential on Bitcoin’s price.

    This latest sudden dump has so far seen the “stablecoin” drop by 6%. And it’s this drop that’s pushing up the premium of Bitcoin value on Tether-integrated cryptocurrency exchanges.

    So the Real Price of Bitcoin Isn’t North of $7,000?

    No. All major fiat-to-crypto exchanges including Coinbase and Kraken are currently trading at around the $6,600 mark. Although, the fact remains that they did see the price of bitcoin surpass the $6,700 mark, which can be good news for Hodlers.

    It doesn’t take a cryptocurrency market analyst to see the reasons behind this price spike. Look no further than TrueUSD if you want an example of a regulated, audited stablecoin that remains steady today.

    It seems glaringly obvious that large amounts of Tether are being used to purchase both Bitcoin and Ethereum (that has also saw a large uptick in price, pushing it over $216 in the past few hours, $214 at the time of writing).

    So, if this is the case, is there any reason for Bitcoin fans to celebrate? Maybe so, considering the general Bitcoin price surge on all major exchanges–by more than $400 over the last 24 hours. And over the past 12 hours, Bitcoin volume has shot up from $3 billion to $4.8 billion.

    But the troublesome fact remains: For all those in the industry who believe that Tether has no effect on their holdings, it’s time they recognized the canary in the coal mine.

    Featured image from Shutterstock.