Saga is a Layer 1 blockchain protocol that allows developers to design their own dedicated chains for running applications. Learn more in this article.

 universe right now is the lack of accessible tools for developers. Many people interested in designing new 

 projects struggle to find the right software developer kits (SDKs) for their projects. The Saga ecosystem aims to fix this issue by providing unparalleled support to app and game developers. 

Can the Saga ecosystem really become the premier chain for web3 development? Keep reading to learn how it works and see whether it's likely to attract new developers.

 blockchain protocol. It allows developers to design their own dedicated chains for running applications. People who work on Saga all share the same security, scaling solutions and SDKs, but they each get their own unique chain that they can customize to suit their needs.

 of technology, crypto and finance enthusiasts. CEO Rebecca Liao is a co-founder of the Skuchain project, the designer of the 

 and a former international corporate attorney. Other members of the founding team include former Tendermint executive Jin Kwon, Blocktech Ventures founder Bogdan Alexandrescu and 

. They realized that there was a major need for a development-focused blockchain specifically designed for game project development. Saga's mission has attracted many major investors, 

Saga aims to create a new system for web3 project developers. Currently, most developers have to choose between the ease of working on an established chain like 

 versus the convenience and customization of designing their own chain. The Saga team realized that the most effective option for game developers would actually be a combination of the two types of development environments.

Saga wants to let developers set up their own sovereign blockchain so they can decide how things like 

 and transaction fees work. However, Saga also aims to provide extensive support for developers in its ecosystem. Its underlying framework ensures that people still have excellent security and a reliable validator set, no matter what their gaming project is.

 ecosystem, whose interchain web development standard is a set of protocols that allows a broad variety of blockchains to communicate with each other. The Saga network uses the 

 and the shared security system of the Cosmos ecosystem to manage the network, and has created its own Layer 1 chain that runs the entire Saga ecosystem and can do things like automatically launching 

The Saga Mainnet handles each developer's compiled smart contract binary. However, it also runs parallel dedicated chains that function as virtual machine (VM) modules capable of handling a specific set of smart contracts. End users for blockchain games and other apps interact only with the dedicated blockchain, while the developer's system manages the fees and individual transactions on the Saga Mainnet.

All of the chains on Saga are validated through optimistic coordination, which requires every Saga validator to validate each chain in the Saga ecosystem via 

 validation, verifying transactions by temporarily locking Saga tokens.

The Saga network contains a lot more than just the basic features offered through the Cosmos SDK and ecosystem. In addition to the software development tools and helpful interface for Saga's validators and developers, the ecosystem also contains the following features.

The overall layout of the Saga ecosystem starts with the Saga Mainnet. Built on the Cosmos hub, this framework includes a full validator set and a dedicated blockchain for handling all smart contracts. The basic protocols are passed on to each child chain in the system, and information is relayed back and forth between the main chain and all of the secondary chains. Saga's validators stake tokens, and then check to make sure every element of the topology follows Saga’s regulations.

 are a method for creating a dedicated blockspace that a developer can manage. These chainlets function as virtual machines that can handle smart contracts and automatically launch Celestia rollups. Each chainlet is its own blockchain that handles nothing but a specific gaming project. Developers decide on the gas fees they'll charge users, and can add chainlets as their projects expand and require more throughput from the remaining validators.

Saga's shared security relies on both the Cosmos hub and its own set of validators to secure the network. Validators on Saga’s network are monitored by auditors who can catch potential issues with individual dedicated chains. If anyone in the validator set fails to properly confirm a smart contract, their staked tokens are automatically confiscated.

 is a publishing system for gaming developers who want to create their own blockchains with help from Saga. It offers infinite scalability, seamless 

 and transactions without gas fees. In addition to use of the Cosmos SDK, developers who choose to publish their game through Saga Origins receive access to a variety of helpful marketing and distribution tools.

 is an interconnected blend of all the developers and projects in the Saga system. Though each sovereign blockchain is fully independent of others, they all join together to offer users a variety of exciting web3 projects. People interested in checking out the latest blockchain designs can join the Multiverse and browse all the neat concepts built on Saga.

To help get the Saga validator system started, Saga released 

 to its community members. People were eligible for the 

 if they had participated in the staking program or played in tournaments to promote Saga ecosystem games. The airdrop eligibility period required remaining validators and other participants to be active between January and October of 2023. Once the airdrop began allowing people to claim tokens, it continued to run until Mar 27, 2024.

 consists of four separate phases. The company has already completed the Andromeda and Cassiopeia phases, which focused on designing the Mainnet and setting up the system of Saga validators. Currently, the Saga team is in the Pegasus phase, which is about releasing tokens and opening the Saga Mainnet to the public. Sometime in late 2022, Saga’s team hopes to reach their Mainnet V2 phase, which will prioritize a new version of the Saga Mainnet with more features and options for dedicated blockspace.

SAGA tokens are the primary method for paying fees on the Saga network. These tokens are also used for staking, and function as a method of confirming Saga transactions. There are a total of 

, of which around 90 million have thus far been released. Saga plans to distribute its tokens as follows:

SAGA is still in the early stages of its token launch. However, it’s already surprised investors, having debuted at $4.91 on Apr 9, 2024 before quickly surging to its ATH to date of $7.60. It then steadily declined over the next few days to its current price of $3.06 as of Apr 19, 2024.

 SAGA, with its experts believing SAGA’s price will reach $15.73 by 2025 and decrease in 2027 to $6.27, before rising again to $13.45 by 2030. This bullish sentiment is amplified by analysts at Changelly, 

 SAGA’s price will increase to $6.91 in 2025, $14.21 in 2027 and $44.36 in 2030.

Looking to trade Saga tokens? Bybit now offers SAGAUSDT Perpetual contracts. To get started, you’ll first need to 

, then fund it with cryptocurrency and navigate to the 

SAGA has done an extremely impressive job of attracting users, and seems poised to become the big coin debut of April 2024 with its high price.

However, it's hard to say whether SAGA can maintain its price in the long run. It's quite common for new startups to have a strong start and then drop in price once their project fails to take off. If the Saga ecosystem can’t attract new developers and continue to release impressive projects, investors could see some major SAGA losses in the future.

Since this coin is so volatile right now, investors need to 

. It has the potential for both big profits and big losses, so you’ll want to carefully consider how these price shifts might affect your portfolio. For best results, avoid investing more than you can afford to lose, make sure you diversify your investments — and 

By offering developers the chance to create their own dedicated chains, Saga offers a more convenient and scalable system for blockchain gaming. Its helpful features and low transaction fees have already attracted many people, and it's no surprise that many others are interested in the project. Furthermore, SAGA tokens have had a promising start with extremely impressive growth. If the Saga company can successfully capitalize on its early buzz, it has a bright future.

Intermediate

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Saga (SAGA): Catalyzing the Multiverse With Scalable Chains

Discover Masa, a platform empowering individuals to control and monetize their data, decentralizing AI storage and promoting ethical data sharing.

Few areas of the crypto industry are as popular these days as artificial intelligence (AI). AI-related tokens and projects experience some of the highest growth rates, with particular interest attached to generative AI technology and large language models (LLMs), all thanks to OpenAI's massively popular ChatGPT tool. This is no surprise, as blockchain technology has the potential to address many of the limitations of LLM algorithms, particularly those related to the issues of data and centralization of AI models.

The Masa network (MASA) is a new AI-focused crypto platform that brings a fresh paradigm to the world by allowing individuals to control and monetize their personal data. Its platform also contributes to the AI revolution by decentralizing the storage of both the user data and the LLMs utilizing it.

 (MASA) is a blockchain platform that provides access to user-consented, hyper-specific behavioral and personal data and decentralized LLM algorithms. 

The platform launched its operations on Apr 11, 2024. Masa operates as a subnet on the 

 (AVAX) blockchain. To enable cross-chain functionality, it has also integrated 

 technology. This lets Masa bridge assets, initially to two key blockchains, 

 (BSC), with additional chains to be added in the future.

Masa provides user-consented AI data that’s stored in a decentralized way. As of mid-April 2024, more than 40 million data points from over 1.4 million 

 user wallets are available via its permissionless data layer. Masa represents an entirely new decentralized AI paradigm: while most data providers use centralized storage solutions, its platform's data is always stored in a decentralized, blockchain-based format.

The data made available via Masa’s platform is user-consented for collection and privacy-protected using its Zero-Knowledge 

 (zkSBT) technology, which allows users to share their personal data securely and confidentially by storing this encrypted data on the blockchain. Thanks to the zkSBT, users can share fairly detailed personal data while protecting their identities and the specifics of their online activities.

This user-consented data is directly sourced from users through the Masa App and Masa Chrome browser extension with their consent. Users have complete control over their data, which is collected in a highly detailed, verified and ethical manner. 

As such, it's different from the typical user-aggregated data collected from the internet by companies. Compared to user-consented data, user-aggregated data tends to be less granular and, obviously, has ethical strings attached to it: in most cases, users don't consent to the collection of such data, or (at best) provide reluctant consent by clicking on annoying "Accept All Cookies" buttons.

While focusing mostly on user-consented data, the Masa platform also offers developers a way to access user-aggregated data for a richer data network. Using Masa's web data scraper, developers can extract data from websites, social media posts, blogs and online databases.

User-aggregated data is collected by data node workers via the Masa Oracle network and Masa Chrome extension and stored on the platform, benefiting from the 

In addition to datasets, Masa enables the decentralized execution of LLM algorithms, facilitated by the Oracle node workers, who leverage their surplus CPU and GPU computing power to run open-source LLMs for fine-tuning AI models.

The Masa project aspires to achieve goals crucial to the development of all data and AI industries. First, Masa allows individuals to completely control their own personal data by choosing what to share with the outside world while protecting their confidentiality. The blockchain-based storage mode also ensures the security of the stored data. Additionally, users can monetize access to their personal data, becoming a major beneficiary of its use.

All of these benefits are in stark contrast to the traditional way user data is collected, stored and used on Web 2.0 platforms. In this traditional mode, one is often unaware of what personal data is collected about them, as well as when and by whom. Although the data used for analytics purposes might be in an aggregated form, together with the details of other online users, individual users are still part of the "guinea pig" cohort whose details have been unceremoniously extracted and utilized without their knowledge or consent.

Moreover, when hit online with some fairly relevant advertising based on past search phrases, one begins to realize that data isn't always used in an aggregated format. In fact, its utilization can be quite personalized. And of course, in the traditional mode of data collection, we’re all rarely reimbursed for the data we share.

Another aim of the Masa project is to provide a secure and efficient decentralized infrastructure for running LLM algorithms. Traditional, centralized hosting solutions for AI models face challenges, such as technical capacity and security issues. For instance, many centrally hosted LLM-based solutions suffer from performance degradation when large numbers of users access them simultaneously. Masa's approach to leveraging decentralized resources for running open-source LLMs efficiently addresses these capacity limitations, providing enhanced scalability and reliability for AI applications.

Masa operates as a subnet on the Avalanche blockchain, using cross-chain communications supported by LayerZero to access other networks as well. Avalanche subnets are completely independent 

 networks with their own set of rules and functionalities. Subnets, including Masa, use Avalanche's validators, or a subset of validators, to secure the network and achieve consensus.

Besides the validators, the Masa network has another type of functional nodes — 

. These special Masa nodes play a critical role in providing structured data and advanced AI models while prioritizing data privacy.

The Masa Oracle network acts as a decentralized web scraper, gathering data from the internet and organizing it for AI training and development. This approach gives developers access to hyper-personalized training data to improve language model performance. It also supports the decentralization of LLMs, making them easily accessible without complex setup.

As mentioned above, users can manage access to and monetization of their personal data via Zero-Knowledge Soulbound Tokens (zkSBTs), which provide a secure way of providing access to users’ personal data without compromising their privacy.

 is the main gateway for users to interact with the Masa platform. It lets them provide access to personal data and earn crypto rewards by staking data in four different ways:

Masa’s native cryptocurrency, MASA, is a utility and 

 used to reward users for providing their data to the network. 

 MASA also earns you crypto rewards. Entities who wish to utilize data held by the network pay for access to it in MASA tokens. The token is also used to reward the Oracle nodes.

As a governance token, MASA lets you participate in votes on any changes and upgrades to the platform's rules or fee structure.

The token's supply economics doesn't specify a maximum cap. MASA's total supply is 1,588,866,523, which will be released gradually over a period of around four years starting in April 2024. Token supply allocation shares are per the table below.

The MASA token is available on Bybit via a 

. Bybit's Spot and Derivatives markets provide you with opportunities to trade hundreds of cryptocurrencies and crypto-based products. If you don’t have a Bybit account, you can easily 

 to access Bybit's range of crypto products and assets.

The Masa network is a refreshing addition to the data industry, whose user consent and privacy have been under attack for many years. The Masa platform puts data ownership in users' hands, allowing them to control access to their data and benefit from its monetization. As online privacy concerns and invasive Web 2.0 advertising shenanigans grow, more users will be attracted to Masa's unique data concept.

In addition to allowing individuals to control and monetize their data, Masa also contributes significantly to the development of 

, which is important because the decentralized mode of data and model storage championed by the platform has the potential to solve many technical limitations of LLMs and other types of AI algorithms. This is a network full of merit and promise; all it needs now is wider recognition and user adoption.

Advanced

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Masa (MASA): Powering AI With User-Centric Data Monetization

Today’s outperformer is LSK, which jumped 17.63% after Lisk partners with Velodrome to enhance blockchain access and drive ecosystem growth.

The SPX index is down 0.22% as the market anticipates less Federal Reserve rate cuts, considering the possibility of no cuts this year. The broader cryptocurrency market is up, with Bitcoin and Ether rising by 4.18% and 3.19%, respectively in the past 24 hours.

Lisk (LSK), launched on May 2016, is a cryptocurrency platform that enables developers to build decentralized applications (dapps) using JavaScript and TypeScript. It supports custom "sidechains" within its network, offering tools like a software development kit. Lisk has announced a partnership with Velodrome to support and expand its blockchain ecosystem. Lisk will purchase and lock $VELO tokens for voting, directing VELO emissions to key pairs on Lisk. This collaboration aims to support existing protocols on Lisk, attract new developers, and enhance blockchain accessibility and adoption in emerging markets. Velodrome will back Lisk's Layer 2 initiatives, aligning with the goal of creating a scalable, interoperable Ethereum future.

Check Out the Latest Prices, Charts, and Data of 

The Runes protocol is set to debut alongside Bitcoin's 2024 halving, heralding a new phase in Bitcoin's evolution by enabling the creation of fungible tokens directly on its network. This follows the impactful Ordinals protocol, which significantly expanded Bitcoin's functionalities. The Runes protocol will spark competition among developers to issue and acquire the first tokens, with global exchanges ready to support these tokens from day one. The halving event will also feature a race to mine a highly valuable "Epic" satoshi. As Bitcoin approaches this transformative era, extensive preparations and educational initiatives are underway to equip users for the forthcoming changes, marking a profound shift in Bitcoin's operational and cultural landscape.

Spot Bitcoin ETFs have yet another day of outflow, however, yesterday’s outflow was close to neutral. The market has seen fluctuating flows in these ETFs, with significant activity in some and none in others, reflecting mixed investor reactions. Recent substantial outflows echo trends from March, but analysts regard such fluctuations as typical for ETFs and not indicative of failure. Despite this volatility, the outlook for Bitcoin ETFs remains positive as they continue to draw institutional interest and shape market dynamics.

Avail, a blockchain data-availability protocol developed using Polygon’s SDK, has announced an airdrop of 600 million AVAIL tokens, marking its one-year anniversary since spinning off from Polygon Labs. The "Unification Drop" aims to bring together various blockchain communities by rewarding developers, governance contributors, educators, rollup users, stakers, and others who have significantly contributed to the ecosystem. Avail's infrastructure includes three segments: Nexus for cross-chain transactions, Fusion for liquid staking on chains like Ethereum and Bitcoin, and DA for scaling rollups through technologies like KZG commitments. The airdrop will distribute tokens to 354,605 wallet addresses and includes significant allocations for various roles across multiple blockchains, including Ethereum, Bitcoin, Solana, Cosmos, and more, emphasizing a unified Web3 environment.

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Runes Protocol Revolutionizes Bitcoin with New Token Capabilities Ahead of 2024 Halving

Nolus is a decentralized finance lending protocol with cross-chain capabilities. Learn more about how it works in this article.

One of the big advantages of decentralized finance (

) is that it provides more options for users. People who cannot get traditional loans because a typical bank deems them "high-risk" can turn to the DeFi sector to borrow crypto assets. The Nolus Protocol is a new DeFi lender that offers users all sorts of exciting opportunities. To see how this intriguing project works, explore this guide to learn all about Nolus.

 is a DeFi lending protocol. It has cross-chain capabilities that let people choose the most favorable rates possible and avoid the need to save up funds for liquidity.

Nolus was founded by Ivan Kostov and Kamen Trendafilov. Kostov worked in traditional finance, while Trendafilov has a background in marketing and business. During their time in these sectors, Nolus's founders realized that blockchain networks had the potential to revolutionize banking. They decided to join together and create a new leasing system that makes the most of DeFi products instead of just trying to mimic past banking methods.

Nolus started work on its plans in 2022 and officially launched its mainnet in 2023, having successfully completed several investing rounds and receiving 

 Token Metrics, Autonomy Capital, Everstake and more.

Nolus aims to tackle three problems common in crypto lending markets:

 software developer kit (SDK). Its code is entirely open sourced, and is updated and changed only when all stakeholders in the Nolus community vote to do so. According to the Nolus white paper, its ecosystem’s goal is “to build a novel user experience–driven automated money market” that facilitates direct interactions between lenders and borrowers without involving any other users.

The Nolus lending method starts with lenders choosing to supply 

 to the system. Any borrower who submits a down payment can get a loan from this supply of stablecoins. Both the coins and the down payment are 

, and interest is determined based on the value of the items. There’s no fixed repayment schedule, but the smart contracts ensure that interest is automatically removed from the collateral, and then paid to the lender at regular intervals. Once the user decides to repay the lease, the original assets are released from the smart contract.

Nolus's lending protocol includes many ways for customers to profit and enjoy convenient services. Here are the main DeFi products you can access through Nolus.

DeFi leasing on Nolus is designed to be as convenient as possible. Customers don’t have to go through a lengthy application or pay a lot of fees to other users. You just enter your collateral and get a loan of up to three times the value of the initial investment. Interest rates vary between 11% and 18%, based on the market value of the digital assets. The 

 allow the loan to be repaid on your own schedule. However, keep in mind that you pay more interest if you wait a longer amount of time to repay the loan.

If you want to earn money based on your existing crypto, you can join one of the many 

 on Nolus by submitting stablecoins in exchange for interest-bearing Nolus crypto. When you're ready to withdraw your funds and stop participating in DeFi leasing, you can cash out your Nolus tokens to receive your initial asset, plus any additional interest or network fees you’ve earned.

Nolus's system of money markets isn't the only thing they provide. Users who decide to 

 a crypto asset on Nolus can earn more money. The Nolus ecosystem offers the option of staking NLS tokens in exchange for various incentives. Lenders receive higher amounts of rewards for lending stablecoins, and borrowers get a lower interest rate.

Nolus has had some impressive growth since its launch in 2023. In just six months, the lending protocol has assisted with thousands of loans, collectively worth $8.6 million in total. Its team calculates that they've managed to achieve an average 

Nolus hopes to expand on this momentum in 2024. Its main plan is to continue marketing the lending protocol heavily, attracting more users who want to do their own research and find the best possible loans. To further attract users from the DeFi sector, Nolus aims to add more support for other crypto tokens and increase network liquidity. Nolus stands for community-led governance, so they don't have a long-term road map in place. Instead, they plan to evolve and adjust to suit whatever community needs arise in the future.

. It allows users to adjust their interest rates, and it's also a 

. People with NLS tokens can vote on how the platform is run and help implement new changes for the platform. The NLS token has a total supply of 1 billion. Nolus’s plan is to gradually mint tokens over a ten-year period, and implement a token buyback program to help maintain value. NLS token distribution will be as follows:

When the NLS token was released in the summer of 2023, Nolus prices were fairly stable. However, now that investors can sell their NLS tokens, prices have become more volatile. Starting in December 2023, NLS prices 

, and although the token currently seems to be dropping from its all-time high of $0.10, more price increases seem likely in the future.

Not only is the market for the NLS token quite bullish right now, but the Nolus lending protocol is also attracting a lot of positive attention in the crypto space. If the network can maintain its positive attention and attract more users, prices seem likely to rise even further. CoinCodex predicts Nolus prices will stay in the $0.04 to $0.19 range for 2025, and hit 

. This attitude is backed up by crypto influencers such as Crypto Revolution, 

 an underrated crypto with a lot of potential for growth.

The Nolus project is a well-thought-out crypto protocol that offers users significant advantages. Its innovative approach to lending could potentially attract a lot of users from the DeFi space. In addition to having a reliable system backed with effective technology and a detailed white paper, NLS digital assets have also experienced some promising growth patterns. The crypto asset has had a slow yet steady climb in price, and now that it's trending in crypto news, it seems poised to take off.

However, keep in mind that it's still important to 

 on digital assets. Some crypto investors might find it concerning that the Nolus project is mostly backed by marketers, instead of blockchain enthusiasts. There have also been some tech issues, such as the 

 that led to some unnecessary margin calls. Subsequent issues could limit price appreciation of its crypto assets. Therefore, it's necessary to approach Nolus with caution and not overextend your finances.

Nolus's DeFi lease system allows people to obtain easy access to crypto. Its innovative approach provides investors with significant advantages. Unlike traditional finance, there's no lengthy application process, and in contrast to many other blockchain networks Nolus doesn't have frequent margin calls or high network fees. As long as Nolus doesn't run into any technological issues or financial problems, its network is likely to have a lot of success in the DeFi space.

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Nolus (NLS): Crafting Liquidity's Future With Leading DeFi Leases

Investing

Trading

Interested in crypto mining stocks? From share dilution to potential bankruptcy, here's why it's better to buy the cryptocurrency instead.

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When it comes to mining Bitcoin, crypto mining stocks immediately come to mind given how often they appear on headlines. Droves of miners operate behind the scenes to confirm transactions that have pushed Bitcoin to nearly $900 billion in value (as of mid-September). They are an essential piece of blockchain consensus, creating new bitcoins from scratch by solving complex cryptographic puzzles and verifying transactions on the blockchain. 

Commodities like oil and gold have upstream and downstream components, which start at the beginning of the extraction process and end downstream with refined products. Trading and investing in Bitcoin mining companies is similar to investing in upstream commodity markets. 

The companies behind Bitcoin mining stocks either offer crypto mining hardware, or mine the cryptocurrencies themselves.

Investors trade crypto mining stocks to take advantage of the high volatility and growth in the sector while harnessing the leverage available. However, the unusually high volatility is a double-edged sword, because the bottom can fall out on these stocks far more quickly than with any digital coin. 

We’ll take you through the lesser-known risks of crypto mining stocks so that seasoned investors can make an informed decision.

Investors buy the best Bitcoin mining stocks because as digital assets like Bitcoin and Ether rise in value, cryptocurrency mining stocks also climb. Investors capitalize on leveraged stock market trades without actually owning any cryptocurrency. 

Bullish surges and leaps in Bitcoin and other cryptocurrency prices, as well as increased demand and distribution, mean that stocks associated with cryptocurrencies also start attracting attention. You can compare trading crypto mining stocks to trading gold shares. There’s no actual gold ownership, but the value of large gold mining enterprises reliably moves in line with the price of gold. Similarly, crypto mining stocks tend to fluctuate relative to the value of crypto assets. 

One reason to invest in crypto mining stocks is that most retirement accounts won’t allow adding cryptocurrencies to your retirement portfolio. A way around this is to buy Bitcoin mining stocks. That way, you expose your portfolio to the potentially massive upside of investing in cryptocurrency, albeit indirectly.

Leeor Shimron, a member of the Business Development & Strategic Partnerships Team at Kraken, refers to Bitcoin mining shares as a “high beta play” due to the way public mining companies rose 5,000% on average during the last bull run, when Bitcoin climbed 900%. His analysis reveals that Bitcoin mining stocks

. In certain cases, crypto mining stocks can outperform the underlying cryptocurrency mined. 

Historically, mining pools in China have controlled the majority of Bitcoin’s hash rate. China manufactures most of the world’s mining equipment, and mining farms have used cheap electricity prices there to build up a large presence. Due to the recent ban on cryptocurrency mining in China, numerous opportunities for miners in North America and the rest of the world to make huge profits have opened up. At the same time, companies are mining more bitcoins than ever, since it’s now easier, due to the downward difficulty adjustment resulting from the expulsion of Bitcoin miners from China.

Investors holding a significant stock market portfolio who qualify for margin trading effectively trade cryptocurrency mining stocks as a leveraged bet on the underlying cryptocurrency’s rise in value. While the logic behind this strategy works, many investors don’t realize how volatile mining stocks can be. A managed corporate crypto mining pool can shut down overnight if its holding company decides the expense is no longer worth it. They can decide to simply liquidate all assets, and move on to another investment. Or — in the case of Chinese miners — regulatory action can lead to a crackdown. Buying Bitcoin mining stocks comes with significant risk.

Cryptocurrency popularity is accelerating and, with it, the demand for mining. According to an

report, “the size of global cryptocurrency mining activities is projected to reach [$258 billion] by 2026, from [$102 billion] in 2020, at a 

 of 16.8% during 2021–2023.” In addition, the total value of all crypto surpassed $1 trillion in early 2021. 

What Are the Risks Of Crypto Mining Stocks?

Investors are attracted by returns. Crypto mining giants Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT) are two clear examples of how Bitcoin mining stocks can outperform the growth of Bitcoin itself. In 2021, Marathon stocks have climbed 165%, and Riot has grown by 65%, whereas Bitcoin has only been up by about 30% in the same space of time. Even though MARA has plans to deploy over 75,000 more miners by the end of the year, with 15,200 more coming in January 2022, the company is not yet profitable. 

RIOT, on the other hand, reported a considerable gross margin of 67.6% during the first quarter of 2021. Despite massive investments and a fairly steady rate of return at the moment, there’s no guarantee that mining companies will continue to meet their profitability projections. Miners purchase expensive hardware, acquiring the world’s highest-powered semiconductor chips based on the expectation that prices are going to follow a particular trend over the next three to five years. During this period, energy prices can fluctuate, and buying new mining equipment will grow more expensive. If this offsets projected returns, crypto mining stocks could collapse. 

Trading Bitcoin and Ether mining stocks is a risky endeavor. Without assessing the risks of crypto mining stocks, many investors find themselves taking on far too much volatility while entering trades, without a clear assessment of where the market may be moving. 

Here’s a breakdown of a few risks to be aware of. 

High Upfront Cost Can Result in Operational Inefficiencies

In the “early” days of Bitcoin, it was possible to create or “mine” bitcoins on a home computer. Since then, the race to mine bitcoins has led miners to use increasingly sophisticated and expensive hardware. Prices on specialized mining hardware have surged as miners compete with gamers for equipment. Miners have also pooled resources and created mining companies to get the most out of their mining production.

Bitcoin mining companies need to make massive investments into high-end processors and semiconductors to mine cryptocurrencies. This high upfront cost is worsening with the global semiconductor shortage that’s driving mining hardware prices up. With a lack of hardware, mining wouldn’t be as efficient. At the present moment, mining companies are acquiring graphics cards well before gamers do. Between these two markets a massive shortage is arising.

The cryptocurrency boom has already hiked up semiconductor production to the point where there are now more powerful 

 than ever. Unfortunately, the global scarcity of semiconductors has driven the costs even higher. Now, even mid-range cards are out of reach for the average gamer. Should hardware shortages continue to wreak havoc on the industry, causing mining hardware prices to skyrocket, mining could quickly end up at the point where it’s simply not worth it as an investment anymore. 

Huge Energy Consumption And Carbon Footprint from Mining

To keep operating costs low, cryptocurrency mining companies need to find cheap energy sources. These tend to be fossil fuels and natural gas, which can cause plenty of greenhouse gas emissions and lead to huge carbon taxes down the road. Carbon taxes already play a major role in

, and are set to increase as natural resources diminish. Only time will tell whether crypto mining companies will be able to sustain the massive fees imposed.

With carbon emissions of over 77.54 megatons of CO2, which is currently comparable to that of New Zealand, and electronic waste equivalent to that of the Netherlands, critics are coming down hard on the resource consumption of cryptocurrencies. After all, the mining

 for one Bitcoin is 191 tons of carbon dioxide, whereas the equivalent mining value in gold only equates to 13 tons. 

Before the crackdown on crypto, China hosted

 of all the miners in the world. One of the reasons for this was China’s low-cost renewable energy, specifically hydroelectric energy. Hydroelectric dams produce excess energy in the rainy season, which drives down energy costs significantly. After the rains, the miners have reverted to coal or whatever source of energy that’s cheapest. 

Non-PoW (proof of work) coins currently comprise

. There’s a movement away from consensus algorithms with huge energy consumption and large carbon footprints, which could theoretically decrease the popularity of Bitcoin and begin a vicious cycle in which prices drop and miners make even less profit. 

Introduction of New Blockchain Technologies May Affect Mining

While the current consensus algorithm of Bitcoin is unlikely to change in order to lower energy and carbon emissions, other cryptocurrencies are addressing the issue. Ether mining stocks currently hinge on power-hungry consensus algorithms, but Ethereum 2.0 will soon transition from proof of work to proof of stake (PoS). Crossing over to PoS could make ETH 2.0 considerably more efficient than it currently is.

With PoS, gone is the need for mining equipment that requires massive computational power. A combination of 

 and PoS can lower the carbon footprint of Ether to a fraction of its current resource draw. As currencies like Ether evolve, mining could become redundant for many coins and tokens. The effect on mining share prices would be devastating, and no one truly knows the time frame of adoption and rollout with any degree of certainty.

Sudden crashes in the coins that are being mined can cause big swings in overall revenue, which can ultimately determine whether a crypto mining company can stay afloat in the long run. This makes mining companies even more vulnerable, especially in light of potential government restrictions and clampdowns. Should cryptocurrency markets stay bearish for too long, crypto mining companies could quickly decide to shift their investment elsewhere and cut their losses, instead of struggling to keep up with costs and regulations. 

 have gained more than 6,000% since the start of the year, they can also plummet in value. Bitcoin skyrocketed from a high of $60,000 in April 2021 to under $30,000 in July. While it’s steadily retraced to just over $45,000 by mid-September, an excessive fall in value could forecast doom for many crypto mining companies, forcing undercapitalized miners to abandon operations.

Unlike investment in Bitcoin, for example, your holding in a crypto mining company can be reduced when the company issues additional shares out of the blue. This process is known as share dilution, and happens when mining companies try to raise funds for expansion. When a company dilutes its shares by issuing additional ones, the value of existing investors’ shares and their proportional ownership of the company are reduced.

Crypto mining companies operate similarly to traditional ones, with ownership structures and centralized management. Unlike with cryptocurrencies, there is no path to truly decentralizing management of operations. This leads to the consolidation of power — along with the potential for abuse.

Since it’s traditionally structured, a crypto mining company can declare bankruptcy when it runs out of funds. This requires liquidation of any assets, with any remaining value going to creditors first. Shareholders have the lowest priority in the capital structure, meaning that they’re the last to get any money back from the liquidation of a company. This makes holding crypto mining stock potentially more risky than holding a cryptocurrency that benefits from collective belief in an asset.

Trading cryptocurrency mining stocks isn’t easy, especially when one begins to invest in small-cap stocks.

 are easily influenced by the hype and market movements of groups of traders. With the right timing, early investors made fantastic returns in just a few short months, but opportunities like this are few and far between. Risky, early-stage investment saw quick returns, but those who didn’t realize when to sell off and move on would have done far better in a market they understood.

The difficulty of scaling and the rising cost of hardware — combined with rising regulation — create uncertain market conditions. Miners invest in ASIC rigs and other high-end mining equipment, relying on an estimated revenue rate based on their 

. Not all companies can keep up with the immediate costs, and while their computational power may be there, changes within the crypto space can lead to expenses smaller companies can’t afford.

The cryptocurrency mining industry is still relatively new. You have far more people owning crypto than mining crypto, and little is known about the future of related industries. Conventional stocks are connected to companies and movements which have been charted and studied relative to competitors for years. However, cryptocurrency’s future is uncertain, which is largely responsible for the prevailing volatility. A lack of basic comparative measures between new mining companies makes gauging investment viability extremely difficult.

There’s very little to go on when analyzing the viability of new miners, other than the basic hash rate offered and the share price. Before China’s crackdown on cryptocurrency, which banned initial coin offerings and cryptocurrency mining, the country was a haven for startups. Companies like Bit Digital, Inc. are now forced to find

. If local regulation and tariff structures around the world change too much in the coming years, miners may be forced to shut down operations completely. 

Cryptocurrency mining companies have fixed costs which allow for fairly reliable revenue projections.

 that in the $16 billion dollar Bitcoin mining market, around $5 billion is spent annually in mining costs for Bitcoin mining companies, which leaves the miners taking roughly $11 billion in profit. This doesn’t mean, however, that the share price of mining companies will remain stable.

The recent ban on cryptocurrency mining in China uprooted countless mining companies, creating an unexpected and unforeseen expense. We have yet to see the effect of moving thousands of mining machines to new countries — and even after crypto mining share prices adjust, they’ll take time to find their new place amid the new infrastructure. New regulations and changes within the industry create unstable share prices that are hard to predict.

Crypto mining stocks offer investors a leveraged bet against the price of Bitcoin. However, Bitcoin mining involves a significant amount of risk, both financial and regulatory. High up-front costs that crypto mining companies have to pay for specialized equipment expose them to operational inefficiencies, and huge energy consumption and carbon footprint draw significant negative attention. The inherently volatile nature of crypto is often magnified in crypto mining stocks. 

Many seasoned investors still prefer Bitcoin and Ether as long-term investments. The U.S. investment sector is eagerly awaiting any 

 approval by the SEC. The United States’ last application was filed by

. Whether they’ll end up approved or not remains unknown, but investors are confident that it’s just a matter of time before a Bitcoin ETF will be approved. Until then, investing in Bitcoin and other cryptocurrencies is a far more stable strategy than unpredictable, high-volatility cryptocurrency mining shares.

The Lesser-Known Risks of Crypto Mining Stocks

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