Recently, the Bitcoin Standard Hashrate Token aka BTCST token, launched on Binance Smart Chain (BSC) on December 13, 2020 created a lot of buzz among crypto miners. Over the past week, “hashrate tokens”, which collateralize proof of work (PoW) hashpower have come to life as two of the largest mining pools –Binance and Poolin – lead the way. In this article, we focus on Binance Pool’s hashpower token,
The magnanimous surge in Bitcoin’s price to $41,000 gave rise to a mining craze as the blockchain’s hashrate hit all-time highs on January 18, 2021. The mining demand has seen new innovations sprout in the crypto space as miners try to increase their profits and keep up with the raging bull market.
The Bitcoin Standard Hashrate Token, abbreviated BTCST, is a collateralized token by Bitcoin’s hashrate, each token representing 0.1TH/s of actual Bitcoin mining power to an efficiency of 60 W/TH. Miners contribute mining power on the platform in exchange for newly minted BTCST tokens.
The BTCST token aims at bringing liquidity to Bitcoin’s mining market, which allows anyone to have exposure to mining rewards and hashpower of any size at a low cost. The app brings liquidity and efficiency to mining power markets in a similar manner that Grayscale’s GBTC share brings liquidity to institutional investors wanting to invest in Bitcoin.
Additionally, “those without mining power tokenized by BTCST to hedge against the risks of mining machine cost price fluctuations,” a post from Binance reads.
BTCST token holders can also choose to stake their coins in order to receive daily distributions of Bitcoin mining rewards in proportion to the amount staked.
BTCST Token launched in December 2020 with an initial token supply of 1,000,000 BTCST tokens. According to a Binance blog post, 4% of the initial circulating supply will be allocated to the Binance Launchpool and the rest will be allocated to the initial tokenizing miner.
NB: BTCST token can only be issued when eligible miners choose to standardize and tokenize Bitcoin hashrate. Therefore, the project has not and will not host public or private sale events.
The total supply cap of BTCST is determined by the total BTCST tokens staked on the app. As assets under management increase, the 1,000,000 initial supply will increase accordingly but any newly minted token will be subject to a 25-week weekly linear vesting schedule.
The BTCST token was first traded on the secondary market on Binance exchange – trading against USDT – at a launch price of $74.86. The coin has since dropped to $65.03 as of writing, representing a 13% decrease from launch price. The highest BTCST price recorded is $103.33, as reported by Coingecko.
As of January 20th, a total of 64,011 BTCST tokens are staked on the platform, a hashrate equivalent of 6,401 TH/s.
Binance is however not the only mining pool launching its own hashrate token. Poolin, the second largest Bitcoin mining pool, also announced the launch of its own hashcoin, pBTC35A, an ERC20 token anchoring 1TH/s of Poolin hashing power at 35 joules per TH.
A total of 50,000 pBTC35A tokens were released by Pooling, representing 50,000 TH/s of computing power from the newest ASIC miners in Poolin’s facilities.
The two coins aim to battle it out in this new trend – adding to the liquidity and efficiency they bring to Bitcoin’s mining business. So far, Poolin’s hashcoin seems to have an edge over Binance’s BTCST Token in that it supports decentralized finance (DeFi) through its recently launched Mars protocol.
As is common in the cryptocurrency market, the launch price of a token is often different to the efficient market price of the token. Such is the case with BTCST price, which is heavily overvalued at current prices of $65, according to some Bitcoin analysts.
In a tweet sent out on January 13, shortly after BTCST listing on Binance, Wu Blockchain, a Chinese Bitcoin mining analyst, claims BTCST token is highly priced at $73 (price at the time). Currently trading at $65 and each BTCST token anchoring 0.1TH/s, an equivalent price of $650/TH/s is derived of 60W/TH.
The most expensive Bitcoin mining device, the Antminer S19 PRO from Bitmain currently charges $80/TH/s, showing a huge disparity from BTCST mining. This could lead to the price of BTCST falling to “normal” levels across the year, as miners and users find the optimal price for the token, Wu said.
“It is expected that BTCST will return to a relatively normal price in the future. The current price is seriously inflated.”
One user however argues that the mining rig cost only affects a small part of the general cost of mining hence the inflated BTCST price. According to the user, BTCST tokens act more like bonds giving holders an opportunity to earn future cash flows from it.
The price is definitely a crucial point to focus on when analyzing these hashrate tokens, more so as it affects the overall distribution of the tokens.
A spike in BTCST price during bull markets could see miners refuse to sell their tokens, reducing the supply further while in times of a bearish market there would be a barrier for holders to sell.
As alluded to, BTCST token brings together the qualities of staking and the proof-of-work consensus mechanism through its platform. Below we discuss how you can earn, buy and stake BTCST token.
At the moment, BTCST price is still greatly overvalued and we may be headed to an “inventory flash” according to Leo Zhang, Founder of Anicca Research. Mining cycles usually come in four archetypical stages, majorly affected by the price change rate of BTC and hashrate change rate.
With the price of the most expensive miner costing $80/T, Colin Wu expects the price of hashpower tokens, specifically BTCST to drop to “normal” ranges in future.
“It is expected that BTCST will return to a relatively normal price in the future,” Wu said. “The current price is seriously inflated.”
Seeing the growth in mining and price of cryptocurrencies, the two hashpower tokens are set to be followed by a multitude of other projects in future. However, there is a likelihood that the prices will be inflated as the market rushes to get a piece of the hashing power tokens.
BTCST token is built on Binance Smart Chain collateralized by 0.1 TH/s of real-world Bitcoin mining power.
An initial token supply of 1,000,000 BTCST tokens were launched. The total circulating supply will include mining rewards a top the initial token supply.
Yes. BTCST has passed the scrutiny of CertiK, one of the world’s leading blockchain security firms, scoring a 98 out of 100 in a security audit.
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