Bitcoin ICO Review

Bitcoin (BTC) trading volumes in South Korea have recently reached new levels on peer-to-peer (P2P) exchange LocalBitcoins, according to charts on BTC statistics service Coin Dance.

According to the data, bitcoin weekly trading volumes have surged over the past two weeks, with the latest week recording a new high of around 219 million South-Korean won ($185,000).

Founded in Finland in 2012, LocalBitcoins offers over-the-counter trading of local currency for bitcoin and operates as a P2P trading platform. The Finnish crypto trading platform is especially popular in Latin America, with Venezuela and Colombia having reportedly accounted for 85% of LocalBitcoins's trading volumes by February 2019.

According to data from crypto analytics website Coinhills, the South-Korean won is one of the most popular national currencies trading against bitcoin. Accounting for around 20,000 btc ($173 million) in daily trading volumes against bitcoin, the won is ranked the third largest national currency traded versus BTC after the U.S. dollar and the Japanese yen.

In mid-April, major South Korean crypto exchange Coinnest started closing its services, which was reportedly a result of the extended 2018 bear market. Subsequently, Cointelegraph reported that the number of South Koreans buying cryptocurrency with fiat money has significantly increased, while the amount of crypto investment in 2018 surging by 64% over 2017.

Last week, LocalBitcoins banned Iranian residents from using its service, as the exchange purportedly had to restrict Iranian transactions to comply with financial regulations in Finland, as well as with the sanctions imposed by the United States.

China's Center for Information and Industry Development has released its latest rankings of 35 crypto projects that were evaluated over the past two months. While several top positions remain unchanged, Bitcoin has climbed up the overall ranking.

New Rankings From China
The Center for Information and Industry Development (CCID), under China's Ministry of Industry and Information Technology, released the 12th update of its crypto project rankings Thursday. The number of projects evaluated was unchanged from the previous rankings published in March. The center also announced that starting this month the rankings will be adjusted every two months instead of monthly.

In addition to the overall ranking, the CCID published three others based on basic technology, applicability, and creativity sub-categories. EOS tops the list overall, followed by Tron, and Ethereum. The center started ranking Tron in February, debuting at number two overall and has remained at that position ever since. BTC now ranks 12th, up three places from the 15th place in the previous ranking. BCH has also improved, currently occupying the 29th spot overall, up from the 31st place previously.

"The results show that the world's three major Dapp platforms — EOS, Tron, and Ethereum — remain ranked in the top three, [and] the scores are 148.5, 144.1 and 136.6," the CCID wrote.

The center describes itself as "a first-class scientific research institution directly under the administration of the Ministry of Industry and Information Technology of China." The first crypto ranking was released in May last year. The assessment is carried out by the CCID (Qingdao) blockchain research institute, an entity established by the CCID, in collaboration with multiple organizations such as the CCID think tank and the China Software Evaluation Center. "The result of this assessment will allow the CCID group to provide better technical consulting services for government agencies, business enterprises, research institutes, and technology developers," the center previously explained.

Sub-Rankings
The overall ranking is based on the total index scores of 35 crypto projects. The total index of each crypto project is the weighted average of its three sub-indices: the basic technology index, the applicability index, and the creativity index. The basic technology sub-index accounts for 64% of the total index, while the applicability sub-index accounts for 20% and the creativity index 16%.

"The basic technology sub-index mainly assesses the level of technical realization of the public chain," the center described, adding that the key areas evaluated under this category "include the function, performance, safety and decentralization of the public chain." The top five crypto projects in this category are EOS, Tron, Steem, Bitshares, and Gxchain.

The creativity sub-index "focuses on continuous innovation in the public chain, including developer size, code updates, and code impact," the center detailed. In this category, the top five crypto projects are Bitcoin, Ethereum, Lisk, EOS and Tron.

The applicability sub-index "mainly evaluates the comprehensive level of public chain support for practical applications," the center continued. "The assessment includes four aspects: node deployment, wallet application, development support and application implementation." For this category, the top five crypto projects are Ethereum, Neo, Nebulas, Tron, and Ontology, which are unchanged from the previous ranking for this sub-category. "However, the data shows that the applicability indices of only 11 of the 35 public chains have increased, and the overall index has declined compared to the previous period," the CCID noted.

Dutch authorities arrested a 33-year-old businessperson for allegedly defrauding investors through a crypto mining fraud.

According to local reports, Dutch tax authority's investigative department, FIOD, made the arrest. The suspect was a director of two private limited companies, which he allegedly used for money laundering, fraud and forgery activities.

The man started his company back in 2017. Through the company, the suspect received money from investors who thought they were buying computers for buying bitcoins. The suspect collected about €2 million ($2.2 million) from the investors. Investors were promised returns of 0.3 Bitcoin Core (BTC) per month (about $2,389 at current prices). Investors became worried when they failed to get the returns or their mining computers.

Upon investigations, authorities discovered that the BTC mining machines were probably never even purchased. Initially, police had searched his house in November 2018 and discovered luxury goods such as bags, dirt bike, and shoes, and understand that he also used the money on motorbikes and gambling.

Notably, one of the suspect's BTC mining companies, Koniz Trading, was declared bankrupt last year after customers' accused him of fraud, according to reports by the NL Times.

The FIOD added that fighting money laundering is the priority for the government as it is one of the "serious" crimes in the country.

Earlier this year, De Nederlandsche Bank (DNB), the nation's central bank, and the Netherlands Authority for the Financial Markets published a report that suggested that fiat-to-crypto exchanges and custody solution providers must be licensed as cryptocurrencies carry "high financial crime risks." In their report, these authorities explained:

"These risks must be addressed effectively, which can be achieved as a result of the international coordination of countermeasures that AMLD5 [the Fifth European Anti-Money Laundering Directive] provides."

Other countries, notably Malta, have already started to warn its investors on crypto fraud. Late last month, authorities in that country came out to issue guidelines that will help investors identify fraudulent crypto projects. This was done through a report released by the Malta Financial Services Authority (MFSA).

Among the issues addressed in the report, is the need for investors to protect themselves from engaging in suspicious projects, especially those that promise huge returns.

An Israeli court has ruled that bitcoin is an asset, confirming the central bank's stance. The case involves the country's tax authority and the founder of a blockchain startup who argues that profits from the sale of cryptocurrency should be tax-free. The court has ruled in favor of the tax authority, endorsing the central bank's definition of currency.

An Israeli central district court reportedly ruled in favor of the country's tax authority Monday, recognizing bitcoin as a financial asset and not a currency. Profits on its sale in Israel are therefore subject to capital gains tax.

Judge Shmuel Bornstein simultaneously rejected an appeal by the founder of a blockchain startup who argues that bitcoin should be considered a currency, so the proceeds from its sale should not be subject to taxation. Globes daily financial newspaper reported Tuesday:

The Central District Court in Lod accepted the tax authority's interpretation, and held that bitcoin is an asset and not a currency, and that the transaction in question is therefore taxable.

Emphasizing that the status of bitcoin is still undefined in the country, the judge stated in his ruling that "it was hard to envisage a result whereby bitcoin would be considered a currency for tax purposes in particular," the news outlet conveyed, noting that the case could reach the supreme court.

Itay Bracha, managing partner at Israeli law firm Bracha & Co. and the head of the firm's tax department, shared his thoughts with local daily business newspaper Calcalist. He said: "The ruling is a signal to all those who have yet to report cryptocurrency-related profits or based their actions on differing legal advice … The ruling is unequivocal, and since it is not new legalization but a judicial interpretation, it applies retroactively."

The Case
According to reports, the case involves Noam Copel, founder of blockchain startup DAV. "We're building a decentralized infrastructure to revolutionize the transportation industry on the blockchain," the company's website explains.

Globes reported that Copel bought BTC in 2011 and sold them in 2013 for a profit of approximately NIS 8.27 million (~$2.29 million). Asserting that his profits should not be subject to capital gains tax, he told the court:

Bitcoin should be classified as a foreign currency, and that his profits should be seen as exchange rate differences received by an individual not in the course of a business, and therefore should not be taxed.

However, the Israel Tax Authority disagreed, proclaiming that bitcoin is not a currency under the central bank's definition, so it cannot be a foreign currency as suggested by Copel. Instead, the agency claims that cryptocurrency falls under the definition of an asset, therefore profits on its sale are subject to capital gains tax. Monday's court ruling obligates Copel to pay tax of about NIS 3 million, the news outlet estimated.

Central Bank's Definition of Currency
The court accepted the tax authority's position that the definition of "currency" should be the one defined by the country's central bank which does not apply to crypto assets. The agency affirmed that bitcoin is not a currency from both accounting and economic aspects, stating that "its valuation is extremely volatile, any related investments carry high risk, its use is severely limited and restricted mostly to unlawful entities, and it is not used as a benchmark for value," Calcalist wrote.

Copel, on the other hand, believes that from both aforementioned aspects, "the trust users put in bitcoin and its use as both a payment method and to benchmark value means it should be considered a currency."

After listening to both sides of the argument, the judge rejected Copel's appeal and ruled that he "had failed to demonstrate that bitcoin met this definition [of currency], or that it represented a real alternative to coins and notes in any country," Globes described.

Bittax founder Gidi Bar Zakay, former Deputy Director of the Israel Tax Authority and currently director of the Israeli CPA Association, said that Monday's ruling was based on current law, elaborating:

In my view, what will ultimately determine whether bitcoin is a currency is the reality test. As soon as its use becomes widespread, the legislature will have to rewrite the law in such a way as to accommodate this.

He added that when that happens, "we shall all benefit from these technological and monetary developments and from the ability of bitcoin and other cryptocurrencies to serve as efficient, trustworthy, and widely accepted means of payment." He further opined: "the way to that lies through the regulator. If the enforcement agencies feel comfortable with the coin, and use blockchain analysis tools that make it possible to meet standards of money laundering prevention and tax avoidance prevention in a more reliable and efficient way than is the norm today, the road to it becoming a widespread means of payment will be open."

Cryptocurrency Taxation
The Israel Tax Authority has long considered cryptocurrency an asset subject to capital gains tax. In December last year, Calcalist reported that the agency had been cracking down on the unreported crypto earnings of hundreds of Israelis, sending notices to those whose activities raised suspicion. "The authority will continue to seek out unreported [crypto] earnings," said Eran Yaakov, the head of the Israel Tax Authority, in reply to the news outlet's request for comment. The publication explains:

Cryptocurrencies are not defined as a currency but as a financial asset in Israel. As such, trading in cryptocurrencies is subject to a capital gains tax of 25%-30% in the country.

In July last year, the tax authority reportedly reached an agreement on obtaining information on crypto transactions with Bits of Gold, an Israeli cryptocurrency exchange with about 50,000 users. The exchange will share information about traders who have made transactions of $50,000 or more over a 12-month period. The authority has also approached other platforms for the same purpose.

While Israeli law requires financial institutions to report fraudulent transactions and suspicious activities to the Israel Money Laundering and Terror Financing Prohibition Authority, sharing data with the tax authority is not mandatory. Tomer Niv, Chief Growth Officer at Bits of Gold, clarified that his exchange only transfers "the information we are required by law … in order to protect the privacy of customers on the one hand, and [comply with] the provisions of the law on the other."

Central Bank's Position and Global Standards
Nadine Baudot-Trajtenberg, who served as Deputy Governor of the Bank of Israel from March 2014 to the end of February, said in January last year that the central bank had been studying cryptocurrency. However, she revealed that not much had been learned from other countries' regulations "since no regulator anywhere in the world had issued guidelines to the banking system on how to act in relation to customers' activity in virtual currencies," Reuters conveyed. She was further quoted as saying:

There is a real difficulty in issuing sweeping guidelines to the system regarding the proper way to estimate, manage, and monitor the risks inherent in such activity … Beyond the risks to the customer there are also compliance risks to the bank.

In December last year, Israel became a full member of the Financial Action Task Force (FATF), an intergovernmental organization which focuses on developing policies to combat money laundering and terrorism financing. The FATF currently has 36 member jurisdictions and 2 regional organizations, including the European Commission. In February the organization urged its member countries to regulate crypto exchanges like commercial banks, elaborating:

For the purposes of applying the FATF recommendations, countries should consider virtual assets as property, proceeds, funds, funds or other assets, or other corresponding value.

Over the last few weeks, cryptocurrency markets have been on a tear accumulating considerable gains following the notorious 'crypto winter.' Since the recent price hike this spring, mining digital assets with next-generation miners has allowed participants to secure significant gains and even older mining devices are turning a profit.

After the price of bitcoin core (BTC) and bitcoin cash (BCH) started seeing significant gains miners that process the SHA-256 algorithm have started to pull in decent profits. The trend has changed since last December when news.Bitcoin.com reported on how only five SHA256 miners were profiting at the time. Now a large majority of devices are doing quite well and according to data at an average of $0.10 per KWh the top ten most profitable miners are clearing more than $10-15 a day per unit.

The top 10 available SHA-256 miners and their 2019 profits per day. Picture shown is set at a rate of $0.10 per KWh.

This includes mining devices such as the Asicminer Pro (76TH/s), Antminer S17 (56TH/s), Innosilicon T3 (52TH/s), and the Bitfury Tardis (80TH/s). Moreover, if the miners are located in mainland China and are getting $0.04 per KWh then those using next-generation machines are pulling in $15-21 a day per unit. And now with the wet season in China, the cost of electricity in Sichuan can be as low as 0.08 yuan ($0.01), which means mining pools with high performing rigs can profit by $25+ a day per miner.

According to statistics, China is one of the cheapest places on the planet in 2019 to mine SHA-256 coins like BCH and BTC. This is followed by countries like India, Canada, and Russia, while countries like the U.S. and much of Europe have average electricity prices. The worst regions to mine in the world include Germany, Denmark, Belgium, and Italy as each country has around $0.15-0.30+ per KWh. In regions like China where cheap electricity is rampant, mining rig vendors who sell second-hand machines are selling a ton of older devices.

Three regions in the world that offer some of the cheapest electricity rate per KWh — China, Canada, and India.

Zhang Xilin, a mining equipment vendor in Huaqiang North detailed last week that "the price of second-hand mining rigs doubled." For instance, data shows that old Antminer S9s that pull in 13-14.5 TH/s will give a miner $0.25-0.50 per unit at 13 cents per KWh if the person was mining in the U.S. or Europe. And those profits exceed well over two thirds the global average if the mining operation is in Sichuan, China with a facility full of old S9s. In the U.S. there's been a lot of second market ASIC sales as well on sites like Craigslist and Ebay.

With crypto exchange rates up, even older generation mining rigs are pulling in a profit. Picture shown is set at a rate of $0.10 per KWh.

Obelisk & Cuckatoo Miners and 112 Profitable Devices

Mining rigs that mine the SHA256 algorithm processing either BTC or BCH, however, are not the most profitable miners today. Devices that mine coins like sia and grin are raking in much larger profits over the last month. For example, miners that can process the Obelisk or Cuckatoo31+ algorithm can manage to capture $30-50 a day per unit.

Some of the top mining rigs gathering the most profit process the Obelisk or Cuckatoo31+ algorithm. Picture shown is set at a rate of $0.10 per KWh.

Next generation miners who mine Obelisk and Cuckatoo which have been announced but haven't been manufactured yet could profit by $50-250 a day per unit. This includes devices like the Obelisk GRN1 Immersion (Oct. 2019), and the Innosilicon G32-1800 (Aug. 2019). An X11 miner like the Strong-U STU-U6 due to go on sale in July claims to offer 660 GH/s which is close to $40 a day per unit with an average electricity cost of about $0.10 per KWh.

At today's crypto exchange rates, 112 mining devices that are available to the public that mine various types of cryptocurrencies are at least profiting by $0.10 a day per unit, with electric costs at $0.10 per KWh. This includes a slew of much older Canaan, Bitmain, GMO, Bitfury, Innosilicon, and Ebang miners. A lot has changed since the low prices last year in November and December and when miners were tossing old mining devices to the curb or selling them for pennies on the dollar. At the moment the two top SHA-256 cryptocurrencies BCH and BTC have seen significant hashrate increases and it's likely due to the magnitude of fresh profit coming in.

Though trading will continue, the $40 million hack means Binance will halt withdrawals and deposits for a week, while performing a security audit.