Welcome to this week’s edition of This Week in Crypto! In this issue, we delve into several groundbreaking developments shaping the future of cryptocurrency. First, we explore how the U.S. government has emerged as one of the largest Bitcoin holders globally. Then, we turn our attention to the recent surge in Bitcoin mining difficulty, reaching an all-time high just as we approach the significant halving event, set to alter the mining landscape. Lastly, we examine Hong Kong’s pioneering move to approve the first spot Bitcoin and Ether ETFs. Join us as we unpack these pivotal events and their potential impacts on the cryptocurrency market.
U.S. Dominates Government Bitcoin Reserves Globally, UK and Germany Trail Behind
The U.S. government is currently the largest holder of Bitcoin among global governments, possessing an impressive 212,847 BTC, as revealed by Arkham, a crypto intelligence platform. This significant stockpile places the U.S. well ahead of other nations like the U.K. and Germany, which hold 61,245 BTC and 49,858 BTC respectively. The United State government’s holdings also include about $200 million in other cryptocurrencies such as Ether and major stablecoins like USDC and Tether.
Notably, the U.S. has continued to expand its cryptocurrency reserves, acquiring at least 5,000 BTC since early 2023. A large portion of these holdings stems from seizures related to criminal activities, including those associated with the darkweb market Silk Road and the Bitfinex exchange heist.
Bitcoin Mining Difficulty Reaches Record High as Halving Approaches
Bitcoin mining difficulty has reached an all-time high, marking a new peak at 86.39 trillion hashes just one week before the much-anticipated halving event, according to data from BTC.com. This rise in difficulty, which measures the complexity of the cryptographic challenges involved in mining new coins, means that more computational power is required than ever to mine Bitcoin, thus enhancing the security of the network.
The difficulty adjustment mechanism ensures the network remains secure and stable, responding to changes in the network’s hash rate and mining power. Despite occasional dips, the trend in difficulty has been on the rise since the beginning of the year. Post-halving, miners may have to work through a continued increase in difficulty as block rewards are halved from 6.25 BTC to 3.125 BTC.
Hong Kong Approves Spot Bitcoin and Ethereum ETFs
Hong Kong has made a significant advancement in the cryptocurrency market by approving its first spot exchange-traded funds (ETFs) for Bitcoin and Ethereum. This approval was granted by the Hong Kong Securities and Futures Commission (SFC) to three offshore Chinese asset managers—Harvest Fund Management, Bosera Asset Management, and China Asset Management (ChinaAMC). These ETFs use the in-kind creation model, allowing for the creation of new shares using Bitcoin and Ethereum directly. This is anticipated to enhance market liquidity and stability by enabling the direct exchange of the asset for ETF shares and reducing reliance on cash settlements.
This model of ETF is seen as a substantial innovation in the Hong Kong financial markets, providing a framework that aligns with both digital and traditional asset ETFs practices. Although the specific start dates for trading these ETFs are not yet confirmed, the initiation is forecasted by analysts to greatly increase capital inflow into Hong Kong’s digital asset market.
