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China shuts down more Bitcoin miners, Mark Cuban loses big, Alchemix forced to pause contract

2021.06.19 Adam James

The blockchain and cryptocurrency industry saw its biggest headlines once again be negative this week.

It’s been another particularly bearish week in the blockchain and cryptocurrency industry — at least on the news front. Another Chinese province has ordered a shut down of Bitcoin mining operations while the World Bank has thrown something of a wet blanket on El Salvador’s Bitcoin ambitions. Meanwhile, one Mark Cuban-invested algorithmic stablecoin totally collapsed as an unrelated decentralized-finance loan platform was forced to pause a contract.

Here’s everything you need to know about these stories, and more, in this week’s edition of OKX Insights’ News of the Week.

Sichuan orders shut down of Bitcoin mining operations

Sichuan has ordered a complete shutdown of Bitcoin mining operations after the province’s energy bureau and the Sichuan Development and Reformation Commission passed the command on to state-owned power suppliers.

The latest shutdown is in line with China’s hardline stance on Bitcoin mining throughout the country.

Key takeaways

  • Sichuan’s abundant hydroelectric power has made it a hub for Bitcoin miners.
  • More than 20 mining entities will be affected by the shut down, while smaller mining operations may continue to skirt regulations through private deals with smaller power plants.

World bank rejects El Salvador’s request for help implementing Bitcoin

After El Salvador officially made BTC legal tender, the World Bank has rejected the country’s request for assistance in implementing it — citing environmental concerns and transparency issues around Bitcoin’s pseudo-anonymity.

Key takeaways

  • The rejection from the World Bank may stall El Salvador’s plans to implement widespread infrastructure for Bitcoin acceptance in the country.
  • The World Bank’s decision also sends a message to other countries looking to implement BTC as legal tender — mainly, that they must do it themselves.

Alchemix bug causes alETH to become undercollateralized

Alchemix — a well-known DeFi protocol featuring loans that automatically pay for themselves — was forced to pause a smart contract this week after a withdrawal bug caused one vault to become undercollateralized.

In short, the bug allowed alETH borrowers to withdraw 100% of the ETH backing their tokens after treating the latter as repaid debt — effectively under-collateralizing alETH.

Key takeaways

  • The issue with Alchemix caused its token price to decline from above $640 to below $400, as of the time of this writing.
  • Alchemix had previously drawn criticism from traditional financial circles for its innovative promise of offering loans that pay themselves. The latest bug undermines that promise and illustrates that no novel DeFi platform is currently risk-free.

Mark Cuban loses big on algorithmic-stablecoin collapse

Billionaire Dallas Mavericks owner Mark Cuban has called for stablecoin regulation after his investment in algorithmic-stablecoin project Iron Finance collapsed. “There should be regulation to define what a stablecoin is and what collateralization is acceptable,” Cuban stated. “Should we require $1 in U.S. currency for every dollar, or define acceptable collateralization options, like U.S. treasuries?”

After the price of its IRON stablecoin lost its peg, the price of the project’s other token, TITAN, lost nearly 100% of its value in roughly 48 hours.

Key takeaway

  • Mark Cuban has drawn the ire of the DeFi community after his latest statements. The Dallas Mavericks owner has famously taken a deep interest in decentralized finance and is known to have invested in various risky protocols — in line with many DeFi believers. Now, many who are critical of Cuban believe the billionaire is simply trying to save face after making a losing bet.
The price of TITAN collapsed roughly 100%. Source: CoinGecko

SEC seeking more input on Bitcoin ETF application

The United States Securities and Exchange Commission is seeking more input as it decides whether or not to approve VanEck’s Bitcoin exchange-traded fund application. The request for more comments comes after Cboe submitted a proposed rule change earlier this year, which was partially responsible for the SEC delaying its decision.

Key takeaways

  • The SEC’s primary concern continues to be, as it indicated in Wednesday’s notice, the need to “prevent fraudulent and manipulative acts and practices,” as well as investor protection.
  • The regulator has notoriously delayed Bitcoin ETF applications before ultimately rejecting them on numerous occasions, but the latest request for comment seemingly illustrates that they are taking a more serious look than ever.

OKX Insights presents market analyses, in-depth features and curated news from crypto professionals.

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Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.