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Bitcoin creator Nakamoto Satoshi designed Bitcoin’s daily production rate for a four-year reduction in the entire network. This is the equivalent of a gold miner in the real world being able to dig less as time goes by and more rarely. With the increase of difficulty in digging digital currency, mining has become a heavy investment, and professional miners, mines and mining pools have emerged while hash power has also become an essential resource for all parties to expand. Bitcoin hash power is the work productivity of the bitcoin miner (similar to the legal currency printing machine). The bitcoin workload proof mechanism is based on random hashing. The hash solution requires computation to ensure that the block information cannot be changed.
Digging bitcoins that used to generate huge profits have triggered the participation of many investors. Bitcoin mining has become increasingly large-scale, specialized, capitalized, and globally engaged. Traditional bitcoin miners now need to compete with financial institutions, fund investment banks and listed companies in order to compete for the smaller output of bitcoin. With the large influx of computing resources, the higher the threshold will become for individuals to participate in bitcoin mining. In order to somewhat break the high threshold and level the playing field, bitcoin miners actively seek change. Chinese miners, that occupy 70 percent of the world’s computing power, have begun a new exploration in trying to financialize bitcoin hash power. Hash power as represented by the BHP Bank, the capitalization of hash power and the sharing of computing power have begun to come into play.
The purpose of bitcoin is to remove the intermediate links in a transaction, which in this case are the traditional financial institutions. In the traditional transaction process, financial institutions used credibility and letters as endorsements, which served as proof that a transaction would be actualized. However, in the digital currency mining service, with the lack of intermediaries and roles with credit guarantees, the traditional miners cannot use traditional financial means to expand the scale and operation of the mine, and instead must rely more on their own funds or selling income to pay for equipment costs and high electricity bills. For miners of cryptocurrency, bitcoin is increasingly difficult to dig, the benefits are reducing and most of its revenue is used to pay for electricity and mine maintenance.
The goal of the BHP is to financialize the computing power being used and, on the one hand, attract more social and financial resources to invest in hash power while, on the other hand, it will provide miners with financial services that are guaranteed through hash power assets. This brings up a few questions: How will the financialization of hash power change the fate of traditional miners? Will it bring an end or an opportunity to bitcoin miners?
Essentially speaking, BHP is an infrastructure that operates on a blockchain. It establishes a set of digital currency financial systems by embodying this abstract resource of computing power, similar to a legal currency-based financial system. BHP is a set of financial systems based on BHPC, while BHPC is issued with the endorsement of major digital currencies such as BTC and ETH. In the BHP project, each BHPC is a real-world computing target. BHPC is also the cash in the digital world. It can carry out “exchange” operations of various digital currencies in BHP. The purchase includes BTC, ETH, and various mainstream digital currencies within. In addition, BHPC is a common payment method. Because of its solid value support, BHPC is naturally applicable to all kinds of payment scenarios. The processing fees generated in these payment scenarios will be deducted in the form of BHPC and fed back to BHPC’s support.
BHP is not just a kind of pass, it is not just a blockchain infrastructure, it is more than just a payment method or a multi-currency wallet; BHP is an attempt to force financialization, or a method of crediting credit for hash power calculations, even more so, a search for capitalization of hash power assets. The financial risks of hash power are mainly attributed to the mining machine, electricity bills and bitcoin prices.
First of all, the mining capacity has been greatly improved, the calculation power of the entire network has skyrocketed, and day-to-day mining costs have decreased. Secondly, the price of electricity and bitcoin, if bitcoin were to collapse, would directly result in electricity expenses accounting for output. The proportion would soar. As a result, the profitability of the operator would decrease.
The calculation of financial power, the capitalization of assets, and the sharing of computational power, represented by BHP, have solved the problem of liquidity as though the production rights of bitcoin were evenly divided. Investors participate in power mining without having to deal with mining machines or other cost elements. Just like they would when buying stock in a company.
They can also trade tokens. Like stocks born more than 400 years ago, not only can bitcoin mining raise funds to help investors spread risks, but they can also attract more attention and resources to promote the progress and popularity of blockchain technology. It can attract more small and medium-sized miners to add computing resources to BHP to re-invest assets.
In the blockchain digital assets market such as bitcoin, the original market specifications have yet to be improved, not to mention the new hash power of financial assets. At present, the world’s financial sector adopts a license system, which is convenient on the one hand, and on the other hand is conducive to the protection of investors. However, it is currently not included in the scope of supervision.
Rouger Wu, founder of the BHP project, said that ‘Banks currently do not seem to trust the assets of hash power trades as many countries do not have the relevant legal framework in place yet and companies can only do their own way without common standards. Therefore, the financialization of hash power is either a great opportunity or, the end of existing miners’ groups.’
Traditional miners may need to actively embrace this huge disruption to make sure they stay ahead.
BHP is a decentralized blockchain financial platform that provides treasury services as a commitment to issuing digital currency (BHPC) and provides global customers with financial investment services in the digital currency industry. BHP’s token BHPC is a common value circulation intermediary for all services and financial products of BHP.
With headquarter in Cayman Islands, offices in Singapore, China and United States, it employs more than 50 people all working towards a better, fairer and more efficient financial system for all.