3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.


Goldman Sachs CFO: No Crypto Trading Desk is “Fake News”, Plans a New Bitcoin Derivative

September 6 – Martin Chavez, the chief financial officer at Goldman Sachs, has announced at a conference that there has been “fake news” spreading about the company’s cryptocurrency ambitions.  A Business Insider article earlier last week reported that Goldman Sachs had cut its plans to open a cryptocurrency trading desk, helping fuel a weekly decline in most major cryptocurrency prices. Chavez reiterated the major investment bank’s current cryptocurrency endeavors, which includes a new type of derivative that has arisen due to client interest. Goldman Sachs is reportedly working on “non-deliverable forwards” for bitcoin, which are over-the counter-derivatives settled in US dollars, referencing BTC/USD prices across a set of exchanges.

I never thought I would hear myself use this term but I really have to describe that news as fake news,” said Chavez. “Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical bitcoin, and as they got into it they realized part of the evolution but its not here yet.” Chavez also re-affirmed that Goldman Sachs is still moving forward on a cryptocurrency custody service, but working with physical bitcoins still proves to be a challenge for the firm. “Physical bitcoin is something tremendously interesting, and tremendously challenging,” said Chavez. “From the perspective of custody, we don’t yet see an institutional-grade custodial solution for bitcoin, we’re interested in having that exist and it’s a long road.”

Read the full article here.


Ethereum Co-Founder: Crypto Growth at a “Ceiling” as Growth Turns to Adoption

September 8 – Vitalik Buterin, the co-founder of Ethereum, has expressed doubts about the potential for another “1,000-times” growth run in the cryptocurrency market. The Toronto-native was at an Ethereum and blockchain conference in Hong Kong when he discussed that cryptocurrencies are at a new level of growth: one that is based on the adoption of real applications used by real people, rather than one that is based on speculation of cryptocurrencies for their returns. Buterin believes that it is up to the blockchain community to start getting involved with adopting and utilizing cryptocurrencies in real world scenarios, such as paying for items with cryptocurrencies. This past week, ether breached $200 USD to the downside across numerous exchanges. Acting as the “fuel” of the Ethereum blockchain, many ICOs and other projects that use the Ethereum blockchain need to own ether in order to operate.

“The blockchain space is getting to the point where there’s a ceiling in sight. If you talk to the average educated person at this point, they probably have heard of blockchain at least once. There isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore”, said Buterin. However, Buterin noted that Ethereum may turn around if new developers ‘en masse’ select the Ethereum blockchain for future projects.

Read the full article here.


Small Canadian Ghost Town Gets Boosted by Bitcoin Mining

September 4 – Ocean Falls, a small town on the coast of central British Columbia, has gotten a boost from Bitcoin mining. Ocean Falls, dubbed as a “ghost town”, has an average population per year of under 100 residents. The town is situated near a large dam that powers two other small towns, Bella Bella and Shearwater. Even during the coldest winter months, the towns combined only use less than a third of the energy output of the dam, opening opportunities for new power-hungry businesses. Additionally, the dam is not connected to any gird, essentially making the excess power useless. Unlike many dams in British Columbia, the one situated near Ocean Falls is owned by a private company called Boralex, not BC Hydro.

Over the last few years, employees at Boralex, the private company that owns the dam, started receiving many phone calls from prospective Bitcoin miners. Brent Case, the operations manager at Boralex, noted that a Vancouver-based businessman named Kevin Day took up the opportunity, and completely transformed the town’s deserted paper mill into a bitcoin mining operation. A local resident labeled the cryptocurrency mining operation a “victory” for the town. “The day we fired up, the miners started going, there was the humming, and I said to Kevin, ‘It’s a good feeling seeing that extra power being used’.”

Read the full article here.


Coinbase in Talks With BlackRock for a Bitcoin ETF

September 8 – Major cryptocurrency exchange and service provider Coinbase has reportedly asked for help from BlackRock’s blockchain working group on creating a Bitcoin ETF. Despite the US Security and Exchange Commission (SEC) denying or delaying approvals of several Bitcoin ETFs to date, Coinbase will now join the likes of VanEck, Bitwise Asset Management, and Gemini in getting the first cryptocurrency ETF to the market. BlackRock, which manages approximately 7 trillion USD in assets, previously reported that the company was not exploring crypto products due to lack of client interest. The efforts from Coinbase to seek help on releasing a Bitcoin ETF from BlackRock may indicate that BlackRock is finally starting to open up to cryptocurrency-related products.

Sources who were familiar with the matter said that it remains unclear whether the talks were just a one-time occurrence, or if it was part of an ongoing conversation between Coinbase and BlackRock. According to BlackRock’s blockchain group representatives, they didn’t give any solid recommendations to Coinbase. Regardless of the outcome, it is becoming more clear that traditional market players are eyeing the opportunities still present in cryptocurrencies.

Read the full article here.


Bitfury is Utilizing “Magic Baths” to Keep Miners Cooler, Smaller

September 5 – Bitfury, one of the leading infrastructure companies in the Bitcoin mining industry, has created a fix to the everlasting issue of hardware cooling. The company’s 40 megawatt plant in Tbilisi, Georgia is designed to host their mining hardware submerged in non-conductive liquid called Novec. Since this alternative cooling option does not need ventilation or water-cooling pipes, it significantly reduces the total size of the mining operation. With the use of Novec, the cost of cooling is also significantly diminished by upwards of 95%.

“We realized early on that high-powered data centers would be used for everything from internet searches to securing the Bitcoin blockchain,” said Bitfury’s Chief Executive Officer, Valery Vavilov. Kar-Wing Lau, the founder of Allied Control, who’s immersion-cooling systems got acquired by Bitfury, said that the technology reduces the space required to house a mining operation by one-third.

Read the full article here.


3iQ Global Cryptoasset Fund: Price as at September 7, 2018

3iQ is the first regulator approved multi-cryptoasset portfolio manager in Canada, providing accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund.


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