Crypto and AI Set for Major Energy Consumption Surge by 2026

Crypto and AI Set for Major Energy Consumption Surge by 2026

As the International Energy Agency (IEA) forecasts, AI’s energy consumption is poised for an explosive increase, overshadowing even the substantial growth in crypto’s energy use. Despite AI’s burgeoning demand, the spotlight remains on cryptocurrency for its significant energy footprint.


The global electricity market is going through major changes. 

This is mainly because the energy industry is at the forefront of reducing carbon emissions and adapting to new ways of using power. 

Two areas that are expected to change how much energy we use are cryptocurrency mining and artificial intelligence (AI). The International Energy Agency (IEA), a big organization made up of many countries, believes these changes will happen in the next few years.

According to the IEA’s report for 2024, which offers a forecast until 2026, there’s some good news about energy use. 

Right now, making electricity is the biggest reason for carbon dioxide (CO2) emissions worldwide. But, this sector is also leading the charge towards zero emissions. 

By 2025, renewable sources like wind and solar are expected to be the main way we generate power.


Energy use increased at a slower rate, going from 2.4% in 2022 to 2.2% in 2023. However, it’s predicted to jump to 3.4% by 2026. This increase will mainly come from countries like China and India.

At the same time, the amount of energy used by data centers, artificial intelligence, and cryptocurrency is expected to more than double during this period, going over 1,000 terawatt-hours (TWh). Notably, a third of all types of data centers are found in the United States.

According to the IAE rapport, electricity consumption is expected to rise up to 1,000 TWh by 2026.

Source: IAE


Artificial Intelligence (AI) is set to lead in energy consumption, with its usage predicted to increase by ten times from 2023 to 2026. For example, just ChatGPT is expected to use almost 10 terawatt-hours (TWh) each year during this period.

To put that in perspective, every time someone uses ChatGPT, it uses about ten times more energy than a single Google search.

Bitcoin energy consumption was measured to be about 120 TWh in 2023. 

This was part of the 130 TWh used for all cryptocurrency mining that year, which increased from 110 TWh in 2022. 

At that time, cryptocurrency mining made up 0.4% of the world’s total energy consumption. The International Energy Agency (IEA) forecasts that by 2026, cryptocurrency mining will consume 160 TWh.

Even though the situation with energy use is changing and cryptocurrency mining only uses a small part of the world’s energy, the report points out that crypto is still worrying:

The report notes that it’s hard to reduce electricity use because any energy saved might just be used up by other things that need a lot of power, like different types of cryptocurrencies besides Bitcoin, even though some are getting more efficient.

It’s said that Bitcoin mining uses 54.5% sustainable energy. There’s an increase in mining activity as the Bitcoin halving approaches, leading many miners to invest a lot in new equipment.

Source: IEA

To put things into perspective, let’s see what 1 TWH means in terms of normal consumption. 

One terawatt-hour has enough energy to supply electricity to 70,000 homes in the United States for a whole year. 

When comparing this to the energy use of entire countries, it means that the combined energy consumption of cryptocurrency and related users is expected to reach the same level as Japan’s consumption.

How can energy consumption be more efficient?


To make energy consumption more efficient, especially in data centers, several strategies and regulations are crucial. 

Regulatory and policy initiatives

  • Regulatory measures. The European Commission’s revised Energy Efficiency Directive imposes regulations on the European data center sector to enhance electricity demand management. Starting in 2024, data center operators are required to report their energy use and emissions. Large-scale data centers must also incorporate waste heat recovery applications, when feasible, and aim for climate neutrality by 2030.
  • Efficiency standards. An EU regulation effective since 2020 sets efficiency standards for data centers, helping to control their environmental impact. The Climate Neutral Data Centre Pact, a self-regulatory initiative, aims for climate neutrality in the sector by 2030.
  • U.S. energy policies. The Energy Act of 2020 in the United States mandates studies on energy and water use in data centers. It encourages the development of efficiency metrics and best practices. The Department of Energy (DOE) is also focusing on producing more efficient semiconductors, which can reduce cooling requirements.
  • Chinese regulations.  China requires data centers acquired by public organizations to improve energy efficiency and be fully powered by renewable energy by 2032, starting with a renewable energy share mandate of 5% in 2023.

Technological and operational innovations

  • Advanced cooling systems. Adopting high-efficiency cooling systems can significantly reduce electricity demand. Innovations like direct-to-chip water cooling and the use of specific low viscous fluids are promising.
  • Machine learning and AI. Utilizing machine learning, as Google did with its DeepMind AI, can optimize data center operations, significantly reducing electricity demand.
  • Quantum computing. In the long term, replacing supercomputers with quantum computers, which require less energy, could reduce overall electricity demand. However, efficient cooling systems are necessary due to their low operating temperatures.
  • Hyperscale data centers. Transitioning to Hyperscale Data Centers, which can handle large-scale operations without significantly increasing electricity consumption, is both sustainable and financially attractive.
  • Carbon-aware models. Software that allows for time and location shifting of electricity demand to regions with lower carbon intensity can significantly reduce emissions and operational costs.

By combining these approaches, data centers can significantly increase their share of carbon-free energy in total electricity consumption, as demonstrated in Google’s 2023 Environmental Report.

What Is A Crypto Hedge Fund? (Top Hedge Fund List)

What Is A Crypto Hedge Fund? (Top Hedge Fund List)

Crypto hedge funds have emerged as a pivotal player, offering a unique blend of traditional investment strategies and the thrilling potential of cryptocurrencies. 

The sector is rapidly expanding, attracting both seasoned traders and newcomers intrigued by the fusion of blockchain technology with hedge fund acumen. 

Let’s dive into the intriguing world of crypto hedge funds, exploring the top players, their strategies, and what it means to start a fund in this cutting-edge field.

What is a crypto hedge fund?

A crypto hedge fund is a specialized investment fund that specifically focuses on cryptocurrencies, similar to traditional hedge funds that invest in assets like stocks or bonds. 

These funds are managed by professionals who aim to increase their value through different investment strategies. 

These hedge funds invest in a variety of cryptocurrencies, not just the well-known ones like Bitcoin or Ethereum. They might also include other digital assets related to blockchain technology.

Don’t confuse a crypto hedge fund with a crypto ETF. The ETF is a type of investment fund traded on stock exchanges, much like stocks. It tracks the value of one or more digital tokens and offers a more passive investment approach. ETFs provide an easier entry point for the average investor, allowing exposure to cryptocurrencies without the complexities of direct trading or the higher minimum investment often required by hedge funds.

The hedge fund is managed by experts who understand the crypto market’s complexities. They use their knowledge to make informed decisions, aiming to grow the fund’s value.

Just like traditional hedge funds, these crypto funds use strategies to “hedge up” or protect against potential losses. This might involve diversifying investments or using advanced trading methods.

Some funds may specifically focus on investing in blockchain technology projects, not just cryptocurrencies.

Funds like 3AC and those associated with figures like Anthony Scaramucci have gained attention in the crypto hedge fund space.

These funds attract investors interested in crypto but who might not have the expertise or time to manage their own crypto investments.

Like any investment, there’s risk involved, and the regulatory landscape for crypto hedge funds is still evolving.

Crypto hedge funds list

There are many crypto hedge funds out there, some of which are well-known and have significant investments. You may come across lists showcasing the top or largest funds in this sector.

It’s important to note that the landscape is constantly evolving, and the size can be measured in various ways, such as assets under management, influence, or performance. Here’s a list to include:

The largest crypto hedge funds are:

  • Pantera Capital. One of the first U.S. Bitcoin funds, Pantera Capital has a strong focus on Bitcoin and other digital currencies, with a significant amount of assets under management.
  • Galaxy Digital Assets Fund. Founded by Michael Novogratz, this fund is known for its sizable investments and extensive involvement in the cryptocurrency space.
  • Polychain Capital. A leader in the field, Polychain Capital focuses on blockchain technology and has garnered significant investments from prominent venture capital firms.
  • Grayscale Investments. Known for its Bitcoin Investment Trust, Grayscale offers a range of digital currency investment products.
  • Bitwise Asset Management. Famous for creating the world’s first cryptocurrency index fund, Bitwise is a leader in crypto-based investment services.
  • BlockTower Capital. A well-known player in the crypto hedge fund market, BlockTower Capital employs a mix of professional investment practices and deep crypto knowledge.
  • Andreessen Horowitz (a16z) Crypto Fund. While more of a venture capital fund, a16z has a significant focus on crypto startups and blockchain technology investments.
  • Digital Currency Group. This company is not a traditional hedge fund but has significant investments in the cryptocurrency market and blockchain industry through various subsidiaries.

Crypto hedge fund that went bankrupt

Although Bitcoin was only invented in 2009, we have already witnessed the bankruptcy of several crypto hedge funds. 

The bankruptcy of a crypto hedge fund typically occurs when it fails to manage risks effectively, leading to significant financial losses. This could happen due to a variety of factors like poor investment choices, unexpected market downturns, regulatory issues, or operational mismanagement.

The downfall of a crypto hedge fund can have wide-reaching implications. 

For instance, it might result in substantial financial losses for investors, affect market confidence, and potentially lead to a stricter regulatory environment. 

The story of a bankrupt crypto hedge fund often serves as a cautionary tale in the world of cryptocurrency investments, highlighting the inherent risks and the need for careful, informed decision-making.

In the case of notable bankruptcies like Three Arrows Capital (3AC) or Alameda Research, these events have become significant moments in the history of cryptocurrency, often discussed and analyzed for insights and lessons learned.

Alameda Research 

Co-founded in September 2017 by Sam Bankman-Fried and Tara Mac Aulay, Alameda Research was much acclaimed for its trading, investments, and market-making in the cryptocurrency space.

In November 2022, following a series of financial challenges, Alameda Research, along with FTX and more than 130 affiliated entities, filed for Chapter 11 bankruptcy protection. 

The company’s website was taken down, and Sam Bankman-Fried, the founder of Alameda Research, announced that the firm was winding down its trading operations and would close.

The entire scandal started with the collapse of the FTX exchange (once valued at $32 billion), also founded by Sam Bankman-Fried. His crypto empire collapsed in a matter of days, also exposing his associates, who eventually ended up condemned for fraud. 

What Is A Crypto Hedge Fund? (Top Hedge Fund List)
Former FTX CEO Sam Bankman-Fried

Three Arrows Capital (3AC)

Three Arrows Capital (3AC), a Singapore-based cryptocurrency hedge fund, was established in 2012 by Kyle Davies and Su Zhu. 

Initially, the company focused on arbitraging foreign exchange derivatives before shifting to cryptocurrencies in 2017. 

3AC grew rapidly, becoming one of the most prominent crypto hedge funds. It engaged in significant investments in various blockchain projects and claimed a net asset value of $18 billion. 

However, the fund faced challenges in 2022 due to the broad decline in cryptocurrencies, particularly its substantial investment in LUNA (on Terra blockchain created by the infamous Do Kwon), which collapsed to near zero.

In June 2022, the fund’s troubles intensified as it failed to meet its margin calls and repay loans, leading to a court-ordered liquidation in the British Virgin Islands. This failure had a ripple effect on the crypto market, contributing to the bankruptcy and difficulties of other crypto firms. 

The founders, Davies and Zhu, faced legal issues, with Zhu being arrested in Singapore for failing to cooperate with the liquidation process. Their last known venture was starting Open Exchange, a new crypto-related project in Hong Kong.

Crypto hedge fund companies

Crypto hedge fund companies are specialized investment firms that concentrate on cryptocurrencies and blockchain-related assets. These companies employ a range of investment strategies to generate returns from the highly volatile and rapidly evolving crypto market. 

Their approaches can vary widely, from conservative, long-term holdings of major cryptocurrencies like Bitcoin and Ethereum to more aggressive tactics like high-frequency trading or investing in initial coin offerings (ICOs) and emerging digital assets.

These firms are often characterized by their deep expertise in both finance and technology, enabling them to navigate the complex and often technically demanding landscape of cryptocurrency investments. They attract investors who are interested in gaining exposure to the crypto market but may lack the time or expertise to manage their investments directly.

However, you can always choose to do your own research before investing. 

Organizations like PricewaterhouseCoopers (PwC), a prominent global network of audit and consultancy firms, frequently release reports on the crypto hedge fund industry. These reports provide valuable insights into the trends, performances, and overall health of the sector. 

These insights are crucial for investors, fund managers, and other stakeholders in the crypto industry. They offer a comprehensive overview of the market, highlighting both opportunities and risks. Moreover, they serve as a barometer for the maturity and evolution of the crypto investment space, reflecting how traditional financial practices are adapting to the new digital asset class.

It’s also important to always research the company offering the hedge fund to avoid any future surprises. For instance, according to the 2023 PwC report, 12% of crypto hedge funds are considering relocating from the US to crypto-friendly jurisdictions. This might mean that potential investors should pay a closer look to the way existing regulations are applied by the hedge fund company. 

Notable crypto hedge fund companies

  1. Grayscale
  2. 500 Global
  3. Pantera Capital
  4. a16z Crypto (Andreessen Horowitz)
  5. CoinShares
  6. Galaxy Digital Capital Management
  7. Morgan Creek Digital
  8. Brevan Howard (BH Digital)
  9. Systematic Alpha
  10. 10T Holdings
  11. Bitwise Asset Management
  12. BlockTower Capital
  13. Off The Chain Capital
  14. Eaglebrook Advisors
  15. ODIN88 Asset Management

Starting a crypto hedge fund

Yes, you can start a crypto hedge fund. However, this is a complex process that requires thorough planning, legal compliance, and expertise in both finance and cryptocurrency markets. 

Here’s a simplified guide on how to start a crypto hedge fund:

  • Define the fund’s focus. Decide on the specific cryptocurrencies and strategies your fund will target. Consider whether you’ll focus on major cryptocurrencies, a mix of assets, or specific geographic regions.
  • Legal structuring. Choose an appropriate legal structure for your fund, like a limited partnership or LLC, and consider the tax implications. Popular jurisdictions for registering crypto funds include the Cayman Islands, the USA, and Singapore.
  • Obtain licenses & ensure compliance. Depending on your location, obtain the necessary licenses and ensure compliance with regulatory bodies like the SEC in the USA or the Monetary Authority in Singapore. Implement strict KYC and AML procedures.
  • Raising capital. Develop a marketing strategy to attract investors, focusing on both crypto-native VCs and traditional investors. Prepare a compelling pitch and transparent terms.
  • Investor relations & reporting. Maintain clear communication with investors, providing regular performance statements and transparency in operations.
  • Assemble a skilled team. Hire professionals with expertise in trading, compliance, legal matters, and technology. The team should include portfolio managers, compliance officers, and legal experts.
  • Develop an investment strategy. Outline your approach to asset selection and portfolio construction. Implement risk management strategies and choose reliable trading platforms for executing trades.
  • Infrastructure setup. Establish a robust trading and storage infrastructure, focusing on security to protect against theft and hacking. Implement risk management systems and analytics tools for performance tracking.
  • Operational management. Set up efficient back-office functions for accounting, reporting, and administration. Choose a reputable asset custody solution.
  • Performance evaluation. Regularly evaluate the fund’s performance against set KPIs and adjust strategies as necessary.

Is it wise to invest in a crypto hedge fund?

In essence, a crypto hedge fund operates much like a traditional hedge fund but focuses on the dynamic and emerging world of cryptocurrencies and blockchain technology. 

It’s a way for investors to engage with the crypto market through a managed, potentially more strategic approach.

Investing in a crypto hedge fund can offer exposure to the dynamic and potentially lucrative world of cryptocurrencies, leveraging the expertise of professional fund managers. 

However, this investment carries significant risks due to the inherent volatility of the crypto market, the evolving regulatory landscape, and the technical complexities of digital assets. It’s crucial for potential investors to assess their risk tolerance, conduct thorough research, and consider the fund’s track record and management strategy before investing. 

As with any investment, diversifying and not investing more than one can afford to lose is key to mitigating risks. 

For a more detailed understanding and current insights, it’s advisable to consult financial experts and stay updated with the latest market trends.

Venezuela’s Doomed Petro Cryptocurrency: End of the Road on Jan. 15 After Six Turbulent Years

Venezuela’s Doomed Petro Cryptocurrency: End of the Road on Jan. 15 After Six Turbulent Years

Venezuela’s Petro cryptocurrency, set to cease operations on January 15 after six years. Launched as a countermeasure to U.S. sanctions, the Petro struggled with acceptance both domestically and internationally, ultimately failing amidst widespread scandal and operational challenges.

Venezuela’s Petro will stop working

Venezuela‘s government-made cryptocurrency, the Petro (oil-tied), will stop working on January 15, 2024. 

The Petro started in 2018 to help Venezuela avoid U.S. sanctions, but it wasn’t used much.

The government’s Petro website (https://www.petro.gob.ve/) announced it’s closing, but that website isn’t working now. The Petro was only traded on a special part of the Venezuelan Patria website, which needs a password to get in.

The Petro was made because Venezuela’s regular money, the bolivar, lost a lot of value due to U.S. sanctions. Bitcoin was already popular in Venezuela when the Petro came out. President Nicolas Maduro wanted the Petro, but the parliament didn’t agree.

The Petro was fully working by 2020, but other countries didn’t use it, even though Maduro tried to promote it to the Bolivarian Alliance for the Peoples of Our America country members. 

It was also not widely used in Venezuela. We should also note that Pedro was never made legal tender, so many didn’t see it as official money. Venezuela’s biggest bank didn’t take it unless forced by a presidential order.

The National Superintendency of Crypto Assets oversees Pedro and its ties to drug trafficking 

In June 2020, U.S. authorities offered a $5 million reward for capturing Joselit Ramirez Camacho, who was in charge of the National Superintendency of Crypto Assets and, inherently, of the Petro. 

Camacho is accused of being involved in drug trafficking.

They say he’s closely connected to suspected drug lords, including former vice president Tareck El Aissami.

Ramirez’s bounty is the lowest among the people the U.S. is after in this case. The U.S. is offering $15 million for Maduro and $10 million for others, including El Aissami.

Ramirez Camacho was arrested in Venezuela in March 2023 for financial issues in the oil industry. The agency he led was closed for changes and won’t reopen until March 2024. This led to the shutdown of some cryptocurrency exchanges and mining in Venezuela.

The Petro was different from a central bank digital currency, which is a type of official digital money. Venezuela’s Central Bank talked about making one in 2021, but it never happened.

Venezuela’s CBDC

In October 2021, the Central Bank of Venezuela announced that it will introduce a digital version of its currency, the bolivar, and will also remove six zeros from it because of high inflation. 

This digital bolivar was to be used in the economy, and there will be a new 1-bolivar coin and banknotes from 5 to 100 bolivars.

The Central Bank also wanted to introduce a text message-based system for easy payments and transfers with this digital currency. They say this big change won’t affect the bolivar’s value; it’s just to make using the currency easier. The bank stated, “The bolivar’s value won’t change; we’re just simplifying it.”

President Nicolás Maduro first mentioned a digital bolivar in February 2021. He was promoting this project as part of modernizing and fixing the economy. 

Removing zeros from the bolivar, Venezuela’s actual legal tender is a common tactic of Maduro’s government. However, this doesn’t solve the issue of the economy. 

By 2020, the yearly inflation rate was about 2,300%.

However, economists criticized this plan and pointed out that just changing the currency’s look doesn’t fix the real problems causing its loss of value. 

Venezuela has been struggling with a long economic crisis, worsened by U.S. sanctions and very high inflation. Maduro’s solution to avoid these sanctions was to create digital currencies.

Bitcoin ETFs: A Beginner’s Guide to Crypto Exchange-Traded Funds

Bitcoin ETFs: A Beginner’s Guide to Crypto Exchange-Traded Funds

Bitcoin ETFs are the intersection where cryptocurrencies meet the structured universe of traditional investing. 

Bitcoin ETFs, or ‘exchange-traded funds’ that focus on Bitcoin, offer a unique way to participate in the exciting growth potential of cryptocurrencies without diving headfirst into the often complex crypto markets. 

These ‘crypto ETFs’ blend the familiarity of conventional stock trading with the adventurous spirit of digital currencies, providing a gateway for both seasoned investors and curious newcomers. 

As we explore this innovative investment vehicle, you’ll discover how it simplifies the process of adding digital assets to your portfolio, all while maintaining the ease and accessibility of traditional stock market trading. Let’s dive in and unravel the essentials of Bitcoin ETFs.

What are exchange-traded funds (ETFs)?

Imagine you want to invest in the stock market, but instead of picking individual stocks (like shares of Apple or Google), you decide to buy a little bit of lots of different stocks all at once. That’s essentially what an Exchange-Traded Fund (ETF) is.

An ETF is like a basket that contains a mix of various stocks, bonds, or other assets. When you buy a share of an ETF, you’re buying a small piece of all the things inside that basket. This mix can include all sorts of investments – from tech companies to government bonds. The beauty of ETFs is that with just one purchase, you can invest in a whole range of assets, which can reduce the risk compared to buying just one company’s stock.

What makes ETFs special is that they are traded on the stock exchange, just like regular stocks. This means you can buy and sell shares of an ETF throughout the day at different prices, just like you would with stocks of individual companies.

So, in a nutshell, ETFs offer a simple way to diversify your investments, spreading out your risk while still allowing you the flexibility to buy and sell as you would with traditional stocks.

Why is everyone talking about a spot Bitcoin ETFs?

The sudden importance of spot Bitcoin ETFs in the crypto world stems from their potential regulatory approval, a significant step forward in legitimizing Bitcoin as a mainstream investment. 

Unlike previous ETFs tied to Bitcoin futures, spot Bitcoin ETFs would be directly linked to the current price of Bitcoin, offering a more direct and potentially more accurate reflection of Bitcoin’s market value. This direct connection attracts investors looking for a more straightforward way to invest in Bitcoin through traditional financial structures.

The anticipation of these ETFs has been heightened by the involvement of major asset management firms like BlackRock, Fidelity, and VanEck, signalling strong institutional interest. 

The approval of spot Bitcoin ETFs by the SEC would not only increase Bitcoin’s accessibility to a broader range of investors but also potentially provide more stability and liquidity in the crypto market. 

This move is seen as a critical milestone for the cryptocurrency industry, as it represents a significant endorsement from regulatory authorities and could lead to increased adoption and integration of Bitcoin into the traditional financial system.

The benefits of Bitcoin ETFs

Bitcoin ETFs are an exciting option for those interested in the buzz of the cryptocurrency world but looking for something a bit more familiar and potentially less risky. Let’s break down why someone might lean towards a Bitcoin ETF instead of buying Bitcoin directly.

Familiarity and Ease of Trading

Investing in a Bitcoin ETF feels much like investing in any other stock. You don’t need to learn the ins and outs of cryptocurrency exchanges or how to securely store digital coins. It’s as straightforward as trading regular stocks, making it a comfortable option for many traditional investors.

Diversification

Bitcoin ETFs often track not just the price of Bitcoin but can include other cryptocurrencies or related assets. This means you’re not putting all your eggs in one basket (Bitcoin) but spreading your risk across a range of assets. It’s like choosing a mixed fruit basket over just apples. This diversification can be a safer bet, especially in the volatile world of cryptocurrencies.

Regulatory oversight

ETFs are subject to regulatory oversight, which means there’s an added layer of security and transparency. When you buy Bitcoin directly, you’re stepping into a largely unregulated space, which can be riskier. With a Bitcoin ETF, you have the peace of mind that comes with regulated financial products.

Lower entry point

Investing in Bitcoin directly can be expensive, as you often have to buy whole units of the cryptocurrency. But with a Bitcoin ETF, you can invest with much smaller amounts, making it more accessible for the average investor.

No digital wallets are needed

Holding Bitcoin directly means dealing with digital wallets and the security concerns that come with them. 

With a Bitcoin ETF, you don’t have to worry about digital wallet security or remembering complex passwords. Your investment is as safe as any other stock in your portfolio.

Top Bitcoin ETFs to invest in

When it comes to dipping your toes into the world of Bitcoin through ETFs, there are several key players you might want to consider. Here’s a list of some of the top Bitcoin ETFs, each offering a unique crypto-investing approach.

ProShares Bitcoin ETF

ProShares is a big name in the ETF world, and their Bitcoin ETF is a popular choice. It’s known for its reliability and is a go-to option for many investors looking to get involved in Bitcoin through a more traditional investment vehicle.

Grayscale Bitcoin Trust

While not a traditional ETF, Grayscale’s Bitcoin Trust is another major player. It offers exposure to Bitcoin’s price movements without the need to directly buy and store the cryptocurrency.

Valkyrie Bitcoin Strategy ETF

This ETF is relatively new but has quickly gained attention. It focuses on Bitcoin futures contracts, offering a different angle on Bitcoin investment.

VanEck Bitcoin Trust

VanEck is known for its innovative investment products, and its Bitcoin Trust is no exception. It aims to reflect the performance of Bitcoin, offering investors direct exposure to the cryptocurrency’s price changes.

Bitwise 10 Crypto Index Fund

For those who want broader exposure, the Bitwise 10 Crypto Index Fund covers the top 10 cryptocurrencies by market cap, not just Bitcoin. It’s a good option if you’re looking to diversify within the crypto space.

Each of these options has its unique features and approaches to Bitcoin investment. Whether you’re looking for something straightforward like the ProShares Bitcoin ETF or something more diverse like the Bitwise 10 Crypto Index Fund, there’s likely an ETF that fits your investment style and risk tolerance.

Remember, investing in Bitcoin, whether directly or through ETFs, carries risk. It’s always wise to do your own research and consider seeking advice from a financial advisor to find the best fit for your investment goals.

How to trade Bitcoin ETFs

Trading Bitcoin ETFs is like playing a video game where you need to know a few key moves. Let’s make sense of terms like ‘bitcoin tracking’ and ‘bitcoin exchange-traded note,’ and also explain how different platforms work for trading these crypto ETFs.

Bitcoin Tracking

 Imagine Bitcoin’s price is like a rollercoaster at an amusement park. ‘Bitcoin tracking’ is like having a model of that rollercoaster in your backyard. The ETF follows the ups and downs of Bitcoin’s price, just like your model coaster follows the same path as the real one.

Understanding Bitcoin Exchange Traded Notes (ETNs)

Think of ETNs as a promise note from your school friend. They promise to pay you back your lunch money with a little extra. In the financial world, an ETN is a promise by a company to pay you based on Bitcoin’s price performance. 

But remember, if your friend moves away, you might not get your money back. Similarly, if the company behind the ETN has problems, your investment could be at risk.

Trading platforms for Bitcoin ETFs

Now, let’s talk about where you can trade these ETFs. You’ve got two main options: brokerage platforms and crypto exchange platforms.

  • Brokerage platforms: These are like your regular supermarkets where you can buy all sorts of things (stocks, bonds, ETFs). Trading Bitcoin ETFs here is like buying cereal from a supermarket. You use the same cart (platform) you use for other shopping. These platforms are user-friendly and regulated, offering a familiar environment for regular stock traders.
  • Crypto Exchange. These are specialized stores, like a shop that only sells video games. They mainly deal with cryptocurrencies. While you can’t directly buy Bitcoin ETFs here, these platforms are where the action happens for Bitcoin and other cryptocurrencies. They offer more crypto-specific features and can be a bit more complex to use.

The main difference between these platforms is what you can buy on them. Brokerage platforms offer a variety of investment products, including Bitcoin ETFs, while crypto exchanges focus on cryptocurrencies. 

Also, brokerages are often seen as more beginner-friendly and regulated, while crypto exchanges offer more in-depth features for crypto trading.

Crypto vs crypto ETFs: comparing investment options

Let’s talk about the difference between buying cryptocurrencies directly and investing in crypto ETFs, and how these stack up against other investment options like mutual funds.

1. Direct crypto investment

Imagine buying cryptocurrencies like Bitcoin or Ethereum directly is like owning a specific type of exotic fruit. You have full control over it; you can eat it, save it, or sell it. However, you need to know where to buy it, how to store it safely and be ready for its price to jump up and down wildly.

2. Crypto ETFs

Now, investing in a crypto ETF is like buying a fruit basket that includes a bit of this exotic fruit along with other types. You don’t own the fruit directly, but you own a share of the basket. It’s simpler and safer in some ways because you’re not responsible for taking care of the individual fruits, and you also get a variety, which can balance out the risk.

3. Crypto ETFs vs traditional mutual funds

Traditional mutual funds are like a pre-packed lunch – you know what you’re getting, and it’s usually a well-balanced meal.

Mutual funds pool money from many investors to invest in stocks, bonds, or other assets and are managed by professionals. They’re not as volatile as cryptocurrencies but may offer lower returns.

4. Platforms for trading

The difference in platforms is like shopping at different types of stores. 

Crypto exchanges are like speciality stores where you buy and manage individual types of fruit (cryptocurrencies). Some of the most popular centralized exchanges (CEXs) are Binance, KuCoin, WhiteBit, Kraken and Coinbase.

In contrast, brokerage platforms where you trade ETFs are like big supermarkets where you can buy fruit baskets (ETFs), along with other groceries (stocks, bonds).

As you see, there is more than one way to invest in crypto. Investing directly in cryptocurrencies is for those who want full control and are comfortable with high risk and volatility. 

Crypto ETFs, on the other hand, offer a simpler, more diversified way to get into the crypto market, much like traditional mutual funds, but with a focus on digital assets. 

And where you shop (trade) depends on whether you want to manage individual assets or prefer a more diverse, managed portfolio.

The Ledger Hack: An Incident with Major Implications for Crypto Security

The Ledger Hack: An Incident with Major Implications for Crypto Security

The cryptocurrency world was shaken by a significant security breach involving Ledger, a leading wallet provider, on December 14. 

This incident, as explained by Ledger CEO Pascal Gauthier, not only highlights the vulnerabilities in the crypto ecosystem but also the importance of advanced security measures. 

Let’s delve into the details of this event, its implications, and the responses from Ledger and the wider community.

The Incident 

Pascal Gauthier, in a post on Ledger’s blog and a tweet on his X (former Twitter) account, described the hack as an “isolated incident.” 

The hack was swift but impactful, affecting third-party decentralised applications (DApps) for less than two hours and was promptly deactivated within 40 minutes of its detection. 

The breach occurred due to a phishing attack on a former employee whose identity was unintentionally left in the hacked code. 

This vulnerability did not impact Ledger’s hardware wallets or the Ledger Live platform.

Mechanics of the Ledger Exploit

As explained in various public statements, including one on Ledger’s X account, the attacker inserted malicious code into several app interfaces. 

This code tricked users into making unauthorised transactions, leading to the theft of at least $484,000. 

The hacker accessed a former Ledger employee’s node package manager JavaScript (NPMJS) account and then uploaded a malicious update to Ledger Connect’s GitHub repository. 

This led to the unwitting distribution of the harmful code among users of Web3 apps like Zapper, SushiSwap, Phantom, Balancer, and Revoke.cash.

Extent of the Damage

Initially estimated at $484,000, the damage was later updated to $504,000, as reported by Web3 security service Blockaid

The hacker manipulated transaction data, misleading users into approving transactions that directed funds to their own accounts

This technique affected a wide range of Ethereum Virtual Machine users who interacted with the compromised DApps.

Ledger’s Response and Future Measures

Gauthier committed to implementing stronger security controls and enhancing software supply chain security. 

He stressed that Ledger’s standard practice involves thorough internal reviews and multi-signature requirements for code deployment. 

Ledger Connect Kit 1.1.8 was announced as safe, and gratitude was extended to WalletConnect, Tether, Chainalysis, and ZachXBT for their support.

Broader Implications for the Crypto World

The breach has potential implications for the entire Ethereum Virtual Machine ecosystem. 

It demonstrates the sophisticated methods employed by cybercriminals in the crypto space and the need for heightened security awareness. 

The core of the Ledger hack revolved around the manipulation of transaction data in users’ wallets. 

The attacker employed malicious code to display confusing and misleading transaction information. This deceitful data led users to unknowingly approve transactions that were actually in favour of the attacker.

Ledger hack token approval. Source Etherscan
Ledger hack token approval. Source Etherscan

The Role of Connect Kits in Web3 Applications

In the realm of Web3 applications, developers commonly use open-source “connect kits.” 

These kits serve as a bridge, allowing apps to interface with users’ wallets. 

They are essentially pre-written code packages that developers can integrate into their apps, saving time and resources that would otherwise be spent on writing this connection code from scratch. 

Ledger’s Connect Kit is one such tool used for this purpose.

When a developer builds a Web3 app, they typically incorporate a connect kit through a node package manager. 

After creating the app and uploading it to their website, the connect kit becomes part of the app’s codebase. This means that whenever a user visits the app’s site, the connect kit code is downloaded into their browser.

In the Ledger hack, the malicious code was cunningly inserted into the Ledger Connect Kit. 

This allowed the attacker to modify the transactions that were being sent to users’ wallets. 

For instance, during the normal operation of a Web3 app, users might need to grant approvals for token contracts, thereby allowing the app to move tokens from their wallets.

However, with the malicious code in place, the users’ wallets would display requests for token approval, but these requests were altered to benefit the attacker. 

The user might see a request to confirm a transaction, but due to the confusingly presented data, they might unwittingly approve a transaction that sends their tokens to the attacker’s address.

Real-World Impact on Users

As a result of this deceptive tactic, users ended up granting extensive token approvals to the malevolent contract controlled by the hacker. 

In some cases, large amounts of funds were siphoned off in single transactions. For example, over $10,000 was drained from one Ethereum address in a particular instance.

This exploit underscores a significant challenge in the crypto world: users often face difficulty in understanding and interpreting transaction confirmations, especially when they are presented in a technical or confusing manner. 

It emphasises the need for vigilance and a careful evaluation of each transaction confirmation message.

The exploit demonstrates a critical vulnerability in the Web3 ecosystem and underlines the importance of robust security practices. 

While tools and platforms are evolving to detect and thwart such attacks preemptively, the industry is still grappling with these challenges. 

Ledger incident: A Call for Increased Security Vigilance

It’s essential for users and developers alike to remain alert and informed to mitigate the risks associated with such sophisticated cyber threats.

The Ledger hack serves as a stark reminder of the persistent threats in the crypto world. 

It emphasises the need for robust security measures, constant vigilance, and collaborative efforts to safeguard digital assets. 

As the crypto industry evolves, the security of transactions and the protection of user data must remain paramount.

Société Générale’s is Launching the Euro-Pegged ‘EUR CoinVertible’ Stablecoin & First Green Bond on Ethereum

Société Générale’s is Launching the Euro-Pegged ‘EUR CoinVertible’ Stablecoin & First Green Bond on Ethereum

In a landmark development for Europe’s financial landscape, France’s third-largest bank, Société Générale, has made a bold entry into the digital currency domain. 

A French bank is launching its euro-pegged stablecoin

The bank has unveiled its native euro-pegged stablecoin, named EUR CoinVertible (EURCV), marking a significant stride in the European banking sector’s adaptation to the evolving world of cryptocurrency.

This groundbreaking stablecoin, set to debut on the Luxembourg-based Bitstamp crypto exchange as reported by the Financial Times, is fully backed by the euro. 

This move allows Société Générale’s customers to seamlessly engage with the digital asset market, opening up new avenues for trading and investment.

Jean-Marc Stenger, CEO of Société Générale Forge, has emphasized the EURCV’s pivotal role in the bank’s ongoing journey within the crypto sphere, highlighting its potential utility in settling trades involving digital bonds, funds, and various assets. 

The EURCV extends beyond the confines of Société Générale, promising widespread applicability across different financial service providers.

Société Générale is also launching a crypto bond

In a parallel yet equally innovative venture, Société Générale has issued its first digital green bond as a security token on the Ethereum public blockchain. 

This bond, valued at 10 million euros, carries a three-year maturity and is earmarked for financing environmentally sustainable activities. The bank stated, “This enables issuers and investors to measure the carbon emissions of their securities on the financial infrastructure.” 

The bond’s digital infrastructure offers around-the-clock access to data on its carbon footprint through a smart contract, pioneering transparency in green financing.

The first licenced crypto provider in France

Société Générale’s subsidiary, Forge, has recently earned the distinction of becoming the first fully licensed crypto service provider in France. 

Forge, a part of Société Générale, which is France’s third-largest bank, has become the first company in the country to get the top license for offering cryptocurrency services. This license, known as PSAN, allows Forge to hold digital assets for customers, buy and sell them for real money, and trade them against other digital assets.

On July 19, 2023, the French stock market regulator, the Autorité des Marchés Financiers (AMF), added this information to their register. According to Société Générale, this license is the highest regulatory approval possible for handling digital asset transactions.

Already, about 90 companies are licensed by the AMF. 

For example, Crédit Agricole, a major rival of Société Générale, got permission for holding digital assets in June 2023. 

But Forge is the first to receive this top-level approval for many different services. Business FM, a French radio station, pointed out that these tough requirements for the license favour big, established banks over smaller crypto companies.

This accreditation by the French stock market regulator, the Autorité des Marchés Financiers (AMF), signifies a high level of regulatory endorsement for digital asset transactions, setting a precedent in the French financial sector.

Société Générale has been very active in the crypto world. 

It has issued euro bonds on the Ethereum blockchain, created security tokens on the Tezos blockchain, and offered Dai stablecoin loans for bond tokens. 

In April 2023, Forge introduced EUR CoinVertible, a stablecoin tied to the euro, for big, institutional clients. This new digital asset is available only to investors who have gone through Societe Generale’s standard customer verification and anti-money laundering checks.

As Europe gears up for the Markets in Crypto-Assets Regulation in 2024, Société Générale’s ventures into the euro-pegged stablecoin market and the issuance of a green bond on Ethereum signify major milestones. 

While France is generally open to crypto, the French branch of Binance, a global crypto company, is currently under investigation by the French finance investigation service, directed by a specialized court in Paris.