This Week in Crypto: Hyperreality is the new Real Edition

Jean Baudrillard first came up with the twin ideas of accelerated culture and hyperreality while the internet was in its infancy.

It’s an postmodern idea where we have an inability of consciousness to determine reality from simulation in technologically advanced postmodern societies. Hyperreality could therefore be a condition where we can’t determine what is real and what is fiction because there’s no clear idea or distinction of where one ends and the other begins.

We see hyperreality reflected everyday in politics, in culture, and in the development and increasing presence of technology in our lives. In politics, we have disparate news outlets offering different spins on the truth until the concept of truth is in question; in culture, we have hyperreality reflected in the rise of YouTubers, TikTokers and their antecedents, the reality TV star—who are people famous primarily for being famous.

And last, in tech—where the notion of seeing is believing is regularly challenged by a confluence of deep fakes, artificial intelligence and facial recognition software. Depending on the narrative, technology is meant to free humanity from the antiquated mindsets of the powerful (as in blockchain tech ideology), but the actuality is that these technologies can and will be used to enslave us, if we let them.

What is real? That is the question.

Here’s another:

Why is nobody terrified by the prospects of the Metaverse?

The news:

Galaxy Digital (GLXY.T) and TIME have launched the newly created TIME100 Companies Metaverse category to help build a more immersive virtual experience.

It’s almost the very definition of hyperreality when you can put on a headset in your living room, enter and interact with a virtual world, and produce tangible results in physical reality.  Yes.  We’ve already had an unhealthy dose of this with the rise of ecommerce, and again augmented by tech like blockchain, which itself produces a digital byproduct which has challenged the concept of value as we understand it.

But we’ve never been in a position like this where returning to meatspace is optional. It’s like someone forgot to tell the tech developers that postmodernism is meant as a critique of modernism, not its replacement.  Such is the nature of hyperreality.

The intention behind this launch is to educate readers on the expanding and evolving metaverse, and will include a newly weekly Time newsletter called, ‘Into the Metaverse.’ The newsletter intends to explore the various ways our physical and digital serves are becoming increasingly intertwined, and it will likely do so in a completely un-ironic way that doesn’t raise any suspicions or fears about what’s really going on here.

Because seriously. Am I the only one who’s nervous about this whole metaverse thing?

Here’s what wikipedia says about the metaverse:

“The metaverse (a portmanteau of “meta-” and “universe“) is a hypothesized iteration of the internet, supporting persistent online 3-D virtual environments[1][2] through conventional personal computing, as well as virtual and augmented reality headsets.[3][2] Metaverses, in some limited form, are already present on platforms like VRChat or video games like Second Life.”

Haven’t we seen (or read) enough science fiction about futzing around with alternative streams of consciousness? Do we really need to give our tech-company overlords another means to pilfer our private lives?

Apparently not.

“Over the next decade, the metaverse will become an increasingly important part of the world economy; our physical and digital realities are already becoming hard to distinguish,” said Mike Novogratz, CEO and founder of Galaxy Digital. “We look forward to partnering with TIME, an iconic brand driving innovation, as we seek to bring readers, creators, and the curious into the metaverse and demystify the tremendous amount of transformation happening within.”

Circle selects AI-analytics company with track record for playing with dangerous tech for portfolio data services

Remember Clearwater Analytics (CWAN.NYSE)? They’re the company that produced the scarily accurate facial recognition software that for awhile there looked like it was going to turn us all forcibly into loyal devotees of Big Brother who love the party. Well, they’re back and this time they’re helping Circle Internet Financial in terms of providing clarity, consistency and transparency for the reserves reporting process for their USD Coin (USDC).

The marriage of AI-based facial recognition and blockchain’s immutability function seems like a recipe for political and social disaster, doesn’t it? But to be fair, that’s not what’s happening here. We hope.

USDC is like Tether, except it doesn’t suck and given that they’re audited regularly, they actually have in store what they say they do. They’ve been doing the same things Tether has been, including helping businesses use digital currencies and public blockchains for payments, commerce, and other financial applications. They presently have $33 billion USDC in circulation and over $1.3 trillion in on-chain transactions, their claim to being the leading regulated dollar digital currency is a valid one.

Also, note that word: regulated. Because when it comes to crypto—you’re going to be hearing it a lot more soon.

“As investment professionals around the globe are working to untangle the complexities of accounting and reporting for an evolving investment landscape, Clearwater’s commitment to data accuracy and timeliness are more relevant than ever. We are very excited to work closely with Circle to help them keep their commitment to transparency and streamline their reporting,” said Scott Erickson, president of Americas and New Markets at Clearwater.

Cryptostar’s latest LOI proves that growth is good

Blockchain and cryptocurrency are expanding at an alarming rate, despite temporary setbacks like the SEC getting on crypto’s case and China hunting down hidden miners on the mainland like Stormtroopers taking out Aunt Beru and Uncle Owen. In other places and in other times, decentralized finance (DeFi) is gradually becoming a place where any serious cryptocurrency company wants to be—and so it is with Cryptostar (CSTR.C).

They recently picked up Neuro Digital, a Quebec-based data center operator specializing in GPU mining, DeFi and AI solutions, and plans to expand into various locations that haven’t yet been identified in the province of Quebec. Honestly, though, since we’re on the topic: decentralized finance, with its focus on distributed almost-completely democratic power and economic control, is almost a perfect example of a postmodern, hyperreality focused reaction to power centralization caused by big banks and the regulations that insulate them from competition.

And that’s my digression for the day.

As for cryptostar’s move to the homeland of Leonard Cohen and poutine, why not? It’s the perfect time of year for mining crypto, as long as you’ve got a space heater in your office. Turn off the AC and fling open all the doors and let Quebec’s crazy winter cold chill your ASIC rigs out.

“We are delighted that Neuro Digital has agreed to the terms of the proposed Transaction, and more specifically, we are looking forward to incorporating the extremely talented team at Neuro Digital with a proven expertise in Ethereum (ETH) mining, AI solutions and DeFi. Furthermore, this acquisition will ensure our expansion of green operations in Quebec, Canada and is another step toward transitioning our operations to renewable sources,” said David Jellins, president and CEO of Cryptostar.

The curious bit about DeFi is what’s going to become of it in the next few years. Regulations are closer than you think—especially up here in the Soviet Socialist Nanny State of Canuckistan—and certain DeFi platforms are going to be forced to fall in line, or else.

For right now, though, growth is good, or so the narrative would tell you.

With Convertible Note Retirement, BTCS Now Debt Free

This next one breaks with this week’s theme of hyperreality, but we have to stop for a moment.  It’s rare to spot a unicorn in the wild.

BTCS (BTCS.Q) has paid off its last $1 million convertible note, originally issued in January 2021, and is now debt-free.

The peculiar and interesting point about this company is that three short years ago, they were trading at a fraction of a fraction of a penny. Tumbleweeds rolled through their cafeteria and neighbourhood children dared each other to brave their server room. Now they’re out of debt and ready to rock.

Here’s their two year chart to get an idea of what I’m talking about.

Crypto is strange like that.

“By eliminating our remaining outstanding debt and avoiding the potential dilution from the conversion of this note, we are driving further value for our shareholders,” according to Charles Allen, chief executive officer of BTCS. “The note could have converted at a discount to the closing market price on the date of conversion.”

TAAL’s Q3 revenue shows that they’re doing something right

TAAL Distributed Information Technologies (TAAL.C) numbers are in and perhaps unsurprisingly, they’re doing well. They’re an enterprise blockchain company dealing in one of Bitcoin’s lesser known cousins, Bitcoin SV or Bitcoin Satoshi Vision. Specifically, they leverage BSV’s unique infrastructure to build all kinds of peculiar software for enterprise clients. One of their key products is the What’s On Chain explorer product, which like all blockchain explorers, is a window onto the BSV blockchain. They’re hoping to use it to flare global interest in the platform.

It’s uncertain that the strategy being employed is working, but at least they’re making money.

Taal at a glance:

• Revenues increased by over 80% over the previous quarter
• Gross revenues of approximately $12.4 million for the quarter, which exceeded the Company’s previously issued guidance of $11.5 to $12 million
• Adjusted EBITDA*¹ for the quarter was $3.9 million, representing an increase of 500% over previous quarter
• TAAL processed over 52 million transactions on BSV in the quarter, earning $411 thousand from transaction processing fees, or 3% of total quarterly revenues
• As of September 30, 2021, TAAL held approximately 69,000 BitcoinSV (“BSV”) in treasury, compared to the 75,000 in the issued guidance; this decrease was due to funding additional deposits related to operations
• Future growth secured as deposits for plant and equipment increased to $22.1 million compared to $9.3 million in the previous quarter as the company purchases mining equipment and infrastructure.

Color Star Technology: Into the Metaverse

Let’s get back to our digital future, shall we?

Entertainment tech company, Color Star Holdings (CSCW.Q) has joined forces with National Glory Holdings to take advantage of advantages offered by both non-fungible tokens and the metaverse.

National Glory is an international investment company in the real estate, venture capital, and the development of blockchain tech. The two companies will work to each others strengths to use augmented reality and virtual reality in a combined industry platform, and then add that to the metaverse and NFT products.

“Color Star’s business has often centered around entertainment technology, and this cooperation with National Glory will help integrate our respective business offerings in the future. National Glory has strengths in building industry platform technologies, and it has great influence in the Middle East. National Glory’s strengths will help Color Star in research, development, and promotion of more metaverse and NFT products. In addition, as Color Star’s business continues to expand and its market value continues to increase, we believe that the Company is building up momentum and entering a phase of rapid growth,” said Basil Wilson, CEO of Color Star.

The relationship between virtual and augmented reality and hyperreality is direct. They’re the direct purveyor, and actually referenced by Baudrillard long before they became an actual reality. One has to wonder what the old brilliant bastard would have thought about Fortnite and its ilk had he lived to see 2021.

If there’s a takeaway from this piece it’s that no matter how much some things change to conform to the new phenomenological milieu, there’s at least one thing that stays the same:  as long as there’s money to be made, there will be companies out there trying to find a way to make it.

Relatively cold comfort but something based more in reality than hyperreality.

Luxxfolio levels up

Because we can’t have a crypto sector roundup without miners.

Luxxfolio Holdings (LUXX.C) picked up another 100 Bitmain S19J Pro Miners this week. They’re operating at a production rate of 131 petahash per second, which is a hashrate increase of approximately 6.5% since November started. At the present rates for mining, the company is earning approximately 22-24 Bitcoin per month from its mining. That’s not bad. It also increases their projected mining capacity to 366 PH/s by mid 2022.

“We are making adjustments every day to improve mining capacity and act on any opportunity to put more miners to work and increase our monthly Bitcoin production,” said Kien Tran, COO of LUXX mining division.

Marathon takes a hit after SEC delivers note

If you listen closely you can almost hear the class-action lawyers sharpening their knives in preparation for what’s to come. They’re responding, of course, to Marathon Digital Holdings (MARA.Q), which took a 27% dive after revealing that they had been subpoenaed by the United States Securities and Exchange commission in relation to their 2020 deal with Beowulf Power in Hardin, Montana.

Here’s the specifics from a press release:

“On October 6, 2020, Marathon entered into a series of agreements with multiple parties to design and built a data center in Hardin, Montana, and issued 6 million restricted Marathon common shares in connection with the agreements. Then, on November 15, 2021, Marathon disclosed receipt of a subpoena from the U.S. Securities and Exchange Commission to produce documents and communications concerning the Hardin data facility.

On this news, Marathon’s stock price fell $20.52 per share, or 27.03%, to close at $55.40 per share on November 15, 2021.”

Definitely going to be one to watch in the coming months to see how this all shakes out.

Bit Digital’s numbers are in and they are exactly what you’d expect

They’re not doing as well as they did in previous quarters, but if there’s any reason to give a company a pass for a bad quarter, it’s likely this.

Here’s the story:

Bit Digital (BTBT.Q) completely exited the technological dystopian nightmare that is the People’s Republic of China earlier this year and it took some time, but 100% of their fleet arrived in North America. As of September 30, 2021, they had no miners remaining in China: 79.1% of our miner fleet was already deployed or awaiting installation in North America, and 20.9% was in transit.

• The Company owned 27,744 miners as of September 30, 2021, with an estimated maximum total hash rate of 1.603 Exahash (“EH/s”). The 0.318 EH/s reduction in the third quarter was due to fleet repositioning, in which the Company sold or disposed of certain models (partially offset by purchases) in anticipation of purchase opportunities. The Company recognized a $0.375 million gain on miner sales, and the net sale proceeds had been reinvested into miner purchases as of the date of this press release.
• Subsequent to September 30, 2021, the Company signed an agreement with Bitmain Technologies Limited to purchase 10,000 Bitcoin miners, boosting their max hashrate by 1 EH/s. The previously announced purchases are expected to increase Bit Digital’s maximum hash rate by approximately 1.0 EH/s.
• The Company earned 248.36 bitcoins. The reduction from the second quarter was due to the migration program, in which a higher percentage of fleet capacity was offline while in transit to, or awaiting installation in, North America, as well as miner sales and disposals.
• Treasury holdings of BTC and WBTC were 526.1 and 101.0, respectively, for a total of 627.1 BTC equivalent, with a fair market value of approximately $27.5 million as of September 30, 2021.

Unwilling to go to the room where there is no darkness, BTBT.Q did the sensible thing and left before the Chinese officials could send them all off to wonderful reeducation camps to play stress-position Jenga and learn about how to be a good citizen (or else), and it turns out there might be life beyond the party.

“Bit Digital marks a major milestone for our Company. Our mining assets are now entirely out of China and 100% in North America. It’s unusual that a business is faced with migrating the majority of its operating assets across the globe on an expedited timeline. Thanks to our talented team, partners, and head start, having begun migrating in October 2020, we accomplished a major logistical feat. I’d like to thank the entire Bit Digital team for exceptional performance in executing against these unprecedented circumstances,” said Bryan Bullet, Bit Digital’s CEO.

What he said later was also quite relevant.

“It’s also unusual that a major economy exits an entire vertical, as China did earlier this year, by banning bitcoin mining. Despite the initial operational complexity – a challenge our team squarely met – we believe the shift in global hash distribution will result in a stronger bitcoin network, with the majority of hash now located here in North America.”

Damn straight.

—Joseph Morton

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