Law Decoded: The difference between New York City and New York State, April 25-May 2

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New York State moratorium on PoW mining reinvigorates the conversation around crypto industry’s sustainability.

Last week, New York dominated crypto media headlines in very different ways. In New York State, the local Assembly voted in favor of the bill that would ban for two years any new mining operations that rely on proof-of-work (PoW) consensus mechanisms and use fossil fuel-generated energy. 

A temporary moratorium, which could be extended after the state’s Department of Environmental Conservation provides its assessments of the industry’s carbon footprint, marks the first major legislative attack on PoW mining on environmental grounds in the United States. The push mobilized the community — after digital asset advocacy groups rang the alarm on Twitter. Then, proponents of the ban had to endure three hours of a heated debate to narrowly pass the draft. There’s hope for an even tighter fight in the NY State Senate.

Meanwhile, New York City Mayor Eric Adams set an example of supporting innovation as he hit out at his state’s BitLicense regime during an interview at the Crypto and Digital Assets Summit in London. As a recently elected politician who’s claimed to take his three paychecks in Bitcoin (BTC), Adams called the license — the only one at the state level — a “high barrier” and urged legislators if not to think outside the box, then to at least not destroy the box itself.

Another instance of a reasonable approach to regulation was exemplified by New York State Senator Kevin Thomas, who has introduced a bill to define, penalize and criminalize fraud specifically targeting developers and projects that intend to dupe crypto investors. The amendment would impose rug pull charges on developers that sell “more than 10% of such tokens within five years from the date of last sale of such tokens.”

A discussion that is here to stay

While some consider New York State’s legislature to be “dominated by radical and fringe elements” who are “ignorant to a new and innovative sector of finance and technology,” the proposed PoW moratorium bill might in fact represent a first notable instance of legislative action with regard to crypto mining’s sustainability. The clash over how power-hungry various consensus mechanisms are and whether it is renewable or fossil fuel-generated energy that powers mining operations has been building up for some time on federal and international levels. These battles will definitely intensify in the months and years to come. At the end of the day, it’s not all bad. Some experts consider Albany legislators’ efforts to be a “prudent action” in terms of pushing the miners toward the green shift, even if it could have a cooling effect on their operations at first.

Regulation fest in Latin America

As a major South American jurisdiction, Brazil passed its first bill governing cryptocurrencies in a Senate plenary session. According to the draft, which is still yet to gain approval from the Chamber of Deputies, the executive branch will draft rules for crypto assets and either create a new regulator or crown the Securities and Exchange Commission or the Central Bank of Brazil as a principal regulator for the industry. Panama is already a step ahead, with its own crypto law passing the third and final round of consideration. Now, it is the president’s turn to greenlight the bill. The initiative’s main advocate, congressman Gabriel Silva, believes that the law will “help Panama become a hub of innovation and technology in Latin America.” Meanwhile, Cuba is expected to begin to issue virtual asset service provider licenses starting May 16.

CFTC gains momentum

The United States Commodity Futures Trading Commission, one of the main power centers in the crowded U.S. crypto regulation scheme, seems to have gotten some extra points in the race. A bipartisan group of lawmakers re-introduced the Digital Commodity Exchange Act, which would bring cryptocurrency developers, dealers, exchanges and stablecoin providers under the purview of the CFTC. Granted, the mandate would extend only to cryptocurrencies deemed to be commodities, while the U.S. Securities and Exchange Commission would still hold power over the digital asset securities offerings. Well-received by the crypto community, the bill should make it through the first hearing by the U.S. House Agriculture Committee first.

Has New York State gone astray in its pursuit of crypto fraud?

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A new Senate bill strives to keep the “spirit of blockchain” while combating crime, but critics call it ill-conceived, redundant and unworkable.

The Empire State made two appearances on the regulatory stage last week, and neither was entirely reassuring. 

On April 25, bill S8839 was proposed in the New York State (NYS) Senate that would criminalize “rug pulls” and other crypto frauds, while two days later, the state’s Assembly passed a ban on non-green Bitcoin (BTC) mining. The first event was met with some ire from industry representatives, while the second drew negative reviews, too. However, this may have been more of a reflex response given that the “ban” was temporary and principally aimed at energy providers.

The fraud bill, sponsored by State Senator Kevin Thomas, looked to steer a middle course between protecting the public from scam artists while encouraging continued innovation in the crypto and blockchain sector. It would criminalize specific acts of crypto-based chicanery including “private key fraud,” “illegal rug pulls” and “virtual token fraud.” According to the bill’s summary:

“With the advancement of this new technology, it is vital to enact regulations that both align with the spirit of the blockchain and the necessity to combat fraud.” 

Critics were quick to pounce, however, assailing the bill’s relevance, usability, overly broad language and even its constitutionality. 

The Blockchain Association, for instance, told Cointelegraph that the bill as currently written is “unworkable,” with “the biggest nonstarter being the provision obligating software developers to publish their personal investments online, and making it a crime not to do so. There’s nothing remotely like this in any traditional industry, finance or otherwise, even for major shareholders of public companies.”

The association further added that all the specified offenses were already covered under New York State and federal law. “There’s no good reason to create new offenses for ‘rug pulls.’”

Stephen Palley, partner in the Washington D.C. office of law firm Anderson Kill, seemed to agree, telling Cointelegraph that New York State already has the Martin Act. This is “an existing statutory scheme that is one of the broadest in the country that, in my view, likely already covers much of what this bill purports to criminalize.”

A threat to trust

On the other hand, it’s hard to deny that fraud dogs the cryptocurrency and blockchain sector — and it doesn’t seem to be going away. “Rug pulls put 2021 cryptocurrency scam revenue close to all-time highs,” headlined a Chainalysis December report. The analytics firm went on to declare these activities a major threat to trust in cryptocurrency and crypto adoption. 

The Thomas bill concurred, noting that “rug pulls are now wreaking havoc on the cryptocurrency industry.” It described a process in which a developer creates virtual tokens, advertises them to the public as investments and then waits for their price to rise steeply, “often hundreds of thousands of percent.” Meanwhile, these malefactors have stashed away a huge supply of tokens for themselves before “selling them all at once, causing the price to plummet instantly.”

The summary went on to describe a recent rug pull that involved the Squid Game Coin (SQUID). The token began life at a price of $0.016 per coin, “soared to roughly $2,861.80 per coin in only one week and then crashed to a price of $0.0007926 in less than five minutes following the rug pull:”

“In other words, the SQUID creators received a 23,000,000% return on their investment and their investors were swindled out of millions. This bill will provide prosecutors with a clear legal framework in which to pursue these types of criminals.”

Are the proposed fixes workable?

Some were baffled by some of the remedies proposed in the bill, however, including a provision that token developers who sell “more than 10% of such tokens within five years from the date of the last sale of such tokens” should be charged with a crime.

“The provision that makes it a fraud for developers to sell more than 10% of tokens within five years is preposterous,” Jason Gottlieb, partner at Morrison Cohen LLP and chair of its White Collar and Regulatory Enforcement practice, told Cointelegraph. Why should such activity be considered fraudulent if conducted openly, legitimately and without deception, he asked, adding:

“Worse, it’s sloppy legislative drafting. The rule is easily circumvented by creating a massive amount of ‘not for sale’ tokens that simply get locked in a vault, to prevent any sale from crossing the 10% threshold.”

Others criticized the bill’s lack of precision. With regard to stablecoins, the bill would require an issuer “not” to advertise, for example, said David Rosenfield, partner at Warren Law Group. By comparison, most bills of this type “will mandate certain disclosures or prohibit certain language.” The legislation’s vague and overbroad language “permeates and infects the bill fatally, in my view,” he told Cointelegraph.

The bill also stipulates that a trier of fact must “take into account the developer’s notoriety,” he added. Again, it isn’t really clear what this means. Ask 10 people to define notoriety, and one might receive 10 different answers. Or, take the provision that software developers publish their personal investments. “This unconstitutionally stigmatizes a class of citizens and developers without a compelling reason that would pass constitutional muster,” Rosenfield said. “This whole bill will not pass Constitutional requirements.”

Cointelegraph asked Clyde Vanel, who chairs the New York State Assembly’s Subcommittee on Internet and New Technologies — and who introduced a companion bill to S8839 in the lower house — about the criticism that rug pulls and other sorts of crypto fraud are already covered by existing statutes, including the state’s Martin Law. He answered:

“While the Martin Act provides some jurisdiction for the Attorney General to address fraud, we must provide clear authority for New York prosecutors in the cryptocurrency space. This bill provides clear authority regarding cryptocurrency fraud.”

When asked for an example of how the bill aligns with “the spirit of blockchain,” as claimed in the summary, Vanel answered, “Interestingly, one of the main tenets of blockchain technology is trust. This bill will provide the much-needed trust for certain cryptocurrency investments and transactions.”

Was Vanel — a self-described entrepreneur — worried that the legislation might discourage software developers, in particular, the requirement that software developers publish their personal investments online?

“I want to make sure that New York is a place with a free, open and fair marketplace for entrepreneurs, investors and all to participate,” Vanel told Cointelegraph. “The disclosure obligation applies exclusively to a developer’s interest in the specific token created. It does not apply to other investments outside of the specific token in question.”

Gottlieb took issue with some of this characterization, though. “The bill is not aligned with the spirit of blockchain,” he declared. The bill might use some blockchain terminology, like rug pull, but that doesn’t mean it has grasped the true nature of blockchain. “The bill has serious flaws that would impede legitimate developers, and the true spirit of blockchain is to encourage development while protecting participants,” he said.

What is driving the state’s legislators?

One suspects this bill may have been hurriedly drafted, given some of the imprecise language cited above. It bears asking, then: What is motivating New York’s lawmakers? A need to catch up with a new technology that many still don’t understand? A desire not to be outdone by other states and locales like Wyoming, Texas and Miami that are busy staking their claims in the crypto territory?

“Read the 20-page criminal complaint in the recent charges against Ilya Lichtenstein and his wife, Heather Morgan,” answered Rosenfield. He referenced the recently arrested couple charged with stealing crypto valued at $4.5 billion at the time of writing from the Bitfinex exchange in 2016, “and you will appreciate what a challenge legislators and regulators have in combating the ever-increasing level of cryptocurrency fraud, especially in New York State.” More regulation is arguably needed, he added, “but this bill certainly isn’t it.”

On the matter of the lawmakers’ motivation, Palley said, “A generous view is that the market is in fact rife with misconduct and in some cases outright fraud, and that legislators wish to make a mark and add laws to the books to address that behavior.”

On the other hand, a cynic might hazard that it’s nothing more than legislative theater. “The truth probably lies somewhere in between,” Palley told Cointelegraph, adding:

“Regardless, I’m just not sure that the new nature of the asset class really calls for new laws to address behaviors that are as old as commerce itself.” 

Wherefore crypto mining?

As noted, S8839 was closely followed last week by the passage in the NYS Assembly of a two-year ban on non-green Bitcoin mining. Is the state’s long-simmering crypto wariness beginning to boil over?

Gottlieb suggested the two events really weren’t comparable. “The Bitcoin mining legislation, while misguided and faulty, at least comes from an understandable desire to safeguard our environment in interactions with a new technology,” he said.

The new rug pull legislation, in comparison, may also come from a desire to safeguard investors and prevent fraud, but it offers nothing new. “Existing law covers that concern perfectly well.”

The Bitcoin mining “ban” seemed to have attracted more attention than the rug pull bill last week, but this may have been partly due to a misapprehension. “This [mining] bill has been framed in the media as a ban on crypto mining. It is not that,” declared NYDIG Research Weekly in its April 29 newsletter. Rather, it is a two-year suspension on some kinds of crypto mining principally aimed at power companies, not Bitcoin miners, said NYDIG, adding:

“The New York State Assembly voted to put a 2-year moratorium on issuing air permits to fossil fuel-based electric generating facilities that supply behind-the-meter energy to cryptocurrency mining.”

All told, it may be no surprise that New York State seems to be forging its own path on the matter of blockchain and cryptocurrency regulation. After all, “New York State is the financial engine of the country,” commented Gottlieb. On blockchain-based finance, however, “New York’s legislative regime has greatly hampered responsible development in the industry.” He cited the state’s BitLicense requirement as an example of one “onerous” and “largely ornamental” requirement. Overall, Gottlieb told Cointelegraph: 

“New York lawmakers need to consider whether they want New York to attract and nurture a burgeoning fintech industry, or whether they want to pass more ill-conceived laws that serve little purpose other than to scare away companies.”

Go green or go home? What the NY State mining moratorium could mean for crypto industry

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The “anti-technology” bill could accelerate mining operators’ switch to renewable energy, experts say.

On April 26, the State of New York put itself at the forefront of the regulatory struggle with crypto, as its Assembly voted for a two-year moratorium on crypto mining operations that use energy generated by fossil-fuel power plants. Depending on how one looks at it, this development could either signal a new alarming legislative trend or a trigger that would accelerate the digital asset industry’s movement toward a more sustainable path. 

Moratorium with further evaluation

The lower chamber of the NY state legislature, the Assembly, passed a bill that would put a two-year hold on any new mining operations using the proof-of-work (PoW) consensus mechanism, as well as on the renewal of existing permits.

The bill, S6486D/A7389C, is marketed by its sponsors as a necessary act of compliance with the 2019 Climate Leadership and Community Protection Act and its goal to reduce greenhouse gas emissions by 40% by 2030. The bill also mandates a “generic environmental impact statement” to be made by the Department of Environmental Conservation (DEC), which should evaluate the energy consumption and greenhouse gas emissions of PoW miners and their impact on public health.

Next up for the bill is a vote in the upper chamber, the State Senate, after which, if approved, it would go to Governor Kathy Hochul, who can either veto it or sign it into law.

The advocacy group Blockchain Association believes that the “anti-technology” bill can still be sunk in the Senate. The heated debate in the Assembly lasted for three hours, and the vote ended up far from unanimous: 95 in favor, 52 against.

A state affair

The passage of the bill triggered an alarm from the crypto community. The Crypto Council for Innovation shared a concern that the initiative could put innovation on the back burner. Kyle, Schneps, director of public policy of Foundry, underlined that the initiative is singling out only one industry out of many operating on fossil fuels in the state, and the decentralized finance (DeFi) Education Fund emphasized legislators’ refusal to acknowledge the benefits of the industry.

The sponsor of the bill, environmental and housing rights activist Anna Kelles dismissed these arguments in a Twitter discussion with the head of policy of Blockchain Association Jake Chervinsky. She pointed out that the bill is “extremely narrow in scope” and will only pertain to “large-scale crypto mining” in power plants that use fossil-based energy sources. Moreover, the moratorium will apply only to mining operations at decommissioned power plants with the single aim of preventing the large-scale relaunch of such plants that could be incentivized by crypto mining profitability. By her estimate, there are 49 such facilities in the State of New York.

As John Belizaire, CEO of green data center developer Soluna Computing, noted to Cointelegraph that the moratorium will certainly “have a cooling effect” on crypto mining in the state. He believes the state is taking a “prudent action” to study the issue of environmental effects as the growth of the industry has raised concerns about whether it is prolonging the life of legacy fuels rich with carbon:

“We’d encourage the state to participate in open dialogue with forward-looking companies to learn how the crypto mining industry could accelerate New York’s renewable energy development.”

John Warren, CEO of GEM Mining — which claims its 32,000 miners to be 97% carbon neutral — commented to Cointelegraph that the passage of this bill reveals that the New York legislature is “dominated by radical and fringe elements” who are “ignorant to a new and innovative sector of finance and technology.” Warren said:

“It is no wonder why so many citizens and businesses are fleeing New York in order to pursue great opportunities in common sense business-friendly states. As a graduate of New York University and someone who loves New York, it is painful to see the state implement policies that mirror China and Russia.”

The future is green

The experts tend to agree on the possible effects of the bill beyond the boundaries of New York State. Warren is convinced that the issue represents a unique case of “a radical outlier” and hence will have little effect on the United States’ role as the global leader in cryptocurrency mining:

“We’ve recently seen the opposite as many legislators have openly encouraged crypto operations in their states and even gone so far as to enact legislation in favor of crypto. Take Georgia, for example.”

Belizaire also found it hard to name other states with similarly hostile policies toward miners. He brought up the example of North Dakota as a state that saw the job creation potential of crypto mining and chose to partner with the industry:

“The NY ban seems to send a unilaterally negative message even before a conversation takes place. Unfortunately, this emboldens the narrative that the PoW protocol is bad for the planet.”

Regardless of the vote’s outcome, the New York moratorium is unlikely a case of a single state’s allergy to crypto mining. Coming from an environmental activism background, Kelles repeatedly highlighted that her concern is for the possible influence on New York State’s environment, not the crypto industry at large. It resembles a larger discussion about PoW mining that is happening on both national and international levels.

In October 2021, more than 70 NGOs have co-signed a letter to the U.S. Congress where they called legislators’ attention to the numerous instances of fossil-fuel plants’ relaunch across the country.

As Steve Wright, former general manager of Chelan County — Washington’s public utility district — explained at the congressional hearing in January 2022, miners’ interest in dormant fossil fuel facilities is driven by a simple market mechanism, which means there’s no rational reason for them to stop exploring such possibilities.

In that sense, the environmental push from the New York State legislators is an instance of a larger discussion that will inevitably persist around crypto mining and fossil fuels. While the New York bill doesn’t contain a single word about using renewable energy in mining, it could, in fact, incentivize the usage of green energy — Warren, who doesn’t perceive this measure as proper, still admitted that such a possibility exists.

Belizaire commented:

“I think the moratorium will have mining companies give a second thought to using fossil fuels to power their operations. New York’s mission is clear: It’s all in on renewables. PoW crypto mining needs to get on the bus.”

Crypto mining, he believes, could even become a “special ingredient” of the larger green energy shift.

Here’s why Bitcoin bears aim to pin BTC under $39K ahead of Friday’s $1.9B options expiry

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Holding BTC price below $39,000 will give bears a $350 million profit in this week’s $1.9 billion options expiry.

Up until April 25, Bitcoin (BTC) bulls had been defending the $38,000 level, but bulls were caught off-guard by the recent drop. As Bitcoin plunged from $46,700 to $37,700 between April 5 and 26, most of the bullish bets for the upcoming $1.96 billion monthly options expiry became worthless.

Regulatory concerns continue to pose a threat to Bitcoin and on April 26 the New York State Assembly passed a bill banning new proof-of-work (PoW) cryptocurrency carbon-based mining facilities in the state. Fortunately for Bitcoin, mining equipment is portable, so there’s no real risk to the Bitcoin network’s security but the steady threat of anti-crypto legislation can have an impact on price.

Geopolitical tension in Europe also led investors to avoid riskier assets and many are seeking protection in U.S. dollar-denominated assets. CNBC reported that the impact of Russian state energy firm Gazprom’s decision to halt natural gas supplies to Poland and Bulgaria, created concerns about a deeper economic slowdown in the Eurozone region.

Investors are also obsessed with the potential U.S. Federal Reserve rate 250 basis point rate hike planned throughout 2022. The maneuver aims to contain inflationary pressure but it could spin global economies into a recession and this is another reason why investors are avoiding highly-volatile assets like cryptocurrencies.

Bulls did not expect prices below $40,000

The open interest for the April 29 options expiry in Bitcoin is $2 billion, but the actual figure will be much lower since bulls were not expecting the BTC price to drop below $40,000.

These traders might have been fooled as Bitcoin held above $45,000 between March 27 and April 6, placing enormous bets for the monthly options expiry above $50,000.

Bitcoin options aggregate open interest for April 29. Source: CoinGlass

The 1.55 call-to-put ratio shows more sizable bullish bets as the call (buy) open interest stands at $1.19 billion against the $770 million puts (sell) options. Nevertheless, as Bitcoin stands near $39,000, most bullish bets will likely become worthless.

For instance, if Bitcoin’s price stays below $40,000 at 8:00 am UTC on April 29, only $60 million worth of these calls (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $40,000 if it trades below that level on expiry.

Bulls need $41,000 to balance the scales

Below are the three most likely scenarios based on the current price action. The number of options contracts available on Friday for call (buy) and put (sell) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

  • Between $37,000 and $39,000: 600 calls vs. 9,800 puts. The net result favors the put (bear) instruments by $350 million.
  • Between $39,000 and $40,000: 1,500 calls vs. 8,300 puts. The net result favors bears by $260 million.
  • Between $40,000 and $41,000: 3,400 calls vs. 5,600 puts. Bears remain better positioned by $90 million.
  • Between $41,000 and $42,000: 4,100 calls vs. 4,700 puts. favors the put (bear) instruments by $30 million.

This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Bears are aiming for a $350 million profit

Bitcoin bears need to pressure the price below $39,000 on April 29 to secure a $350 million profit. On the other hand, the bulls’ best case scenario requires a 6% price push above $41,000 to cut their losses to $30 million.

Bitcoin bulls had $330 million leverage long positions liquidated in the past 7 days, so they might have less margin required to drive Bitcoin price higher. With that in mind, bears will likely try to suppress BTC below $39,000 until the April 29 options expiry.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

City of Fort Worth votes in favor of Bitcoin mining program

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“We are going to become the first city in the world to mine Bitcoin here on site at city hall,” said Fort Worth Mayor Mattie Parker.

Fort Worth, Texas has launched a pilot program to mine Bitcoin in partnership with the Texas Blockchain Council.

In a Tuesday city council meeting, Fort Worth approved a resolution to start running three Antminer S9 Bitcoin (BTC) miners donated by the Texas Blockchain Council in the city hall building. The pilot program was aimed at recognizing “the exponential growth of the blockchain and cryptocurrency industries” in addition to encouraging Fort Worth to become a tech leader.

“This is a very small opportunity for Fort Worth that has big possible returns on investment,” said Fort Worth Mayor Mattie Parker at the council meeting. “We are going to become the first city in the world to mine Bitcoin here on site at city hall.”

Fort Worth Mayor Mattie Parker addressing the city council meeting

According to the city, each BTC miner will use the same amount of energy “as a household vacuum cleaner,” with costs expected to be offset by the mined crypto. Carlo Capua, deputy chief of staff for the Fort Worth Mayor and Council Office, told Cointelegraph the three rigs were expected to mine roughly 0.06 BTC annually — $2,353 with the price of Bitcoin $39,215 at the time of publication.

The pilot was designed to be limited in both the number of machines and duration “to learn the potential impact and opportunities for Bitcoin” — the city will evaluate the program after six months, starting in October. Capua said the program would be considered based on the amount of BTC mined, the amount of energy used, and public awareness of tech and crypto in Fort Worth:

“In this rapidly evolving industry, better understanding 1) the evolution of Crypto and future outlook, 2) what institutional voids might exist in the current laws and regulations, and 3) how government and municipalities interact with this technology.”

“By starting small to learn as they go, Fort Worth is positioning itself to be the Bitcoin mining capital of Texas,” said Lee Bratcher, president and founder of the Texas Blockchain Council. “The state as a whole has already established itself as the Bitcoin mining capital of the world.”

At the city council meeting, Fort Worth resident Thomas Torlincasi suggested tabling the measure, citing environment concerns over mining as well as potential legal issues over adopting digital currencies. He likened the program to a Ponzi scheme and questioned private businesses donating materials to advance their agenda.

“This is not the city’s mission,” said Torlincasi. “Many of you believe in the free market and the business system, spreading good business ideas. The city does not need to endorse or embrace blockchain, Bitcoin, or any type of currency that is not United States federal currency.”

Related: Texas should use Bitcoin mining to capture wasted natural gas: Sen. Ted Cruz

Texas has become a hub for some crypto mining firms following China cracking down on the practice in 2021. The state is currently home to Blockcap and Riot Blockchain, and has advanced some legislation promoting greater adoption of digital assets.

Bitcoin vs BTC miner stocks: Bitfarms mining chief explains key differences

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Direct BTC purchases and Bitcoin mining stock investments are two “fundamentally different” investment strategies to suit different people and interests, Ben Gagnon says.

Amid Bitcoin (BTC) mining stocks like Hut 8 Mining touching multi-month lows, a major industry executive has outlined key differences between BTC investment and investing in BTC-linked stocks.

Ben Gagnon, chief mining officer (CMO) at the major Bitcoin mining company Bitfarms, believes that direct BTC investment and exposure to BTC mining stocks are two “fundamentally different” investment strategies to suit different people and interests.

“A direct investment in Bitcoin is a simple, long-term investment suitable for the vast majority of people,” Gagnon said in an interview with Cointelegraph.

On the other hand, investing in publicly-traded BTC miners is a “much more sophisticated strategy,” the exec noted. “For sophisticated investors who are looking for liquid exposure to Bitcoin in their traditional stock portfolio, the publicly traded miners are one of the best ways to do that,” Gagnon said.

The CMO went on to say that the primary value of Bitcoin miners stems from the value of BTC they mine and generate as cash flow over time, adding:

“When Bitcoin goes up, the miners should go up more. When Bitcoin goes down, the miners should go down more.”

Gagnon’s remarks come amid some big BTC mining stocks recording a significantly bigger slump to compare with major cryptocurrencies like Bitcoin and Ether (ETH).

Riot Blockchain, one of the world’s largest Bitcoin mining companies, has seen its stock drop 45% year to date, trading slightly above $12 during pre-market trading at the time of writing, according to data from TradingView. Another public crypto miner, Hut 8 Mining, plummeted more than 50% year to date. The Bitfarms’ stock tumbled around 41% over the same period.

In the meantime, the prices of Bitcoin and Ether decreased 15% and 20% respectively since Jan. 1, 2022, according to data from CoinGecko.

The same correlation of the Bitcoin price on BTC mining stocks worked in another direction last year as BTC was on the way to hit all-time highs above $68,000. Amid a massive crypto rally of 2021, Bitcoin mining stocks were massively outperforming the general crypto market. As previously reported by Cointelegraph, BTC mining stocks outstripped BTC by as much as 455% over a one-year period in March last year.

The value of Bitcoin is not the sole trigger affecting the value of Bitcoin mining stocks, according to the Bitfarms’ mining executive. Gagnon pointed out five major aspects to evaluate “any public miner,” including the amount of owned BTC, current mining volumes, the cost of mining, expansion investments and future mining plans.

“While each public Bitcoin miner has its own strategy and differentiators as a business they are all very similar,” Gagnon noted.

According to data from the crypto and blockchain analytics startup Arcane Research, Bitfarms is one of the world’s largest public Bitcoin miners, producing 363 BTC ($14.7 million) in March 2022. Apart from being a major BTC miner, Bitfarms also made its first ever Bitcoin purchase in January, buying 1,000 BTC ($40.4 million).

Five biggest public Bitcoin miners in March 2022. Source: Arcane Research

Related: Bitcoin miner Riot Blockchain files prospectus for $500M stock sale

Among other top BTC producers in March, Core Scientific reportedly generated the biggest amount of BTC, producing 1,143 BTC ($46.2 million). Riot Blockchain and Marathon Digital mined 511 BTC ($20.6 million) and 436 BTC (17.6 million) respectively.