[Above]   Cryptoglobal employees Jacob Shultis (left) and Peter Yuen stand inside the company’s building. Shultis says it took 30 people to set up the enterprise. (Adam Carter/CBC)

Mining company Cryptoglobal started building 5K computer facility in December

By Adam Carter, CBC News

In the heart of Hamilton’s east end, a new kind of mining operation is running full tilt.

They’re not searching for gold, silver or any kind of precious metals. They’re mining cryptocurrency — an enigmatic digital currency that is prone to massive swings on the world’s financial markets.

Cryptocurrencies like bitcoin and litecoin have drawn interest and ire the world over, and now, a company called CryptoGlobal is betting big on them.

“The markets will be volatile no doubt, but we are big believers that there is a space for crypto in the financial markets of the future,” said Rob Segal, Cryptoglobal CEO.

From the outside, the company’s building looks unassuming. But as soon as you step inside, a wall of heat slams into you. Then comes the noise — the sound of hundreds of fans, trying to control the extreme temperature being thrown off by rows and rows of powerful computers sitting on utilitarian warehouse shelving, all working overtime.

Segal says there are 5,000 machines running at their facility, which began setting up back in December. By April, they expect to have 10,000 machines fully operational. Right now, they’re sitting in a building the size of a typical retail big box store, whirring away.

Why is the “mining” operation here?

“Hamilton is a fantastic place. It has one of the best utility companies in the world. It’s 40-odd minutes from Toronto, which is fantastic, and it allowed us to really get set up, to go for it. We think Hamilton provides us the opportunity to really grow.”

How does it work?

How coins are created, how transactions are authenticated and how the whole system manages to power forward with no central bank, no financial regulator and a user base of wily computer users all comes down to computing power and technical wizardry.

“It’s not like digging for gold or something,” Segal said. “What it is, is running very powerful computers that solve complex algorithms and by doing that, allows people to use the block chain to transact.”

The tally, or “block chain” is one of the most important ways in which these currency systems prevent fraud. Miners are then in turn rewarded for supporting the system.

Bitcoin is generated by thousands of these so-called miners. These are people who, working individually or in groups called “mining pools,” (like this one) use powerful computer components to run software that solves a series of mathematical puzzles. Each time the miner solves the puzzle, they receive bitcoins or other currency, which they can trade for physical currency or otherwise put into circulation.

So why should they get money for doing this? The argument is that these users essentially become a decentralized version of the Bank of Canada. They invest their own time and resources — like electricity and computing power — and in turn, the bitcoin network is supplied with the processing power needed to maintain a transparent, running tally of all transactions. A similar process applies to all alternative digital currency.

But it’s not a terribly stable market. Cryptocurrency values plunged last week, with bitcoin at one point sliding below $8,000 US, which marked its biggest weekly loss since Dec. 2013.

The company says each computer that’s used for mining is rugged and powerful. (Adam Carter/CBC)

Facing a slump

This slump brought the total market value of cryptocurrencies down to around $400 billion US, half the high it reached in January, according to industry tracker Coinmarketcap.com. The market value of cryptocurrencies is calculated by multiplying the number of digital coins in existence by their price, although many question whether that is the right way to value them.

Retail investors have poured money into digital coins, enticed by the huge run-up in prices. Regulators say cryptocurrencies are highly speculative and dangerous investments.

Last week, India vowed to eradicate the use of crypto-assets, joining China and South Korea in promising to ban parts of the nascent market where prices have boomed in recent years.

Cryptoglobal currently has 5,000 machines running, with plans to scale up to 10,000 by the spring. (Adam Carter/CBC)

Facebook said last week it would ban cryptocurrency advertisements because many were associated with misleading or deceptive promotional practices. U.S. regulators also sent a subpoena to two of the world’s biggest cryptocurrency players, Bitfinex and Tether.

A massive $530 million hack of a Japanese cryptocurrency exchange late last month renewed worries about the security of the industry.

Critics of virtual currencies have called the run-up in prices a speculative bubble, but supporters of cryptocurrencies say short-term price volatility is to be expected, and the blockchain technology underpinning these assets maintains its power and value.

Segal says that all this volatility is just a “new kind of financial paradigm getting its legs underneath it.”

“I think it will find some stability in the coming months or year,” he said. In the meantime, Cryptoglobal plans to keep scaling up in Hamilton.

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[Left]  Bankcoin is a cryptocurrency that at present is only held by its owners. It is in the process of being offered in exchanges in Mexico, Hong Kong, China and Dubai.

Owners hold few press conferences and only gave formal interviews at its recent Latin American Blockchain Summit in San Jose Los Cabos, Mexico.

While Doug Arend and Jeffrey Henderson of GreenbergTraurig’s Chicago, Illinois office are Bankcoin’s attorneys of record, during the summit in Mexico, it was Greenberg Traurig’s Mexico City attorney Carlos Garduño who presented a well received talk on cryptocurrencies’ acceptance in the business world and how its use is growing in all aspects of industry, commerce and manufacturing.

Bankcoin is priced according to the highest price reached by a troy oz of gold in any given quarter. At present, the highest price reached was $1,375.00 usd per coin. Bankcoin goes up when the price of gold goes up but never comes down due to its constantly mining 10% compound interest per year.

Unlike Bitcoin whose most interesting and exciting feature is its volatility, Bankcoin does not move from its determined price making it a viable solution for businesses that find themselves uncomfortable with Bitcoin’s ups and downs.

Bankcoin is also the only cryptocurrency (along with its associated AAABlockchain) holding eight (8) GRANTED patents. View here:  http://bankcoins.info 


Addressing Distributed Ledger Technology Implementations and Cryptocurrency Offerings

Blockchain technology, or distributed ledger technology, has the potential to revolutionize data analytics, business processes, securities transactions, and even basic contracting. Some industry experts expect the degree of change in automation and analytics due to blockchain and smart contracts to parallel the emergence of the internet. Blockchain’s implementation and commercial acceptance, however, rely upon a variety of factors, including the adaptation of blockchain applications to legal and regulatory requirements as diverse as securities laws, data privacy and security, financial services regulation, and FinCen (anti-money laundering and know your customer) obligations.

Function of the Blockchain Task Force

In order to leverage our diverse experience and for the purpose of centralizing our approach to blockchain matters, in 2017, Greenberg Traurig formed a global Blockchain Task Force, comprised of more than 40 attorneys across multiple legal disciplines in key financial hubs around the world. The Task Force advises clients on matters ranging from token generation events, initial coin offerings and cryptocurrency exchanges, to the development and licensing of blockchain-as-a-service.

Our multidisciplinary approach enables the Task Force to readily anticipate, recognize, and address challenges that our clients may face with respect to blockchain development or utilization. Our dedicated response team consists of experienced attorneys with diverse backgrounds in securities and broker-dealer regulations, entity and fund formation and financing, exchange formation, financial services regulation, technology and intellectual property licensing, and taxation. We also utilize resources from our robust government, law and policy practice, which regularly advises governments and municipalities on evolving or model regulatory standards and other pertinent matters relating to blockchain.

Advising on Blockchain and Smart Contract Technology Implementations As blockchain applications and smart contracts introduce automat ion to entirely new functions, our attorneys advise clients on appropriate standards and protocols for the deployment of blockchain applications and smart contract coding to ensure that clients can meet the demands of regulators, law enforcement and any trier of fact or law. As blockchain technology continues to grow and evolve, so do uncertainties about obligations surrounding the potential scope of and protocols for (i) regulator

and auditor access to blockchain and smart contracts data, (ii) the reporting, authentication and certification of controls, and (iii) retention, production and authentication of records relating to disputes. We are actively engaged in assessing and considering emerging data privacy and security obligations relating to client data and end user data on the blockchain, and in assisting client legal and regulatory preparations and negotiations relating to these matters.

Cryptocurrency Offerings As cryptocurrencies have risen substantially in value and demonstrated tremendous volatility, and interest in initial coin offerings (ICOs) as a fundraising vehicle for our clients has grown, our team carefully evaluates each opportunity in terms of the business and financing requirements of the client, as well as the emergent risks and costs associated with securities compliance obligations, market volatility, and other factors.

The cryptocurrency market is in constant evolution; our team is committed to assisting clients with maximizing their opportunities in any environment. Our team stays abreast of existing laws, recent enforcement actions and decisions, rulings, and orders, and keeps track of legal trends, upcoming bills, and technical developments, helping clients to anticipate and prepare for potential compliance requirements and legal and regulatory changes. With a global team of attorneys skilled in compliance, securities laws, guidance and enforcement, financing, data privacy, cybersecurity technology, intellectual property protection, regulatory and government law, licensing and commercialization, we develop innovative legal and financing strategies.

Greenberg Traurig Blockchain Task Force

The breadth and depth of Greenberg Traurig’s experience with distributed ledger technology, our familiarity with the components and building blocks of blockchain technology, and our leadership role in crafting legal and regulatory strategies for various blockchain applications, uniquely positions Greenberg Traurig to advise on blockchain and smart contracts matters.

With the resources of approximately 2,000 attorneys in 38 offices throughout the United States and around the globe – in key financial, technology, and regulatory hubs, such as Silicon Valley, New York, Texas, London, Berlin, Shanghai, Mexico City, Israel and Washington D.C. – at our fingertips, our Blockchain Task Force is uniquely qualified to assist clients in multiple jurisdictions.

Disclosure:  1) Writing in red was added by someone that loves all kinds of cryptocurrency (especially Bankcoin due to its qualities). 2)  Some of my US based attorneys accept legal fees in Bankcoin (not cash).

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