Crypto Mining Service Coinhive to Shut down over Market Downturn, XMR Updates

Coinhive, an in-browser cryptocurrency mining service that helped fueled a cryptojacking trend, has recently announced it’s shutting down over various updates to Monero (XMR), the cryptocurrency it allowed users to mine, and crypto market’s slump.

According to a blog post, a hashrate drop on the privacy-centric cryptocurrency’s network, along with its price drop, were behind the decision.

The drop in hash rate (over 50%) after the last Monero hard fork hit us hard. So did the ‘crash’ of the currency market with the value of XMR depreciating over 85% within a year.

The company added that this, along with an announced hard fork and algorithm update for the cryptocurrency on March 9, led it to the decision. As such, it’ll effectively shut down on March 8, and users will be able to withdraw their funds from the platform until April 30.

Coinhive was launched back in September of 2017, and at the time promoted itself as an alternative to ads on websites, as it allows website operators to earn from users’ CPUs, by mining cryptocurrency with them.

Essentially, through a JavaScript file, website administrators were able to control how much of their visitors’ CPU resources they used to mine. The system was even experimented on The Pirate Bay, but never took off as an alternative to ads.

It was, in fact, criticized online was cybercriminals started using its JavaScript code to hijack websites and rake in the privacy-centric cryptocurrency, leading to a cryptojacking trend. It got so big that government websites, thousands of routers, and YouTube ads were used to mine crypto with users’ computers.

As a result, a McAfee report in late 2018 revealed the cryptocurrency mining malware trend had grown at least 4,000%. Soon, browsers like Opera and FireFox started blocking cryptocurrency mining scripts altogether.

Cryptojacking Success

Coinhive’s initial success saw a number of other firms open with the same goal: offer website operators code that would allow them to monetize their pages. While various competitors surface, as ZDNet points out security researcher Troy Mursch revealed in August of 2018 Coinhive had a market share of 62%.

Some estimates claim at its peak, Coinhive was making $250,000 a month. As XMR’s price started dropping, so did interest in using its code, which saw profits dwindle. ZDNet reports fewer cryptojacking campaigns have been taking place, and only one of its competitors has been gaining traction.

Bitcoin Price Surges Above $9,300 for First Time Since June 25

On Monday (July 6), the Bitcoin price managed to surge past the $9,300 level for the first since June 25, a move that was likely powered by the current bullish in the stock markets of China and the United States.

Today's strong rally in the world's major stock markets started was led by China, where the Chinese government is apparently encouraging investors to buy stocks.

According to a report by CNBC, "a front page editorial in state-owned China Securities Journal" (publishe-d earlier today) talked about the “wealth effect of the capital markets” and suggested that a “healthy bull market" was important for the economy at this time.

Peter Boockvar, chief investment strategist at Bleakley Advisory Group, says:

"We have the Fed to juice bull markets, China has its state media."

The CSI 300, which is "a capitalization-weighted stock market index designed to replicate the performance of the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange", closed over 250 points higher at 4,670.09, up 5.67%. 

CSI 300 Chart by Google Finance on 6 July 2020.png

As you can see in the above chart from Google Finance, in the past five trading session, the CSI 300 index has gained over 13%, the most in a five-day period since December 2014, and helping the CSI 300 to reach a level last seen in June 2015.

CNBC says that although "China’s economy faces many hurdles, including trade issues with the U.S. and the growing friction as the economies move to decouple",  in the near term, "the prospect of an improving China spilled over to other markets, boosting sentiment for global trade."

Europe's major stock markets followed China's and all closed higher.

As for the U.S. stock market, premarket trading data indicated that the market would be having a good day, and it has not been wrong so far.

Currently (as of 18:37 UTC on July 6), the Dow Jones Industrial Average (DJIA), the S&P 500, and the Nasdaq are at 26196.15 (up 368.79 or 1.43%), 3172.03 (up 42.02 or 1.34%), and 10404.81 (up 197.18 or .93%) respectively. The leading sector was (as usual) technology, with Amazon and Netflix setting new all-time highs, helping the tech-heavy Nasdaq to power itself to a new all-time high.

This is what President Trump tweeted around 10 minutes after the U.S. stock market opened:

Today's stock market rally in the U.S. means that the S&P 500 and the Nasdaq are both on a five-day winning streak. 

So, what's fuelling investors' perhaps surprising amount of bullishness on stocks in the midst of the COVID-19 pandemic? This might be especially mystifying in the case of the U.S., where we are seeing around 50,000 new daily cases of COVID-19 (even though, thankfully, the number of death are going down).

It seems that investors and traders believe that:

  • As lockdown measures are eased, the outlook for businesses should keep improving.
  • There are encouraging signs from the pharmaceutical industry that we will soon have good therapeutics in the next few months and reliable vaccines by next year.
  • Governments around the world will continue to support the financial markets with monetary and fiscal stimulus.

Andrew Brenner of National Alliance told CNBC:

"I’m starting to believe the Covid case are an inverse indicator. The worse it gets, the more the market does better because it means more Fed and fiscal stimulus will come towards the markets."

The optimism that is fuelling the stock market rally appears to be also helping Bitcoin since today Bitcoin shake off the lethary of the long Independence Day weekend -- which saw Bitcoin dropping below $9,000 at 21:15 UTC on Sunday (July 5) and bounce back above $9,300 for the first time in 11 days:

2 Week BTC-USD chart on 6 July 2020.png

Featured Image by "WorldSpectrum" via Pixabay.comSave