Welcome to The Protocol, your weekly cryptocurrency tech development update from CoinDesk. I'm Margaux Nijkerk, a CoinDesk reporter. This issue covers key stories in the crypto space, including the evolving bitcoin mining landscape and the rise of liquid staking. Bitcoin mining executives recently discussed the industry's shift at the SALT conference in Jackson Hole, highlighting the need for diversification due to rising power costs and the impact of artificial intelligence on infrastructure.
Matt Schultz, CEO of Cleanspark, noted that the traditional four-year halving cycle no longer defines the business, with the adoption of bitcoin as a strategic asset driving demand. Schultz emphasized the importance of monetizing megawatts, as the cost of electricity significantly affects mining profitability. For instance, with electricity costing five cents per kilowatt hour, mining a single bitcoin can cost around $60,000, leaving slim margins when bitcoin's price is at $115,000.
This has led companies like Cleanspark to explore opportunities beyond proof-of-work, leveraging their energy infrastructure to diversify their revenue streams. Another significant development is the emergence of liquid staking tokens, which allow users to stake their cryptocurrency and receive a liquid, tradable token that can be used across DeFi platforms while the original tokens continue to earn staking rewards. Projects like Lombard Finance are making waves in this space, enabling bitcoin to be used productively within on-chain capital markets. Additionally, Optimism has partnered with Flashbots to enhance transaction processing across its OP Stack ecosystem, aiming to make Ethereum's layer-2 networks faster and more customizable.
This partnership will bring near-instant confirmations and user-friendly transaction ordering to chains within the Superchain, underpinning over 60% of Ethereum's layer-2 activity. Lastly, Hemi Labs has secured $15 million in funding to accelerate the development of its Bitcoin programmability network and expand its ecosystem, focusing on applications for borrowing, lending, and trading on Bitcoin. These developments underscore the dynamic nature of the cryptocurrency and blockchain space, with ongoing innovations and partnerships shaping the future of crypto.