Recently, due to the continuous rise of Kaspa token KAS, the PoW concept has become another hot topic after the Bitcoin ecosystem concept, and the "mining coin sector" has become a recurring word in many community discussions. But in addition to the boost from Bitcoin-related concepts and market conditions, the sudden rise of the PoW concept does not seem to be accidental. Behind the "KAS myth", there seems to be a hidden "mythical mining coin production line" that is unknown to the mainstream market.
KAS flywheel
On November 7, 2021, the Kaspa mainnet built on the GhostDAG protocol was officially launched. It uses the BlockDAG architecture to solve the scalability issues associated with traditional blockchain operations. The KAS mining algorithm is kHeavyHash, which supports GPU single mining or dual mining with ETHW and ETC, and supports mining with some FPGA and ASIC mining machines. According to F2Pool data, the current network computing power of KAS is 60.97PH/s, and the 24-hour output revenue reaches 1.5267 million US dollars.
Kaspa's economic model is similar to Bitcoin's issuance mechanism. There is no pre-mining or pre-sale, and all tokens can only be obtained through mining. The total supply of its token KAS is 28.7 billion, which is expected to be mined within 186 months, and the circulation will be basically released in April 2037.
On November 16 this year, Binance suddenly announced that it would launch KAS 1-50 times U-based perpetual contract at 10:00 on November 17. According to Coingecko data, as of the time of writing, the PoW public chain Kaspa token KAS exceeded $0.13 and is currently quoted at $0.134, with a 24-hour increase of 18.3% and a price increase of 37.40% in the past 7 days.
KAS price trend; Source: CoinGecko
The rise in KAS's coin price can be traced back to its launch on TxBit at the end of May 2022. At that time, the lowest price of KAS was US$0.0002. In September of the same year, KAS was listed on MEXC, and the price quickly soared to US$0.008.
By April 2023, the price of KAS hit a record high of $0.039, an increase of more than 1850% in less than a year. That month, the trading volume of KAS continued to increase, fluctuating between $15 million and $40 million per day, and even exceeded $500 million at one point. During this period, the trading platforms with the largest KAS trading volume were: MEXCGlobal, TxBit, Gate.io, and Coinexcom.
In May, Iceberg and Bitmain successively launched dedicated ASIC mining machines, and mining machine manufacturers rushed to Kaspa.
On May 17, Bitmain released the first KS3 model Kaspa mining machine. According to F2Pool data, the computing power of the KS3 mining machine is as high as 8.3TH/s, the power consumption is 3188W, and the unit power consumption is 384W/T. Calculated at the KAS price at the time, the theoretical daily income of a single mining machine can reach US$2,600. However, people familiar with the mining industry revealed to BlockBeats that due to factors such as mining machine manufacturing and technical wear and tear, its actual income may not reach this standard.
At present, the mainstream mining machines for KAS mining are the Wind Chaser, Ant and Glacier series. The average power consumption of the mining machines is above 3000W, and the theoretical daily net income can reach US$200 to US$300.
However, by August of the same year, the price of KAS had fallen by about 50% from its peak, and the sales effect of the new mining machines after entering the market was not obvious. People familiar with the matter told BlockBeats that this may mean that there are not many high-performance mining machines circulating in the market, and miners have not yet sold their tokens.
Kaspa mining machine model; Image source: F2Pool
But BlockBeats found that the Kaspas community has always had a strong consensus and "cohesion".
On August 14, TxBit announced that it would shut down trading on the platform on September 14. Kaspa community users joked that "KAS allowed the founder of TxBit to directly achieve his retirement goal." The community will also launch an airdrop campaign in conjunction with CoinPal and IceRiver. On November 9, Kaspas community members discovered that the market value ranking information of the KAS token was displayed incorrectly on CoinMarketCap, and strongly requested the official to make changes. The next day, CMC corrected the KAS token information, and the KAS ranking jumped from 207th to 34th.
As the price of KAS continues to rise, the income of Kaspa miners is also gradually climbing. According to TrustPool data, Kaspa's daily miner rewards exceeded 1.6 million US dollars in November, making it the second-ranked mining coin.
Ranking of computing power of the entire network; Image source: X Community
Driven by the recent positive crypto market conditions, the FOMO sentiment of "KAS price is really strong" began to spread in the secondary market. Some community users found that mainstream exchanges also seemed to be "ready to move" on KAS.
On November 3, the OKX Web3 wallet was connected to the Kaspa Network. On the 16th, Binance announced that it would launch the KAS perpetual contract. The price of KAS rose by nearly 20% in a short period of time, starting the ecological flywheel.
Mining coins enter the gold rush, SafeTrade emerges
Driven by the rise in KAS price, the "mining coin sector" also reached a high point of sentiment. Among them, mining coins such as Spacemesh (SMH), ZephyrProtocol (ZEPH), and Qubic (QUBIC) received high attention. BlockBeats found that the name SafeTrade frequently appeared in many communication communities.
In August this year, Spacemesh (SMH) was listed on SafeTrade, and its price rose from $0.42 to a maximum of $2.285, an increase of 442%. In the same month, SafeTrade announced the listing of Qubic (QUBIC), and its token price rose to a maximum of $0.0000039, an increase of 1566% since its listing.
SafeTrade is a centralized cryptocurrency trading platform founded in 2018. Although it has been established for 5 years, it still ranks 225th among trading platforms according to BitDegreeExchangeTracker. According to Coingecko data, as of the time of writing, SafeTrade's 24-hour trading volume is less than 3 million US dollars. However, it is such a "third-tier trading platform" with serious lack of liquidity that has become the preferred liquidity exit place for miners.
According to the SafeTrade official website, the platform currently has 53 currencies and 102 trading pairs, and most of them are PoW mining coins, including SMH, QUBIC and other popular PoW currencies.
SafeTrade currency interface; Image source: SafeTrade
"TxBit brought us KAS and then went offline. Now SafeTrade brings us QUBIC and SMH," ThriftySoFi consultant deXer (@DexerXP) tweeted on X (original Twitter), saying that "QUBIC and SMH have not yet appeared on the lists of Coingecko and Coinmarketcap. Everything is still too early."
BlockBeats noticed that although most PoW currencies on SafeTrade have experienced "price flywheels", there are many doubts about the platform in the community. Among them, "the trading platform is too small and looks strange" is the main concern of users. One user said in the community, "I want to buy QUBIC, but I don't trust SafeTrade at all," and said that he would rather conduct over-the-counter transactions than deposit money into the exchange.
On November 12, due to the excessive number of people buying QUBIC, the server was temporarily unable to handle it, and SafeTrade closed the trading channel. The next day, when Qubic officially released a post introducing how to buy QUBIC, a large number of users said in the comment area that the funds they transferred to the platform could not be received. On the same day, the price of QUBIC fell from its highest point to $0.0000023, a drop of 69%. After SafeTrade restored the entry and exit channels, the token price rose again.
PoW Exchange: The Mythical Mining Coin Assembly Line
BlockBeats found through investigation that "PoW Exchange" seems to be a platform with fixed business routines and community groups, but it rarely receives attention from the mainstream crypto market.
In addition to SafeTrade mentioned above, BlockBeats also found a number of small "PoW exchanges" such as TxBit, Exbitron, XeggeX, TradeOgre, etc. These exchanges have very similar trading interfaces, most of which directly use TradingView's candlestick charts and do not have their own trading indicator system. In addition to the common mainstream currencies, these exchanges focus on ultra-small market value PoW mining coins and often stage "price myths."
The above picture shows the trading currency interface of XeggeX, and the picture below shows the trading currency interface of TradeOgre
Among them, TxBit, which first launched KAS, announced in August that it would be permanently shut down a month later. According to official news, the platform said that the closure was due to the rising compliance costs and the uncertainty of cryptocurrency legal supervision.
In addition to the shut down TxBit, Exbitron also faded out of the market this year. Launched in May 2021, Exbitron is a centralized trading platform headquartered in Germany that also focuses on new coin trading. In early February this year, Exbitron was hacked and $390,000 worth of TRX was stolen. Since then, its official Twitter account has rarely been updated, and there has been no price change on the website trading pairs.
Exbitron currency interface; Source: Exbitron
BlockBeats found that "PoW exchanges" such as SafeTrade are actually seen by many users as "baton passers" for early price discovery.
Crypto trader Kaduna (@CryptoKaduna) once wrote on X, "People say that diamond projects are all on MEXC and Kucoin. I would like to say that we should go a step further and look at Txbit, Tradeogre, Xeggex, etc., although whether these transactions are safe is another matter." Community members who have become users of "PoW exchanges" often call for these small currencies to be "listed on MEXC and Gate."
Listing on second-tier exchanges such as MEXC seems to have become the "main consensus" and "fixed expectation" of the community to buy mining coins. In October this year, FACTORN (FACT), which has been listed on XeggeX, officially released a community donation plan to crowdfund the cost of listing on MEXC. The fundraising target is $60,000 worth of FACT tokens and $45,000 in USDT.
Listing on a second-tier exchange can bring more liquidity to the token, which can not only provide an exit window for early entrants, but also help boost the token's price again. This path has been particularly evident since the "mining coin sector" entered a high point in November this year.
OctaSpace (OCTA), which was listed on MEXC from SafeTrade in August this year, broke through $0.69 on November 17, up more than 36.8% since its listing, and MEXC contributed 82.09% of the trading volume during this period. ZephyrProtocol (ZEPH), which was listed on MEXC from XeggeX in September this year, broke through $15 on November 1, up more than 300% since its listing, and MEXC contributed 96.65% of the trading volume during this period.
In a public account article titled "The Fall of the "Binance Effect" and the Rise of the "Matcha Effect"" published by BlockBoundary in 2019, it was mentioned that MEXC played the role of "mining coin headhunter" in the early days:
“Some projects see MEXC as a positive, and their goals are surprisingly consistent. The first step is to test the waters on a small trading platform, and when the time is right, the second step is to start planning on MECX, and finally consider going to Huobi or Binance.
Not only the platform coins, but also many other projects on Matcha have achieved their highest prices on the Matcha platform, so much so that the project owners later regarded listing on Matcha as a positive. The old editor talked with several project owners, and their goals were surprisingly consistent. The first step is to test the waters on a small trading platform, and when the time is right, the second step is to start planning to list on Matcha, and finally consider going to Huobi or Binance for the final sprint. "
Image source: Block boundaries
Insiders told BlockBeats that behind the rise of the "mining coin sector", there is actually a mature and complete chain of interests. BlockBeats summarizes it as follows:
1. The project party approves the project and starts promoting it;
2. Some mining machine manufacturers (many of which are project owners themselves) sell mining machines and recover early funds;
3. Use part of the recovered funds to receive the tokens thrown into the market by miners. Since the profit from selling mining machines is much greater than the profit from mining, the price can be raised;
4. After observing the price fluctuations, the second-tier exchanges will consider listing the tokens on their own platforms. After the listing is completed, the project party can sell part of the tokens to retail investors on the platform;
5. Some large-scale mining projects will also regularly produce new mining machines according to the difficulty of mining, and use the new round of income and other cooperative capital to push up the token price again, attracting the attention of first-tier exchanges such as Binance, in order to achieve the goal of landing on mainstream platforms and obtaining more liquidity.
Compared with public chain ecosystems such as Ethereum and EVM or crypto tracks such as DeFi and NFT, PoW mining and the mining coin market have always been one of the least-noticed areas in the crypto field, and its industrial chain and business model are not known to most people. It is this certain degree of "hiddenness" and "high-risk" threshold that has created space for some upstream and downstream participants in the mining field to achieve continuous arbitrage.
At present, the Bitcoin ecosystem continues to be hot, and mining coins as a related concept are gradually attracting the attention of the mainstream crypto market. The listing of KAS contracts on Binance marks the first time that this "hidden production line" has opened up the "value discovery path" from the third-tier "PoW exchanges" to the mainstream trading platforms. Will the mining coin community seize the opportunity to introduce continuous liquidity increments to the market?
At the same time, BlockBeats reminds readers that according to community feedback, many small trading platforms mentioned in the article have risks such as small token circulation market value and unstable capital deposit and withdrawal entrances, and users need to invest with caution.
