Israel’s Blockchain Mining merges with Canadian miner Bitfarms

Canada, in particular the Quebec area, is quickly becoming a hub for cryptocurrency mining operations. Aside from maple syrup, the area enjoys competitive electricity rates, cold weather to keep equipment cool. It’s for these reasons that Bitfarms set up shop there in 2013 and quickly became one of the leading cryptocurrency mining operations. Now, the company is set to merge with Israel-based Blockchain Mining Ltd (BML) to form one of the world’s largest mining outfits.

Bitfarms, the commercial name chosen by its registered owner, Backbone Hosting Solutions, Inc., has farms that have a combined capacity of around 27.5 megawatts (MW). It also has plans for three additional farms, which would have more than 100MW of capacity. The four existing facilities are capable of mining 200 quadrillion hashes per second (200 Ph/s). In November and December 2017, it was earning over $200,000 per day from mining SegWit-Coin BTC (also referred to as Bitcoin legacy or Core), Bitcoin Cash, Dash, Ethereum and Litecoin.

BML is traded on the Tel Aviv Stock Exchange (TASE) under the name BLCM. The company was formerly known as Natural Resource Holdings and had made substantial income dealing with precious metals. When it said that it would get into the cryptocurrency game with a transition to Bitcoin investing, its stock skyrocketed by 1,300%.

BML first mentioned late last year that it would be merging with Bitfarms, and announced this past Sunday that the merger had been completed. With that news, BML’s stock rose by almost 50% before the day was out. BML now owns 75% of Bitfarms, and is the 10th most-traded company on the TASE.

Bitfarms received $39 million in loans from two investment banks after the news of the pending merger was first announced. The money will be used to expand the company and invest more in its mining operations. Bitfarms’ corporate vice president of strategy, Emiliano Grozky, said of the merger, “The deal confirms our position as a leader in the blockchain technology industry. We are ready to implement our expansion in Canada.” Bitfarms was reportedly started without any outside financial support, attracting more than 200 shareholders to fund the company.

Note: Tokens in the SegWit chain are referred to as SegWit-Coin BTC (inaccurately called Bitcoin Legacy or Core by many) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Is Israel poised to embrace cryptocurrencies?

Israel is certainly not a country that is afraid of technology. It brought flash drives and Waze navigation to everyone and has consistently been in the top ten of world technological hubs. It’s no surprise, then, that Israelis are jumping to embrace cryptocurrency and its underlying technology—blockchain—despite the government pulling back the reins.

With more than $5 billion raised in venture capital in only one year, Israel is considered by many to be the major hub for startups. That has spilled over into cryptocurrencies, with the country’s largest bank, Hapoalim, partnering with Microsoft in 2017 in launching a blockchain-powered platform. The Israeli Tax Authority have also accepted cryptocurrencies, mandating that they be taxed as capital gains on property.

In February, the Israeli Supreme Court resolved a case brought by a gold broker, Bits of Gold, against the Leumi Bank, siding with the broker. The bank had refused to do business with the broker, as well as others in the cryptocurrency industry, citing the insecurity surrounding the digital currency. A district court had ruled in favor of the bank last year before Bits of Gold took the case before the Supreme Court.

Not everyone is getting behind the future, though. The Tel Aviv Stock Exchange has refused to include companies that deal in cryptocurrencies due to the high degree of volatility seen in the markets. As the markets, and acceptance, evolve, this will undoubtedly change for the better.

Israeli citizens have almost an inherent “build a better mousetrap” mentality that propels them to believe that there is always a better way to do things. That mentality has helped the community thrive, and has given rise to some of the most well-established technological advances today.

Israeli authorities have repeatedly said that they is more than open to accepting cryptocurrencies. However, they want to ensure that proper safeguards are put into place that outline how they are perceived from a legal point of view. There is still a long road ahead, but the recent decisions certainly demonstrate a favorable response to the industry. With its forward-thinking mentality, Israel could set the bar for other countries to try to reach.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Israeli crypto broker gets reprieve after high court halts account shutdown

An Israeli cryptocurrency brokerage service involved in a dispute with its bank has been granted a lifeline, following a decision by Israel’s Supreme Court.

Bits of Gold, a brokerage service based in Tel Aviv, had been operating an account with Bank Leumi since the company started operations in 2013. But after the bank flagged their account over concerns about their business model, the broker petitioned for an injunction from the courts to prevent Bank of Leumi from closing their account.

The decision on Tuesday to grant the temporary injunction provided some relief for Bits of Gold, although by no means guarantees their banking position long-term. The judgement noted that banks still have obligations and rights to inspect the bank accounts of their customers, including those operating cryptocurrency businesses.

However, the decision has been welcomed as a cause for celebration by Bits of Gold. The company’s CEO, Youval Rouach, said the decision would allow the company to get back to focusing on its cryptocurrency business.

“The court’s decision enables us to focus on the growth of the Israeli cryptocurrency community. We were the first to request for the creation of rules for digital currency trade and the first to comply with those rules and others…We’ll continue to lead this field in order to give cryptocurrencies their rightful place – as a massive growth engine for the Israeli high tech and fintech industry,” he said.

The issue first arose back in Q3 of 2017, when Israeli banks began stepping up efforts to scrutinise and monitor the activities of businesses in the cryptocurrency sector. This naturally took in brokers like Bits of Gold, and comes at a time of increasing pressure for regulation in Israel, and across the wider world.

Most recently, this has culminated in the decision of the Tax Authority to treat cryptocurrency assets as a form of property, thereby introducing the application of capital gains tax on any profitable disposals.

This comes at a time of increasing clarity over the approach being adopted by lawmakers in Israel, with authorities striving to put together an effect regulatory regime for the emerging cryptocurrency and supporting industries.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Cryptocurrency is property for tax purposes in Israel

The government of Israel has confirmed this week that cryptocurrencies like legacy Bitcoin (BTC) and Bitcoin Cash are to be treated as a form of property, confirming the draft position that was circulated back in January.

The government, which has been seeking to shore up its approach to cryptocurrencies, has confirmed that the Tax Authority will consider cryptocurrenciesas “a property, not a currency,” which has significant implications for its taxation treatment.

As a form of property, cryptocurrencies will be liable for capital gains tax, payable between 20 and 25 percent at banded rates. Commercial cryptocurrency mining operations will also be subject to an additional 17 percent VAT rate, in addition to their liability under capital gains.

Importantly, this means that cryptocurrency transactions will be exempt from VAT, following a similar line of thinking amongst other regulators, including the European Court of Justice, which indicated in October 2015 that cryptocurrency transactions fall outside of the scope of applicable VAT.

The confirmation marks the conclusion of a process of investigation by the Israeli government, which began as early as 2013. As one of the most developed markets in respect of its cryptocurrency sector, the move could now influence how other regulators approach the same question in their own jurisdictions.

The announcement this week comes as no surprise to analysts and industry stakeholders, with the verdict following suit with the draft guidance issued earlier in the year. However, at present, officials at the Israeli Tax Authority continue to work on new proposals for cryptocurrency regulation, which could still have further significant impact on the sector.

In particular, they are also thought to be investigating ICOs, and examining methods for taxation of this emergent form of fundraising. A similar draft paper also released in January of this year discussed a number of possible approaches, such as setting a minimum revenue level for triggering a tax liability.

While there are no further indications on when the ICO proposals will be finalised, expectation is that the authorities could be looking to confirm their position sooner rather than later.

For the time being, investors and cryptocurrency businesses in Israel can only wait for further developments in the legal position.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Israel financial regulator wants to ban Bitcoin from Stock Exchange

Israel’s financial regulator has announced proposals seeking to effectively ban companies dealing in Bitcoin from listing on the Tel Aviv Stock Exchange.

Shmuel Hauser of the Israel Securities Authority made the announcement at a conference early this week, suggesting the proposals would be formally brought forward to the regulator’s board next week.

While the provisions are still subject to approval, involving a public hearing and subsequent amendment of stock exchange regulations, they indicate a clear direction for the regulator in tightening the laws around companies engaging in cryptocurrency business.

There are at least two companies listed on the Tel Aviv Stock Exchange that would be directly affected by these provisions, namely Fantasy Network and Blockchain Mining, with the potential for others to be caught by the proposals.

Addressing the need to find fresh regulation for these companies, Hauser was unequivocal in his stance.

“If we have a company that their main business is digital currencies we would not allow it. If already listed, its trading will be suspended,” he said.

Blockchain Mining changed its name and business focus as recently as last Sunday. Formerly known as Natural Resources, the firm has now pledged to shift its focus from mining for iron and gold to mining for specific cryptocurrencies, in a move that seen its share price soar some 5000%. However, on the news from the regulator, its shares were down 4.2%.

Fantasy Network, formerly specializing in gaming, announced its own further exploration into the blockchain space, causing its own share price to grow by 400%. Similarly, it lost 50% of its value over the last few weeks, with the regulator’s plans no doubt weighing adversely on the price.

Still, Hauser remains undeterred, and confident that the ISA approach is the right one, in terms of protecting investors and offering certainty to companies.

“We feel that the prices of Bitcoin behave like bubbles and we don’t want investors to be subject to that volatility and uncertainty…There is an importance to signal to the market where things are…Investors should know where we stand,” Hauser said.

The proposals are regarded as the last significant move from Hauser, as he prepares to stand down from the ISA next month.

It remains to be seen whether the new regulations will gain the necessary approval to be written into Israeli law.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Israel financial regulator wants to ban Bitcoin from Stock Exchange

Israel’s financial regulator has announced proposals seeking to effectively ban companies dealing in Bitcoin from listing on the Tel Aviv Stock Exchange.

Shmuel Hauser of the Israel Securities Authority made the announcement at a conference early this week, suggesting the proposals would be formally brought forward to the regulator’s board next week.

While the provisions are still subject to approval, involving a public hearing and subsequent amendment of stock exchange regulations, they indicate a clear direction for the regulator in tightening the laws around companies engaging in cryptocurrency business.

There are at least two companies listed on the Tel Aviv Stock Exchange that would be directly affected by these provisions, namely Fantasy Network and Blockchain Mining, with the potential for others to be caught by the proposals.

Addressing the need to find fresh regulation for these companies, Hauser was unequivocal in his stance.

“If we have a company that their main business is digital currencies we would not allow it. If already listed, its trading will be suspended,” he said.

Blockchain Mining changed its name and business focus as recently as last Sunday. Formerly known as Natural Resources, the firm has now pledged to shift its focus from mining for iron and gold to mining for specific cryptocurrencies, in a move that seen its share price soar some 5000%. However, on the news from the regulator, its shares were down 4.2%.

Fantasy Network, formerly specializing in gaming, announced its own further exploration into the blockchain space, causing its own share price to grow by 400%. Similarly, it lost 50% of its value over the last few weeks, with the regulator’s plans no doubt weighing adversely on the price.

Still, Hauser remains undeterred, and confident that the ISA approach is the right one, in terms of protecting investors and offering certainty to companies.

“We feel that the prices of Bitcoin behave like bubbles and we don’t want investors to be subject to that volatility and uncertainty…There is an importance to signal to the market where things are…Investors should know where we stand,” Hauser said.

The proposals are regarded as the last significant move from Hauser, as he prepares to stand down from the ISA next month.

It remains to be seen whether the new regulations will gain the necessary approval to be written into Israeli law.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.