Recording 101 Million Cryptocurrency Users Worldwide Is Cambridge University's Third Crypto Study

Studies Conducted By The University Of Cambridge

Publishing the third Global Cryptocurrency Benchmarking Study is the University of Cambridge and the school’s Centre for Alternative Finance. Examining the current growth of the crypto industry, mining, off-chain activity, crypto-asset user profiling, regulation, and security is the 71-page in-depth study. 

Concentrating on four market segments which include mining, payments, custody, and exchange is the September 2020 third edition of the Global Cryptoasset Benchmarking Study. Taking part in the University of Cambridge study including wallet providers, exchanges, miners, cloud mining providers, crypto custodians, and more are a great number of participants from the cryptocurrency industry. To get a number of report’s metrics, the 71-page UC report says it leveraged two surveys from March and May 2020. 

Employment Figures And Growth Of The Crypto Industry

Noting that even though the industry provides an opportunity, there has been a decline since 2017 as the UC report first delves into the crypto-asset ecosystem’s employment figures. The UC authors detail that respondents across all the market segments were reported year-on-year growth of 21% in 2019 down from 57% in 2018. 

As its aggregated employment level saw a 37point decline, furthermore, the mining sector was hit the hardest. According to data, the Asia-Pacific respondents recorded the highest share of high-growth enterprises in 2019. 

Representing 49% of the share of respondents, the high growth is primarily younger firms that are 3-4 years old. Detailing they saw an increase in profits in 2019 compared to years prior are a few service providers polled.

The UC benchmarking study notes that whereas the median firm reported a 75-percentage point downward change in employment growth, industry-wide, the growth in FTE employment declined by 36% points between 2017 and 2019. 

Hashers And Global Mining Operations

The report highlights that mining is steadily reaching an industrial scale as the UC study then discusses the cryptocurrency mining ecosystem. In order to choose which coin the operation should mine is entirely based on profit scaling as the findings detail the criteria miners or hashers leverage. 

Bitcoin is the most popular coin with 89% of respondents mining the crypto asset as the benchmark report notes. It was then followed by Ethereum (ETH-35%) and bitcoin cash (BCH-30%) respectively. Depending on the region and demographic, certain regions have different miner popularity ratings 

The authors detail that whereas bitcoin cash is more popular in APAC and North America, for instance, Ethereum mining appears to be particularly popular among Latin American hashers. Differing from the global average is the mining of privacy coins in Western regions which comes to be: 28% and 19% of European and North American hashers that report mining zcash, as many North American hashers, also engaged in monero mining. 

The utility cost for the average miner is roughly 79% of the aggregate operational expenditures as the UC findings show. The study’s authors note that there are differences that arise at the regional level. 

The report further states, US hashers have to pay 28% tariffs on ASICs shipped to the USA for instance since the introduction of new tariffs on Chinese imports. 

Paying roughly the same amount for electricity, while discussing electricity costs, one takeaway from the study suggesting is the median Asian and North American miner. 

In general, as the mining section too examines Proof-of-work’s (PoW) energy consumption, here the subsidies or tax exemptions are stemming from governments. Only 28% of the surveyed hashers report receiving support from governments as government benefits have entered the fray. 

Much lower than prior reports concerning renewable energy and bitcoin mining is additionally the renewable energy estimate. The UC study highlights that 39% of miners’ total energy consumption comes from renewables. Leveraging a mix of traditional fuels like coal and renewables like hydropower is however 79% of the survey respondents. 

Further detailing the UC study says with 62% of surveyed hashers indicating that their mining operations are powered by hydroelectric energy, hydropower is listed as the number one source of energy.

Ranking further down behind coal and natural gas which respectively account for 38% and 36% of respondents power sources are other types of clean energies like wind and solar. 

Bitcoin is still the most popular cryptocurrency by representation on custodial services, payment processors, exchanges, and wallet providers as far as the growing crypto asset landscape is concerned. The UC authors mention that over time from 98% of service providers in 2017 to 90% in 2020, support has declined slightly. 

While LTC, BCH, and XRP are available on at least 50% of 2020’s crypto service providers, Ethereum is the second most commonly leveraged coin and the crypto asset is widely supported. 

Zcash and monero are still becoming increasingly more available and are supported at 24% and 17% of service providers respectively despite the negative news and delisting. Identity verified crypto-asset users have increased significantly since the second UC benchmark report. 

Moving on the UC crypto study states:

At about 35 million globally, the 2nd Global Benchmarking Study estimated the number of identity-verified crypto-asset users in 2018. It was thereby said in an update of this estimate that it indicates a total of up to 101 million unique crypto-asset users across 191 million accounts opened at service providers in Q3 2020 applying the same methodology.

Allowing us to increase our estimate of minimum user numbers associated with accounts on each service provider, this 189% increase in users may be explained by both a rise in the number of accounts as well as a greater share of accounts being systematically linked to an individual’s identity. 

A Variety Of Other Key Crypto Factoids

Discussing a number of other subjects like stablecoins, IT security, and government regulation is the vast number of findings within UC’s study. The report highlights that stablecoins like Tether have become very prominent and increasingly available.  

The study insists that as all non-tether stablecoins grew from 11% to 55%, tether support grew from 4% to 32% of service providers. Rather more service providers are offering stablecoins, this increase is not simply from service providers holding stabelcoins diversifying their holdings. 

Also, it was observed that at the same time as crypto asset companies are therefore complying with new regulations, it is that there is the decoupling of duties that are between custody, clearing, and settlement responsibilities appearing to be underway as well as the report says. 

During the last two years, UC’s authors, therefore, say that the number of crypto companies that didn’t adopt know-your-customer rules dropped from 48% to 13%. Regulatory guidelines and compliance are on the rise as this metric highlights. Insisting that the standards enforced by the Financial Action Task Force (FATF) invoked this significant change is the UC study. 

The Bottom-Line 

UC’s third benchmark study underscores the recent emergence of decentralised finance platforms despite the increase of KYC/AML procedures. 

Emphasising defi has introduced more risky and experimental innovations according to UC’s authors Apolline Blandin, Gina Pieters, Yue Wu, Thomas Eisermann, Anton Dek, Sean Taylor, and Damaris Njoki. The study notes crypto service providers may be impacted considerably by the defi space shortly. In the next 12 months, defi will likely impact large crypto service providers in particular and their business models.