(ATF) The ether cryptocurrency plunged and bounced back during Asian trading hours on Thursday, after hitting a another record high on Wednesday, which saw its gains this year touch nearly 500% briefly, as interest grows in decentralised digital finance.
The second-biggest cryptocurrency by market capitalisation after bitcoin, ether climbed to as high as $4,380.64.
But it and bitcoin were both rocked by news that Tesla would no longer accept bitcoin for vehicle purchases because of the excessive power used in bitcoin mining.
Bitcoin was down 17% before rebounding to about $50,000 at early in the Asian session, according to Reuters, while Ether dropped 14% to a low of $3,550 before bouncing back to about $3,965.
Prior to the announcement by Tesla boss Elon Musk at 2200 GMT, Ether had jumped about 470% against the dollar this year as the ethereum blockchain becomes more widely used by peer-to-peer – or decentralised – cryptocurrency platforms that enable crypto-denominated lending outside of traditional banking institutions.
The surge had also seen ether – which in the crypto world is also widely referred to as ethereum – outperform bitcoin, which has almost doubled in price this year as larger investors warm to the emerging technology.
“Ethereum is growing in part by the prospects of a revamped network with the right upgrades highly anticipated to accommodate [decentralised applications] and smart contracts that are built on it,” Nick Spanos, co-founder of Zap Protocol, told Reuters.
“The coin is bound to grow more in the near future, with an ambitious target of $10,000 by year-end.”
ROOM FOR GROWTH
JP Morgan on Wednesday said the pace of evolution in the ethereum market has “remained rapid” and that there is still room for growth.
The relentless growth of cryptocurrencies in recent months has caught mainstream attention and fuelled a surge in interest in crypto mining – or receiving crypto tokens for verifying blocks of transactions.
But profitability is hampered by a number of factors: supply and price of the computer system, operation and maintenance costs, and electricity fees that render crypto mining costly and painstaking.
One Singapore-based crypto exchange has launched “cloud mining” which connects users to a remote data centre with shared computing power to mine ether without their own hardware.
The company, Bybit Cloud Mining, said short-term investment plans offer greater profitability, while minimising the risks of price fluctuations.
“The service will be instantly available upon purchase, come with 100% usability, and have any downtime covered by Bybit, allowing users to mine with greater confidence,” said Bill Xing, head of financial products at Bybit.
With reporting by Reuters