Demelza Hays is originally from Florida. She has been living in Liechtenstein in Europe for the last 7 years. The two years before that, she was researching in India. Right now, she is the Director of Research at Cointelegraph which is a large media company in the crypto space.
Interview Date : 26st August 2020
Hash Rate and Bitcoin Price – Reverse Causality
I met some researchers from the Fidelity Digital Assets group, and one of the researchers said he believed the price of Bitcoin is following the hash rate. I tended to disagree with him. I thought the hash rate followed the price. So, we had a big debate, and both of us were good enough with statistics that we could play around and pull price data and hash rate data, and try to figure out this relationship.
We concluded that there is reverse causality where each one causes the other. If the price went down to 0, it wouldn’t make sense for miners to mine, so the hash rate would follow the price to 0 as well. Nevertheless, if the hash rate goes up, it would mean that the network is more secure, and this could justify people investing more leading to a rise in price. Hence, we could say the price goes up due to an increase in the hash rate.
Hash Rate Today and BTC Price 11 months Ago
When you have this type of reverse causality, there are different ways you can find out the essence of the relationship with statistics; take the change of the hash rate and the change of the price, and subtract the trend of each. Then, by trying to study how those changes between price and hash rate correlate over time, I found that there is a very limited correlation in the change. Weirdly, there is no correlation between the day to day basis, so I reached out to the researcher at Fidelity and sent him my results. After thinking about the matter, it did make sense, because miners do not make their decisions based on the price today. All decisions for their mining strategies had to come 9 months before. Miners have to order equipment and get the facilities prepared which takes time. Even if the price would go down after they have started, it would have to go down quite significantly for them to turn off any of their equipment, or they would lose money.
Lastly, we added lag variables to see if we could see any correlation between the price 9 months ago and the hash rate today. We tried to study each month, and we found that the most correlated variable between hash rate and the price is the hash rate of today and the price of 11 months ago. I believe that 2 separate variables are impacting each other, but they are not causal, and that’s the final result we concluded. We still have to turn this into an academic paper which we will.
Directory of Research Group – Cointelegraph
I love my new job. The goal is to start writing research reports. Cointelegraph does many small news articles, but not in-depth 10+pages about more specific topics. We are working on a new side of the website that will launch in September, where we will have in-depth reports. Those reports will be on DeFi, institutional investors, etc. We want to bring more educational papers to the readers. Cointelegraph is read by the news-readers and retail readers, but we want to branch out to the academic and professional investor readers as well. I have a lot of freedom of expression in this position, and if I have an idea, I can pitch it and it potentially will be accepted, and that’s what I love about it.
Google Scholar and University Reports on Bitcoin
I have always considered myself to be an advanced reader, and that is why the research department makes sense to me. The standard news article is just too short, and that is why I do not read the news in general. I am more interested in the fundamentals, in the long term, and the changes in the long term of value. However, I have been reading more of the articles on Cointelegraph since I joined, and some of the articles are surprisingly good.
I like reading 10+ pages of academic papers, there is a good body of academic literature on google scholar for example. Searching for mining or MakerDAO on google scholar will give you so many good papers that are from places like Stanford University, MIT, University of Zurich, etc., and they have gone through every topic like security weaknesses, energy consumption, and many more. There are some gems there, so I usually search google scholar for a specific topic I am interested in.
Recommended Sources for the Average Reader
Crypto has people from different disciplines and areas interested. You have computer scientists, economists, entrepreneurs, etc., and it has got them talking about space. In the last 2 years, some companies have started publishing research reports. The research reports are not the academic kind, rather more in a template that is easier for the normal reader to understand. They have nice graphs that are not too complicated with nice visuals. These are companies that have experts working on those reports so that people can associate education with them.
Cointelegraph will soon have a library on its website dedicated to these research reports. We will have the latest reports on all sorts of topics which we have collected from good sources.
Our team is reading academic papers to turn them into reports that our normal Cointelegraph reader can digest. We take out all the regression analyses, and math formulas, and give the readers the meaning and the charts. Lastly, we cite the paper for people who would like to go more in-depth on a specific topic with the sources we have, so they can be led directly to the academic papers.
Cointelegraph’s Internal Organization
Cointelegraph has 8 million views per month. We have hundreds of employees and hundreds of freelancers, so it’s a massive team. The organization is very decentralized, which is what I love about it. We have small groups that make decisions for a specific area they work in. We have Cointelegraph Espanol, Cointelegraph Portuguese, Cointelegraph English, and we also have Cointelegraph YouTube, Twitter, SNS, and many more. I am the Director of the research team, and I have 7 people in my group. We interact and discuss our tasks every day, but it’s all remote. There are many employees at New York and Hong Kong hubs, so they do meet up at coworking spaces to work together as if it were an office. However, most of us are working remotely.
Decentralized Work Comes With Issues TooI was doing reports for banks before joining Cointelegraph. Banks would reach out to me to get a specific question answered. Questions like “why Huobi and Binance are sending so much money back and forth between each other on-chain?”. Their addresses can be confirmed on the chain, and so I would have to deep-dive into similar topics to write reports for them. I think as more and more banks get interested in in-depth research, it is going to be increasingly crucial to have such research groups like Cointelegraph make their own Research hub.
I don’t know the exact number, but there are so many women working at Cointelegraph, and they do everything from marketing to strategy to design, and much more. I think the Cointelegraph is open to hiring women, and anyone that has talent and is willing to work. The research team is a new hub, so the director position is a role that was not there before me. We are planning to do multiple reports per year, and predict it will grow over time just like crypto does in an organic manner and due to word-of-mouth growth. Stock analysts or bond analysts in general are looking for these kinds of reports. They are used to have reports that are a summary of last month’s market movements for example. I think this is a great interface for them, and traditional legacy investors because we are providing the information to them in a way that they are familiar with. I think our team will have a bright future as the crypto market matures, and crypto becomes just another asset class like the other assets classes.
Interviewer , Editor : Lina Kamada
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