The dark side of Bitcoin 🧛🏿
The environmental impact of Bitcoin mining. Technical analysis suggests $50k for BTC in 2023. 99.5% of crypto investors did not pay taxes in 2022. A million Bitcoin crabs in the blockchain sea.
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So Bitcoin has been in the thick of things this spring, and why not?
The times have been such - of financial turmoil for banks and ensuing uncertainty and for everyone involved.
So what about Bitcoin has always been a concern for everyone in the mix. We dig in.
Environmental impact of Bitcoin mining 😟
US Senator Ed Markey has called for greater scrutiny of the environmental impact of Bitcoin mining.
Markey is the sponsor of a bill pushing for more transparency from miners regarding their environmental impact.
A report published by the Environmental Working Group (EWG) on April 5 detailed how Bitcoin miners are polluting communities across the United States and interfering with Americans' day-to-day lives through air, water, and noise pollution.
What these mines have in common is their use of proof of work, which is wasteful by design, highly inefficient and requires vast amount of fossil-fuel generated electricity.
The Bitcoin community has rejected the report's findings, arguing that it fails to consider the increasing use of renewable energy sources in mining operations. Some have also pointed out that traditional banking systems consume vast energy and that Bitcoin's decentralised nature could ultimately lead to a more sustainable financial system.
Adam Back, Blockstream CEO
“People are buying digital gold, to protect against inflation and monetary erosion. Central banks are buying physical gold for similar reasons at a record pace. Gold is costly to mine analogously, and that's also inherent to hard money.”
Luke Dash Jr, Bitcoin developer
“PoW is actually good for the environment. It makes clean energy like solar viable on its own, where previously it would typically require fossil fuel to compliment it.”
Why not sponsor us, eh?
The government wants to keep a check.
The Biden administration's proposed budget includes a provision that would impose a 30% tax on cryptocurrency mining operations' electricity usage. The move aims to reduce the industry's carbon footprint, which has been criticised for its high energy consumption. The tax would apply to all cryptocurrency mining operations, regardless of size or location.
TTD MTM 📉📈
Bitcoin could rally toward $50,000 in 2023, according to a historical price fractal highlighted by popular market analyst Mags.
The chart fractal highlights the similarities between Bitcoin’s trends
Bear market consolidation
2013–2015 - $200–$300
2021-2022 - $18,500–$25,000
2016 saw a rally towards $700.
Will 2023 see Bitcoin price doubling to $50,000? 🤔
Though, not everything is to be believed at its face value. Bloomberg analyst Mike McGlone has cautioned about a potential bull trap in the Bitcoin market due to a mounting liquidity crunch.
“It may be illogical to expect the stock market, crude oil, copper, and the Bloomberg Galaxy Crypto Index (BGCI) sustain the recent bounces with year-over-year measures of money supply and commercial bank deposits falling around 2%.”
TTD Number picker 🔢
The number of Bitcoin addresses holding at least 1 BTC has reached close to a million, according to data from Glassnode.
What does this mean?
A positive sign for crypto adoption and long-term value, and more people are interested in owning Bitcoin as a store of value or investment.
Of all them sea creatures of Bitcoin, which one are you?
Here is what Bitcoin Holding looks like for public companies.
TTD WTF ⚠️
Swedish crypto tax firm Divly reports that 99.5% of cryptocurrency investors did not pay taxes in 2022.
The study analysed data from over 250,000 cryptocurrency investors and found that only 0.5% reported their crypto investments on their tax returns. It suggests that tax authorities' lack of clarity and guidance on reporting crypto investments is a major factor in the low compliance rate. The study also highlights the need for better education and resources for crypto investors to ensure they meet their tax obligations.
TTD Blockquote 🔊
Economist Rafael Lemus, professor at UCA El Salvador University.
“Just as more than 2 Million dollars was busted in bitcoin, why not undo that investment, get back what you can, and spend it on the poorest households.”
El Salvador is one of the poorest nations in the Americas. As per the data from the Nayib Tracker, the president has spent over $113 million on Bitcoin but is currently down 34% on the investment.
The economist has urged President Nayib Bukele to distribute the country's Bitcoin to the poor.
Fund social programs and provide direct aid to those in need.
Pay for imports and reduce the country's reliance on the US dollar.
The president is very popular in El Salvador and Latin America, but not everyone agrees with his Bitcoin bet. The World Bank and the IMF have dismissed the idea, and not many Salvadorans use it for everyday purchases.
TTD Surfer 🏄
Craig Wright reckons that Apple may be violating copyright laws by storing the Bitcoin white paper on its App Store.
South Korean prosecutors accuse Do Kwon of converting illicit funds from LUNA to Bitcoin and have requested Binance to halt withdrawals.
Bitcoin miner Sphere 3D sues partner Gryphon Digital Gryphon for losing $500,000 of its bitcoin in a spoofing attack.
The correlation between Bitcoin and gold tightened in March 2023, while the stock market weakened due to market uncertainty.
Bitcoin's price has remained steady at around $28,000 as new US jobs data has increased the likelihood of a recent Federal Reserve rate hike.
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The Token Dispatch is a daily newsletter that takes you on a 4-5 minute drive through the wild west of the Crypto World. Daily in your email inbox @13:00 GMT. Almost always.
Here is what I am thinking - would more people pay taxes on crypto if doing so was easier?