The Latest News - Bitcoin Special
Hello McFinancers! Today we wanted to take a special look at crypto with the massive rise in Bitcoin over the past week. So this week, we are dedicating our news to some hot topics regarding Bitcoin.
The latest in financial news: JPMorgan analyst says that Bitcoin halving will have positive effects on Bitcoin mining companies, Bitcoin miners block the US government attempt to monitor energy usage for miners, and a surprise on a massive owner of Bitcoin is revealed.
JPMorgan Analyst Look To Bitcoin Mining Companies
Roughly every four years, Bitcoin undergoes a halving event, resulting in a 50% reduction in the amount of newly minted Bitcoin. This April marks the latest halving, diminishing Bitcoin production from 900 to 450 Bitcoin per day. As renowned economists suggest, this decrease in supply typically triggers a surge in prices. In the past week, analysts from JPMorgan, led by Nikolaos Panigirtzoglou, have asserted their belief that the upcoming halving will drive an increase in the value of publicly traded Bitcoin mining companies.
It's well-established that each halving prompts Bitcoin miners to enhance their efficiency, striking a balance between profits and expenses. Older mining machines often demand more electricity and time for calculations compared to their newer counterparts, resulting in increased costs. To address this, some mining companies (i.e. Marathon Digital Holdings) are exploring strategies such as operating older machines at reduced speeds to optimize the balance between profitability and expenses. This commitment to improving efficiency, particularly in energy consumption relative to hashing value, underscores the constant need for miners to upgrade and refine their mining rigs.
Bitcoin Miners Halt US Government
In the preceding week, the legal system sided with Bitcoin miners by ruling against the requirement for them to disclose energy-related data to federal energy authorities. The courts determined that the US Energy Information Administration (EIA) exceeded its authority in demanding electricity consumption data from Bitcoin miners. The EIA introduced this survey requirement in late January, but thanks to the collaborative efforts of the Texas Blockchain Council and RIOT Platforms, the request was successfully opposed. Their argument emphasized the unjust and unrealistic nature of the time frame given to miners to provide the requested data.
This case exemplifies another instance of a US governmental agency overstepping its boundaries in the realm of cryptocurrencies. The Securities and Exchange Commission (SEC) stands out as a prominent example, grappling with numerous court cases in the past year regarding the classification of cryptocurrencies as commodities or securities. This underscores the significance of the checks and balances within the US government, ensuring that regulatory bodies adhere to the law and refrain from overreach. Notably, lawmakers have been enacting legislation related to cryptocurrencies that contradicts the SEC's language. These legislative changes necessitate a reevaluation by the SEC of its definitions and regulations concerning cryptocurrencies as Congress passes new laws.
Who Is A Massive Owner Of Bitcoin
In the preceding week, it has come to light that a substantial Bitcoin holder possesses approximately 1% of the total Bitcoin in circulation, and this holder is none other than the US government. The presence of such a significant amount of Bitcoin under government control raises eyebrows, particularly considering the regulatory landscape and legal actions against cryptocurrencies in the United States. The US government acquired these holdings by seizing Bitcoin from criminals and hackers involved in illicit activities such as utilizing the Silk Road on the dark web or participating in the 2016 Bitfinex hack. While these seizures took place several years ago, the surge in Bitcoin's value has propelled the total value of the US government's holdings to over $12 billion.
As of now, there are plans for the US government to sell some of its Bitcoin holdings, but there is no official announcement regarding the disposition of the remaining holdings. The emergence of the US government as a major custodian of this digital asset is a noteworthy development over the past decade. With other central banks around the world also entering the Bitcoin arena, speculation arises about whether the US government might explore the use of Bitcoin in issuing future bonds. Notably, El Salvador has expressed intentions to create bonds based on its existing Bitcoin holdings as a means of fundraising, although such a development is yet to materialize.
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