The Latest News - AI Demand For Power Grows
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The latest in financial news: The growing demand for energy with AI, US Treasury looks to stop unregulated stablecoins, Bitcoin wallet hacked, and a strong indicator for Bitcoin’s peak during a bull cycle.
AI Requires More Energy
The escalating energy demand driven by the increasing use of AI and data centers is straining the power grid. As AI becomes more prevalent across various industries, this energy demand is projected to multiply, potentially doubling by 2030. This surge is already taxing the existing electrical grid infrastructure in the US, which is struggling to keep up with the growth of industrial production and the rising adoption of electric vehicles. Regions with high concentrations of data centers, such as Northern Virginia, are experiencing significant fluctuations in power demand, threatening the stability of the energy infrastructure.
As this rising energy demand persists, the US faces increasing pressure to meet its energy needs. The push towards renewable energy sources raises concerns about their capacity to provide sufficient power. The high costs associated with building and maintaining renewable energy infrastructure have sparked debates over their economic viability and the justification for investing billions or trillions of dollars. Nonetheless, significant advancements in energy storage technology, particularly in battery capacity, are promising. These improvements enable the storage of excess energy generated by renewable sources, making it available for use during periods when renewable generation is low.
Unregulated Stablecoins
The U.S. Treasury Department is set on addressing jurisdictional regulatory arbitrage, identifying unregulated stablecoins as a significant national security threat. At the Consensus conference on May 29, Brian Nelson, the Treasury's undersecretary for terrorism and financial intelligence, highlighted that unregulated stablecoins are increasingly used by North Korean cybercriminals, ransomware operators, and terrorist organizations. Nelson stressed the serious national security risks these activities pose. While on-chain analytics indicate that cryptocurrencies represent a small portion of terrorist fundraising compared to other sources, a February report from the Treasury Department confirmed that cash remains the primary tool for money laundering. To counter these risks, Nelson suggested establishing an authority to prevent U.S.-based financial institutions and individuals from interacting with Virtual Asset Service Providers (VASPs) in jurisdictions without robust anti-money laundering and counter-financing of terrorism (AML/CFT) measures. In August 2022, the Treasury made the unprecedented move of sanctioning Tornado Cash, a prominent Ethereum privacy protocol, by adding its smart contracts and associated wallets to the Office of Foreign Assets Control's Specially Designated Nationals list.
With the advent of new technologies, bad actors inevitably find ways to exploit them. It's not surprising that cryptocurrencies, with their pseudonymous wallets, are used for money laundering and illegal transactions. While government efforts to curb illicit activities are commendable, there is debate over whether imposing requirements on institutions is the right approach, especially given the inherent challenges of identifying counterparties in cryptocurrency transactions. For example, create a smart contract on Ethereum. You cannot prevent a North Korean user from interacting with it, nor can you enforce restrictions, as this would contradict the decentralized nature of cryptocurrency.
Hacked Bitcoin Wallet
Hacker Joe Grand, known as "Kingpin," successfully cracked a long-lost Bitcoin wallet from the Satoshi era containing $3 million worth of Bitcoin. The wallet belonged to a crypto holder in Europe who had been locked out since 2013 after forgetting the password generated by the RoboForm password manager. Unsurprisingly,Grand and a friend identified a flaw in the specific RoboForm version, allowing them to narrow down the possible password range and ultimately crack it. This successful retrieval of a lost Bitcoin wallet from over a decade ago showcases the resilience and innovative spirit of the hacker community within the cryptocurrency space.
It is important to note that the hacker cracked the seed phrase through a vulnerability in the passphrase generator, not through Bitcoin itself. Some might argue this incident raises concerns about Bitcoin's security, but it highlights the importance of choosing reliable sources for wallet creation and management. Investors should thoroughly research companies providing seed phrases and ensure they are random to prevent potential vulnerabilities. This case serves as a reminder of the critical need for secure and robust password management practices in cryptocurrency.
Identifying Crypto Bull Market Peak
With the start of the latest crypto bull market, it is important to remember that everything that goes up does fall at some point. One of the best indicators of the bull cycle peak is the Bitcoin MVRV (Market Value to Realized Value) indicator. The Bitcoin market is still in an accumulation phase and has not yet reached the peak of the bull cycle. When the MVRV values below 2.0 typically indicate Bitcoin is undervalued and in an accumulation zone. Bitcoin’s MVRV is currently at 2.3, suggesting the price can rise further and potentially hit a new all-time high, possibly exceeding $100k. Bull cycle peaks usually occur when MVRV surpasses 3.5, indicating the network is sitting on 250% profits.
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