A game of Bitcoin chess seems to be playing out – but who’s controlling the pieces?
Crypto commentator Susie Violet Ward asks ‘Is this the start of a few crucial moves to checkmate, or is a string of recent events merely a coincidence and not a coordinated effort to control Bitcoin?’
The Biden administration…
The Biden administration’s proposal to levy a 30% tax on electricity consumption for cryptocurrency mining exudes a sharp and decisive approach to regulating the emerging digital economy.
The tax would be phased in at a rate of 10% per year over three years. It would apply to profits by miners who operate in the US. Yet, reading the small print, this only applies to cryptographically secured assets.
It is suggested this is about energy, but if a data centre serving amusing cat photos is not taxed similarly, is this fair?
The New York Times is rumoured to be publishing a piece relating to mining, which could further fuel discussions on the environmental impact of Bitcoin mining and its regulation by government agencies. The potential involvement of government entities in these developments raises questions about the extent to which Bitcoin is being targeted and manipulated by government agencies.
Environmental, social, and governance (ESG) standards, which are government-backed initiatives, are also a subject of concern. While these initiatives are intended to promote responsible investing many argue they only exist to tick boxes and are not addressing real problems.
While the Biden administration’s move aims to reduce the carbon footprint of cryptocurrency mining, experts believe that it could have the unintended consequence of driving mining operations overseas with fewer regulations.
Other developments have raised concerns among Bitcoin advocates. Banks are increasingly restricting access to crypto exchanges to curb outflow, marking a growing trend in the financial industry.
Natwest, one of the largest banks in the UK, recently announced that it would no longer allow its customers to buy cryptocurrency using credit cards. This move follows similar steps taken by other banks, including JPMorgan, Citigroup, and Bank of America.
Add to this several hit pieces published in mainstream media outlets, including the New York Times, that paint a negative picture of Bitcoin and its users.
Greenpeace USA has attacked Bitcoin for its environmental impact, even as other branches of the organisation have recognised its potential as a tool for social, environmental and economic empowerment.
The assail on Bitcoin is not limited to the media. Bitcoiners are often held to a higher standard than individuals and industries in other sectors. They are expected to be perfect, and any misstep is quickly pounced upon by critics. This double standard has led to frustration among some in the Bitcoin community.
The fractional reserve banking system is showing cracks as financial institutions collapse, as demonstrated by Silicon Valley Banks failure. Despite avoiding fractional lending, Custodian Bank’s application for Federal Reserve system membership was rejected. The reason behind the rejection is unclear, raising questions about the regulator’s relationship with the safer alternative offered by Custodia Bank, and whether their association with the crypto industry played a role.
It’s also worth noting that the three major banks that serviced Bitcoin and Crypto were all closed in one week.
Amid worries surrounding the regulation of digital assets and a severe lack of transparency, the US Securities and Exchange Commission (SEC) has been intensifying its efforts to clamp down on tokenised “securities”.
All the pieces seem to be coming together, indicating a synchronised effort. These events appear to be coordinated and potentially linked with the emergence of Central Bank Digital Currencies (CBDCs). This global initiative affects most countries, with China leading the way.
What happens in the US affects the UK and vice versa. Bitcoin’s future in the UK and other countries could be significantly impacted by developments in the US.
Despite being the most successful asset of the past decade, Bitcoin has not been immune to criticism.
Could this be mere saltiness from certain media outlets that missed its investment potential? Do real concerns exist?
While some challenges are related to environmental concerns and the need for greater regulation, others might be driven by a coordinated effort to control the use of Bitcoin. How it navigates these challenges will determine its future and its place in the global financial system.
What’s going on?
Is something going on?
Only time will tell. Watch this space!