Synopsis The slide pushed Bitcoin down as much as 8% to about $50,500, sending it below the low of $51,707 reached Sunday.
By Vildana Hajric
Bitcoin declined for the sixth time in seven days, extending losses after President Joe Biden was said to propose almost doubling the capital-gains tax for the wealthy.
The slide pushed Bitcoin down as much as 8% to about $50,500, sending it below the low of $51,707 reached Sunday. The coin had tumbled as much as 15% over the weekend in the wake of a false report from an anonymous Twitter account that the U.S. Treasury was cracking down on crypto money laundering.
โOne of the biggest things you have to worry about is that the things with the biggest gains are going to be most susceptible to selling,โ said Matt Maley, chief market strategist for Miller Tabak + Co. โIt doesnโt mean people will dump wholesale, dump 100% of their positions, but you have some people who have huge money in this and, therefore, a big jump in the capital gains tax, theyโll be leaving a lot of money on the table.โ
U.S. investors in the digital asset, which has advanced about 80 per cent since December, already face a capital-gains tax if they sell the cryptocurrency after holding it for more than a year. But the coinโs been one of the best-performing assets in recent years — anyone who bought a year ago is sitting on a 625 per cent gain. For investors who bought in April 2019, that gain equals roughly 860 per cent.
The IRS has stepped up enforcement of tax collection on crypto sales. The agency — which began asking crypto users to disclose transactions on their 2019 individual tax returns — asks taxpayers whether they โreceived, sold, sent, exchanged or otherwise acquired any financial interest in any digital currency.โ
The nervousness among the crypto crowd can be seen in another rash of speculative tweets that popped up, just days after the earlier-debunked conjecture sent the market spiraling.
To be sure, Treasury Secretary Janet Yellen would very unlikely be taking the lead role for the administration when it comes to proposing policies, if that makes anyone feel better.
Synopsis Iceland, Sweden and Norway have been popular mining locations because of an abundance of geothermal, hydro and wind power. China, where most coins are mined, relies mainly on coal. That Nordic power surplus is set to dwindle as aluminum smelters, …
The Nordic region is losing its edge in green Bitcoin mining, just as the industry faces growing scrutiny for its carbon emissions and everyone from Elon Musk to mom-and-pop investors pile in.
Iceland, Sweden and Norway have been popular mining locations because of an abundance of geothermal, hydro and wind power. China, where most coins are mined, relies mainly on coal. That Nordic power surplus is set to dwindle as aluminum smelters, oil rigs and steelmakers thirst for renewable energy.
There could be very little excess energy in 2021 and 2022,โ said Hordur Arnarson, chief executive officer at Landsvirkjun, Icelandโs national utility. โBecause of the climate issues we see a lot of very interesting segments that are growing rapidly, and several of them need electricity.โ
The coins are mined by computers that process complex algorithms in halls as big as airport hangars. That makes electricity one of the key inputs, consuming as much power as thousands of households. And it keeps growing. Bitcoin mining now uses 66 times more electricity than in 2015, and carbon emissions from the process may face increasing regulation, Citigroup Inc. said in a recent report.
Emissions from mining coins in China are expected to peak in 2024, releasing as much carbon dioxide into the atmosphere as all of Italy, according to a study published in Nature Communications.
Iceland was the pioneer in green mining. Until four years ago, it hosted as much as 8% of global Bitcoin production, the nationโs Blockchain foundation said, a figure thatโs now down to less than 2%. The University of Cambridge put the contribution even lower at 0.35% in April 2020, the most recent data available. By comparison, China accounted for 65% then.
Growing concern about Chinaโs cryptocurrency clout is fueling demand for mining locations elsewhere. Kevin OโLeary, the chairman of OโLeary Funds Management LP, told CNBC earlier this month that two kinds of Bitcoin will emerge, โblood coinโ from China and โclean coinโ mined using sustainable hydroelectricity, where the provenance can be proven, and that he would opt for the green one.
Icelandโs biggest electricity consumers are the giant smelters built decades ago to benefit from the cheap power. With aluminum prices surging, plants owned by Rio Tinto Plc and others will consume more electricity after a slowdown in 2020, according to Landsvirkjun.
Bitcoin Rush Itโs unclear exactly how many cryptocurrency miners operate in the region. Hive Blockchain Technologies Ltd. from Canada has expanded mining at home as well as in Iceland and Sweden this year. Hong Kong-listed Genesis Mining Ltd. has facilities in Sweden and Iceland. Bitfury Holding BV has also been active on the volcanic island. None of them responded to questions about the regionโs future role.
Gisli Kr. Katrinarson, chief commercial officer at AtNorth, Icelandโs biggest data center operator and home to some miners, says he doesnโt see an energy shortage.
As Bitcoin sailed through $60,000 for the first time this month, Daniel Fannar Jonsson, the CEO at new mining company GreenBlocks, is bullish. He cites Icelandโs prominent history in the industry and says carbon-free power is still a big plus.
Elsewhere in the Nordic region, new green and energy-intensive industries will produce everything from carbon-free steel to hydrogen and ammonia. Their selling point is that they boost the economy by creating thousands of jobs while helping to reduce emissions. Bitcoin mining, on the other hand, offers little back to society.
Bitcoin mining is problematic as โit leads to an almost infinitely increasing energy demand,โ said Espen Barth Eide, the Norwegian Labor partyโs top energy lawmaker. โIt will displace other far more productive industries.โ
Norwayโs electrification program will boost power demand 30% by 2040, according to grid manager Statnett SF. The country, known as Europeโs green battery because of its vast hydro resources, is poised to send more electricity to the continent through new cables, which will curb availability for new large users.
The Nordic power surplus, excluding Iceland, is expected to shrink by 90% from 2023 to the end of the decade, according to industry consultant Volue Insights AS. New demand will mainly be for hydrogen production and data centers.
Rocky Path While Iceland built a separate hydropower plant to allow for a new smelter in 2008, that courtesy wonโt extend to Bitcoin miners, according to Arnarson, the utility chief.
โNobody would build a power plant for Bitcoin,โ he said. โThereโs a lot of uncertainty about the future development.โ
Cryptocurrencies emerged as an alternative investment in the last decade, but have famously whipsawed investors. A spectacular crash three years ago left it ice cold. Itโs been spurned by billionaire investors including Warren Buffett, and loved by business mavericks such as Musk.
Itโs on a tear again, having doubled in value this year.
Goldman Sachs Group Inc. and Morgan Stanley plan to offer their clients access to crypto investments. Tesla Inc. earlier this year disclosed a $1.5 billion investment in Bitcoin and now accepts it as payment for its electric cars.
Back on Iceland, Johann Snorri Sigurbergsson, business development manager at the HS Orka power plant, says the nation is closer to an energy shortage than a glut. His company is busy adding capacity on the Reykanes peninsula in the southwest.
While heโs open to eventually taking on more customers, right now the price would need to be โpretty high.โ
โWe would need to buy some energy from the market to be able to serve them,โ he said. โBut that kind of business case is not the price the miners are looking for.โ
Synopsis Bitcoin climbed as much as 1.6 per cent to as high as $64,207 in Asia trading. Cryptocurrency-exposed stocks such as Riot Blockchain Inc. and Marathon Digital Holdings Inc. advanced during U.S. trading hours.
Bitcoin advanced Wednesday, breaching the $64,000 level for the first time after eclipsing its most recent record in March a day earlier as the mood in cryptocurrencies turned bullish ahead of Coinbase Global Inc.โs listing this week.
The token climbed as much as 1.6 per cent to as high as $64,207 in Asia trading. Cryptocurrency-exposed stocks such as Riot Blockchain Inc. and Marathon Digital Holdings Inc. advanced during U.S. trading hours.
Crypto bulls are out in force as a growing list of companies embrace Bitcoin, even as skeptics doubt the durability of the boom. In one of the most potent signs of Wall Streetโs growing acceptance of cryptocurrencies, Coinbase will list on the Nasdaq on April 14 at a valuation of about $100 billion.
Coinbaseโs debut โwill mark the first official juncture between the traditional financial avenue and the alternative crypto path,โ Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. โAs such, a successful addition to Nasdaq should act as endorsement of cryptocurrencies by traditional investors.โ
Goldman Sachs Group Inc. and Morgan Stanley have announced plans to offer their clients access to crypto investments. Tesla Inc. earlier this year disclosed a $1.5 billion investment in Bitcoin and more recently started accepting it as payment for electric cars.
Still, skeptics argue that digital coins have been inflated by stimulus thatโs also sent stocks to records. Regulators around the world are stepping up oversight and casting doubt on its usefulness as a currency.
Isabel Schnabel, member of the executive board of the European Central Bank, called Bitcoin โa speculative asset without any recognizable fundamental valueโ in an interview with Der Spiegel this month.
Coinbaseโs public debut this week is also boosting the digital coins of other cryptocurrency exchanges, such as Binance Coin, which has jumped to become the third-most valuable cryptocurrency behind Bitcoin and Ether.
Many analysts expect the rally to continue.
โThe lowest 30-day volatility since October tells us Bitcoin is ripe to exit its cage and continue in a bull-market on its way to the next $10,000 move,โ according to Mike McGlone, Bloomberg Intelligence commodities strategist. โSimilar to Teslaโs equity-wealth allocation to Bitcoin, the Coinbase IPO may add to the growing list of 2021 crypto-validation milestones.โ
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