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Last yearscrypto-market meltdowntriggered a series of bankruptcies that almost completely reshaped the digital-asset industry. This year, government watchdogs appear to be arriving on the scene to finish the job.

The past week saw the industry hit with another deluge of enforcement news, from theSECs threat to take legal action againstCoinbase Inc. and its suit against theTron blockchain networkto the apprehension ofcrypto fugitiveDo Kwon. Even celebrity crypto promoters like actress Lindsay Lohan and rapper Soulja Boy gotcaught upin the crackdown.

As the headlines piled up, the developments put a lidon a rallyin Bitcoin that had been pushing the oldest token back up toward the closely watched $30,000 level. Aglitch Friday morningat crypto exchange Binance took spot trading offline for more than two hours on a platform whose market dominance has only grown as other players have folded, adding to the sour mood. Bitcoin drifted around $27,500 on Saturday.

The collision course between the US government and crypto true believers vision of a system where money can be freely exchanged around the world without censorship by authorities was accelerated by thefailure of the Terra blockchainsstablecoin to maintain its $1 peg and thebankruptcy of FTXlast year, which combined to vaporize almost $2 trillion of digital wealth. This months implosion of crypto-friendly banks Silvergate Capital Corp. andSignature Bankhas added fuel.

At the center of much of the recent actions is the SECs decision to treat many cryptoassetsas securitiesthat must be registered with the agency and subject to all the regulations that go along with it. Needless to say, digital-asset aficionados were livid with much of the weeks news flow, especially when it comes to publicly listed Coinbase, which says it hasrepeatedly triedto engage with the regulator to no avail.

A reprehensible amount of resources and brainpower have been spent in the US trying to engage with this SEC and trying to create substance and a path out of the wraithlike comments issued by the agency, Sheila Warren, chief executive of the Crypto Council for Innovation trade group, said in an email. Meanwhile, most other major economies are actively in productive consultation with experts about how to land the regulatory plane.

The treatment of many crypto coins as securities means the SEC is testing its authority, leaving those caught up in its sights an option: capitulate and pay a settlement with the regulator, or fight it in court. Coinbase CEO Brian Armstrong has made it clear that the company will fight the complaint, tweeting that the process will prove that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on digital assets.

Six of the eight crypto-touting celebrities including Lohan and YouTubeprankster-turned-boxerJake Paul decided just to cut the SEC a check after the regulator accused them of touting coins traded on the Tron blockchain without disclosing they were being paid to do so.

DeAndre Cortez Way aka rapperSoulja Boy and singer Austin Mahone havent settled. The celebrities are keeping quiet about the whole issue. (For what its worth, the only thing Soulja Boy washawkingthis week on Twitter was a pink hoodie featuring a cartoon image of his smiling face. That is almost definitely not a security.)

Of course, some of the crimes being alleged went beyond just dealing in unregistered securities.The caseagainst Justin Sun and three of his companies connected to the Tron blockchain also involves accusations of fraud and market manipulation that artificially inflated the trading volume of tokens by encouraging employees to do more than 600,000 so-called wash trades. Sun wrote on Twitter that he believes the SECs complaint lacks merit.

Do Kwons indictment in the US, which came shortly after his arrest Thursday in Montenegro, also revealed that the government believes the collapse of his Terra blockchain project was more than just a$60 billion accident. According to prosecutors, Kwon also allegedly engaged in market manipulation and deceived investors about certain aspects of the project. His US lawyer did not respond to a request for comment from Bloomberg.

By the end of the week, it had all started to look like a drama that could be called Law & Order: Web3. So what will the next episode entail? Many industry watchers are bracing for more shoes to drop.

Overall, I expect we will see more enforcement news like this in the future given we are operating in an environment with little or no regulatory guidance, said Duke University finance professor Campbell Harvey.

For the crypto optimists searching for a silver lining, its all about looking at the future instead of the dwelling on the ugliness of the past week. The latest bout of drama in the market tells us nothing, according to Aaron Brown, a crypto investor who writes for Bloomberg Opinion

Useful attention should be directed to the new ships preparing for departure, the ones who will lead the next boom, he said. Many of the developments of the past week were just the flotsam and jetsam washing ashore long after the storm has passed.

Or maybe Soulja Boy put it best back in his MySpace days when herapped: On the internet, got em jumpin off the wall.

With assistance by Emily Nicolle

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Bitcoin rally stalls as crypto dragnet ensnares Coinbase, Do Kwon, and Lindsay Lohan: We will see more enforcement news like this - Fortune

MCCAMEY, Texas, March 23 (Reuters) - Cryptocurrency bankruptcies and worries over electric power consumption have failed to dent the industry's growth in Texas, according to a top trade group, citing the rise in the miners' power demands.

Bitcoin miners consume about 2,100 megawatts of the state's power supplies, said Lee Bratcher, president of industry group Texas Blockchain Council. That power usage rose 75% last year and was nearly triple that of the prior 12 months, Bratcher said.

Those demands amount to about 3.7% of the state's lowest forecast peak load this year, according to data from grid operator Electric Reliability Council of Texas (ERCOT).

"There's been some challenges with the Bitcoin mining industry," Bratcher said, noting his group recently saw two prominent bankruptcies and other miners scaling back expansions.

The industry also faces new federal regulations, including a proposed 30% tax on electricity usage for digital mining and calls by the U.S. Treasury secretary and commodities regulator for a regulatory framework.

New York this year imposed a ban on some cryptocurrency mining that runs on fossil fuel-generated power. Other states are expected to follow suit.

But in Texas, some counties have offered tax incentives and miners continue to be drawn to its wind and solar power, which could supply about 39% of ERCOT's energy needs in 2023.

"Bitcoin mining is a very energy intensive business, which is why we tend to find places like West Texas to be full of Bitcoin miners," said Matt Prusak, chief commercial officer at cryptocurrency miner U.S. Bitcoin Corp, which has one of its mining operations in a 280-megawatt wind farm in Texas.

Its McCamey, Texas, site last month consumed 173,000 megawatt hours of power about 60% provided by the grid and nearly 40% from the nearby wind farm. The average American home uses about 10 MWh in a year, according to the Energy Information Administration.

In Texas, where about 250 people died during a winter storm blackout that exposed the fragility of the state's grid, the prospect of higher crypto demand has raised alarms.

"There are a lot of Bitcoin mines that are trying to connect to the system," said Joshua Rhodes, a research scientist at the University of Texas at Austin. "If all of them were to connect in the timelines that they are looking to connect, then it probably would present an issue to the grid because that load would be growing way faster than it ever has before."

Reporting by Evan Garcia and Dan Fastenberg; writing by Laila Kearney; Editing by Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.

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Bitcoin mining booms in Texas - Reuters

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At this point, for most of us, cryptocurrency seems like nothing more than a fad. After the FTX bankruptcy and broader crypto crash last year, basically all of the celebrities who were promoting crypto have gone silent. MiamiCoin, hyped by Miami Mayor Francis Suarez as a new source of income for the city, is now worthless. The Wild West days of the industry may be over. Recently, the head of the SEC warned crypto firms to do their work within the bounds of the law or face enforcement actions. Lots of people lost money in the crash, but from the planets perspective, the industrys downfall is good news: The computing power fueling the crypto boom was so substantial that it was causing substantial greenhouse-gas emissions.

And yet cryptos greenhouse-gas emissions are still shockingly high, according to an industry tracker run by the University of Cambridge. The tracker focuses on bitcoin, the cryptocurrency with by far the largest market share, and estimates that at its current rate of mining new coins, bitcoin will release about 62 megatons of carbon-dioxide equivalent each yearabout as much as the entire country of Serbia emitted in 2019. Thats up from about 43 megatons a year in December, and just slightly below the all-time peak of nearly 74 in May 2021. Many people whove invested in crypto tend to have a lot of sunk costs, whether digital wallets bulging with various coins, tokens, or expensive physical setups designed to make more. Even now that the boom times are over, they have no reason to stop.

Mining bitcoin does not involve actually digging anything out of the groundunless you count the fossil fuel that often powers it. The process involves using heavy-duty computers to grind through trillions of calculations, solving equations to create virtual coins. The method is known as proof of work. Once upon a time, bitcoin mining was something that people did if they had a couple of spare computers they wanted to put to work. Over time, its taken more and more computing power to unlock a single coin; now most mining is done in large-scale operations using purpose-built mining rigs.

And it is Americas problem now. After China clamped down on crypto mining in 2021, such computing work increased in the United States. Miners set up shop in communities with low energy prices. And owners of unprofitable power-generation infrastructure, such as waste-coal-burning power plants, opened up crypto-mining operations to create another revenue stream. These companies have put a lot of money into their hardware and their physical space, and they will continue mining until they are actively losing money. There are miners that have been quoted saying, As long as the price is over $10,000 per coin, it still can generate money, Elizabeth Moran, a policy advocate at the green law firm Earthjustice, told me. And that is a big reason crypto keeps spewing out so many emissions even during the crypto winter: Bitcoin prices in particular have held up, in fact they just passed $28,000 a coin. Thats still far below their peak of almost $68,000 in late 2021, but represents a bit of a comeback from the sub-$16,000 prices of last fall.

So it is still very possible to make money at this game. Some companies bypass the energy grid entirely; depending on the price of gas and the price of bitcoin, turning natural gas into crypto might be twice as profitable as selling it to the wholesale gas market. Gas companies bring in a trailer or three jam-packed with generators, plugging one end into the well and the other into shipping containers full of bitcoin miners, says Rob Altenburg, the senior director for energy and climate at PennFuture, an environmental nonprofit. Weve heard of three different companies doing it. But weve got thousands of fracked gas wells across the state and just simply have no way of knowing where this is happening. Gas drilling is heavily regulated, but crypto mining itself is not.

A recent federal investigation in Colorado found crypto mining powered by gas wells on public-lease lands, creaming energy off before it hit the grid and converting it to crypto without paying any royalties. The report noted that because the generators and rigs are usually on trailers, the entire operation can be moved quickly, so miners can stay ahead of government oil and gas inspectors. Other behind-the-meter operations are physically located at power plants. The natural-gas-fired Greenidge Generation Station, on the shores of Seneca Lake in upstate New York, opened a massive bitcoin-mining operation plugged right into the plant, which in 2021 consumed the bulk of the electricity it produced. Tapping into energy before it hits the grid is just one way bitcoin miners keep costs down; theyll seek out and exploit any cheap source of energy.

Crypto doesnt have to torch the planet. The second-largest cryptocurrency, Ethereum, switched to a different method of creating its tokens in September 2022. The new approach, called proof of stake, uses significantly less computing power, so much so that after the switch, the companys total energy consumption dropped 99.95 percent. It is impossible for bitcoin to switch to proof of stake, because the bitcoin network is completely decentralized, Kyle Schneps, the director of public policy at Foundry, a major mining financier, told me. There is no governing body that could make such a decision.

Renewables could also power bitcoin mining, just like they power anything else. Maybe as much as 38 percent of bitcoin mining is currently powered by renewables, according to the Cambridge tracker, though no one really knows. But that hasnt gone up since the crypto winter. Schneps said that bitcoin mining could help with the energy transition: Renewable-energy companies can always sell their energy to bitcoin miners when demand is otherwise low, keeping them profitable enough to stay in business and grow. But its not clear if mining operations that run only at certain times would be profitable.

For now, bitcoin will remain an albatross on the planet at just the moment that the energy transition ramps up. Cambridge predicts that its environmental impact in 2023 will be worse than it was in 2022. The Super Bowl ads and awkward late-night celebrity endorsements may be gone, but crypto is not dead. Still embraced by true believers and international criminals, the hard drives grind on, in shipping containers and empty warehouses and back lots of power plants, endlessly calculating, spinning money out of carbon and faith.

Lots of other digital activities do consume power and cause greenhouse-gas emissionsquesting with pals, hoarding years of work emails on the cloud, making friends with a hallucinating AI. One analysis in 2019 suggested that our online lives were responsible for 3.7 percent of planet-wide emissions; the number may have gone up since. Schneps likened bitcoins global electricity consumption to roughly the same as video games. But even if thats true, while two-thirds of Americans play video games, just 21 percent of Americans own crypto, and even less bitcoin in particular. The massive environmental impact of bitcoin is harder to swallow because it is part of an industry that is, in essence, smoke and mirrors, as the crypto blogger James Block put it in an interview with Charlie Warzel. Theres nothing produced by these companies.

Finance experts around the world largely agree with Block. In December, a director-general at the European Central Bank, Ulrich Bindseil, called for serious financial institutions to stop legitimizing cryptocurrency, saying bitcoin was not suitable as an investment. If the world is going to continue to burn fossil fuels, it makes sense to do so for things that genuinely contribute to peoples well-being, not for risky virtual tokens untethered to any real thing of value in the world.

Originally posted here:

Crypto Is Mostly Over. Its Carbon Emissions Are Not. - The Atlantic

Bitcoin and other cryptocurrencies were lower Thursday after a selloff Wednesday following the latest interest-rates hike from the Federal Reserve. Crypto traders see continued momentum in the digital asset rallybut a pause for now.

The price of Bitcoin has fallen 1.5% in the past 24 hours to $27,700, tumbling from Wednesday highs above $28,500 but rebounding from the trough below $27,000 immediately after the Fed raised interest rates by a quarter of a percentage point. Wednesdays peak marked the highest level for Bitcoin...

Bitcoin and other cryptocurrencies were lower Thursday after a selloff Wednesday following the latest interest-rates hike from the Federal Reserve. Crypto traders see continued momentum in the digital asset rallybut a pause for now.

The price of Bitcoin has fallen 1.5% in the past 24 hours to $27,700, tumbling from Wednesday highs above $28,500 but rebounding from the trough below $27,000 immediately after the Fed raised interest rates by a quarter of a percentage point. Wednesdays peak marked the highest level for Bitcoin since the crypto bear market accelerated last June, with prices for the largest digital asset still up by more than two-thirds in 2023 in a rally that has spurred calls of a new bull market.

Bitcoins rally ahead of the Fed set us up for disappointment, and sure enough we saw Bitcoin retreat from just shy of $29,000 after Powells press conference, said Sam Yilmaz, co-founder of venture fund Bloccelerate. A cooling off period is overdue and allows Bitcoin and crypto to settle I still believe Bitcoin could go to $35,000 in a matter of weeks because, put simply, price action breeds price action in crypto.

Cryptos fell in line with the stock market after the Fed hiked rates, a return to Bitcoins correlation with equities after weeks of outperformance. While the rate hike of 25 basis points was priced in, digital assets dropped in step with the Dow Jones Industrial Average and S&P 500 as investors worried about how tightening financial conditions will continue to pressure the banking system.

Beyond Bitcoin, Ether the second-largest cryptofell 2% to $1,750, but was above late-Wednesday lows. Smaller cryptos or altcoins were more mixed, with Cardano up 1% and Polygon 1% lower. Memecoins were slightly weaker, with Dogecoin and Shiba Inu both down less than 1%.

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Write to Jack Denton at jack.denton@barrons.com

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Bitcoin Edges Lower. Crypto Traders Pause Before Another Rally. - Barron's

BitcoinBTC, ethereum and other major cryptocurrencies are currently trading far below their all-time highsthough one influential investor who saw the Covid pandemic coming thinks that could be about to change.

Subscribe now to Forbes' CryptoAsset & Blockchain Advisor and successfully navigate the bitcoin and crypto market rollercoaster

The bitcoin price has added around 70% since the beginning of the year as traders brace for a potential Federal Reserve u-turn, helping the ethereum price rally.

Amid the brutal crypto winter that's erased almost $2 trillion of value from the market, two of the world's largest financial institutions with a combined $14 trillion in assets under managementFidelity and BlackRockBLKare quietly expanding into the world of bitcoin, ethereum and cryptocurrency.

It's at the beginning of a bull run you need up-to-date information the most! Sign up now for the free CryptoCodexA daily newsletter for traders, investors and the crypto-curious that will keep you ahead of the market

"At BlackRock we continue to explore the digital assets ecosystem, especially areas most relevant to our clients such as permissioned blockchains and tokenization of stocks and bonds," Larry Fink, the chief executive of the world's largest asset manager wrote in his annual letter to shareholders, adding "very interesting developments are happening in the digital asset space."

Last year, Fink predicted crypto's blockchain technology will usher in "the next generation for markets" after signing a major deal with bitcoin and crypto exchange Coinbase.

Meanwhile, Fidelity Investments has now opened up its crypto trading platform to its 37 million users to buy and sell bitcoin and ethereum commission-free, it was first reported by The Block.

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The bitcoin and crypto market has traditionally moved cyclically, surging higher before crashing and then soaring higher again.

Some bitcoin, ethereum and crypto market watchers are pointing to bitcoin's next halving, when the flow of new bitcoin being created will be cut by half, as a potential catalyst for the next bitcoin price bull run.

"Were about a year away from bitcoins next halving," Alex Thorn, Galaxys head of research, said in emailed comments. "Historically, these have been bullish events for the digital asset."

The next bitcoin halving is scheduled for late April 2024 and will see the bitcoin block reward issued to miners cut to 3.1 bitcoin, down from 6.2 currently.

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com.Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

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$14 Trillion Earthquake: Fidelity And BlackRock Are Quietly Laying The Groundwork For The Next Bitcoin, Ethereum And Crypto Price Bull Run - Forbes