Crypto
As states divide on the benefits of Bitcoin, is there a solution to its climate and power system impacts?
Bitcoin advocates insist their energy-intensive digital “mining” is necessary to protect the cryptocurrency despite its power system impacts, which climate activists find unacceptable. But there may be a middle ground.
Many Bitcoin miners are discovering clean energy is a cost-cutting electricity source, cryptocurrency analysts said. And a growing regulatory backlash suggests miners should capitalize on it before potentially costly new regulations are imposed on them by the Biden administration and some state policymakers unconvinced of its economic benefits, environmentalists said.
Mining creates Bitcoins from algorithm-guided energy-intensive computations and digital transactions, the cryptocurrency’s foundational 2008 white paper acknowledged.
The white paper’s algorithm “will require increasing computing and electricity use, and the main variable miners can control is their electricity price,” Bitcoin Policy Institute, or BPI, Fellow Margot Paez said. “Bitcoin mining is being forced by its design toward low-cost renewables” and new strategies “that can reduce their costs and improve system reliability,” she added.
But that cannot be the whole solution, climate activists responded.
Bitcoin miners cannot “take existing renewables and impose dirty generation on others” or “take over new renewables needed for emerging electrification loads,” said Sierra Club Senior Advisor for Strategic Research and Development Jeremy Fisher. And large load tariffs are needed “to protect customers from stranded infrastructure costs when miners relocate for lower-priced power,” he added.
The easy solution is shifting Bitcoin from its computationally complex, energy-intensive transaction validation method to a method that can reduce energy use 99.99%, climate activists like Greenpeace argue. But Bitcoin miners insist they have the right to use their method to ensure transactional security.
There is, however, an emerging vision of Bitcoin mining data centers co-located with clean energy to power operations, support reliability, and protect the planet, some Bitcoin advocates and opponents agreed. But that will require scarce clean energy and transmission to be wisely allocated, others said.
A bit about Bitcoin
Today’s over 20,000 cryptocurrencies, called by some “digital gold,” have reached a combined $1.197 trillion market value, led by Bitcoin’s market capitalization of $512.4 billion and Ethereum’s over $221.5 billion market cap, Infinite Market Cap reported June 7. Real gold remains the world’s primary store of value, with an over $12.9 trillion market cap, Infinite Market Cap reported.
Bitcoin miners compete to create new Bitcoins using data center-scale computational power to solve a puzzle created by the white paper’s algorithm about every 10 minutes, according to vpnMentor. Solutions are validated by the mining community through a rigorous proof-of-work, or PoW, method considered vital to Bitcoin’s integrity and added to the encrypted chain of blocks in a secure online blockchain ledger.
Bitcoin miners reject Ethereum’s proof-of-stake, or PoS, method for solving the puzzles, through which the user who puts the most Ethereum at stake to validate the puzzle solution earns the reward, Wood Mackenzie Global Head of Grid Edge Ben Hertz-Shargel said. If the solution in the blockchain is proven wrong by other users, the stake is forfeited, he added.
Ethereum’s September 2022 transition to PoS was estimated to have reduced its electricity usage “by an astonishing 99.99%,” by almost completely eliminating Bitcoin’s rigorous repetitive computations, Cambridge University’s Judge Business School reported April 26.
But PoS cannot fully protect Bitcoin earnings because it gives the most affluent “stakers” too much leverage over decisions that are made by all participants in PoW, Bitcoin advocates agreed. “The Bitcoin world will never be convinced PoW is a problem compared to problems in the financial world that PoS replicates” by giving the most leverage to the most affluent, BPI’s Paez said.
Bitcoin mining’s impacts on renewables supply and power system reliability, likely to grow with algorithm-controlled inevitable Bitcoin scarcity, are the divisive questions in need of solutions that both protect cryptocurrency markets and address climate concerns if they are possible, those on both sides of the question said.
Reliability, renewables, polarization
In debates about Bitcoin mining’s power system and environmental impacts, polarized environmental and cryptocurrency advocates often seem to talk past one another.
Some environmental advocates seem convinced that Bitcoin mining “needs to be stopped in order to save the planet,” which “is a bit disingenuous,” a BPI January 2022 opinion piece argued.
But cryptocurrency mining “could hinder broader efforts to achieve net-zero carbon,” a September 2022 White House Office of Science and Technology Policy report concluded. If that happens, it could impede renewables funding by 2022’s Inflation Reduction Act and 2021’s bipartisan infrastructure law from enabling clean energy to electrify the transportation, buildings and industrial sectors, it added.
A key point of disagreement is over cryptocurrency mining data centers’ ability to act as demand response to support power system reliability.
While Bitcoin mining requires a significant amount of energy, its operational flexibility can support system reliability through demand response programs that compensate large loads for shutting down during critical peak periods, the White House report acknowledged.
But that value has been overpaid by tens of millions of dollars in Texas demand response programs, the Tech Transparency Project reported.
Unlike many large loads, Bitcoin miners can shut down their data centers quickly to earn the programs’ compensation and often don’t want to run when electricity prices are high anyway, climate activists said.
And many miners are astute market traders with legal hedge contracts that allow profitable electricity price arbitrage during high-priced demand spikes, Bitcoin analysts acknowledged.
“Demand response is critical,” but its compensation can be rethought to prevent rewarding large loads like Bitcoin mining data centers that would in any case shut down when prices spike, Sierra Club’s Fisher said. Those rewards enable Bitcoin miners to continue operating at other times dominated fossil fuels, he added.
Any large load can be paid “for curtailing peak energy usage and the costs are shared” by electricity customers because clean energy advocates agree it supports reliability, an April 11 CoinDesk opinion piece responded. That is not “nefarious manipulation.”
Regulations that give miners an incentive to use clean energies “when it is good for them and for the planet” can be a middle ground by allowing mining without generating climate crisis-inducing greenhouse gas emissions, BPI’s Paez said.
Policy solutions
Policymakers are working on a range of laws and regulations that could be costly for miners.
The Biden administration’s Fiscal Year 2024 budget includes a proposed excise tax on digital asset mining’s electricity usage. Bitcoin mining’s “negative environmental effects” can increase energy prices and “uncertainty and risks” for others on the same electricity system, said a Treasury Department explanation of its proposal to phase in a 30% tax on digital mining’s electricity costs to protect other customers.
But the proposed tax and other administration efforts show the Biden administration does not recognize the importance of using the electricity to secure cryptocurrencies through the PoW approach, Bitcoin advocates responded.
Testimony in support of legislation like Senate Bill 661 from Senator Edward Markey, D-Mass., which would require stricter reporting of emissions by miners, showed the same prejudice, Paez said. Witnesses said “Bitcoin mining is wasteful by design” without recognizing the algorithm’s “economic incentive to move to low-cost renewables,” she added.
But the bill is “a good first step” because “it would begin to show the scope of the lack of energy use and emissions disclosure by almost a third of miners,” said Earthjustice Deputy Managing Attorney Mandy DeRoche.
Draft bipartisan House legislation just introduced amid new turmoil and controversies over cryptocurrency markets would create a framework for stronger regulation, Forbes contributor Billy Bambrough wrote June 5.
Given the wide partisan divides in the current Congress, near-term action on the legislation, the proposed excise tax, or financial regulation of digital assets is unlikely, analysts on both sides of the issues agreed.
But some state-level work has already been effective, said DeRoche. New York’s legislatively-imposed moratorium on Bitcoin miners’ fossil fuel use to power data center operations “is a piece of the bigger puzzle,” as are the Oregon and Washington climate laws “with specific emissions reductions requirements for cryptocurrency miners,” she added.
“There aren’t many Bitcoin mining operations as harmful as the behind-the-meter natural gas plants that led to the New York moratorium, but most mining operations tap into dirty grids,” DeRoche said.
In other states, the Bitcoin mining energy usage debate is being addressed by regulators.
“A traditional regulatory principle is to protect non-discriminatory customer access to electricity with a just and reasonable price,” said Regulatory Assistance Project, or RAP, Senior Associate Mark LeBel. Moral judgments will differ about the value of different energy uses, but rates and demand response programs “should require all customers to pay their costs.”
After Texas demand response programs during 2021’s Winter Storm Uri and other emergency events led to high payouts to Bitcoin mining operations, Texas began considering more cost-effective reliability programs. ***A performance credit mechanism compensating dispatchable resources was approved May 28. A capacity market, Senate Bill 624, which would slow renewables growth, and Senate Bill 1751 to increase compensation for critical peak shut downs remain under consideration.***
But while some states are working to limit the impacts of Bitcoin operations, others want to attract Bitcoin mining data centers’ jobs and economic benefits with special electricity rates. Opponents say Bitcoin advocates exaggerate those benefits and are studying protections against the high costs their utilities could incur to accommodate the large loads of such data centers.
Economic development rates or special contracts to large load customers can attract them, RAP’s LeBel said. Such rates need to be low to interest those customers but should not unreasonably harm other ratepayers, he added.
There is a legitimate concern with large loads requiring new long-term amortized infrastructure investments that could be stranded and increase rates if those loads relocate, LeBel said. But “utilities also may use a new large load to secure financing for infrastructure that can serve future customers if the large load exits,” he said.
Protective tariffs can require large loads like Bitcoin data centers to commit to exit fees or penalties if they relocate, suggested Earthjustice’s DeRoche.
But Arkansas legislators rejected an Entergy-proposed protective tariff imposing penalties on large load customers for exiting service before utility costs were recovered. Intead, they passed House Bill 1799 along with a special tariff to attract miners and protect their rights and costs, DeRoche said. And Kentucky’s lawmakers approved special taxes for Bitcoin mining that Applachian climate activists estimate will reduce state revenues $9 million annually, she added.
When Idaho Power reported approximately 2,000 MW of potential new Bitcoin mining data center load, its regulators approved a protective tariff, Sierra Club’s Fisher said. A new regulatory docket will allow regulators and stakeholders to develop the non-discriminatory tariff, he added.
Climate activists continue to fight state by state and proceeding by proceeding to make their concerns known. But Bitcoin miners are seeing electricity market price signals that could have a bigger impact sooner on when they use electricity and the types of generation they choose to support, some advocates said.
Real-world solutions
Scarce new and existing renewables and transmission capacity is being absorbed by Bitcoin mining data centers, moving them from other uses, Sierra Club’s Fisher and Wood Mackenzie’s Hertz-Shargel insisted.
And the only magic bullet is miners moving from PoW to PoS, “which does not seem likely,” added Natural Resources Defense Council Senior Advocate, Climate and Clean Energy Program, Cullen Howe. “They are profit-driven companies acting within their rights.”
But Satoshi Energy is an example of Bitcoin mining’s future, according to Brock Petersen, its CEO. Its data center was co-located at an existing wind project, which bypassed project financing complexities and reduced costs by using existing infrastructure, he said. Fitting the renewables project size with the data center load has allowed the operating project to use 100% renewables about 50% of its hours, he added.
TeraWulf’s different business model, which focuses on existing clean energy sources, has a similar goal, said Kerri Langlais, its chief strategy officer. A 60 MW upstate New York Bitcoin mining data center runs on 91% clean energy from nearby Niagara Falls hydropower and the Fitzpatrick Nuclear Power Station, and its 200 MW Pennsylvania mining data center runs on 100% clean energy through a direct connection to the 2.5 GW Susquehanna Nuclear plant, Langlais said.
“Location is everything,” she said. The clean energy going to TeraWulf Bitcoin mining data centers cannot easily reach other demand pockets “due to transmission constraints,” she added. The rest of the mining sector “cannot move to zero carbon overnight,” but many miners are “evolving” to recognize the economic opportunity in clean energy, she said.
Bitcoin mining’s claims of a trend toward renewables “is greenwashing because it is largely about small early projects ad future aspirations,” Earthjustice’s DeRoche responded. And “it is not clear the total stranded clean energy and congested transmission locations will come close to offsetting the burden that PoW mining is adding,” she said.
BPI’s Paez disagrees. “Bitcoin mining’s energy use will continue to grow, but emissions will drop as miners feel the pressure of valid concerns about the climate,” and economics drives them to the best clean energy locations, she said. “It has taken time,” but companies are starting to react “because Bitcoin mining is energy agnostic and clean energy is the lowest cost option,” she added.
Crypto
How the Fed's Rate Cuts Could Shave Millions in Stablecoin Issuer Income
Key Takeaways
- The Federal Reserve’s recent decision to cut interest rates will lead to lower revenue for stablecoin issuers, according to a new cryptocurrency industry report.
- Issuers of stablecoins have held U.S. Treasurys as a way to earn a return on the reserves backing the digital assets they issue.
- Stablecoin providers hold nearly $125 billion of U.S. Treasurys, and each 50 bps rate cut is expected to lead to a $625 million drop in annual interest income derived from these assets.
- If rates continue to fall, as expected, stablecoin providers may need to look into alternative reserves to back their digital assets, a crypto industry executive forecast.
Stablecoin issuers could be looking at lower income as the Federal Reserve (Fed) kicked off its first rate cut cycle since 2020.
Each 50 basis point cut by the Fed could lead to a $625 million drop in total annual interest income for stablecoin issuers, according to a new report from digital asset data provider CCData.
Those hits could quickly add up as the Fed itself expects cuts totaling 50 basis points by the end of this year, and another 100 basis points by the end of next year.
Why Would A Rate Cut Affect Stablecoins?
Stablecoins are cryptocurrencies whose value is pegged to another cryptocurrency. Some of the most popular stablecoins have their value pegged to the U.S. dollar and keep a reserve in cash or equivalent investments—often U.S. Treasurys—to maintain that peg.
Centralized stablecoin providers, such as Tether (USDTUSD) and Circle (USDCUSD), have relied heavily on their holdings of U.S. Treasurys earning interest over the past few years as high interest rates drove up Treasury yields.
U.S. Treasurys make up the vast majority of reserves held by stablecoin issuers, at just over 80%. This amounts to holdings of nearly $125 billion worth of Treasurys.
Tether, the largest stablecoin by market cap, alone holds $93.2 billion worth of U.S. debt, which accounted for much of that digital asset company’s $5.2 billion of profits in the first half of 2024, the CCData report said.
Bitcoin.com Director of Engineering Andrei Terentiev speculated on social media that lower interest rates could eventually push stablecoin providers and other financial institutions into riskier assets in an effort to earn a return on their reserves.
“With lower yields on safer assets, institutions often shift their focus toward ‘risk-on’ assets,” Terentiev posted on the platform X. “Think stocks, crypto, and other investments that offer higher potential returns but come with greater risk,” he wrote.
Crypto
Which Cryptocurrency Under $0.50 Can Turn a $150 Investment Into $150,000 by 2025? Expert Top Picks Are… – Brave New Coin
Turning a small investment into a fortune is the dream of many crypto enthusiasts. With various coins priced under $0.50, the opportunity is tantalizing. This article dives into the top expert picks that have the potential to transform a modest $150 into a staggering $150,000 by 2025. Discover which cryptocurrencies are poised for explosive growth.
CYBRO Presale Climbs Past $2.5 Million: A One-in-a-Million DeFi Investment Opportunity
CYBRO is capturing the attention of crypto whales as its exclusive token presale quickly surges above $2.5 million. This cutting-edge DeFi platform offers investors unparalleled opportunities to maximize their earnings in any market condition.
Experts predict a potential ROI of 1200%, with CYBRO tokens available at a presale price of just $0.03 each. This rare, technologically advanced project has already attracted prominent crypto whales and influencers, indicating strong confidence and interest.
Holders of CYBRO tokens will enjoy lucrative staking rewards, exclusive airdrops, cashback on purchases, reduced trading and lending fees, and a robust insurance program within the platform.
With only 21% of the total tokens available for this presale and approximately 80 million already sold, this is a golden opportunity for savvy investors to secure a stake in a project that’s truly one in a million.
>>>Join CYBRO and aim for future returns up to 1200%
LUNC: Terra Classic’s Role in the Global Payments Ecosystem
Terra Classic, known as LUNC, is a blockchain protocol utilizing stablecoins for price-stable global payments. Combining stability and adoption of fiat with Bitcoin’s resilience, Terra aims for efficient transactions. Its mainnet launched in 2019, and expanded with stablecoins linked to several currencies. In 2022, Terra Classic emerged after a rebranding, with its native token LUNA renamed LUNA Classic. While the new Terra chain focuses elsewhere, LUNC draws parallels to historic blockchain splits. With its unique approach to stablecoins, LUNC offers potential for those seeking an innovative payments system. The design seeks to balance stability and speed, reflecting lessons learned from past crypto market challenges.
Stellar (XLM): A Bridge for Global Fund Transfers
Stellar (XLM) offers a platform for fast, affordable fund transfers by connecting diverse financial systems. It uses blockchain technology to support currencies from around the world, including cryptocurrencies like Bitcoin. Stellar Lumens, its own currency, helps facilitate these transactions. The network aims to improve existing financial setups, not replace them. Both individuals and businesses can benefit, using Stellar for global money transfers or building blockchain apps. The Stellar Development Foundation encourages using the network for things like NFTs and smart contracts. Over the years, Stellar has built meaningful partnerships and processed a massive number of transactions, creating a promising stage for its future growth.
Kaspa: The Future of Fast and Secure Transactions
Kaspa is a proof-of-work cryptocurrency using the GHOSTDAG protocol. Unlike typical blockchains, GHOSTDAG lets blocks coexist rather than reject them. It organizes them while keeping them all. Kaspa uses a blockDAG structure for high-speed and secure transactions. It can currently process one block per second, with goals of increasing that significantly. This allows nearly instant confirmations. Kaspa includes features like Reachability, SPV proofs, and plans for subnetwork support. These enhance its scalability and could simplify layer 2 developments. This innovative approach positions Kaspa as a promising player in the crypto landscape. With this setup, Kaspa offers quick and secure transactions, making it an exciting option for users.
VeChain’s Blockchain Powers Real-World Solutions in Enterprise
VeChain is a blockchain platform that is transforming how industries track goods. Known for its supply chain solutions, it lets companies monitor products like food, fashion, and cars. With its native token, VET, ranking high in market cap, it’s clear that VeChain has significant use and acceptance. By assigning IDs and sensors to products, it helps verify authenticity and manage recalls, proving vital for luxury and automotive industries. Founded by Sunny Lu, it moved from Ethereum to its own blockchain, VeChainThor. This switch introduced a dual-token system and a proof of authority for better transaction validation. Major partnerships demonstrate its practical applications, making VeChain a key player in blockchain solutions.
Dogecoin’s Rise: From Meme to Major Cryptocurrency Player
Dogecoin started as a light-hearted alternative in the crypto world. Its Shiba Inu logo became a popular symbol online. Unlike Bitcoin, Dogecoin has no supply limit, which means coins are always being produced. It gained attention when its value soared, influenced by Elon Musk and social media buzz. Dogecoin’s playful origins didn’t stop it from becoming one of the top cryptocurrencies by market cap. Its journey shows how community support and online trends can shape financial markets. With many fans worldwide, Dogecoin remains an interesting part of the digital currency landscape.
Conclusion
LUNC, XLM, KAS, and VET have less potential for short-term gains. In contrast, CYBRO offers a unique advantage. As a DeFi platform, it uses AI-powered yield aggregation on the Blast blockchain. This provides lucrative staking rewards, exclusive airdrops, and cashback on purchases. It ensures seamless deposits and withdrawals, focusing on transparency and compliance. CYBRO has attracted strong interest from crypto whales and influencers. Its advanced technology and superior user experience make it a promising project to watch.
Site: https://cybro.io
Twitter: https://twitter.com/Cybro_io
Discord: https://discord.gg/xFMGDQPhrB
Telegram: https://t.me/cybro_io
This is a sponsored article. Opinions expressed are solely those of the sponsor and readers should conduct their own due diligence before taking any action based on information presented in this article.
Crypto
PayPal Introduces Cryptocurrency Trading for US Merchants – Brave New Coin
Global payments giant PayPal will allow U.S. business account holders to buy, sell, and hold cryptocurrencies directly from their accounts.
Global payments giant PayPal has unveiled new features allowing U.S. business account holders to buy, sell, and hold cryptocurrencies directly from their accounts.
The move comes as more business clients seek access to crypto services available to consumers. PayPal also intends to expand its cryptocurrency features into regular business operations. According to the statement, this feature will be unavailable in New York State.
PayPal’s peer-to-peer payments app Venmo initially allowed clients to manage cryptocurrency in 2020. Since then, they have “continuously made significant steps to increase cryptocurrency utilization,” the statement read.
“Business owners have increasingly expressed a desire for the same cryptocurrency capabilities available to consumers. We’re excited to meet that demand by delivering this new offering, empowering them to engage with digital currencies effortlessly,” said Jose Fernandez da Ponte, senior VP of blockchain, cryptocurrency, and digital currency at PayPal.
According to PayPal’s statement, the new features of crypto services for business accounts aim to boost crypto’s real-world utility. The company’s latest move is a response to business owners who have been asking for access to crypto services since the platform launched its consumer-level digital currency services.
“Since we launched the ability for PayPal and Venmo consumers to buy, sell, and hold cryptocurrency in their wallets, we have learned a lot about how they want to use their cryptocurrency,” Fernandez da Ponte added.
PayPal stock has climbed roughly 26% this year, suggesting positive sentiment from investors.
Businesses can Now Transfer Cryptocurrency On-Chain to External Wallets
In addition to the new buying and selling ability, U.S. merchants can now transfer cryptocurrencies to third-party wallets. This new functionality extends the flexibility of digital currency transactions for businesses.
“PayPal business account holders can now send and receive supported cryptocurrency tokens to and from external blockchain addresses,” the company mentioned in its statement.
Last month, Crypto.com teamed up with PayPal to allow US users to make purchases through cryptocurrencies. This alliance expands on earlier joint ventures between the two businesses, which included allowing PayPal to recharge Crypto.com Visa Card. Besides Crypto.com, PayPal’s stablecoin is available within selected exchanges including Coinbase, Bitstamp, and Kraken.
PayPal Cuts Fees by Expanding PYUSD to Solana
In 2023, PayPal launched its own US dollar-denominated stablecoin (PYUSD), in August 2023. PYUSD was issued by a US-regulated entity named Paxos Trust Company. Initially, PYUSD was launched as an ERC-20 token through the Ethereum blockchain.
One limitation of Ethereum-based stablecoins is their high transaction fees. PayPal expanded PYUSD to the Solana network in May 2024 to minimize the cost. This move led to a significant fee reduction (sometimes over 90%). These lower transaction rates on Solana made PYUSD more attractive for regular purchases like coffee or groceries, which boosted the demand for PayPal to introduce crypto services to businesses.
“The Solana network’s speed and scalability make it the ideal blockchain for new payment solutions that are accessible, cost-effective, and instantaneous,” said Sheraz Shere, General Manager of Payments at the Solana Foundation. “Continued adoption from industry participants like PayPal helps realize the next generation of fintech innovation.”
According to BraveNewCoin data, PYUSD’s market capitalization has expanded dramatically since its introduction over a year ago, rising from approximately $45 million in September 2023 to around $700 million at the time of writing.
-
Politics1 week ago
New House Freedom Caucus chair reveals GOP rebel group's next 'big fight'
-
News1 week ago
Toplines: September 2024 Inquirer/Times/Siena Poll of Pennsylvania Registered Voters
-
Business1 week ago
Video: Federal Reserve Cuts Interest Rates for the First Time in Four Years
-
Business1 week ago
Cheaper Mortgages and Car Loans: Lower Rates Are on the Horizon
-
Politics1 week ago
Dem lawmakers push bill to restore funding to UN agency with alleged ties to Hamas: 'So necessary'
-
World1 week ago
WATCH: Hungary braces for what could be the worst floods in a decade
-
World1 week ago
What’s South Africa’s new school language law and why is it controversial?
-
Politics1 week ago
House committee to demand 'stonewalled' memo detailing Biden agency's 'curious' voter registration work