Bitcoin is one of the most popularly discussed topics today as interest is driving both to and away from Bitcoin. A ban on Bitcoin mining in the state of New York coupled with the currency declining value begs one to wonder about Bitcoin's credibility as an investment.
Recently, the New York Senate has passed a bill that bans crypto mining operations that use carbon-based fuels to power their facilities in an attempt to reduce the state's carbon footprint. The bill specifically targets proof-of-work mining which consumes a lot of energy to validate blockchain transactions.
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This bill stated that all proof-of-work operations in the state which operate using fossil fuels will face a two-year ban, but those operating using renewable energy sources are free to continue. This is to tackle the issue of climate change. People in the know say that this will force miners away from the state to other states that offer such energy at cheaper rates, driving New York's contribution to Bitcoin even lower.
Moreover, Bitcoin currently trades around $29,653.05 per coin, down 37% from $47,094.25, its price on 01/01/2022. The stock fell through the level of $30,000 in mid-May when TerraUSD and Tether faced panic selling. The currency's market cap has fallen down from $892.17 billion in January 2022 to $565.15 billion today, marking a loss of 37% for investors.
However, not all is bad for Bitcoin as it is facing renewed interest in Argentina. One of the main reasons for the growing interest in Bitcoin is inflation. Inflation in Argentina has always been an issue as they go up to over 50% sometimes. The government devalues the fiat currency in an attempt to curb inflation which ends up devaluing people's savings and results in a financial crisis.
People are using Bitcoin as an inflationary hedge as Argentina is one of the Top 10 countries with the highest adoption rate of cryptocurrencies with current daily volumes of around 18.6 million. Two banks in the country had announced services facilitating the purchase and sale of cryptocurrencies and other crypto-related financial products only for the Central Bank of the country to ban them.
Moreover, Bitcoin is legal tender in the country of El Salvador as all companies are required to accept payment in BTC. The Salvadoran government issued a custodial digital wallet, gave its users $30 in free Bitcoin, and subsidized transaction costs to encourage Bitcoin use when it was accepted as fiat currency.
Some suggest that the downtrend faced currently due to rising inflation and bad geopolitical conditions might be a good thing for some of the strongest projects in the crypto industry since it will help remove speculative assets and leave those projects with robust fundamentals. Furthermore, Bitcoin is speculated to decline further but eventually climb back once again and touch levels higher than $69,000, its all-time high.
Article by Aman Agarwal.
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