Bitcoin crash: Reasons and Analysis
Introduction
For cryptocurrencies, the year 2020 was a game-changer. Despite the damage wrought by the Covid-19 pandemic over the world, Bitcoin's price has eclipsed previous highs, due mostly to rising institutional demand, which many in the cryptocurrency industry expected would catapult the currency to unthinkable heights. However, unless specific rules are enacted, we doubt that favorable advancements in the crypto industry will continue. While the cryptocurrency sector has been anticipating more regulatory oversight, Proof-of-Work (PoW) cryptos have just lately been a source of worry. According to recent reports, the European Union (EU) is on the verge of making crypto mining illegal owing to energy considerations.
Swedish officials are pushing for a crypto mining restriction across the European Union's 27 member states, concerned that solar power is being used to mine cryptocurrencies like bitcoin rather than being channeled for public use. Leaders in Germany, Spain, and Norway have all expressed support for the demand.
What is Crypto Mining and How Does It Work?
Crypto mining is a challenging method for verifying and adding new transactions to a cryptocurrency's blockchain using the proof-of-work (PoW) mechanism. The tournament winner earns a percentage of the prize money as well as transaction costs.
What Is the Impact of Crypto Mining on the Environment?
The most noticeable environmental effect of bitcoin is the electricity required for the mining process, which is how new digital money are created. Mining is utilized in a number of cryptocurrencies, however most people are aware with Bitcoin mining. However, it has been increasingly difficult to produce new units of money through mining since Bitcoin's introduction. Because the currency's supply is capped at 21 million units, the more units minted implies fewer units are available to mine, and minting new ones necessitates more processing power. The projected carbon footprint of electricity-generating power plants is a key source of environmental concern. A single Bitcoin transaction is estimated to need 2,292.5 kilowatt-hours of electricity, enough to power a typical US home for approximately 78 days. There's also the issue of physical electronic waste to think about. Computers, graphics cards, and custom-built ASIC rigs, among other things, are used to mine. People are constantly upgrading and discarding obsolete equipment in order to get an advantage in the race to mine more coins, resulting in up to 30,000 tonnes of electrical waste per year.
Final thoughts
According to EU Parliament member Stefan Berger, who manages the planned legislation package for handling crypto assets in the union, a potential ban on crypto mining would be a death sentence for bitcoin in the EU. According to Advocate P.M. Mishra, Managing Partner of Finjuris Counsel FZ-LLC, UAE, Finlaw Associates, India, and BCH Consulting, Europe, the newest version of the European Union's (EU) proposed legal framework for controlling virtual currencies, Markets in Cryptocurrencies (MiCA) still has a clause that could restrict the use of actual evidence cryptocurrencies.
Hello @lennyblogs, your post has allowed me to focus on a new problem that I had not detailed before, and it is the case of the "new electronic waste" product of the waste of mining equipment, this will be a great ecological, energetic and social disaster as well, which It makes me reflect a bit, is BTC mining really worth it? What will be the social, technological, ecological and social cost in the near future?
Well, it's sadly essential I believe so it needs to keep going, yet what would be the proper way for that.
Thanks for reading through!
Your post was upvoted and resteemed on @crypto.defrag
Thanks for the support!
Thanks for such a great post @lennyblogs. I must admit that I am really worried amidst what is currently happening in the cryptocurrency ecosystem. I just wish we can wake up from this chaos. So painful that it is not a dream, we just have to keep the fate high pending when things will be better.
Indeed, we have to believe in crypto and hope for a better future for the crypto world and everyone involved in it generally.
Thanks for reading through!
The crypto crash has been really a shock for many. Also the sudden massive dump of Terra Luna had negative impact on the entire crypto world. We'll just have to keep walking until we reach the light at the end of this tunnel. Interesting read.
That's right, the crash of Terra brought much fear for many who are either new or those who don't really know a lot about crypto.
Thanks for reading through!
Dear @lennyblogs
Thanks for sharing your thoughts regarding current market conditions. For many investors out there it surely is a very challenging time. We may all know that the best time to buy is when market is bleeding out. But it is not as simple to do as it is to say.
(after all, how many times can we afford to "buy the dip" before our money runs out while we continue watching markets going even lower)
So silly :/
Well. Crypto will not need europe. It will still exist and EU will be the one missing out. Amount of businesses that would move away to other parts of the world would be insane.
I wonder why EU wouldn't focus their attention on amount of energy being consumed by traditional banking system.
Yours, Piotr
Hello @crypto.piotr!
Well, I bought the dip twice and we still get more dips so that's it for me, for now, observation is the best thing we can do.
I don't even know why they focus on crypto and as you said they ignore the consumption of energy by the current or traditional banking system. If they miss out on crypto and they figure it out late they will probably regret it badly, but well, we can only see what they can do about it.
Thanks for reading!
I really think it would be the deathblow for the whole crypto industry in Europe. If they would pass a law like that, it would just give all the innovation away and basically give up on economy for the next century.
That's right, and that made me think that such a law would ruin years to come.
Thanks for reading through!