🇧🇹 Bhutan Goes Big On Bitcoin Mining
The kingdom of Bhutan has been mining Bitcoin since 2019, the Biden administration wants to tax Bitcoin mining, and BRC-20 tokens push BTC transactions to record heights.
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Seems that we have another El Salvador in the making, as the kingdom of Bhutan is doubling down on Bitcoin mining. In the meantime, the U.S. keeps on shooting in its own foot by proposing a 30% tax on Bitcoin mining. And the controversial hype train around the Ordinals Protocol is still going strong.
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Quote of the Week:
“It's no surprise that entities are mining bitcoin in Bhutan. The mountainous country has a massive hydropower capacity compared to its small population and produces a similar amount of electricity per capita as the United States — a much wealthier country.”
- Jaran Mellerud, bitcoin mining analyst
🇧🇹 Bhutan Goes Big On Bitcoin Mining
Seems that El Salvador is not the only country that’s betting big on Bitcoin. Forbes reports that the tiny kingdom of Bhutan in the Eastern Himalayas has been running its own state-funded Bitcoin mining operation for a while. Hydroelectric power is a significant economic driver in the country, accounting for 30% of the GDP and providing the energy needed for nearly the entire country. A government official officially confirmed that they began mining “a few years ago as one of the early entrants when the price of Bitcoin was around USD 5,000”, which would put the starting date at around April 2019. On top of that, Nasdaq-listed mining company Bitdeer announced that they are in talks with Bhutan officials to secure access to 100 MW to power a more extensive Bitcoin mining operation in the country. The country now wants to focus primarily on Bitcoin after the state-owned secretly invested in cryptocurrencies and supposedly lost a lot of money when BlockFi and Celsius went under.
My take: Bhutan’s focus on hydroelectric power perfectly fits Bitcoin mining. It’s good that they now focus on Bitcoin after burning their fingers with crypto investments.
💸 Biden Wants 30% Tax On Bitcoin Mining
Over the past months, it became pretty clear that the current U.S. government doesn’t like Bitcoin and anything that smells like it. Now things are heating up. Biden’s new budget proposal for 2024 includes a Digital Asset Mining Energy (DAME) tax. This would require Bitcoin miners to pay a 30% tax on the electricity used for their mining operations. According to the Biden administration, the industry’s high-energy consumption has negative spillovers on the environment, quality of life, and electricity grids. “This puts a clear line in the sand that they do not like the industry. They are looking for ways to hamstring it,” Tom Mapes, director of energy policy at the Chamber of Digital Commerce, says. “This is just a way to go after the industry which they do not support.” It’s ironic that the Biden administration now condemns Bitcoin mining, and its unique ability to be turned off and on when required. As Twitter user Level39 pointed out, the democrats were the most enthusiastic supporters of this practice, commonly known as “Demand Response” prior to 2020.
My take: The recently published New York Times hit-piece on Bitcoin mining came just in time for the Biden administration to double down on fighting mining. Note that the budget proposal is still a proposal and still needs to pass Congress.
🔥 BRC-20 Tokens Push Bitcoin Transactions To ATH
The growth of Bitcoin’s controversial Ordinals Protocol is not slowing down. In fact, after a short-lived hype around NFTs, we now have BRC-20 tokens on top of Bitcoin. As the name suggests, the idea behind it is similar to Ethereum’s ERC-20 token standard. BRC-20 also allows naming, setting a supply, and transferring these tokens. Amidst this craze, Bitcoin just broke its all-time record for daily transactions, surpassing former bull market levels. So much for the facts. In any case, opinions in the Bitcoin community differ widely. Critics complain that the limited Bitcoin block space is used for pointless gambling and artificially increases the on-chain transaction costs for Bitcoin. Proponents of ordinals find exactly that desirable. After all, Bitcoin can be more than “just” a protocol for financial transactions, and finally, only the capabilities introduced with upgrades like SegWit and Taproot would be used.
My take: The debate about the sensible use of the Bitcoin block space is justified. At the same time, the Ordinals Protocol shows which additional functions are possible on Bitcoin.
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