2/4 FAL Weekly Digest
Welcome to the FAL Weekly Digest, a source for this week’s biggest news articles and crypto market updates.
Here is what you need to know:
Russia Warms Up to Crypto
A recent divide in the Russian government over the regulation of cryptocurrency has proven to be a cause for concern for businesses operating in the country. The Russian Central Bank proposed several regulations of the industry including banning the use and mining of cryptocurrency in Russian territory. The report cites the “potential risks to financial stability provoked by cryptocurrencies” and their “extensive use in unlawful activities” as to reasons behind the sentiment shift.
Several prominent government officials responded to the central bank’s proposal including Russian Finance Ministry director Ivan Chebeskov who favors increased oversight rather than a complete ban. During an interview with the RosBiznesConsulting (RBC) media group, Chebeskov highlighted the importance of cryptocurrency mining in Russia and how it is a major factor in keeping Russia competitive in the global technology industry. He stated that “we need to give these technologies the opportunity to develop. In this regard, the Ministry of Finance is actively involved in the development of legislative initiatives in terms of regulating this market.”
Russian President Vladimir Putin has reportedly contributed to the on-going regulatory discussion according to Kremlin spokesman Dmitry Peskov, who stated that Putin supports a proposal to tax and regulate mining of cryptocurrency rather than completely ban it all together. Putin has reportedly ordered the government and central bank to “work out their differences.”
It is no surprise to see Russia reversing on their hawkish stance towards crypto mining. Russian based Bitcoin mining operations account for about 11% of Bitcoin’s global mining hash rate, and the nation sees about $5 billion worth of cryptocurrency transactions made every year. There are even reports from the government that more than 17 million Russians own crypto, and their holdings combined exceed $200 billion. The opportunity to be a home to the $4 billion dollar mining industry and profit off of the potential tax revenue is arguably too hard to resist.
Market Update - Bitcoin
The overall cryptocurrency market capitalization is about $1.85 trillion USD, a 8.19% increase from last week’s valuation of $1.71 trillion. At the time of publication, Bitcoin ($BTC) is valued at $40,523 per bitcoin with a market capitalization of $768 billion making up 41.5% of the overall market.
The cryptocurrency market is currently seeing a relief rally in conjunction with traditional markets who have suffered severe losses in January 2022. Bitcoin has steadily produced a series of higher highs and lows from its lowest price on January 24th of about $33,000. It faces a significant level of resistance at the $40-42k level as it reaches price range highs.
If Bitcoin produces yet another “higher low” and closes the weekly candle above $39,000 it could be a good sign of a potential market reversal. For a more in-depth technical analysis, please see our report found here.
BTC Mining and the Environment
As global cryptocurrency mining operations continue to expand, there have been increasing calls for government oversight and regulation regarding the impact that crypto mining could have on the environment. The United States House Energy and Commerce Oversight Subcommittee held a hearing to address the growing concerns over proof-of-work (PoW) mining and its extreme energy consumption. Several speakers addressed the committee in a similar fashion, stressing the environmental impact that mining has on a global scale, local settings, and the strain on utility services.
While the figures purported by the speakers may have acted as a cause for alarm for listeners, a new study on global mining operations by CoinShares may suggest that some of these criticisms may be exaggerated. The report estimates that Bitcoin (BTC) mining emitted 42 megatons (Mts) of carbon dioxide (CO2) in 2021, which accounts for less than 0.08% of the world’s total CO2 missions of 49,360 Mts in 2021. The study sheds much needed light on the reality of Bitcoin mining and how it has continuously progressed towards “cleaner” and more efficient means of energy production, atleast in the United States. For more information on the environmental impact of Bitcoin mining, please read our synopsis found here.
U.S. to Review Crypto Tax Laws
Cryptocurrency is often seen as a great speculative investment (not financial advice), but is not seen as a great medium of exchange due to the archaic tax laws in the United States and beyond. The U.S. Internal Revenue Service (IRS) currently treats virtual currency as property, where general tax principles for property transactions such as the taxing of gains/losses on the value of that property are applied to virtual currency transactions.
A new bill introduced by Washington Representative Suzan DelBene aims to change the Internal Revenue Code of 1986 to exclude gains from personal transactions of virtual currency, where those who file taxes in the U.S. will not be required to pay capital gains taxes on cryptocurrency transactions of $200 or less. This will greatly facilitate the actual use of cryptocurrency as a currency, where users will not have to worry about getting taxed on every single purchase they make using crypto.
Crypto Invades Super Bowl LVI
Fans of American football can look forward to an increased presence of the cryptocurrency industry at the famed event. Several major crypto exchanges such as FTX and Crypto.com have already revealed that they have purchased time slots for ads during the big game. The cost for a 30 second advertisement in Super Bowl LVI is about $6 million according to a study by Temple University, suggesting that these exchanges are betting big on the future of crypto.
Not only will viewers see ads for crypto throughout the event, the NFL has officially announced that each fan who attends the game in person on February 13th, 2022 will receive a “limited edition NFT to commemorate a once in a lifetime game day experience.” For more information on the growing relationship between professional sports and cryptocurrency, please see our full article found here.
Thanks for reading! For more information regarding the cryptocurrency space, please visit us at https://www.cryptofal.com/.
