After China is acting more restrictively against Bitcoin mining, there is now new hope in the mining stronghold of Sichuan. Meanwhile, the SEC is calling for new regulations for crypto exchanges.
After the flash crash last week, Bitcoin continues to work its way towards the 40,000 mark. After the crypto reserve currency was only able to briefly break through this important hurdle yesterday, the digital store of value is now back in a lower gear. On a daily basis, Bitcoin is losing around 4 percent, at $ 36,910 at press time.
Some investors explained the sudden crash of various cryptocurrencies with new crypto bans in China and Beijing’s tougher crackdown on Bitcoin mining. It is estimated that the Chinese mining industry accounts for 55 percent of the global hash rate. In order to take more decisive action against climate-damaging digital miners, the Chinese government in the province of Inner Mongolia only adopted new regulations a few days ago, according to which Bitcoin miners are temporarily banned from the city if they violate environmental regulations Social Credit System China threatens. In addition to Inner Mongolia and Xinjiang, the Sichuan region is also one of the country’s most important mining hotspots. According to media reports, the Chinese energy regulator would like to discuss the situation there on June 2nd. However, since Sichuan has enormous hydrogen capacities, miners in the region are now hoping for leniency.
SEC wants further regulations for crypto space
Meanwhile there is news from the USA. The boss of Securities and Exchange Commission (SEC), Gary Gensler, called for further regulations for the crypto market at a hearing before the House of Representatives Finance Committee. Currently, due to the sheer number of coin projects around Bitcoin, Ethereum and Co., it is hardly possible to implement consumer protection measures. Therefore, the authority has so far only been able to show 75 cases in which the SEC could actually take action.
They now want to work with the congress to better protect investors. Gensler have regulations in mind, according to which crypto trading should be subject to regulations similar to conventional exchanges such as the NASDAQ or the New York Stock Exchange. To what extent these new rules could look like for Coinbase, Kraken and Co. is so far unclear. It is also uncertain when the SEC will deal with this issue.
“Bitcoin and Co. could trigger the next financial crisis”
In addition, there is also increasing criticism of Bitcoin and Co. For example, Brett Heath, CEO of Metalla Royalty & Streaming, a company that offers investment opportunities in various precious metals, believes that cryptocurrencies could trigger the next big financial crisis.
If you look back over the last few decades and look at all the financial crises, they all have a few things in common. And one of them is the mass adoption of a new financial product or technology that is not very well understood.
Brett Heath to KITCO News
Cryptocurrencies are nothing more than a “license for the private sector to print money”. Heath is also critical of forecasts in which Bitcoin could overtake gold as a store of value. The limit of 21 million coins does not add value to Bitcoin, according to the Metalla CEO.
What about the other 10,000 crypto tokens and coins that exist today, many of which have better technology, offer better privacy, and use much less energy?
Brett Heath to KITCO News
However, the Metalla CEO did not go into the electricity consumption of the gold industry. However, a report from Galaxy Digital found that the gold and banking sectors each use roughly twice as much energy as Bitcoin.