Energy - Friend or Foe?

GB Market Commentary 03/08/2021

by William Morris

Bitcoin continued its downward trend, over the past 24 hours, increasing its distance from the crucial $42,000 level. Support was found at $38,000, sinking marginally below this at 6am this morning. Since then, Bitcoin has further declined below this level. Nevertheless, many remain positive about the outlook for Bitcoin in the near term. If higher highs continue to be coupled with higher lows this may indicate a key signal for a bullish reversal. The next key support range will be found at $36,000.

Yesterday Forbes highlighted a July report by The American Bankers Association (ABA) which outlines crypto use cases for banks along with revenue models and regulatory issues. The use cases were listed as: “a store of value, custody / wallet provider, interest bearing accounts, payments, lending, exchange trading, broker dealer, insurance, network utility and asset management.” ABA acknowledged customer interest as the driving consideration for banks in offering access to crypto products. The report also highlighted that the current regulatory framework may leave “significant gaps in regulation and oversight.” Strengthening the idea that demand for regulatory consensus is growing from financial institutions, as well as customer’s, in order to facilitate mainstream adoption of cryptocurrency technology.

Following on from this, the ABA report flagged environmental concerns as a major risk for the crypto industry. In March 2021 Bitcoin’s mining energy consumption was estimated to have roughly the same annual energy usage of Sweden. With continued demand, Bitcoin will be mined into 2140, confirming the need for a drastic shift in how energy for mining has historically been generated. Green energy adoption in Bitcoin mining is increasing, in June last month green energy sources jumped 56%. Texas HODL Ranch is the first large-scale operation in Texas to be powered exclusively by wind and solar power, buying cheap energy when demand is low and turning off its rigs when demand is high.

Candela Coin, is utilizing blockchain technology so people can buy and sell electricity without using the existing electricity grid, as well as a protocol which requires solar-powered energy for mining. Networks are also becoming increasingly efficient, Ethereum’s transition to Proof-of-Stake, will reduce energy usage by 99.95%, in its London Hard Fork due to be implemented tomorrow. Adopting the fundamental cornerstones of the crypto community (e.g open source and decentralization) could dramatically further green technological capabilities. As well as radically benefiting the whole energy ecosystem, reaping the financial incentive that comes with this. Many mining operations are large enough to take their source of power into their own hands. Green energy and crypto should not be polarized, together they have the incentive and the financial ability to develop a new era of energy capability.