BT Daily News: Is Russia about to overtake the US as the largest Bitcoin miner? and more
1. Is Russia about to overtake the US as the largest Bitcoin miner?
Russia has risen through the ranks to become the second largest bitcoin mining sector in the world after the US. Will it close the gap on the frontrunner?China was once the world’s top crypto mining hub, accounting for 65-75% of the total bitcoin network hash rate. But since the government essentially banned the practice in 2021, shutting down some of the world’s largest facilities, the global crypto mining landscape has evolved.
On the one hand, new mining centers have emerged, such as Kazakhstan. On the other hand, miners in the US have increased capacity to meet demand, helping the country reclaim the top position.
However, things are changing fast and the US may not be able to maintain its lead.
According to BitRiver, a Russian technology company that operates hydropower-powered cryptocurrency mining facilities, Russia’s mining capacity reached 1 gigawatt in January-March 2023, placing it in second place for the first time.
In comments reported by KommersantBitRiver CEO Igor Runets said that Russia’s rise up the rankings comes as the pace of mining in the US slows down due to rising electricity prices and the abolition of tax incentives. “In addition, the vast majority of the equipment was bought by US miners on credit, so many over-leveraged companies are in bankruptcy or have already gone bankrupt,” he added.
US miners face higher taxes
In general, the tax and regulatory environment that US crypto miners find themselves in has become significantly less hospitable recently.
Of the exemptions that allow qualifying large-scale computing facilities to pay a reduced rate of tax in Montana. For example, now the tide has turned in favor of additional taxes targeting cryptominers.
For example, in President Biden’s 2023 budget, the Treasury Department has proposed a 30% excise tax. The tax is applied to the cost of powering crypto mining facilities. Under the proposals, mining companies would also be required to report the amount of electricity they use and their power sources.
The “Green Book” of the Treasury Department published in March argues that the growth of digital asset mining has a negative environmental impact. It can also increase energy prices. The move makes it clear that the tax is intended to reduce the growth of crypto mining. the document adds that “a special tax on electricity use by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms.”
Federal lawmakers are considering tax increases as a means to rein in the industry. While some states have taken a more direct approach to stopping crypto mining.
Buncombe County in North Carolina is willing to impose a one-year moratorium on all mining activities. This is intended to give the local government time to rewrite their zoning policies to accommodate crypto mining facilities. What you say risks negatively affecting communities.
Meanwhile, the Texas Senate has introduced a bill. The bill will regulate how Bitcoin miners interact with the state power grid and how their profits are taxed.
Russian Crypto Mining Receives State Support
Local, state and national authorities in the US move to reign in crypto mining. Recent developments suggest that Russia may further close the gap between the world’s two largest Bitcoin miners.
It was recently reported that the Russian government will subsidize a new 100 megawatt mining center in eastern Siberia.
BitRiver is currently under construction, the new crypto farm will pay no land or property taxes and will benefit from a reduced rate of income tax. You will also receive subsidized electricity at 50% of the current rate.
2. Bitcoin Miners Protected By New Legislation In Arkansas State
The state of Arkansas has recently joined the ranks of other US states in passing a bill that seeks to regulate Bitcoin (BTC) mining. The Arkansas Data Centers Act of 2023 has successfully passed through both the House of Representatives and Senate and is currently awaiting the final approval of Governor Sarah Huckabee Sanders.The Act seeks to establish guidelines for Bitcoin miners and protect them from “discriminatory regulations” and taxes, ensuring that they have the same rights as data centers.
What Are The Key Guidelines For The Bitcoin Mining Bill?
Subchapter 5 of the approved bill, outlines several definitions that are important for understanding the legislation. This subchapter defines “digital asset mining” as the use of electricity to power computers to secure or validate a blockchain network, and “digital asset miner” as an individual who engages in this activity.
The bill also includes definitions for other terms related to digital assets, such as a “digital asset” and “blockchain network. Furthermore, it defines “digital asset mining business” as a group of computers working at a single site that consumes more than one megawatt (1 MW) annually to generate digital assets by securing a blockchain network.
Additionally, the Act outlines the requirements that digital asset miners must meet to operate in the state, including compliance with state and federal laws, payment of applicable taxes and government fees, and operating in a manner that does not cause “stress” on the electric public utility’s generation capabilities or transmission network.
It also addresses home digital asset mining, allowing individuals to use a node at their residence for this purpose, subject to applicable utility rules and rates. Additionally, the Act clarifies that a person may have a digital asset mining business in an area that is zoned for industrial use that has not been designated by the local government for other uses.
To Protect Bitcoin Mining From “Discriminatory Regulations”
To protect Bitcoin mining businesses from “discriminatory regulations” and taxes, the Act includes provisions that prohibit discrimination against digital asset mining businesses. Specifically, it states that a digital asset mining business may operate in the state if it complies with state law concerning business guidelines and tax policies, any ordinance concerning operations and safety, and state and federal employment laws.
This will help to ensure that Bitcoin mining businesses are not subject to regulations or taxes that could hinder the growth or development of this important sector of the nascent crypto industry, at least in Arkansas state.
Overall, the guidelines for digital asset mining businesses outlined in the Arkansas Data Centers Act of 2023 are designed to provide clarity and protection for the industry, while ensuring that digital asset miners operate in a responsible and sustainable manner.
As of this writing, the trading range of Bitcoin remains steady at $28,200, experiencing a minor increase of 1% within the past 24 hours.
3. Bitcoin: Here’s why this update could make a difference in the current state of BTC
Not so long ago, U.S regulators attempted make it seem like they were embracing Bitcoin [BTC] and altcoins. Only for them to switch up and ban banking access to the crypto market. A classic case of actions speaking louder than words.Bitcoin has so far demonstrated resilience against FUD attacks. As evident by its ability to survive and thrive for more than a decade while gaining more popularity.
This is largely because of Bitcoin’s decentralized nature. But what if governments attempted to attack or take advantage of the Bicoin mining system, the underlying mechanism behind Bitcoin decentralization?
Lawmakers in Arkansas, U.S seem to be siding with Bitcoin and are interested laws that will protect Bitcoin from government overreach. The US Arkansas Data Centers Act of 2023 aims to implement measures that will protect Bitcoin miners from unfair taxes and regulations.
Based on Arkansas’ official publication regarding the new act, Bitcoin mining facilities will be treated as data centers. So, why is this new Arkansas Act important for the crypto industry?
Well, this is because governments might deploy unfair tactics such as heavy taxation to cripple the industry. Unfavorable regulations might discourage crypto mining activities.
Is Bitcoin at risk of unfair taxation and regulation?
In a hypothetical scenario, if a government was to act aggressively against Bitcoin in an effort to prevent mining, it might discourage mining. The potential outcome would be a slight dip in the hash rate, or a migration of miners to other favorable jurisdictions.
If anything, one could argue that unfair tax and regulatory measures against BTC mining would take away opportunities for the affected jurisdiction. The impact of such measures would likely also have a notable impact on Bitcoin miner reserves. The latter, at press time, stood at its YTD lows.
Furthermore, Bitcoin miner reserves remained low reflecting a lack of confidence in the bulls dominating. The Bitcoin miner position index also depicted a low value, confirming that miners were still contributing to sell pressure.
A look at miner flows revealed a surge in miner outflows in the last 24 hours as miner inflows dropped.
The above outcome is likely because the market has slowed down, leading to a drop in transactions, hence a drop in miner revenue. As such, miners have to sell some of their BTC holdings to cover their mining costs.