The price of Bitcoin fell by another seven percent on Friday as Chinese officials repeated their warning against it and Elon Musk said it needs more time to become less environmentally damaging.
Bitcoin slid 7 percent to $37,306 and rival cryptocurrency Ether declined 10% to $2,485 after Chinese officials triggered another sell-off. In a late night meeting, Vice Premier Liu He said Beijing needs to ‘crackdown on Bitcoin mining and trading behavior’.
Musk was a cryptocurrency champion but earlier this month tanked its price by expressing concern about good it was for the environment.
It drove the price down and at around the same time, Chinese officials said they would no longer accept it in their financial systems. Tesla has since gone back on a plan to accept cryptocurrencies as payment for its cars.
In a Twitter thread on Thursday night, Musk argued that the cryptocurrency could be environmentally friendly in the future, so long as the biggest ‘miners’ revealed how much renewable energy they used.
Bitcoin slid 7 percent to $37,306 and ether declined 10% to $2,485 after Chinese officials triggered another sell-off on Friday
In a Twitter thread on Thursday night, Musk argued that the cryptocurrency could be environmentally friendly in the future, so long as the biggest ‘miners’ revealed how much renewable energy they used
‘This *can* be done over time, but recent extreme energy usage growth could not possibly have been done so fast with renewables. This question is easily resolved if the top 10 hashing orgs just post audited numbers of renewable energy vs not,’ he said.
He went on to say that Bitcoin mining was starting to use more energy than small countries.
‘Bitcoin hashing (aka mining) energy usage is starting to exceed that of medium-sized countries.
‘Almost impossible for small hashers to succeed without those massive economies of scale.’
Bitcoin mining sees new ‘coins’ generated by extremely sophisticated computers solving complex mathematical problems. Although no physical mining is involved, and no actual coins are minted, the technology involved uses huge amounts of electricity, which in turn burns large quantities of fossil fuels.
In a report issued on Thursday, the Treasury described new compliance proposals from President Joe Biden, including mandatory tax reporting for transactions of $10,000 or more for Bitcoin and its rival cryptocurrencies.
Explaining the proposal, a Treasury Department spokesman said: ‘Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.
‘This is why the President’s proposal includes additional resources for the IRS to address the growth of cryptoassets.
Musk was a cryptocurrency champion but earlier this month tanked the price by expressing concern about good it was for the environment.
‘Within the context of the new financial account reporting regime, cryptocurrencies and cryptoasset exchange accounts and payment service accounts that accept cryptocurrencies would be covered. Further, as with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on.’
The measure, set to take effect in 2023 if passed, would require businesses to report crypto transactions over the threshold to the IRS, as they are currently required to do with cash, in a bid to crack down on tax evasion and money laundering.
According to CNBC, financial analysts believe the Security and Exchange Commission – a financial regular separate to the Treasury Department – will likely be granted jurisdiction over cryptocurrency by Congress.
Bitcoin dropped 6 percent on the news to just under $40,000, a day after Wednesday’s turbulent trading that saw the coin whipsaw up and down 30 percent within hours, with support from Tesla CEO Elon Musk fueling the rebound.
Analysts believe that Thursday’s proposal could bolster the value of cryptocurrency long term, by granting Bitcoin, Ether and their rivals true legitimacy, as well as making transactions using the currencies safer.
Before Thursday’s IRS announcement, Bitcoin had earlier regained some lost ground to trade above $40,000 on Thursday morning.
The increase in value came a day after a brutal selloff on concerns over tighter regulation in China and unease over the extent of borrowing in the cryptocurrency world.