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Sen. Warren Targets Texan BTC Mining while Network Hashrate Posts All Time Highs

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Since the beginning of the year, traditional and digital asset markets have been caught in a relentless downturn – Bitcoin included.  While the worlds top digital asset seems to have a found a floor around $19,000 in recent weeks, things are once again looking strained with increased scrutiny being paid towards the mining industry, persisting inflation, and what feels like agonizingly slow development of the lightning network.  The following are a few brief looks at what each of these recent hurdles have meant for Bitcoin.

A Letter to ‘ERCOT'

Continuing her persistent onslaught against digital assets, Senator Warren has most recently headlined a letter to the Electric Reliability Council of Texas (ERCOT) making various demands in a bid to expose stressors that Bitcoin mining places on the environment and tax payers alike.

In the letter, which labels Texas as a ‘deregulated safe harbor',  various claims are made which include,

  • Texas-based miners will use enough power to support over 1.9M residences within the next few years
  • Texas will account for roughly 20% of U.S. based mining by 2023
  • Mining results in substantial amounts of CO2 and adverse air quality impacts

The harsh stance did not come from Sen. Warren alone though.  In the letter various individuals shared their concerns over such energy-intensive practices.  One unnamed individual identified as a former member of ERCOT stated, “the problem is [cryptomining is] consuming real resources, doing a function that has no value”.

Beyond raising issues with the environmental impact, and potential for raising taxpayers electric bills, the letter also highlights that “…extreme weather events exacerbated by climate change have already been driving up electricity use and straining Texas's power system”

In closing the letter, the following were a few of the questions raised.

  1. For the year 2022 to date, and for each of the previous five full calendar years, what has been the annual electricity consumption used for cryptomining in Texas, and how many tons of carbon dioxide emissions have resulted from this energy use?
  2. How do cryptomining companies plan to scale their operations in Texas?
  3. With what cryptomining companies do you have power purchasing and/or curtailment agreements?
  4. Does ERCOT have any estimates or models regarding the impacts of cryptomining on energy costs to local families and businesses?

ERCOT has been asked to respond in full by October 31st.

All-Time High Hashrate

Despite the aforementioned concerns raised by U.S. Senators regarding proof-of-work mining practices, the Bitcoin network has never been stronger and more robust.  In fact, miners around the world have continued to ramp up their efforts, resulting in the network continually posting new all-time highs when looking at network hashrates.

Source: blockchain.com

In the last three weeks alone, total network hashrate is estimated to have risen roughly 20%.

Market Reactions

Despite skyrocketing hashrates, along with a relatively strong showing of support at $19,000, sentiment surrounding Bitcoin remains subdued with the popular Crypto Fear & Greed Index indicating that market is in a state of ‘extreme fear'.

Source: alternative.me/crypto

As the story has been for much of the year, many believe that this fear is rooted not in a lack of faith surrounding Bitcoin itself, but rather macro-economic headwinds continuing to subdue the economy at large.  This sentiment was further strengthened today as inflation rates continued to rise, unchecked, despite multiple significant rate hikes over the course of the year.  The CPI report indicated that, “…all items index increased 8.2 percent before seasonal adjustment.”

Source: CoinMarketCap

As a result of the aforementioned CPI report, Bitcoin felt a short bout of downward pressure, resulting in a modest 3% drop.  This however was short-lived, with BTC quickly beginning to rebound and maintain its longstanding floor of $19,000.

In Other News

While Bitcoin enthusiasts are being kept on their heels fending off attacks from environmental lobbyists, Senators, and collateral damage from floundering economies, hope remains that the network will one day boast a solution to many of its current issues.  For many, this is the lightning network – a layer 2 solution which has the potential to allow for BTC to function as a viable currency, supporting practical micro-payments, increase financial privacy, and reduced environmental impact.

While there have been various promising signs surrounding the lightning network, including its continued adoption in nations like El Salvador (Tap-to-Pay with CoinCorner), and the growth of its network (+25% in 4mths), the fact remains that it is still a work in progress.  This was recently highlighted when a developer mistakenly attempted to process a transaction on the network requiring 998 signatures before it would be authenticated.

The result of this mistake was a mixed-bag.  Yes, the transaction was eventually processed for only $4.90, however it resulted in an issue with network synchronization stemming from a missed block.  The issue has since been patched, with no lasting adverse effects, other than to highlight that much work still needs to be done before the Lightning network is truly ready to transform the Bitcoin network at large.

Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology.