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Kentucky Lawmakers Approve Bitcoin Miner Incentive Bill

Kentucky legislators have approved a bill that would offer tax incentives to bitcoin miners that set up shop in the state.

An overwhelming majority of lawmakers in Kentucky has just approved a bill that seeks to make the state a very attractive option for bitcoin mining operations.

The primary bill to receive approval, House Bill 230, seeks to remove some tax obligations from bitcoin miners and is geared toward incentivizing job creation and spurring the growth of the industry. It was passed by a 19-to-two vote by a committee in the Kentucky house.

“The bill’s fiscal note estimated its cost to the General Fund to start at $1 million a year,” the Lexington Herald-Leader reported. “But the full cost after that cannot be determined, legislative staff wrote, because ‘it is unknown how many of the businesses might choose to locate here to avail themselves of this exemption.’”

The bill will now move to the state’s upper chamber for review. The bill’s sponsors noted in their submission that Kentucky could leverage its low energy rates, plus the abundance of the supply of such energies, to cement its position as a national leader in cryptocurrency mining in the United States.

The ratification of this bill would mean that commercial bitcoin miners in Kentucky would enjoy exemptions from paying a 6 percent sales tax and 6 percent excise tax on tangible personal property (such as mining rigs) that is directly used in the process as well as the electricity used. Though some lawmakers expressed their reservations about the amount of electricity needed to power these mining activities, the ability to lure more industrial operations, plus the recent growth cryptocurrencies like bitcoin recently, should make this bill a very attractive option.

Source: Bitcoin magazine

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Bitcoin Hits $56,000, What’s Next?

In January 2021, Bloomberg Analyst Mike McGlone predicted that the price of bitcoin would hit $50,000 at some point this year. At the time, the value of the leading crypto asset was merely hovering above $30,000, and the $50,000 mark felt a very long way off. Less than a full month later and the cryptocurrency king has not only passed $50,000 — a major price milestone — but exceeded $56,000. And it appears as if nothing can stop it from going even further.

The price rise that has seen bitcoin nearly double in value since the beginning of 2021 started in late 2020, when the cryptocurrency industry as a whole witnessed a bull run that surpassed any cycle from the past, particularly that of 2017. 

So, with bitcoin hitting the $56,000 mark, the question on everyone’s mind is: What’s next? What does the future hold in terms of price, regulation and adoption of this “digital gold?”

A Brief Bitcoin Price History

One of the things that has contributed to the appeal of bitcoin is its status as the first-ever cryptocurrency. Created in 2009 by a pseudonymous person or group known as Satoshi Nakamoto, the idea behind its creation was to serve as an alternative to the failing traditional banking system. 

However, its rise to the top and acceptance by the public hasn’t been simple or straightforward. The cryptocurrency barely existed, without any significant value for years. It was only in 2011 that its value increased significantly, with its reaching a meager $10 that year. 

The economic crisis in Europe in 2013 allowed the asset to make inroads into other markets outside of the U.S. And the view that it could serve as a viable alternative to traditional fiat currencies helped in its early adoption. Simultaneously, several other cryptocurrencies were emerging based on the Bitcoin open-source code with little tweaks.

But bitcoin’s rise in value was a steady one (even if it is notoriously volatile in the shorter term), as bitcoin added zeros year after year. While it has had a few bull runs since it was created, the first massive bull run was in 2013 when it crossed the $1,000 mark. In 2017, it crossed the $10,000 mark and got very close to the $20,000 one by reaching highs above $19,000.

What followed those highs was a massive slump the following year. The value came tumbling down from $19,783 in December 2017 to $3,300 in December 2018. From there, its price became more stable and slowly began its rise back to the top. It took almost two years for the cryptocurrency to reach its previous all-time high again and it finally reached the $20,000 mark in December 2020.

Bitcoin carried its 2020 price form right into 2021 as it continued to reach new milestones, seemingly with each day. After finishing 2020 at around $28,000, it quickly rose to a peak around $40,000 in January 2021, before flagging a bit.

With February came the big Tesla announcement of a $1.5 billion investment in bitcoin, plus the entrance of other institutions like BNY Mellon, playing a part in helping the value of the asset continue to climb, inching close to $50,000 before finally passing that figure on February 16, 2021, exactly two months after hitting $20,000 for the first time.

What’s Next?

Now that Bitcoin has passed the big 50, there are several things that cryptocurrency enthusiasts and skeptics alike are looking forward to. The multi-million question, however, is: Will bitcoin’s value keep rising from here, or will we witness another major price slump like we did in 2017? The truth is, it’s hard to tell, but analysts and price forecasts can give us some idea of what to expect from the asset.

Price Forecast

Only a few investors and analysts were able to predict the massive surge in bitcoin price and hedge fund manager Mike Novogratz was one of them. Novogratz has predicted that bitcoin will peak at $65,000 in 2021. The number may have looked overly optimistic when he originally announced it, but given that it is still only February and bitcoin has already reached $50,000, it doesn’t seem far-fetched anymore.

Perhaps a prediction that still looks and feels farfetched is that of Tom Fitzpatrick, the Citibank analyst, who said that bitcoin will peak at $318,000 by the end of 2021.

Looking at previous surges in price and the current price trend, it would seemingly take a miracle for that to happen. But bitcoin has been known to pull off some surprising price stunts that are nothing short of magical. So, it wouldn’t hurt to hold on to that dream.

On the side of technical analysis, many cryptocurrency platforms also have made price forecasts about what to expect from BTC. DigitalCoinPrice, for instance, believes bitcoin will reach highs of more than $86,000 by the end of this year, at the time of this writing.

Given that the price of the cryptocurrency has more than doubled its price in the past two months, it doesn’t seem entirely impossible that the same thing could happen within the next ten months. The Investment bank JPMorgan Chase has predicted that bitcoin could reach $146,000.

But all of these predictions have one thing in common; they see the value of bitcoin rising. Considering that the cryptocurrency is in the price form of its life, it is probably only a full-fledged skeptic that would have a negative price outlook.

Increased Adoption

While it is hard to tell with certainty what will happen to the price of bitcoin, one thing is sure: It is getting the attention of institutional investors.

The primary issue that most institutional investors have with bitcoin is its volatility. But in the current inflationary economic climb, where not taking a risk seems like a more significant risk, investors seem ready to bet on bitcoin.

With companies like MicroStrategy, Tesla and Square already investing or planning to accept bitcoin payments, other corporate entities should join the bandwagon because they wouldn’t want to be left out. 

Mastercard has already announced plans to facilitate bitcoin transactions. Apple seems to be considering investing in bitcoin. As noted above, BNY Mellon plans to include digital assets in its offerings. Even JPMorgan is optimistic about bitcoin. So, you see, major institutions have been backed into a corner of either accepting that BTC is the present and the future, or being left behind.

However, adoption doesn’t mean that bitcoin will become the world reserve currency. Many believe it will only become a more accepted value store. Its current price and the likelihood of even higher importance in the future may actually make it more difficult for bitcoin to become a standard transactional currency. 

Thus, as time goes, we could witness more institutional and mainstream adoption of the cryptocurrency as a store of value than as a payment method for goods and services.

Regulatory Clarity 

As bitcoin continues to climb higher, more regulations don’t just look likely, they have become an inevitability. The increase in value means an increase in risks — the deal is gradually getting to a point where regulators’ warning about bitcoin’s perceived dangers are no longer enough. There’s a need for action.

This is evidenced in a recent statement made by a commissioner of the U.S. Securities and Exchange Commission, Hester Peirce, who said that there is now an urgent need for more regulatory clarity concerning the use of cryptocurrencies. She is not alone with this view, as this writer also shares the same thought.

As BTC becomes more mainstream, regulatory bodies have to become more proactive and take a more cursory look at how the industry could serve the interests of their people. They should avoid reactionary actions, like those of the Nigerian or Indian governments, which have both decided to effectively ban cryptocurrencies in their jurisdictions.

Instead, more regulatory clarity should be offered to the industry and, with time, everyone will become enamored with the cryptocurrency space.

Conclusion

Bitcoin passing $50,000 is a significant milestone, not just for the asset, but also for other cryptocurrencies, too. It is expected that the rise in value of bitcoin and its effects will generally have a ripple effect on the whole cryptocurrency industry. After all, bitcoin has always been the pacesetter.

Thus, this new price level will bring with it a whole new level of scrutiny, pessimism and some fight back from the traditional financial industry. But BTC is like a moving train, and presently, nothing can stop this train from moving further forward.

This is a guest post by Oluwapelumi Adejumo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post Bitcoin Hits $56,000, What’s Next? appeared first on Bitcoin Magazine.

Source: Bitcoin magazine

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Crypto News Updates

How Nigerians Are Reacting To The Cryptocurrency Ban

  • The Central Bank of Nigeria (CBN) has said that its decision to ban cryptocurrency was necessary to prevent crimes and mitigate risks
  • Several Nigerians have condemned the move and believe the ban has some political undertone beyond those stated reasonings
  • The Senate of Nigeria has summoned the CBN governor to explain the decision to ban cryptocurrency. 

In a move that sparked outrage on social media earlier this month, the CBN issued a reminder to regulated financial institutions in the country that a 2017 regulation prohibits them from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges.

Following the outrage that greeted the incident, the CBN released a press statement that explained the rationale for its reminder. According to the statement from Acting Director of Corporate Communications Osita Nwanisobi, banning cryptocurrency facilitation is necessary because they are used to commit crimes. It specifically mentioned terrorism and money laundering as crimes perpetrated with cryptocurrency. It also made reference to the Silk Road, the darknet site where cryptocurrency was used to buy drugs and other illicit goods.

CBN’s Reasoning For Banning Cryptocurrency

The CBN also claimed in its statement that the ban was necessary because of the risks involved in the speculative market, saying Nigerians must be protected.

However, several young Nigerians believe this ban to be a consequence of the End SARS protests. The protests were part of a massive campaign in November 2020 against police brutality in the country. The protest started as a hashtag on social media, but soon developed into in-person protests that shut several cities down for days.

As part of the moves to stop the protests, the CBN directed banks to freeze the accounts of individuals associated with the protest. This was likely done with the belief that if funding was cut, the protests will stop.

But this move failed to work, as donations were sent in bitcoin to fund the necessary logistics of the protests. The movement also received the support of Twitter cofounder Jack Dorsey. Many believe that the reminder of the CBN ban on cryptocurrency facilitation is additional government retaliation.

Reactions

Nigeria ranks as the second-largest bitcoin market after the United States in volume traded via the exchange Paxful. It is therefore not surprising that the news of the ban reminder was taken badly on social media. Several people highlighted the reminder as further proof of the anti-youth agenda of the government in power.

Following recently-released regulatory proposals for cryptocurrency investments from Nigeria’s Securities and Exchange Commission (SEC), others also pointed out the divergence in decision making among financial regulators. This suggests the absence of cooperation between the governmental institutions regulating Nigeria’s financial sector. The SEC has put its regulatory plans on hold following the CBN ban reminder.

Cryptocurrency exchanges operating in Nigeria have also ceased accepting or facilitating transactions involving the naira. Many of these platforms informed their users of the decision on social media.

The CEO of the biggest cryptocurrency exchange platform in the world, Binance, used Twitter to instruct users to withdraw their naira on the exchange or convert it to cryptocurrency.

Speaking about the Binance withdrawal of baira transactions, local economist Nonso Obikili noted the importance of Binance in the cryptocurrency industry in Nigeria. According to him, the daily volume of naira-crypto transactions on Binance surpassed that on the Nigerian Stock Exchange.

He stated that, while trade volume on the Nigeria stock exchange was 5.6 billion naira on February 5, 2021, that of BTC/NGN trades on Binance alone was 13.4 billion naira. Considering that Binance is just one exchange out of many, the overall transactions would likely be far higher.

Also, tweeting about the Binance statement, crypto enthusiasts have said that Nigerians do not need to panic. According to Nigerian blockchain engineer Tosin Olugbemiga, all that a user needs to do is avoid depositing on the platform. It is also necessary for the user to exchange any naira balance for USDT.

Many Nigerians also questioned the logic behind the CBN reminder, saying that there is no rational argument for it and that, given its effects, it might run contrary to the promises of the current administration to take 100 million Nigerians out of poverty.

A social media commentator, Japhet Omojuwa, tweeted that the CBN cannot claim that crypto traders in Nigeria are anonymous. This is because of the processes involved in owning a bank account in Nigeria, from having a bank verification number to the KYC regulations in place to ensure that banks know their customers.

Others mentioned other social issues currently plaguing the country, such as herdsmen attacks.  As Twitter user Ebovi Wali pointed out, there is irony in a government debating open grazing regulations for many years, but quickly banning cryptocurrency.

In addition, according to Adewale Yusuf, CEO of TalentQL, government policies restricting cryptocurrency business for startups could be discouraging foreign investors.

Other investors also noted that the new policy doesn’t address the reason behind the adoption of cryptocurrency by Nigerians and the monetary problems. Thus, policies such as this might push investors and even tech startups to go to other African countries.

Former vice president of Nigeria, Atiku Abubakr, also condemned the ban. From his point of view, it would potentially reduce inflow of capital into Nigeria.

Lawmakers Summon CBN’s Governor

In light of the uproar surrounding the ban,  the senate’s upper chamber has called for CBN Governor Godwin Emefiele to appear before it and explain the decision. The Securities and Exchange Commission has also been summoned.

The senate resolved after considering a motion raised by senators Istifanus Dung Gyang and Adetokumbo Mukhail Abiru. The senators raised the motion to discuss the issue and stated that cryptocurrency appears as an opportunity as well as a threat.

It was co-sponsored by Senator Mukhail Adetokumbo Abiru, who made arguments supporting and against cryptocurrency transactions in the country. He pointed out the various risks associated with it and the threats it poses.

However, he also outlined the several benefits of cryptocurrency and its gradual adoption by institutional investors. In his opinion, the CBN ban will not stop the economic benefits of cryptocurrency transactions. Thus, it is necessary to have a holistic view of the issue.

The motion was finally passed after Senator Hassan Hadejia moved for an amendment that will allow the senate committees on ICT and cybercrimes, capital markets, banking, insurance and other financial institutions, to analyze the issue.

This is a guest post by Oluwapelumi Adejumo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post How Nigerians Are Reacting To The Cryptocurrency Ban appeared first on Bitcoin Magazine.

Source: Bitcoin magazine