One thing is certain: the crypto industry has seen better times. Bitcoin fell below 20,000 dollars at times, losing more than two-thirds of its value. There is a fear of a crypto winter in the industry – continuous price drops without significant recovery for years to come. The last such winter was in 2017/2018, when BTC plummeted by 80 per cent and was unable to break out of the trough for years.
In the current critical geopolitical situation, including the energy crisis, many miners are sliding into unprofitability. The operating costs exceed the achievable revenues and create debts with the mining. The consequence: broad-based sales. Bucking the trend to hodln, Bitfarms Ltd and Riot Blockchain Inc have sold some of their mined coins, according to a Bloomberg report. Recent development: In June, Core Scientific, the industry’s largest miner with 180,000 servers, offloaded over 7,200 BTC – at an estimated 23k per BTC, a cash injection of over $165m to help pay down debt. This leaves the company with only around 2,000 BTC in its possession, making a repeat of the June bailout impossible. Nevertheless, it has announced that it will continue to sell self-mined BTC in order to stay alive (pay off debt, cover operating expenses, maintain liquidity).
Bleak prospects in the EU
After MICA’s decision, which threatened nothing less than a crypto ban in the EU, things continue to ferment: a report by the ECB considers a ban on bitcoin mining “likely”. The reason, as with miners, is the rise in energy prices as a result of the war between Russia and Ukraine. That is why lawmakers should “take a closer look” at the productive use of their power sources. To tackle the “significant CO₂ footprint” of PoW-based cryptocurrencies, the ECB considers a range of policy measures “likely”, from a CO₂ tax on holding or transferring Bitcoin to a complete ban on mining.
BoA sees potential
If drastic measures are threatened in the EU, a study by Bank of America sees potential for the future. Based on a survey of 1,000 potential and actual owners of digital assets, buying and selling expectations in the crypto sector are stable. Despite the massive corrections in the crypto market, consumer interest remains unabated. The average transaction size varies, but is mostly below 25 US dollars. The bank sees significant growth in the use of BTC & Co. as a means of payment.
At the “Web3 & Digital Assets Day” conference, the speakers agreed that the so-called “crypto winter” also offers opportunities, as the past has shown several times. Bank of America attributes the reluctance of investors to the lack of regulation of the market, who are waiting for regulatory certainty despite increasing confidence. So if the legislator establishes “rules of the game”, the investment volume would rise quickly.
Bank of America puts the market potential of digital assets at one billion users, to which another billion could be added if there were a better connection between fiat currencies and the crypto ecosystem. So the direction is set, we will see when the train starts moving.