Autor Cointelegraph By Kirill Bryanov

Former pro-crypto CoC Brian Brooks to testify in a House hearing on the energy impacts of mining

As the U.S. Congress prepares to take a thorough look at the energy use of crypto mining, the list of witnesses for the Thursday hearing contains more proponents of blockchain technology than its outright critics.The House Energy and Commerce Oversight Subcommittee announced a hearing on “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains” last week, with the event itself scheduled for Thursday. The focus of the hearing will be on the energy and the environmental effects of crypto mining, specifically as it relates to networks that use a proof-of-work, or PoW, consensus mechanism.A Committee on Energy and Commerce staff memo released on Jan. 17 revealed the list of witnesses invited to testify. Among the five experts on the list, only one — Cornell Tech professor Ari Juels — can be definitively categorized as an outspoken critic of Bitcoin (BTC) mining in its current form. Ironically, Juels is one of two authors of a 1999 paper that defined and introduced the term “proof-of-work.”Another entry on the witness list is Brian Brooks, former U.S. Comptroller of the Currency and Binance.US CEO who in Nov. 2021 joined BitFury, a major player in the crypto mining industry, as CEO. Also notable is the presence of John Belizaire, CEO of Soluna Computing, a firm that is focused on developing green data centers for batchable computing. In a Jan. 6 blog post, Belizaire lauded Bitcoin’s energy consumption as a “feature, not a bug,” arguing that it provides a viable mechanism for absorbing excess renewable energy.Utility providers will be represented by Steve Wright, a recently retired former general manager of the Chelan County, Washington state, public utility district. During his tenure, Wright took steps to attract cryptocurrency miners to the county.Gregory Zerzan, Jordan Ramis shareholder and former acting assistant secretary of the U.S. Treasury, once noted that concerns around Bitcoin mining could be addressed by “transitioning away from fossil fuels.”The memo itself offers a rather balanced overview of energy-related concerns associated with PoW mining, although it also reiterates certain statements that have been questioned by recent research. For one, the authors stated that the energy consumption and environmental impact of crypto mining may grow in the coming years — a claim that was countered in Bitcoin Policy Institute’s fact-checking brochure.Jake Chervinsky, head of policy at the Clockchain Association, tweeted that the memo was “not all bad, but commits basic errors.”The House E&C Committee published a 9-page memo for this week’s hearing on crypto’s energy use. It’s not all bad, but commits basic errors, like repeating the fallacy of “per transaction” carbon emissions.Read it here & watch Thursday at 10:30 am ET: https://t.co/AgMes2zOwf— Jake Chervinsky (@jchervinsky) January 18, 2022The hearing is scheduled for 10:30 am EST on Jan. 20 and will be streamed here.

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Law Decoded: First-mover advantage in a CBDC conversation, Jan. 10–17

Last week saw an unlikely first move in the opening narrative battle around a prospective U.S. central bank digital currency: Congressperson Tom Emmer came forward with an initiative to legally restrict the Federal Reserve’s capacity to issue a retail CBDC and take on the role of a retail bank. This could be massively consequential as we are yet to see a similarly sharp-cut expression of an opposing stance. As a matter of fact, it is not even clear whether other U.S. lawmakers have strong opinions on the matter other than, perhaps, condemning privately issued stablecoins as a digital alternative to the dollar. By framing a potential Fed CBDC as a privacy threat first, Emmer could tilt the conversation in the direction that is friendly to less centralized designs of digital money.Below is the concise version of the latest “Law Decoded” newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.U.S. representative vs. U.S. CBDCThe tension between decentralized digital money and state-issued CBDCs is at the heart of the ongoing global shift toward digital payment rails. Last week marked the first-ever instance of a sitting U.S. member of Congress taking a formal stance against the Federal Reserve’s potential retail CBDC move.Sovereign digital fiat will undoubtedly be more convenient than its analog predecessor, yet the privacy costs of such convenience might be enormous. If all money is CBDC, the government’s financial surveillance capacity will become virtually unlimited, denying people the anonymity that cash transactions once afforded. Representative Emmer cited these privacy concerns as a rationale for introducing the bill that would ban the Fed from issuing a CBDC directly to consumers and acting as a retail bank.While it may take a long time before Emmer’s initiative reaches the House floor, the mere articulation of such a position by a member of Congress can have a significant impact on the course of the policy conversation around a potential CBDC. This is especially true in the light of some top Fed officials’ stated willingness to defer to Congress on the issue.Another ban scare, another El SalvadorElsewhere in the world, the signals that various regulators have been sending over the past week ran the gamut from potentially banning crypto transactions in Pakistan to considering the replication of El Salvador’s Bitcoin-as-legal-tender move in Tonga. Pakistan’s drive toward a blanket ban follows a familiar scenario where it is the nation’s central bank that is actively committed to outlawing crypto transactions and penalizing crypto exchanges. The task of determining the legal status of cryptocurrencies fell to the High Court of the province of Sindh, yet the judges refrained from making the final call and passed the issue on to the specialized government ministries. On the opposite side of the regulatory spectrum, the island nation of Tonga could be embarking on the Bitcoin adoption trail soon. An announcement by Lord Fusitu’a, a former member of the Tongan parliament and chairman of several regional interparliamentary groups, suggested that the country could make Bitcoin legal tender as soon as late 2022. Given Tongans’ heavy reliance on remittances, replicating El Salvador’s move almost identically seems logical.IMF sees the demise of crypto’s hedge roleAmong many risk factors that analysts ascribed to digital assets over the years, the financial stability risk that stems from crypto’s growing correlation with equity markets comes across as a novel talking point. Yet this is what a group of the International Monetary Fund researchers concluded upon examining the dynamics of Bitcoin to S&P 500 index correlation. The authors argued that the growing interconnectedness between the two asset classes defeats crypto’s hedge function, as it no longer serves to diversify investors’ risks. The IMF analysts’ conclusions come down to a reasonable notion that there should be a global, coordinated approach to crypto regulation.

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Law Decoded: Looking ahead to 2022, Jan. 3–10

As Alex Tapscott put it, 2021 was the year when many governments and lawmakers began to finally wake up to the transformational potential of blockchain technology. Indeed, crypto’s global mainstreaming and growing market capitalization have made it difficult for the agents of power to ignore it and have rendered it a salient economic, social and political issue across many key jurisdictions. By all appearances, we are in for a busy year in crypto regulation and policymaking.Stablecoins, an asset class that attracted a fair amount of regulatory attention in 2021, will surely remain in the hot seat this year. For most nations, stable-value crypto assets will represent competition to their sovereign digital currencies. For the United States, a key question is whether Congress will come forward with the legislation around stablecoins that the President’s Working Group on Financial Markets is calling for.It will also be exciting to watch how far the crypto industry’s political mobilization and lobbying efforts — something that became a prominent feature of the crypto policy landscape in 2021 — will be able to reach this year. A major test of the sector’s newfound political clout will be the struggle to amend the crypto-related provisions of the recently passed infrastructure bill.Many industry experts surveyed by Cointelegraph expect major policy advancements to come from the European Union in 2022. The European Commission is currently reviewing the proposed Markets in Crypto-Assets regulation, a wide-reaching framework that is mainly focused on mitigating consumer and financial stability risks associated with the adoption of digital assets. Combined with digital euro trials being well underway, this suggests that the EU could soon articulate its stances on various interconnected parts of the digital asset ecosystem — CBDCs, private stablecoins and decentralized cryptocurrencies — in a more definitive fashion.Elsewhere in the world, El Salvador maintains the perception that it is all in on Bitcoin (BTC) as a nation-state. One of many points of contention related to this great experiment has been, and will continue to be, the Central American nation’s spat with global financial organizations such as the International Monetary Fund. Speaking of the global watchdogs, it is reasonable to expect that these guardians of the incumbent financial order will start delving deeper into specific sectors of the crypto space, much like the Bank of International Settlements’ recent foray into decentralized finance. The hope is that the resulting alarmist narrative will not become global regulators’ dominant approach to the sprawling domain of DeFi.The first days of 2022 also brought a reminder that regulatory clarity is not the only way in which politics can massively affect the crypto space. Following days of civil unrest in Kazakhstan — a nation that had climbed to the No. 2 spot in the world’s Bitcoin hash rate rankings following China’s mining ban — the government’s decision to cut off the entire population’s internet access resulted in an unprecedented hash rate drop on the Bitcoin network. The geopolitics of BTC mining, which came into motion last year with China’s abrupt exit, seem poised to continue on the path of volatility.All in all, this year is shaping up to be a rollercoaster of Bitcoin politics, crypto regulation and digital currency adoption.  Let’s buckle up and see what else 2022 has in store.

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