From updates on Ethereum’s Merge to Japan reviewing tax regimes to keep crypto start-ups in the country, and SEC denying VanEck’s ETF application again, enjoy reading the 19th edition of ProBit Global’s Weekly Blockchain Bits.
Updates on Ethereum Merge
The build-up to the Merge upgrade has raised the current balance of Ethereum miner addresses according to OKLink. The addresses grew to reach their highest level in three years, with a value of 254,846.35 ETH.
The disclosure comes as the Ethereum Foundation introduces an updated roadmap for the much-awaited The Merge upgrade. In a related move, the proponents of a proposed fork of the Ethereum chain under the ETHW movement, last week published a second code update. They made the EIP-155 update which is to make transactions be signed with Chain ID. It is also to protect against replay attacks that could come from future forks.
In the event of a chain split, the top mining pool, Antpool, says it will not be able to maintain a user’s ETH assets on the PoS chain. It considers The Merge as having the risk of censorship and it has to safeguard its clients’ asset security.
Tornado Cash’s Pertsev linked to FSB, was detained for three months
We refer here to the Vol. 17 edition of this weekly summary. Crypto mixer Tornado Cash was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). Then a 29-year-old suspected developer of Tornado Cash, Alexey Pertsev, was subsequently arrested in Amsterdam by the Dutch Fiscal Information and Investigation Service.
A report emerged from intelligence firm Kharon last week that Pertsev was employed by a company with ties to the Russian security agency, FSB. The report came almost as a judge in the Netherlands ruled that Pertsev, who was accused of facilitating money laundering, has to stay in jail for at least an additional 90 days. As of the time of both developments, Pertsev has not been formally charged with any crime.
Japan considers tax review to grow crypto startup space growth
To stem the outflow of crypto startups elsewhere, the Japanese government is reportedly looking to reduce the tax burden on related entities in its 2023 tax reform. The Financial Services Agency and the Ministry of Economy, Trade, and Industry are considering reviewing the corporate tax regime for crypto assets issued by companies to raise funds. This is to prevent crypto startups from leaving Japan to establish oversea in countries like Singapore, local media report.
Crypto projects use a crowdfunding mechanism known as an initial coin offering (ICO) to raise funds for their novel blockchain ideas. Under the current Japanese tax system, the portion of a project’s holdings after ICO is taxed based on the market value at the end of a given period. As a result, unrealized gains are taxed. The new consideration may no longer be the case next year.
Iran seizes illegal crypto mining devices
9,404 illegal cryptocurrency mining devices have been reportedly seized in Tehran since the beginning of March 2022, the CEO of The Greater Tehran Power Distribution Company, Kambiz Nazerian, said last week.
The discovery of these illegal operations came to the fore as inspectors from 22 districts of Tehran carry out their routine checks in the Islamic Republic of Iran.
The country has recently seen a rise in issues related to illegal crypto mining activities. A Chainalysis crypto crime report highlights that illegal mining accounted for around 85% of the cryptocurrency activity in the country between 2015 and 2021.
Though these illegal activities risk causing new power cuts during winter, More people are supposedly gravitating toward mining cryptocurrencies to earn income. While identified as having a cheaper electricity cost, the recent rise in mining activities has been attributed to the fall in the value of Iran’s currency.
Here is what the cost of mining Bitcoin could be in 2040
Arcane Research last week released an estimate of what the energy usage for Bitcoin’s development could be by 2040. If Bitcoin price reaches $2 million by 2040, the firm claims that Bitcoin may consume 894 TWh per year which is a 10x increase from today’s level.
If the price of Bitcoin reaches $500,000 by then, it says Bitcoin would have consumed 223 TWh per year — about 2x of the current level. If Bitcoin’s price reaches $2 million by 2040 and transaction fees stay at the historical average, Bitcoin’s share of global energy consumption will be 0.36%.
This is despite the authors’ belief that by 2040, most Bitcoin miners will use stranded energy sources that are far cheaper than grid electricity. They point out that Bitcoin price is the most critical factor determining the top cryptocurrency’s future energy consumption.
Meanwhile, Steven Lubka, the managing director of Swan Private Client Services argues that Bitcoin can help incentivize development in the energy sector as it helps provide the most efficient energy production facilities with added cash flow.
SEC denies VanEck’s ETF application again
The response of the Securities and Exchange Commission (SEC) to VanEck’s filed application in July came out last week. The asset management firm’s filing for a spot market Bitcoin ETF did not get the regulator’s nod, again. Rather, the SEC took the time to postpone its decision on VanEck’s application by another 45-day. By October, the regulator hopes to “either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change.”
The SEC rejected the New York-based firm’s initial application last year because it is not convinced the Bitcoin market is resistant to fraud and manipulation.
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