Bitcoin mining is once again under intense scrutiny as US regulators analyze its power consumption. US President Joe Biden’s administration has issued an “urgent data collection request” regarding the electricity consumption of Bitcoin miners. The move caused an uproar as crypto enthusiasts weighed the decision to become Bitcoin in response to the US currency dispute.
US EIA to collect data on electricity consumption by Bitcoin miners
The Energy Information Administration (EIA) plans to begin collecting data immediately this week. This comes after the Biden administration approved an emergency study into the amount of electricity used by Bitcoin and cryptocurrency miners.
As part of an emergency data collection request approved by the Office of Management and Budget on January 26, Bitcoin mining enthusiasts will be required to respond with information about how much energy they use. This includes people using powerful computers to verify transactions and maintain the blockchain in exchange for newly minted coins.
Dollar VS Bitcoin: Where is investor traction heading?
According to Forbes, Bitcoin supporters are becoming increasingly enthusiastic, believing that the US currency will soon collapse. This concern stems from the significant increase in dollars and debt brought on by the coronavirus pandemic. Currently, total US debt is at an all-time high of $34.1 trillion. The market is concerned that the current scrutiny of Bitcoin mining is just another way for the US government to impose stricter regulations in the future.
Is dollar uncertainty good news for Bitcoin?
CoinGape previously reported that the Bitcoin market could be at risk if a debt default occurs in 2025. Historical data suggests that Bitcoin prices have never performed well in volatile markets or uncertain macroeconomic conditions. If a default occurs in 2025, the value of Bitcoin could fall due to panic selling and liquidation of large traders.
A similar situation occurred in early 2020. The value of cryptocurrencies subsequently declined due to a pandemic-related slowdown in economic activity and a stock market crash. At least the market consensus is that an economic downturn could cause a significant decline in cryptocurrencies and price declines.
However, uncertainty around debt and the value of the US dollar could also be a potential upside factor. Market participants may choose to keep their funds away from central authorities because the central bank could be involved in a downgrade. In this case, the digital asset market could rise as a result of the appeal of decentralized cryptocurrencies.
In an interview, Strike founder and CEO Jack Mallers explained possible alternatives in this dire situation. He said the government’s local currency could depreciate amid the debt equation. This could become even more prevalent if current debt trends continue at their current pace. Mueller argues that this could cause investors to devalue fiat money and cause a collapse in purchasing power. He feels that in such a scenario, people need a decentralized physical asset and Bitcoin is the only option at the moment.
Where will crypto voters lean in this election?
The Biden administration has time to solidify its belief that it may not be so pro-crypto. Data collection also indicates that the current US government may be trying to promote the dollar over other digital currencies. The power consumption of Bitcoin mining tends to be a controversial topic, but the data collection comes just before the election. This fan is concerned that the Biden 2.0 administration will not support the digital currency space.
Voters using cryptocurrencies will be very important in this election. According to Forbes, one in five Americans currently owns digital assets. 52 million people to be exact. Despite the heavy crackdown and certain aversion to cryptocurrencies, Forbes also noted that 22% of respondents who own cryptocurrencies are Democrats. The remaining 18% are Republicans and 22% are independents, based on survey data from Coinbase and Morning Consult.