Bitcoin, the world’s biggest and most popular digital currency, is dominating the news for a variety of reasons, ranging from predictions about the electronic currency’s destiny to concerns about its vast electricity power demands and instability.
Bitcoin had a record-breaking year in 2021, surpassing its former all-time best and gaining $545 billion in market capitalization. As per a study by The Block. The entire cryptocurrency market valuation achieved a historic three trillion dollars upon crossing one trillion dollars in January and two trillion dollars in May, with digital currencies hitting new market-rate peaks.
As we approach the conclusion of 2021, we’ve compiled a rundown of all the major happenings that helped Bitcoin become the world’s most famous currency.
- The $1.5 billion investment by Elon Musk
The year 2021 began with the CEO of Tesla Elon Musk declaring a 1.5 billion dollar investment in Bitcoin, marking the largest investment by a major company in the most famous cryptocurrencies like bitcoin. The company stated in a statement with the United States Securities and Exchange Commission (SEC) that it intends to allow bitcoin as a form of payment for its goods shortly. Bitcoin’s price soared to a record shortly after Tesla’s statement, breaking beyond the $44,000 barrier for the initial time.
Elon Musk’s social media engagement on bitcoins was further heightened by the disclosure of Tesla investing in Bitcoin. The measures prompted instant queries about CEO Musk’s behavior on Twitter, where he has been associated with driving up the value of digital currencies such as Dogecoin and Bitcoin by tweeting messages encouraging more people to acquire them.
Musk touts himself as a proponent of reduced carbon manufacturing. The electric car maker support for Bitcoin has sparked issues regarding his choice, as Bitcoins have a yearly carbon footprint nearly equal to that of Bombay, or, putting it in a worldwide context, as much as that of Czechoslovakia.
Due to environmental worries, Tesla instantly halted the usage of Bitcoin to buy its vehicles. In response to an uproar from shareholders and environmentalists, Elon Musk revealed in a tweet, altering the firm’s approach. Bitcoin, the world’s most popular cryptocurrency, dropped more than 7 percent following the tweet, pricing at $52,669. Tesla will not sell Bitcoin, according to Musk, and plans to utilize it for payments after mining shifts to more environmentally friendly energy sources.
- Bitcoin is being added to the reserves of multinational corporations.
Financial services organizations like transactions processor Mastercard, and United States-based lending Bank of New York Mellon have stated their desire to validate digital currencies after Tesla made a 1.5 billion dollar investment in Bitcoin. Marathon Patent Group, a Nasdaq-listed firm, kicked out the year by purchasing 150 million dollars of Bitcoin as the portion of its capital holdings in January.
Aside from Tesla, numerous corporations made their initial Bitcoin transactions in the initial six months of 2021. In addition to BNY Mellon and Mastercard, Twitter has incorporated Bitcoin into its business reserves. Several well-known organizations, notably Square, which devoted around 5 percent of its assets to Bitcoin, bought Bitcoin during the year.
Substack, WeWork, and the insurance company AXA have all started taking Bitcoin deposits.
- Bitcoin became legal currency in El Salvador.
It was never expected to occur, but it did. While the Bitcoin 2021 Summit in Miami in June, El Salvador’s president, Nayib Bukele, a 40-year-old, initially raised the concept of declaring bitcoin legal tender. He expressed his optimism that the introduction of bitcoin would help El Salvador transition from a progressing to an industrialized and developed country.
In June, a supermajority of lawmakers passed legislation entitled Bitcoin Law. Meanwhile, in September, El Salvador emerged as the only nation in the world to declare bitcoin lawful currency, putting it on par with the United States dollar, which substituted the colon as the domestic currency since 2001.
- Bitcoin is being scrutinized by regulators.
This year has seen a lot of activity from authorities throughout the world, with nations like Egypt, Algeria, China and Iraq, Algeria banning Bitcoin, and pushing regional financial regulators scrutinizing cryptocurrency business more closely in 2021.
This is mainly because of the possibility of a fundraising frenzy. As per The Block, a minimum of 12 formal and informal mining businesses embarked on a fundraising binge in the second half of 2021, collecting somewhere between 50 million dollars to 650 million dollars.
Another factor that drew attention was the sum of money made by Bitcoin miners. According to the ETC Group, income increased by 206 percent year over year to 15.3 billion dollars. The rise could be ascribed to Bitcoin’s rising value in 2021, which reached new peaks.
Numerous financial institutions in the United States have begun to take Bitcoin. As per the cryptocurrency custody service NYDIG, users of certain United States financial institutions can now buy, store, and trade Bitcoin using their current accounts. As per Yan Zhao, president of NYDIG, financial institutions are requesting Bitcoin since they see their clients paying dollars to Coinbase and other cryptocurrency exchanges.
Likewise, during the winter sitting of Houses in India, the administration plans to launch the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The Bill also aims to outlaw all private digital currencies in India, but it makes some exclusions designed to motivate cryptocurrency’s fundamental devices and software.
- Digital currency is being targeted by the Chinese administration.
The year 2021 has turned out to be an odd one for Bitcoin mining. In September, China’s central bank declared that all digital currency-related operations are unlawful and should be prohibited, delivering the clearest signal yet of the country’s determination to combat the business.
Here’s a concise chronology of happenings to help you comprehend China’s cryptocurrency crackdown.
The central administration of China issued a letter on the 21st of May that indicated a crackdown on Bitcoin mining and trading. Industrial-scale Cryptocurrency mining facilities in Xinjiang’s Zhundong trade zone were forced to lock down their power sources by the 9th of June.
Cryptocurrencies, according to Chinese officials, disturb economic order by facilitating unlawful asset exchanges and money laundering. Cryptocurrency miners are also being blamed by authorities for wasting electricity and posing a danger to the nation’s attempts to cut carbon emissions. By 2060, the nation wants to be free of carbon.
Bitcoin mining, it must be mentioned, necessitates high-powered machines vying to solve complicated mathematical riddles in a procedure that consumes a lot of electricity. According to a Reuters article, mining rig prices have also fallen since China enforced a ban. One cryptocurrency mining equipment that sold for roughly 4,000 yuan or 620 dollars in April and May can currently be purchased for as little as 700-800 yuan.
The Bitcoin community, and also miners, were impacted by China’s cryptocurrency clamp. As per the data released in the participant reviewed journal Nature Communications in April, Mining bitcoin has been controlled by speculators in China, who contribute to more than 75 percent of Bitcoin mining owing to cheap electricity, minimal overhead costs, and proximity to key manufacturers.
In April, the nation controlled up to 75 percent of total Bitcoin mining in the globe, but by July 2021, it was no longer contributing to the sector at all.
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