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The price of bitcoin has fallen to less than $17,000 per bitcoin from nearly $70,000 at the end of 2021 (although a viral memecoin exploded in the new year).
Now, with serious survival fears swirling around some of the world’s biggest bitcoin and crypto companies, geopolitical strategist Peter Zeihan has explained how the price of bitcoin could fall below zero.
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Bitcoin “is useless, it’s not a store of value, it’s not a medium of exchange and as we’ve seen, if you want to decentralize outside of government control, it’s a paradise for fraud”, Zeihan, author of The Accidental Superpowertold podcaster Joe Rogan.
“[Crypto] is now going to zero, except for bitcoin which will probably go negative because if we go into a world with carbon taxes, you first have to consider the energy to produce it.”
Bitcoin is now “starting to be priced appropriately,” Zeihan said. Bitcoin price “has another $17,000 to go down. There is no intrinsic value to this product.”
The bitcoin blockchain, a distributed digital ledger, is run by so-called miners who use powerful, power-hungry computers to secure the network in exchange for bitcoins.
After China kicked out bitcoin miners in 2021, the United States became the world’s largest bitcoin mining country, contributing around 38% of the so-called bitcoin hash rate according to the Cambridge Bitcoin Electricity Consumption Index. .
Bitcoin mining uses staggering amounts of energy to power and cool computers, consuming as much electricity in 2022 as all of Sweden, according to Digiconomist’s Bitcoin Energy Consumption Index.
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While renewable energy sources account for almost 40% of Bitcoin’s energy consumption, the Bitcoin Energy Consumption Index puts the Bitcoin network’s carbon footprint on par with Hong Kong.
Carbon taxes have been introduced by countries around the world in recent years as they try to reduce their CO2 emissions. In June last year, Danish lawmakers agreed to the highest corporate carbon tax in Europe. However, the United States does not have a national carbon tax, with the Biden administration viewing the idea as politically risky and difficult to push through Congress.
Despite bitcoin’s price crash over the past year, many remain confident that the price will eventually rebound with Mark Cuban, the billionaire Shark Tank star and bitcoin critic turned crypto investor, revealing when he’ll be buying bitcoin again. .
“Bitcoin has become an ideology,” Zeihan said. “People who really love bitcoin are convinced that it’s the currency of the future, the decentralized ledger is the way to go, that anything controlled by a government entity is by definition a downside and if it’s done by the private sector will be better, but that’s just not how money works.”
The scarcity of bitcoin, with a fixed supply of around 21 million bitcoins making it comparable to digital gold, is cited by bitcoin bulls as the reason it is superior to so-called fiat currencies backed by the government that can be created by central banks.
“One of the craziest things about bitcoin is that there will never be more than X units of bitcoin [because] by default, it means it cannot be used for trading,” Zeihan said. “The very idea of economic activity is that there is expansion, which means you need more foreign exchange to lubricate and manage that expansion. If the currency is locked to a specific number, you get currency inflation and that’s one of the fastest ways to destroy an economic model.”