Bitcoin market capitalization cracks trillion mark

Bitcoin cracks trillion mark

The record chase continues for the cryptocurrency Bitcoin after it jumped above the $50,000 mark. Shortly before the weekend, it rises to a new record high. Some factors play a special role in this. It is still not to late to invest in btc, just pick a reliable exchange from this website and start.

The cyberdevise Bitcoin has broken a sound barrier in its record chase: For the first time, all Bitcoin in circulation together were worth more than one trillion dollars on Friday, according to data provider CoinMarketCap. The Bitcoin price rose by 5.5 percent to a record high of 54,405 dollars. The weekly gain was thus eleven percent, and since the beginning of the month the increase was 64 percent. On Saturday morning, the price even climbed to 55,564 dollars. If you are new to crypto trading, you can consider using a bitcoin trading bot from this website.

Bitcoin market capitalizationJust two months ago, the foreign exchange had surpassed its best mark of 2017 and broke through the price threshold of 20,000 dollars. Shortly thereafter, it surpassed the hurdles at 30,000 and 40,000 dollars and had also cracked 50,000 on Tuesday. The rally had really taken off when Tesla announced it had invested 1.5 billion in bitcoin. The head of the e-car builder, Elon Musk, is considered a fan of cryptocurrencies. He had boosted both Bitcoin and other internet currencies with positive tweets in recent weeks. In addition, credit card provider Mastercard announced that it would open its payment network to cryptocurrencies.

Analysts warn of risks

While some analysts see further upside potential, critics warn of the risks of the highly volatile digital currencies, which are hardly used in the real economy, but mainly serve as fodder for speculators. Current prices are significantly higher than fair value, JP Morgan says. Crypto assets, for example, “remain the worst hedge against major stock market setbacks” with “questionable diversification benefits” at prices far above production costs, it said. Some investors said Bitcoin’s high volatility was a hurdle to it becoming a widely used means of payment.

  • Bitcoin supporters, on the other hand, argue that the cryptocurrency is “digital gold” that investors can use to hedge against rising inflation risk.
  • However, according to JP Morgan, Bitcoin would need to rise to $146,000 in the long term for its market capitalization to equal the amount that private investors would have invested in gold through exchange-traded funds or bars and coins.
  • Bitcoin is a purely digital currency that can be used to send money anonymously around the globe in seconds. Unlike the euro or the dollar, there is no central bank behind it. Therefore, the exchange rate is solely the result of supply and demand.
  • The cyber currency, which has been around since 2008, is controlled by the community of its users. All transactions are encrypted and recorded in a common database, the so-called blockchain, in a forgery-proof manner.

Power guzzler Bitcoin

Bitcoin rise

The flight to fame of the virtual currency Bitcoin has very real side effects: In order for new cryptocurrency to be created, mainframes are consuming more and more electricity – now as much as the Netherlands.

Bitcoin is rushing from record high to record high. At times, the price recently scratched the $60,000 mark. The cryptocurrency is becoming increasingly attractive for investors who are willing to take risks. And the higher the price, the more profitable the so-called bitcoin mining, i.e. the calculation of new numerical codes for the cryptocurrency with the help of mainframe computers. But with success comes a turn to the costs and side effects associated with mining. Bitcoin may be a virtual currency, but the energy consumption required to produce bitcoins is real – and gigantically high.

The Cambridge Centre for Alternative Finance (CCAF, visit website) is looking into this issue and has created an index. The Cambridge Bitcoin Electricity Consumption Index is designed to estimate, practically in real time, how much electricity is currently being used for mining. The data is then extrapolated to the year. The calculated value is currently around 120 terawatt hours. That is more than the Netherlands consumes in electricity per year. Germany’s annual electricity consumption is around 524 terawatt hours.

Already around 0.5 percent of a year’s global electricity consumption would be spent on bitcoin mining, with the CCAF referring to 2016 consumption data from the International Energy Agency.

Other cryptocurrencies also energy-intensive

However, the range of estimates is wide, with other experts calculating lower consumption: according to the Bitcoin Energy Consumption Index by “Digiconomist,” a data collection by economist and data analyst Alex de Vries, estimated electricity consumption in 2021 is expected to be just under 78 terawatt hours. That would still be equivalent to Chile’s electricity consumption.

Incidentally, it is not only Bitcoin that is driving up electricity consumption. The creation of the cryptocurrency Ethereum is also very energy-intensive.

As electricity consumption grows, so do the CO2 emissions that result from its production. It is very bad that so much energy is wasted in a lottery, the BBC quotes David Gerard, who runs a news and blog site on blockchain and cryptocurrencies.

Mining makes the meter spin

  • The fact that electricity consumption is so astonishingly high has to do with the high effort involved in mining. In order to mine Bitcoins, computers have to solve complex computing tasks. The more people try their hand at bitcoin mining, the more complex the calculations are to produce new ones. This can hardly be done with a PC at home.
  • Bitcoin prospectors therefore have the tasks performed by special computers with special computing power, which are interconnected to form networks. The higher the bitcoin price, the more lucrative mining is because of the high electricity costs.
  • Because these are relatively low there, Iran plays an important role in the competition for cheap Bitcoins. Worldwide, it is one of the ten countries with the largest mining capacity.

Does the state have to intervene?

However, China plays the main role by far. But according to Wayne Zhao, chief operating officer of crypto research service TokenInsight, China’s share of total mining capacity has fallen from 80 percent to around 50 percent currently. And depending on the way the power is produced, the higher the CO2 emissions.

Experts from the Technical University of Munich had already pointed out the environmental problem of mining in 2019 and also considered the factors of energy consumption and climate change in a study. Christian Stoll, one of the authors, criticizes: The CO2 footprint is so large that it is reason enough to discuss the regulation of crypto mining in locations with CO2-intensive electricity production.