Cloud Hosting

As the U.S. government seeks ways to fund its swellingdebt anddeficits and seemingly ever increasing spending, a puzzling anomalyexists.Investorshave flocked to bitcoin and othercryptocurrencies yet receive a preferred tax rate on long-term profits as compared to gold bullion.This makes no sense if, as its advocates like to say, bitcoin is digital gold.

In 2019, the Internal Revenue Service (IRS) published Notice 2014-21, which characterizes cryptocurrencies as property for tax purposes. Meanwhile, gold bullion and equivalent exchange traded funds (ETFs) are treated as collectibles, like coins, gems, jewelry, art, stamps, toys, comic books, sports cards, etc.

Assets are generally not taxable until the point of sale, when an investor realizes a gain or loss. If either bitcoin or gold is bought and sold within a window of 12 months, the proceeds are taxed as ordinary income at a maximum of 28 percent.

But if bitcoin is held for more than 12 months, anygains from a sale are taxed at the preferred long-term capital gains rate, up to a maximum of 20 percent. Gold bullion held for more than 12 months, however, is still taxed up to a maximum of 28 percent.

The revenue implications of this tax preference for bitcoin are significant if not enormous.If the IRS treated bitcoin like gold,additional billions in tax revenue would result. The value of cryptocurrencies globally has mushroomed from nothing to more than$3 trillionin a decade. A portion of thesemassive gains by U.S. investors would be subject to some form of highertaxation.

Investors appetite for bitcoin and gold is likely to growas inflation heats up andprices rise. As increasing demand for bitcoin drives its value higher, the tax revenue implications of treating it differently than gold will also increase.

What is the rationale for the IRS favoring bitcoin?

If gold and bitcoin are, in effect, alternative currencies, then our current tax policy is irrational.It makes no more sense than a policy that taxes profits from trading euros more lightly than profits from trading yen.

For better or worse, the tax code is a bludgeon that the government uses to influence behavior. Usually, favorable tax treatment exists if the government deems something to be a public good and wants to favor it. For example, tax policy favors home ownership by having the home mortgage interest deduction.

Yet no sound reason exists for public policy through taxation to favor investment in bitcoin and cryptocurrencies, which tend to be speculative, over gold, whichis a time-tested measure and storehouse of value.

The rationalefor taxing gold and collectibles at a higher ratethancapital gains in property like bitcoin is that collectibles were mostly owned by the wealthy and that gains from those collectibles neither motivated innovation nor stimulated economic growth.This rationale no longer makes sense, if it ever did. Regardless, this reasoning wouldapply equally to bitcoin.

The wealthy use bitcoin and other cryptocurrencies as storehouses of value just as they do gold

Billionaires such as Elon MuskElon Reeve MuskHouse Democrats push vote on social spending plan to Friday McCarthy delays swift passage of spending plan with lengthy floor speech Musk planning first orbiting SpaceX test flight in January MORE and Mark CubanMark CubanMark Cuban adamant about vaccinations: 'If you work for me, I require my employees to be vaccinated' 'Shark Tank' investor Barbara Corcoran apologizes for comments about Whoopi Goldberg on 'The View' NFL player said he'll get vaccinated if he can earn a profit from it MORE openly espouse their holdings in cryptocurrencies. They are just some of those who have gone public with their support. Ten individuals hold roughly 6 percent of the entirety of bitcoin.These are known as whales.

So bitcoin and cryptocurrencies are storehouses of wealth for the rich, in a similar manner as gold.

Bitcoin and other cryptocurrencies are no more productive than gold

While technologically innovative, it is unclear whether bitcoin stimulates economic growth compared to other productive uses. In contrast, the (physical) mining industry as a whole, exclusive of oil and gas workers, employs 182,900 in the United States. These are real jobs with real economic benefits for society.

By one account, 4 percent of Americans have quit their jobs due to gains in cryptocurrencies. Good for them, but is this what we really want as a society?

Measuring the productive impact of bitcoin and other cryptocurrencies is less clear since they are mined, or digitally uncovered, by individuals. Of the 21 million bitcoins that exist, 18.7 million, or 89 percent, have already been mined, so even if there is an economic boost from bitcoin mining, it is in theory very temporal.

Tax policy should disfavor bitcoin and deflate the bubble before it bursts

Instead, tax policy shoulddisfavorbitcoin and other cryptocurrencies rather than favor them.

Gold is easier to monitor, tax and regulate, relatively speaking. It cannot go through a metal detector without detection or entirely avoid the possibility of a random bag or cargo inspection.

Bitcoin and other cryptocurrencies, which can be stored on a thumb drive, are more shadowy and elusive, and can be used to evade creditors and to enable criminal enterprises, such as those involved in sex trafficking and money laundering.While privacy advocates may laud this, it comes at a great cost.

Further, the multi-trillion-dollar cryptocurrency market is increasingly a systemic risk to the global economy. The larger it becomes, the more levered the rest of the global economy becomes to it. A sudden drop mirroring the meteoric rise of bitcoin would bring other assets down with it, including housing and the stock market, as crypto investors are forced to sell their non-crypto holdings to cover their losses.

Cryptocurrency minings energy and environmental impacts are also widespread. Digital mining is extremely energy intensive to the point of straining power grids, and therefore a source of environmental concern. Crypto mining operations, by one estimate, consume more energy than the entire country of Argentina. Tax policy should disfavor this.

Fixing the tax anomaly

Taxes on cryptocurrencies should be on par with gold and collectibles. Congress could accomplish this through legislation, or the IRS could simply issue a revised notice and ruling concerning the tax treatment of bitcoin and other cryptocurrencies.

As the old saying goes, If you want to be treated like a lady, act like one.In tax terms, this could be translated as: If bitcoin and other cryptocurrencies are to be valued as digital gold, they ought to be taxed like they are really gold.

Chad Bayse is an attorney and Navy judge advocate. He was a counselor to Attorney General Jeff SessionsJefferson (Jeff) Beauregard SessionsThe metaverse is coming society should be wary Trump criticizes Justice for restoring McCabe's benefits McCabe wins back full FBI pension after being fired under Trump MORE and attorney-advisor at the National Security Agency. He holds stock positions in Barrick Gold (GOLD), Kinross Gold (KGC) and Sibanye Stillwater (SBSW). He holds no bitcoin or other cryptocurrencies. The views expressed in this article are his own and not those of the Department of the Defense or the Navy.

More here:
If bitcoin is 'digital gold,' it should be taxed like gold | TheHill - The Hill

Prices of leading cryptocurrencies, including Bitcoin (CRYPTO:BTC), Ethereum (CRYPTO:ETH), Solana (CRYPTO:SOL), and Cardano (CRYPTO:ADA) are down more than 10% in the last week and some have fallen 20% or more from their highs.

Unlike a company with a management team and financial figures, getting to the bottom of why crypto prices are moving sharply to the upside or downside takes a little more digging. Here are five reasons why crypto prices are moving lower -- and what to do about it.

Image source: Getty Images.

President Biden signed the $1 trillion bipartisan infrastructure bill into law on Monday. Certain crypto-related provisions offer some of the ways the Administration hopes to bolster tax revenue to fund both this bill and the proposed $1.75 trillion Build Back Better plan. The bill's loose definition of what exactly it means to be a crypto broker also encompasses small and large miners and other individuals or entities that aren't exactly brokers in the traditional sense.This issue circles back to regulatory fears of the U.S. government cracking down on the industry, making it less profitable and just more of a hassle overall.

There's also a provision related to transactions of $10,000 or more where social security numbers must be verified and the transaction reported to the government. This is yet another deterrent challenging decentralized finance and the crypto market overall.

Bitcoin Price data by YCharts

On Tuesday, news came in that China's National Development and Reform Commission is continuing its pursuit of a crypto crackdown. The lion's share of crypto mining currently comes from China, where crypto is seen as a direct threat to the country's fiat currency and economy. The second-largest economy's negative stance on crypto isn't exactly a positive sign for the market.

On Nov. 10, Bitcoin and Ethereum both reached all-time highs of $69,000 and over $4,800, respectively. The same day, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 6.2% over the last 12 months, representing the highest yearly increase in three decades. Since then, the dollar has been showing some strength thanks to higher-than-expected American spending across the retail sector. A stronger dollar means less inflation, which reduces the argument to invest in inflation-resistant asset classes.

Gold and high-yield dividend stocks have long been great ways to combat inflation. But cryptocurrency, especially Bitcoin, also has inflation-resistant characteristics due to a fixed maximum supply and independence from any one economy. If inflation starts heading in the other direction, then it would be a great thing for stocks and the U.S. economy, but a bad thing for crypto.

Riddled with speculation, the crypto market is also home to a lot of borrowed funds. Using margin magnifies potential gains and losses. Companies like BlockFi and Coinbase are willing to pay their users high interest rates for holding stablecoins, big-cap cryptos, and even altcoins on their platforms because they can lend out those same assets for a higher interest rate and make money on the spread. However, when prices crash and investors lack the equity to keep their accounts solvent, then the broker can forcibly issue a margin call. If the user can't add new funds into the account to bolster their equity, they may need to sell crypto at lower prices to raise cash to cover the deficit.

In the last 24 hours alone, $609 million were liquidated from over 147,600 traders, which is an average of over $4,100 per trader. That's a lot of money, gone in a hurry. Although the crypto market is still up a lot year-to-date, there have been many occurrences where liquidations caused steep sell-offs, including in the May crash which spilled into a June sell-off, and even the brief pullback in September. Simply put, the widespread use of debt by crypto traders adds fuel to the fire of a crash, but can also accelerate a boom on the upside.

The crypto market is no stranger to volatility. But few phrases evoke more fear than the threat of impending crypto winter.

Crypto winters are basically prolonged periods of stagnating or declining crypto prices. In the past, they've come one and a half to two years after a Bitcoin "halving." A Bitcoin halving is when the reward per block mined is cut in half. They occur roughly every four years. Given that the last halving was in May 2020, many predict that a crypto winter will set in sometime within the next six months.However, the reward per blocked mined is much less than it used to be, and nearly 90% of Bitcoin's supply is already in circulation. Given this backdrop, halvings should have less impact over time.

Quite honestly, it doesn't make sense for Bitcoin and other crypto prices to go through a fairly predictable cycle of bullish and bearish years as they did in the past. But because it happened the last few halvings, and there's widespread consensus that it could happen again, we could very well see a situation of "sell the rumor, buy the news."

The five reasons above all have one thing in common -- they are short-term challenges. The reality is that the long-term thesis for investing in top-tier cryptos like Bitcoin and Ethereum, or even high growth alternatives like Solana and Cardano, hasn't changed one bit.

Investing in cryptocurrencies requires a great deal of patience and risk tolerance. So far, the reward has been absolutely worth it. And given the rise of decentralized finance and more exciting projects in the crypto space, there's every reason to believe that crypto remains a great long-term investment even if we are approaching another crypto winter.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

More:
Does the Bitcoin, Ethereum, Solana, and Cardano Price Crash Signal Another Crypto Winter? - Motley Fool

The annual Sports Illustrated (SI) Awards have just revealed the line-up for the firms 2021 awards show that will broadcast live from the Seminole Hard Rock Hotel and Casino in Hollywood, Florida. This year, fans will be able to win a whole bitcoin from FTX as the crypto exchange has partnered with the SI Awards ultimate sports sweepstakes.

The American sports magazine owned by Authentic Brands Group, Sports Illustrated, has been a very popular magazine since its inception in 1954. Since the day SI was created, for 67 years the company has presented the Sportsman of the Year award annually. This year, the SI Awards will be hosted at the Seminole Hard Rock Hotel and Casino in Florida on Tuesday, December 7 at 8:00 p.m. (EST).

The 2021 SI Awards will also feature a sweepstakes with rewards provided by the crypto exchange FTX. Fans will have the opportunity to win a single bitcoin (BTC), tickets to the award show, hotel and airfare accommodations, and backstage passes to meet and greet with a surprise athlete. FTX has been very involved in the sports industry during the last year and sponsoring the SI Awards comes as no surprise.

FTX recently partnered with the MLB legend Shohei Ohtani, Tom Brady and Bradys supermodel wife Gisele Bndchen. The firm is an official partner of the MLB and has also acquired the naming rights to the NBA Miami Heats arena and the professional esports organization TSM. Other prominent crypto companies are also diving deep into the world of sports as Crypto.com signed a massive deal with the MMA company UFC. Crypto.com also inked a 20-year deal for the naming rights to the Staples Center, home of the Los Angeles Lakers.

FTX details in an announcement sent to Bitcoin.com News that the firm is proud to present the most prestigious award of the evening, Sportsperson of the Year. FTX further added that honoring this years winner as an athlete who best represents the spirit and ideals of sportsmanship, character, and performance. Guests that attend the event will also receive an exclusive Sports Illustrated Awards NFT through FTX US NFT Marketplace to commemorate the event.

In addition to the sweepstakes, the SI Awards will also be hosted by DJ Khaled and Cari Champion. The event will also showcase music performances by 2Chainz and DJ Irie. Other SI Awards attendees that will be in Florida will include JuJu Smith-Schuster, Lamelo Ball, Logan Paul, Rob Gronkowski, Suni Lee, Tyler Herro, Udonis Haslem, Billie Jean King, Brooks Nader, Camille Kostek, Chad Johnson, Candace Parker, DJ Carnage, Haley Kalil, and Jasmine Sanders.

The SI Awards are also produced by the firm Medium Rare, an agency dedicated to sports, celebrity, and brand-focused non-fungible token (NFT) assets. Medium Rare was behind the multi-million dollar NFT drops this year that featured the Golden State Warriors and Rob Gronkowski.

What do you think about the upcoming SI Awards and the sweepstakes that will be giving away a single bitcoin? Let us know what you think about this subject in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Original post:
Sports Illustrated Awards Sweepstakes Sponsored by FTX to Give Away 1 Bitcoin Bitcoin News - Bitcoin News

An oversupply situation could actually put upward pressure on power prices, so we come in, mop up all that surplus hydro and contribute to keeping power prices low for mums and dads, he says.

Its a noble goal for Iris, which is hoping to counteract some of Bitcoins massive environmental impact, given the currency uses as much power as the entirety of Thailand on an annual basis.

But the business has some way to go before it makes any notable dent in Bitcoins energy consumption, with its British Columbia centre boasting a mining output of around 0.7 exahashes, fuelling a tiny amount of the total Bitcoin network, which has a daily average hashrate of around 168 exahashes. Hashrates refer to the total combined computational power required to fuel the Bitcoin network, with an exahash being a quintillion hashes per second.

Iris pulled in $14 million in revenue for the three months to the end of September, but made an after-tax loss for the period of $678 million. On Thursday, the business debuted on the Nasdaq to a muted response, with shares falling 12.9 per cent from their $US28 listing price, a drop that coincided with an 12 per cent fall in the price of Bitcoin over the past week.

However, the successful IPO still values Iris at about $US1.6 billion and puts the Roberts brothers respective 10 per cent stakes at around $US160 million each. Its a valuation that would have likely been unattainable if the business listed locally, with Roberts saying the tech-heavy Nasdaq was the obvious choice, given the numerous other Bitcoin miners already listed on the exchange.

The Nasdaq seems to be the logical home, particularly given the size and scale of the business and the fact that our operations are predominantly in North America and Canada, he says.

Loading

Other crypto companies in Australia have publicly criticised the Australian Securities Exchange for causing a brain drain of Australian cryptocurrency start-ups pursuing listings in other markets due to a bias against them by the local bourse. Roberts disagrees, saying this wasnt Iris experience.

I havent spoken to the ASX in six months or so, but they were always very constructive and very friendly in all their interactions. Theyve obviously got their own policies and objectives as a business, but we made the decision a little while ago to go offshore and havent looked back, Roberts says.

Right now, Iris operations are firmly focused on international markets across Canada, the US and parts of Asia where the business can find renewable energy providers to fuel its power-hungry plants.

Roberts says Iris sights are likely to stay international, despite a recent proposal from the government to give Australian Bitcoin miners a 10 per cent cut in the company tax rate if they use renewable energy for their operations.

Well certainly look at [that policy], absolutely, he says. Political and regulatory support is important for our business, but equally, we want to ensure when we enter a market, were solving problems and delivering positive externalities to that market.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

Continue reading here:
Aussie brothers hit Nasdaq with plan to turn Bitcoin green - The Sydney Morning Herald