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US Senators Raise Crypto Mining Concerns, Propose Government Blockchains

Members of the U.S. Senate Committee on Energy and Natural Resources asked about the cost of cryptocurrency mining and the opportunities for blockchain in the public sector on Wednesday.

Like other crypto-related hearings on Capitol Hill, the hearing – which featured a range of public and private-sector speakers – served in part as an informational session for lawmakers who aren’t very familiar with the technology.

In contrast with past Congressional hearings which at times turned acrimonious toward the concept of blockchain and cryptocurrencies, senators on the Energy Committee largely inquired about how blockchain can be applied to various projects.

The people giving testimony were Robert Kahn, CEO and president of the Corporation for National Research Initiatives; Paul Skare, chief cybersecurity and technical group manager of the Pacific Northwest National Laboratory; Thomas Golden, program manager of technology innovation at the Electric Power Research Institute; Claire Henly, managing director of the Energy Web Foundation; and Arvind Narayanan, an associate professor of computer science at Princeton University.

In remarks, committee chair Senator Lisa Murkowski of Alaska noted the “hearing will examine any cybersecurity advantages that blockchain and similar technologies might offer over other ways of securing our energy infrastructure.”

Mining concerns

The foremost risk discussed at the hearing revolved around the energy needs of cryptocurrency miners. Networks relying on proof-of-work – which require the expense of energy to prove that “work” has been completed – generally require large amounts of energy, such as the bitcoin blockchain, according to Golden.

The witnesses estimated that public blockchains may be using anywhere from one to as much as five gigawatts worldwide, though, as Golden contended, “this is less than 0.1 percent of the global power usage.”

Murkowski remarked that growing demand on the local level from new crypto mining farms can cause stress for utility providers, and may even damage the electric grid. Her concern is that this may translate to increased costs for the provider’s customers.

She asked:

“Can we anticipate the consumer rates and the concern that some might have that, ‘my family and I might not be the ones that benefit from blockchain and bitcoin and yet I’m wondering are my rates going to be expected to pay for this infrastructure?'”

Senator Steve Daines similarly asked how communities can prepare for mining farms moving onto their power grids.

Golden said power utilities should begin having discussions with their communities about providing power for these companies, as a start to solving the infrastructure issue.

But even reinforcing some localities’ grids may not be enough. Henly noted that “bitcoin’s energy use is a substantial concern … we know that bitcoin’s energy use will prevent it from being able to scale.”

Her solution was to look at alternatives to PoW, noting that while they require large amounts of power, proof-of-stake and proof-of-authority algorithms are far more energy efficient, and can pose as feasible alternatives to scaling a blockchain without requiring large amounts of power.

Security questions and federal blockchains

At various times during the hearing, the conversation turned away from perceived problems and toward how blockchain could be applied to the energy sector, including for tracking shipments, validating security protocols or building on other existing technologies.

“I’d like to hone in on the security aspect, because I think it’s one of the most important here today,” Senator Maria Cantwell remarked during an opening statement.

At other points, the senators sought to clarify for themselves different aspects of the technology’s elements. Senator Catherine Cortez Masto, for example, asked about transaction privacy and whether law enforcement officials could be hindered in carrying out their duties.

Senator Bill Cassidy notably asked about specific uses for the U.S. government, asking if it is technically feasible to develop a blockchain for federal governments to track shipments sent from one nation to another. Narayanan confirmed that such a platform is feasible, but would require participation from whichever nations are involved.

And while, like previous hearings, no firm conclusions were reached, Murkowski noted that the hearing was educational for the committee’s members – perhaps setting the stage for more queriers to come.

Lisa Murkowski image via Energy Committee livestream

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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NYSE Parent ICE’s New Futures Contract Will Deliver Real Bitcoin

Intercontinental Exchange (ICE), the Atlanta-based firm that owns the New York Stock Exchange, announced Friday that it plans to launch a digital assets platform and a bitcoin futures product.

Called Bakkt, the platform will leverage Microsoft’s cloud to build “an open and regulated, global ecosystem for digital assets,” according to a press release. Effectively, it will allow consumers and institutions to trade, store and spend digital assets over a worldwide network.

Notably, ICE also plans to offer a one-day “physical” bitcoin futures contract – meaning bitcoin is actually delivered on a specified date, unlike other offerings that are settled with cash. The product is expected to launch in November, pending U.S. Commodity Futures Trading Commission (CFTC) approval, ICE states.

The company said that it believes that the regulated venues will create new protocols for managing “the specific security and settlement requirements” of cryptocurrencies.

The firm adds that major companies including BCG, Microsoft and Starbucks are providing expertise on risk management and consumer experience for the project.

Starbucks will also work to develop “practical, trusted and regulated” applications for consumers to convert digital assets into US dollars for use at the firm’s outlets.

Jeffrey Sprecher, founder and chairman of ICE, said in the release:

“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets.”

“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility,” said Kelly Loeffler, CEO of Bakkt.

The release also indicates that M12, Microsoft’s VC arm, Galaxy Digital, Horizons Ventures, Alan Howard and Pantera Capital are among the firms who have either invested in, or are expected invest in, the project.

NYSE image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Zambia, Overstock’s Medici Ink Deal on Blockchain Land Registry Pilot

Overstock’s blockchain subsidiary is partnering with the Zambian government to build a blockchain land title registry, the company announced Wednesday.

Medici Land Governance (MLG), the blockchain-powered property rights subsidiary of Overstock.com, has signed a Memorandum of Understanding with Trevor Kaunda, the permanent secretary for the Ministry of Land and Natural Resources in Zambia.

Under the agreement, MLG will provide Zambia a “land governance program that collects and secures property ownership information using blockchain.”

MLG has agreed to deliver certificates of title in digital and printed form to the nation’s government by November 30, 2018 to serve as a proof of concept for a streamlined process, according to the announcement.

Overstock.com founder and CEO Patrick Byrne said in a statement that the project would help the country move toward a global economy that builds trust through technology.

“Such a registry would allow individuals across all socioeconomic classes to build equity and leverage it to their benefit, as it has done in the West for generations,” he added.

Zambia struggles with low levels of participation in formal land registry systems, which has hindered economic development in the country, according to the announcement.

MLG is the 14th portfolio company under Medici Ventures, Overstock’s blockchain tech accelerator wing, which has invested in a number of blockchain projects, including tZero, Peernova, Bitt, SettleMint and Factom.

Byrne has been working with Peruvian economist Hernando de Soto on a joint blockchain property rights venture called De Soto Inc. The business aims to provide services for about five billion individuals by granting them access to global capital markets.

Overstock.com image via Shutterstock 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Rejection Aside, Calls for a Bitcoin ETF Are Only Escalating

Karma is real.

Just as the crypto community was – not so secretly – displaying its joy over Facebook’s historic stock loss, bitcoin’s price took a surprising drop below $8,000. A reaction to the news that bitcoin exchange-traded fund (ETF), one proposed by brothers and co-investors Tyler and Cameron Winklevoss, had been rejected for the second time, it was viewed as another blow to the market.

Before going further, to make it clear, the bitcoin ETF proposed by the Winklevoss brothers is different from the bitcoin ETF by investment firm VanEck and financial service company SolidX, which has triggered a wide discussion in the crypto community over the past week.

As CoinDesk reported on June 6, VanEck and SolidX announced that they have applied to the SEC for permission to launch the first bitcoin-based ETF, their latest attempt to do so after several failures.

The SEC responded by calling for comments on the proposal in late June. Since then, it has received more than 100 comments and it is said that a decision may occur as soon as next month.

The possibility of the birth of the first bitcoin-based ETF in history has generated an overall optimism in the crypto sector as bitcoin was trading at its highest since late May.

Yet, Thursday’s news undoubtedly threw a wet blanket on expectations.

According to CoinDesk’s report, the SEC has rejected the Winklevoss bitcoin ETF because the proposal is not “consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.”

Notably, the SEC’s reiteration on concerns over the market manipulation and surveillance is consistent with its opinions during the first rejection back in March 2017.

The SEC, however, also said in the document that “over time, regulated bitcoin-related markets may continue to grow and develop,” leaving the door open to potentially approving such products in the future.

Nevertheless, crypto community didn’t seem to take the news well at first, especially after bitcoin’s price fell from nearly $8,300 following the decision to a low of $7,973.81, according to CoinDesk’s Bitcoin Price Index (BPI).

Even news outlets including CNBC and Bloomberg were accused of manipulating the crypto markets since they covered the news.

Level heads

Despite the more extreme reactions others who read the 92-page response by the SEC largely struck a much more calm and positive response.

As mentioned previously, though, both bitcoin-based ETFs, Winklevoss brothers’ ETF is essentially different from the one proposed by VanEck and SolidX, and should have few impact on the future decisions, which is pointed out by many crypto experts and investors.

High expectations

With that being said, many members said they will remain optimistic about the future of a bitcoin ETF.

For one, there are still major institutions behind the remaining bids.

But while there remains a lot of optimism, not everyone, it seems, will be convinced until one is finally approved. As always, crypto remains on the outlook for possible points of failure.

Either way, the market is certainly headed for an exciting September.

SEC image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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What to Expect When Congress Talks Crypto (Twice) Tomorrow

It’s a crypto doubleheader on Capitol Hill tomorrow.

Two U.S. House of Representatives Committees will be hosting hearings on Wednesday to look at the topic from two distinct angles.

The House Committee on Agriculture will focus on the emergence of “digital assets” while the Financial Policy Subcommittee hearing will examine “the extent to which the United States government should consider cryptocurrencies as money,” as previously reported.

According to new information published Tuesday, the Agriculture Committee hearing will notably see former JPMorgan blockchain lead and current CEO of Clovyr Amber Baldet, former Commodity Futures Trading Commission (CFTC) chairman Gary Gensler and Andreessen Horowitz managing partner Scott Kupor, among others, testify.

“This hearing will shed light on the promise of digital assets and the regulatory challenges facing this new asset class. Our committee has a deep interest in promoting strong markets for commodities of all types, including those emerging through new technology,” Rep. Michael Conaway, chairman of the committee, said in a statement.

By contrast, the Financial Services hearing seems to be tackling the broader question of what cryptocurrencies are exactly. According to a memo detailing the hearing’s goals, members “will evaluate the merits of any uses by central banks of cryptocurrencies, and discuss the future of both cryptocurrencies and physical cash.”

As of press time, none of the committee members contacted by CoinDesk responded to requests for comment, leaving the question of sentiment around the topics an open one ahead of the hearings.

Yet as for what those tuning in can expect, one might want to refer to the last few times Congress tackled the subject.

Back in March, for example, a hearing on initial coin offerings – likely to emerge during the testimonies tomorrow – saw lawmakers argue for greater protections while Representative Tom Emmer called for more regulatory restraint. A hearing in May saw lawmakers discuss the “almost limitless” applications of the tech, to borrow a phrase from one Department of Homeland Security official.

Luckily for those hoping to follow the action, the hearings – which will be live streamed – are spaced out throughout the day. The Agriculture Committee’s gathering is set for 10 a.m. EDT, with the Financial Services Committee’s hearing scheduled for 2 p.m. EDT. B

U.S. flag image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.