Bitcoin plummets, what happens? From the rejection of Warren Buffett to broken promises


Bitcoin plummets, what happens?  From the rejection of Warren Buffett to broken promises
Written by aquitodovale

Apartments produce rents, farms produce food. Bitcoins are useless. If I was offered all the Bitcoins in the world for $ 25, I wouldn’t get it because I don’t know what to do with it. What has recently been called the “enemy number one of Bitcoins” is back to talk. Warren Buffett, the oracle of Omaha, at the last annual Berkshire Hathaway conference, spared no criticism of digital currency, which he considered to be a non-productive asset, incapable of creating anything tangible.

Bitcoin in free fall, -50% from the highs

The oracle spoke and a few days later the Bitcoins were overwhelmed. In fact, since May 5, the digital currency is the subject of a dizzying collapse, which is also affecting all the other cryptocurrencies. Compared to the highs of $ 69,000 reached at the end of 2021, the queen of cryptocurrencies has more than halved. The current situation obviously brings water to the mill of detractors, who see the mother of all cryptocurrencies as mere financial speculation and who also attack for their high energy expenditure and for being, in their opinion, a great way to escape. After all, criminals like Bitcoins. Reports of cryptocurrency-related fraud have increased an average of 312% annually since 2016, according to a report by Crypto Head, which used data from the Federal Trade Commission. These crimes can include everything from hackers breaking into virtual purses and stealing money to outright scams. And Bitcoin, among the cryptocurrencies, the one preferred by criminals.

Bitcoins are not a safe haven

Another element that now seems to be leaking from all sides is the idea – carried as a banner until recently – that Bitcoin and its younger brothers can be a “safe haven”. As Massimo Sideri wrote some time ago, a safe haven asset characterized by an anti-cyclical trend with respect to shares. When investors flee the stock exchanges, the safe haven asset offers a safe haven. It remains stable and, indeed, due to the effect of the demand of those who take refuge there, it inevitably tends to rise given that the supply is limited. The example, of course, is gold. Of course, safe-haven assets can also have financial products, as happens with gold. It is not necessary to buy bullion but you can invest in shares of companies that stock it. But, in fact, there must be an underlying, as was the case for all banknotes issued up to the beginning of the twentieth century with the Gold standard. And Bitcoins don’t have that.

The problem of energy costs

Coins today are basically based on a fiduciary mechanism. The same that should happen with Bitcoin which, at the moment, has a big Gordian knot: sustainability. The growth in the cost of energy, not only in Europe, and the sustainability objectives that the world set itself during the recent Cop26 in Glasgow, make the energy-consuming currency at risk. As Edoardo Vigna recently wrote on Planet 2030, according to the index updated in real time by the University of Cambridge, to “produce” Bitcoins you need 142 Terawatts per year, slightly less than the whole of Egypt or Poland (149 both), more than Ukraine and Norway ( 124) and of Sweden mentioned at the beginning (123). Italy, with 60 million inhabitants, at 286 Twh; Google’s needs seven times less.

The ban in China

Meanwhile, 8 states have outlawed the production of cryptocurrencies (mining) also precisely because of the distorting effects they had on the local energy market. China at the forefront of this war against Bitcoin mining, but despite banning its mining several times, it still hosts around 20% of world production. The first country in the world by extraction is the United States, Kazakhstan the second. And the Kazakh government has declared that it will tighten measures against unauthorized digital currency production activities and impose a tax on all those having their registered office in Kazakhstan. But for the defenders of digital currency, what China or Kazakhstan are doing confirms that the more efforts to censor them are accentuated, the more important Bitcoins become, because censorship increasingly involves financial repression. Buffett’s partner Charlie Munger doesn’t think so: “In my life, I try to avoid things that are stupid and evil and make me look bad compared to someone else, and Bitcoin does all three,” he said. “First, it’s stupid because it’s still likely to go to zero. evil because it undermines the Federal Reserve System, And thirdly, it makes us look foolish compared to the Communist leader in China who banned them. “

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