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Tag: Bitcoin

2024 was big for bitcoin. States could see a crypto policy blitz in 2025 in spite of the risks

HARRISBURG, Pa. — The new year will usher in the bitcoin-friendly administration of President-elect Donald Trump and an expanding lobbying effort in statehouses that, together, could push states to become more open to crypto and for public pension funds and treasuries to buy into it.

Proponents of the uniquely volatile commodity argue it is a valuable hedge against inflation, similar to gold.

Many bitcoin enthusiasts and investors are quick to criticize government-backed currencies as prone to devaluation and say increased government buy-in will stabilize bitcoin’s future price swings, give it more legitimacy and further boost an already rising price.

But the risks are significant. Critics say a crypto investment is highly speculative, with so much unknown about projecting its future returns, and warn that investors should be prepared to lose money.

Only a couple public pension funds have invested in cryptocurrency and a new U.S. Government Accountability Office study on 401(k) plan investments in crypto, issued in recent days, warned it has “uniquely high volatility” and that it found no standard approach for projecting the future returns of crypto.

It has already been a landmark year for crypto, with bitcoin hitting $100,000, the U.S. Securities and Exchange Commission approving the first exchange-traded funds that hold bitcoin and crypto enthusiasts being cheered by Trump’s promise to make the United States the “bitcoin superpower” of the world.

Lawmakers in more states can expect to see bills in 2025 to make them crypto-friendly as analysts say crypto is becoming a powerful lobby, bitcoin miners build new installations and venture capitalists underwrite a growing tech sector that caters to cryptocurrencies.

Meanwhile, a new crypto-friendly federal government under Trump and Congress could consider legislation from Sen. Cynthia Lummis, R-Wyoming, to create a federal bitcoin reserve on which states can piggyback.

A bill introduced last month in Pennsylvania’s House of Representatives sought to authorize the state’s treasurer and public pension funds to invest in bitcoin. It went nowhere before the legislative session ended, but it caused a stir.

“I had a friend who is a rep down the road text me, ‘Oh my god, I’m getting so many emails and phone calls to my office,’ more than he ever did about any other bill,” said the measure’s sponsor, Republican Mike Cabell.

Cabell — a bitcoin enthusiast who lost his reelection bid — expects his bill to be reintroduced by a colleague. And leaders of bitcoin advocacy group Satoshi Action say they expect bills based on their model bill to be introduced in at least 10 other states next year.

Keith Brainard, research director for the National Association of State Retirement Administrators, said he doesn’t expect many public pension fund investment professionals, who oversee nearly $6 trillion in assets, to invest in crypto.

Pension fund professionals take risks they deem to be appropriate, but bitcoin investing has a short track record, might only fit into a niche asset class and may not fit the risk-to-reward profile they seek.

“There might be a bit of dabbling in bitcoin,” Brainard said. “But it’s difficult to envision a scenario in which pension funds right now are willing to make a commitment.”

In Louisiana, Treasurer John Fleming helped make the state the first to introduce a system by which people can pay a government agency in cryptocurrencies.

Fleming said he’s not trying to promote cryptocurrency, but rather sees the step as a recognition that government must innovate and be flexible in helping people make financial transactions with the state. He said he would never invest his money, or the state’s, in crypto.

Fleming recalled meeting with a bitcoin lobbyist recently and came away unconvinced that bitcoin makes for a good investment.

“My concern is that at some point it’ll stop growing and then people will want to cash in,” Fleming said. “And when they do, it could tank the value of a bitcoin.”

In Pennsylvania, Treasury Department officials said they have the authority to decide for themselves if cryptocurrencies meet the agency’s investment standards under state law and don’t need new legislation.

Still, a highly volatile asset is ill-suited to the agency’s need for predictability, considering it writes millions of checks a year. The overwhelming majority of the roughly $60 billion it invests at any given time is in short-term, conservative investments designed for an investment period of months, officials there said.

Pension boards, which invest on a 30-year time horizon, may already hold small investments in companies involved in mining, trading and storing cryptocurrencies. But they have been slow to embrace bitcoin.

That could change, said Mark Palmer, managing director and a senior research analyst at The Benchmark Company in New York.

Pension boards got investment tools they like this year when the U.S. Securities and Exchange Commission approved the first exchange-traded funds that hold bitcoin and, in October, approved listings of options on those funds, Palmer said.

Many “are likely in the process of getting up to speed on what it means to invest in bitcoin and kicking the tires, so to speak, and that’s a process that typically takes a while at the institutional level,” Palmer said.

Several major asset managers like BlackRock, Invesco and Fidelity have bitcoin ETFs.

In May, the State of Wisconsin Investment Board became the first state to invest when it bought $160 million worth of shares in two ETFs, or about 0.1% of its assets. It later scaled back that investment to $104 million in one ETF, as of Sept. 30. A spokesperson declined to discuss it.

Michigan’s state investment board later reported about $18 million in bitcoin ETF purchases while a candidate for New Jersey governor, Steven Fulop, said that if elected he would push the state’s pension fund to invest in crypto.

Fulop, the Democratic mayor of Jersey City, just across the Hudson River from Manhattan, has been preparing for months to buy bitcoin ETF shares for up to 2% of the city’s $250 million employee pension fund.

“We were ahead of the curve,” Fulop said. “And I think that’s what you’re eventually going to see is this is widely accepted, with regard to exposure in all pension funds, some sort of exposure.”

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Follow Marc Levy on X at: https://x.com/timelywriter.

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December 16, 2024
Rolling blackouts plague Iran and some suspect bitcoin mining may have a role in the outages

TEHRAN, Iran — Iran’s capital and outlying provinces have faced rolling power blackouts for weeks in October and November, with electricity cuts disrupting people’s lives and businesses. And while several factors are likely involved, some suspect cryptocurrency mining has played a role in the outages.

Iran economy has been hobbled for years by international sanctions over its advancing nuclear program. The country’s fuel reserves have plummeted, with the government selling off more to cover budget shortfalls as wars rage in the Middle East and Tehran grapples with mismanagement.

The demand on the grid has not let up, however — even as Iranians stopped using air conditioners as the weather cooled in the fall and before winter months set in, when people fire up their gas heaters.

Meanwhile, bitcoin’s value has rocketed to all-time highs after the U.S. election was clinched by Donald Trump. It hit the $100,000 mark for the first time last week, just hours after the president-elect said he intends to nominate cryptocurrency advocate Paul Atkins to be the next chair of the Securities and Exchange Commission.

The surge has led some to suspect that organized cryptocurrency mining — sucking away huge amounts of power — has played a part in the outages in Iran.

“Unfortunately, some opportunistic and exploitative individuals use subsidized electricity, public networks and other resources for cryptocurrency mining without authorization,” Mostafa Rajabi, the CEO of Iran’s government-owned power company, said back in August.

Iran’s state energy company did not respond to a request for comment.

Power outages have come and gone in the past in Iran, which struggles with aging equipment at many of its plants. Over the summer, sustained blackouts struck industrial parks near Tehran and other cities. Then in October and November, rolling power cuts across Tehran’s neighborhoods became the norm in daylight hours.

Climate change has been blamed in part, with persisting droughts and less water running through Iranian hydroelectric dams.

Iran’s reformist President Masoud Pezeshkian ordered several power plants to stop burning mazut, a high-polluting heavy fuel common in the former Soviet Union countries. Tehran has used it in the past to make up the difference in electricity generation.

Fuel reserves, both in diesel and natural gas, also remain low even though Iran is an OPEC member and home to one of the world’s second-largest reserves of natural gas, behind only Russia. There’s been no explanation for the decision to keep those reserves low, though critics have suggested Iran likely sold the fuel to cover budget shortfalls.

For his part, Pezeshkian has said that he must “honestly tell the public about the energy situation.”

“We have no choice but to consume energy economically, especially gas, in the current conditions and the cold weather,” he said in mid-November. “I myself use warm clothes at home; others can do the same.”

Still, winter heating isn’t in full swing quite yet on Tehran — raising questions where the power is going.

In many poor and densely populated neighborhoods across the country, people have access to free, unmetered electricity. Mosques, schools, hospitals and other sites also receive free power.

And with electricity in general sold at subsidized rates, bitcoin processing centers have boomed. They require immense amounts of electricity to power specialized computers and to keep them cool.

Determining how much power is used up by mining is difficult, particularly as miners now use virtual private networks that mask their location, said Masih Alavi, the CEO of an Iranian-government-licensed mining company called Viraminer.

Also, miners have been renting apartments to hide their rigs inside of empty homes. “They distribute their machines across several apartments to avoid being detected,” Alavi said.

In 2021, one estimate suggested Iran processed as much as $1 billion in bitcoin transactions. That value likely has spiked, given bitcoin’s rise. Meanwhile, Iran’s blackouts began in earnest as bitcoin spiked from around $67,000 to over $100,000 in its historic rally.

Rajabi, the state electricity company CEO, said his firm would offer rewards of $725 for people to report unlicensed bitcoin farms.

The farms have caused “an abnormal increase in consumption, disruptions, and problems in power networks,” Rajabi said.

The amount of power used by some 230,000 unlicensed devices is equivalent, he said, to the entire power needs of Iran’s Markazi province — one of the country’s chief manufacturing sites.

Iranian officials and media have not linked bitcoin’s surge and the ongoing blackouts but the public has, with social media users resharing a video showing a massive bitcoin farm earlier this year uncovered in Iran. A voice off camera asks how it was possible the electrical company did not discover the farm sooner.

The U.S. Treasury and Israel have targeted bitcoin wallets that they’ve alleged are affiliated with operations run by Iran’s paramilitary Revolutionary Guard to finance allied militant groups in Mideast war zones.

That suggests the Guard itself — one of the most-powerful forces within Iran — may be involved in the mining.

In contrast, Iranian media nearly every day report on individual mining operations being raided by police.

Iran may see bitcoin as a hedge against increased pressure from the incoming Trump administration and as regional allies are engulfed in turmoil, said Richard Nephew, an adjunct fellow at the Washington Institute for Near East Policy.

“The question for the economists inside Iran is do we trust this enough to fund the government,” said Nephew, who has long worked on Iran issues and sanction strategies in the U.S. government.

However, he cautioned against thinking of bitcoin as a magic bullet for Iran, particularly as bitcoin wallets can be targeted in sanctions.

“A pattern of behavior screams out to intelligence services,” Nephew said. “It screams out to bank compliance departments.”

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Gambrell reported from Dubai, United Arab Emirates. Associated Press writers Mehdi Fattahi and Amir Vahdat in Tehran, Iran, contributed to this report.

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December 13, 2024
From outsider to the Oval Office, bitcoin surges as a new administration embraces crypto

NEW YORK — Born from the ashes of the 2008 global financial crisis, bitcoin arrived after trust had withered in the financial system and in Washington’s ability to protect those who must participate in it. Now, it’s Washington’s very embrace of bitcoin that’s helping to send its price to records and lining the pockets of its believers.

Bitcoin briefly surged above $103,000 after President-elect Donald Trump said he intends to nominate Paul Atkins, a former regulator who’s seen as friendly to crypto, as the next chair of the Securities and Exchange Commission. He would replace Gary Gensler, who critics say has been overly aggressive in his oversight of crypto.

It’s the latest leg in an astonishing run for bitcoin, whose swings in price are already notoriously extreme.

Bitcoin has more than doubled this year, with a particularly big jump coming after Election Day, when its price was sitting below $70,000. During his campaign, Trump called for making the United States “the crypto capital of the planet.”

The crypto industry, meanwhile, did its part to bring politicians friendly to digital currencies into Washington. Crypto corporations poured over $119 million into influencing federal elections in 2024, primarily into a political action committee dedicated to electing pro-crypto candidates and defeating crypto skeptics, according to a recent review by Public Citizen.

It’s a large amount. Crypto companies accounted for 44% of all the corporate money contributed during this year’s elections, according to the consumer advocacy organization.

Such a tight embrace marks an interesting twist from bitcoin’s early days, when someone or a group of someones under the name of Satoshi Nakamoto created a kind of electronic cash that wouldn’t be beholden to any government or financial institution.

In the white paper announcing bitcoin, Namakoto said the traditional way of doing business on the internet “works well enough for most transactions.” But, Nakamoto said, it “still suffers from the inherent weaknesses of the trust based model,” where a third party like a bank needs to process payments.

Instead, Nakamoto suggested harnessing computing power around the world as a way to create a digital currency that can’t be double-spent. “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” That is what became the bitcoin network.

Since then, bitcoin has moved from the financial fringes toward the mainstream, in jagged fits and starts. While it hasn’t taken off as a way to pay for groceries, it found popularity as a kind of “digital gold,” or a way to store value in something that’s not subject to the direct influence of a federal government or a central bank.

In its early days, it had a reputation for use by drug dealers, scammers, crypto enthusiasts, libertarians and others who were looking to move money without oversight by the government. Now, it’s also found its way into more investor portfolios. Earlier this year, the SEC approved exchange-traded funds that track the spot price of bitcoin. Such ETFs give investors a relatively easy way to buy bitcoin directly in their existing trading accounts.

Through its life, bitcoin has soared through a series of manic bull runs as well as “crypto winters” that brought extreme declines. It went from just over $5,000 at the start of the COVID-19 pandemic to nearly $69,000 by late 2021, before crashing below $17,000 following hikes to interest rates by the Federal Reserve and the 2022 collapse of crypto exchange FTX.

With bitcoin in its latest bull run, the man who’s about to roll into the White House seemed to take at least some credit.

“CONGRATULATIONS BITCOINERS!!!” Trump said in a post on his Truth Social network. “$100,000!!! YOU’RE WELCOME!!!”

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December 5, 2024
Bitcoin is at the doorstep of $100,000 as post-election rally rolls on

NEW YORK — Bitcoin topped $98,000 for the first time Thursday, extending a streak of almost daily all-time highs since the U.S. presidential election. The cryptocurrency has rocketed more than 40% in just two weeks.

Now, bitcoin is at the doorstep of $100,000 and investors do not appear to be phased by gravity or any cautionary tales of the cryptocurrencies history of volatility.

Cryptocurrencies and related investments like crypto exchange traded funds have rallied because the incoming Trump administration is expected to be more “crypto-friendly” than the outgoing Biden administration.

As of 8:30 a.m. ET, bitcoin traded at $97,466 after rising as high as $98,349 according to CoinDesk.

Yet cryptocurrency markets remain a wild place and what comes next is impossible to know. And while some are bullish, other experts are warning of investment risks.

Here’s what you need to know.

Cryptocurrency has been around for a while now but have come under the spotlight in recent years.

In basic terms, cryptocurrency is digital money. This kind of currency is designed to work through an online network without a central authority — meaning it’s typically not backed by any government or banking institution — and transactions get recorded with technology called a blockchain.

Bitcoin is the largest and oldest cryptocurrency, although other assets like Ethereum, Tether and Dogecoin have gained popularity over the years. Some investors see cryptocurrency as a “digital alternative” to traditional money — but it can be very volatile, with its price reliant on larger market conditions.

A lot of the recent action has to do with the outcome of the U.S. election.

Trump has evolved from a crypto skeptic to a crypto champion and has pledged to make the U.S. “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. His campaign accepted donations in cryptocurrency and he courted fans at a bitcoin conference in July. He also launched World Liberty Financial, a new venture with family members to trade cryptocurrencies.

Crypto industry players welcomed Trump’s victory, in hopes that he would be able to push through legislative and regulatory changes that they’ve long lobbied for. Trump also had promised that, if elected, he would remove the chair of the Securities and Exchange Commission, Gary Gensler, who has been leading the U.S. government’s crackdown on the crypto industry and repeatedly called for more oversight.

Digital assets like bitcoin had posted notable gains in the months ahead of the election, mostly due to the early success of a new way to invest in the asset: spot bitcoin ETFs, which were approved by U.S. regulators in January.

Inflows into spot ETFs, “have been the dominant driver of Bitcoin returns from some time, and we expect this relationship to continue in the near-term,” Citi analysts David Glass and Alex Saunders wrote in a research note two weeks ago. They added that spot crypto ETFs saw some of their largest inflows on record in the days following the election.

In April, bitcoin also saw its fourth “halving” — a preprogrammed event that impacts production by cutting the reward for mining, or the creation of new bitcoin, in half. When that reward falls, so does the number of new bitcoins entering the market. And, if demand remains strong, some analysts say this “supply shock” can also help propel the price long term.

History shows you can lose money in crypto as quickly as you’ve made it. Long-term price behavior relies on larger market conditions. Trading continues at all hours, every day.

At the start of the COVID-19 pandemic, bitcoin stood at just over $5,000. Its price climbed to nearly $69,000 by November 2021, in a time marked by high demand for technology assets. Bitcoin later crashed during an aggressive series of Federal Reserve rate hikes aimed at curbing inflation. The collapse of FTX in late 2022 significantly undermined confidence in crypto overall and bitcoin fell below $17,000.

Investors began returning in large numbers as inflation started to cool — and gains skyrocketed on the anticipation and then early success of spot ETFs. Experts still stress caution, especially for small-pocketed investors.

Assets like bitcoin are produced through a process called “mining,” which consumes a lot of energy. And operations relying on pollutive sources have drawn particular concern over the years.

Recent research published by the United Nations University and Earth’s Future journal found that the carbon footprint of 2020-2021 bitcoin mining across 76 nations was equivalent to the emissions from burning 84 billion pounds of coal or running 190 natural gas-fired power plants. Coal satisfied the bulk of bitcoin’s electricity demands (45%), followed by natural gas (21%) and hydropower (16%).

Environmental impacts of bitcoin mining boil largely down to the energy source used. Industry analysts have maintained that clean energy has increased in use in recent years, coinciding with rising calls for climate protections

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November 21, 2024
Man who stole and laundered roughly $1B in bitcoin is sentenced to 5 years in prison

WASHINGTON — A computer expert who stole bitcoin worth billions of dollars at current prices — and then spent years laundering some of the hacked cryptocurrency with help from his wife — was sentenced on Thursday to five years in prison.

Ilya Lichtenstein masterminded one of the largest-ever thefts from a virtual currency exchange before he and his wife, Heather Rhiannon Morgan, carried out an elaborate scheme to liquidate the stolen funds, according to federal prosecutors.

U.S. District Judge Colleen Kollar-Kotelly told Lichtenstein that his theft was “meticulously planned” and not an impulsive act.

“It’s important to send a message that you can’t commit these crimes with impunity, that there are consequences to them,” she said.

Lichtenstein, who gets credit for the two years and nine months that he has spent in jail since his February 2022 arrest, expressed remorse for “wasting my talents on crime instead of a positive contribution to society.” He said he hopes that he can apply his expertise to fight cybercrime when he gets out of prison.

“I want to take full responsibility for my actions and make amends any way I can,” he said.

The judge is scheduled to sentence Morgan on Monday. Lichtenstein pleaded with the judge to spare his wife from prison, blaming himself for her involvement.

In August 2016, Lichtenstein hacked into a virtual currency exchange, Hong Kong-based Bitfinex, and stole approximately 120,000 bitcoin. It was worth approximately $71 million at the time of the hack and would be valued at more than $7.6 billion at current market prices, according to prosecutors.

Several months later, Lichtenstein began moving the stolen bitcoin in a string of complex transactions designed to conceal its path across a series of accounts and platforms. He enlisted his wife’s help in cleaning the stolen funds.

Lichtenstein, an entrepreneur and cryptocurrency investor, is a U.S. citizen who was born in Russia and grew up in a Chicago suburb. Morgan, a business owner and writer, adopted the alter ego “ Razzlekhan ” for performing rap songs and recording videos for her music.

Lichtenstein and Morgan were living in New York City when they were arrested in February 2022. They had been living in San Francisco around the time of the hack.

Prosecutors recommended a five-year prison sentence for Lichtenstein, who pleaded guilty in August 2023 to one count of money laundering conspiracy. They recommended an 18-month prison sentence for Morgan, who pleaded guilty to the same charge.

“Neither the hack nor the laundering scheme was an impulsive decision. The defendant (Lichtenstein) spent months attempting to gain access to Bitfinex’s infrastructure and get the accesses and permissions he needed in order to orchestrate his hack,” prosecutors wrote.

Lichtenstein told his wife about the hack over three years later, but he initially solicited her help in laundering the proceeds “without explaining exactly what he was doing,” according to prosecutors.

Morgan “was certainly a willing participant and bears full responsibility for her actions, but she was a lower-level participant,” prosecutors wrote.

During family trips to Kazakhstan and Ukraine, Lichtenstein met with couriers who delivered him money that he smuggled back into the U.S.

“Over half a decade, the defendant engaged in what IRS agents described as the most complicated money laundering techniques they had seen to date,” prosecutors wrote.

Bitcoin is the largest and oldest cryptocurrency, which is digital money that typically isn’t backed by any government or banking institution. Transactions get recorded with technology called a blockchain.

The couple successfully laundered about 21 percent of the funds stolen from Bitfinex. The laundered money was worth at least $14 million at 2016 prices. Its value would have exceeded $1 billion at the time of their 2022 arrest.

Authorities seized the remaining funds, collectively valued at over $6 billion at current prices.

“He became one of the greatest money launderers that the government has encountered in the cryptocurrency space,” prosecutors wrote.

An attorney for Bitfinex said the hack “devastated” its finances and its reputation with its customers, with the stolen funds accounting for approximately 36% of the company’s assets at the time of theft.

“Bitfinex had to take unprecedented and immediate action to ensure that any losses from the Hack would ultimately be borne by Bitfinex and its shareholders alone, not its customers,” the lawyer, Barry Berke, wrote in a letter to the judge.

A prosecutor said Lichtenstein immediately began cooperating with federal authorities after his arrest, helping them with other cybercrime investigations.

Over 96% of the stolen funds have been recovered, with help from Lichtenstein, according to defense attorney Samson Enzer. The “vast bulk” of the stolen money was never spent, the lawyer said.

“This is not an evil person,” Enzer said. “This is a good person who made some very bad mistakes.”

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November 14, 2024
Bitcoin has topped $87,000 for a new record high. What to know about crypto’s post-election rally

NEW YORK — As money continues to pour into crypto following Donald Trump’s victory last week, bitcoin has climbed to yet another record high.

The world’s largest cryptocurrency topped $87,000 for the first time on Monday. As of around 3:45 p.m. ET, bitcoin’s price stood at $87,083, per CoinDesk, up over 28% in the last week alone.

That’s part of a rally across cryptocurrencies and crypto-related investments since Trump won the U.S. presidential election last week. Analysts credit much of the recent gains to an anticipated “crypto-friendly” nature of the incoming administration, which could translate into more regulatory clarity but also leeway.

Still, as with everything in the volatile cryptoverse, the future is hard to predict. And while some are bullish, others continue to warn of investment risks.

Here’s what you need to know.

Cryptocurrency has been around for a while now, but seen come under the spotlight in recent years.

In basic terms, cryptocurrency is digital money. This kind of currency is designed to work through an online network without a central authority — meaning it’s typically not backed by any government or banking institution — and transactions get recorded with technology called a blockchain.

Bitcoin is the largest and oldest cryptocurrency, although other assets like Ethereum, Tether and Dogecoin have gained popularity over the years. Some investors see cryptocurrency as a “digital alternative” to traditional money — but it can be very volatile, and reliant on larger market conditions.

A lot of it has to do with the outcome of last week’s election.

Trump was previously a crypto skeptic, but changed his mind and embraced cryptocurrencies during this year’s presidential race. He has pledged to make the U.S. “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. His campaign accepted donations in cryptocurrency and he courted fans at a bitcoin conference in July. He also launched World Liberty Financial, a new venture with family members to trade cryptocurrencies.

Crypto industry players welcomed Trump’s victory, in hopes that he would be able to push through legislative and regulatory changes that they’ve long lobbied for. And Trump had previously promised that, if elected, he would remove the chair of the Securities and Exchange Commission, Gary Gensler, who has been leading the U.S. government’s crackdown on the crypto industry and repeatedly called for more oversight.

“Crypto rallied as Election Day progressed into the night and as it became increasingly clear that Trump would emerge victorious,” Citi analysts David Glass and Alex Saunders wrote in a Friday research note, pointing to larger industry sentiment around Trump being “crypto-friendly” and a potential shift in regulatory backing.

Even before the post-election rally, assets like bitcoin posted notable gains over the past year or so. Much of the credit goes to early success of a new way to invest in the asset: spot bitcoin ETFs, which were approved by U.S. regulators in January.

Inflows into spot ETFs, or exchange-traded funds, “have been the dominant driver of Bitcoin returns from some time, and we expect this relationship to continue in the near-term,” Glass and Saunders noted. They added that spot crypto ETFs saw some of their largest inflows on record in the days following the election.

Crypto assets like bitcoin have a history of drastic swings in value — which can come suddenly and happen over the weekend or overnight in trading that continues at all hours, every day.

In short, history shows you can lose money as quickly as you’ve made it. Long-term price behavior relies on larger market conditions.

At the start of the COVID-19 pandemic, bitcoin stood at just over $5,000. Its price climbed to nearly $69,000 by November 2021, in a time marked by high demand for technology assets, but later crashed during an aggressive series of Federal Reserve rate hikes aimed at curbing inflation. Then came the 2022 collapse of FTX, which significantly undermined confidence in crypto overall.

At the start of last year, a single bitcoin could be had for less than $17,000. Investors, however, began returning in large numbers as inflation started to cool — and gains skyrocketed on the anticipation and then early success of spot ETFs. While some crypto supporters see the potential for more record-breaking days, experts still stress caution, especially for small-pocketed investors.

“Investors should only dabble in crypto with money that they can be prepared to lose,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said last week. “Because we’ve seen these wild swings in the past.”

Assets like bitcoin are produced through a process called “mining,” which consumes a lot of energy. And operations relying on pollutive sources have drawn particular concern over the years.

Recent research published by the United Nations University and Earth’s Future journal found that the carbon footprint of 2020-2021 bitcoin mining across 76 nations was equivalent to the emissions from burning 84 billion pounds of coal or running 190 natural gas-fired power plants. Coal satisfied the bulk of bitcoin’s electricity demands (45%), followed by natural gas (21%) and hydropower (16%).

In the U.S., the Energy Information Administration notes that crypto mining across the country has “grown very rapidly over the last several years,” adding that grid planners have begun to express concern over increases in related electricity demand. Preliminary estimates released by the EIA in February suggest that annual electricity use from crypto mining probably represents between 0.6% to 2.3% of U.S. electricity consumption.

Environmental impacts of bitcoin mining boil largely down to the energy source used. Industry analysts have maintained that clean energy has increased in use in recent years, coinciding with rising calls for climate protections from regulators around the world.

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AP Business Writer Kelvin Chan contributed to this report from London.

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November 11, 2024