Cryptocurrencies, notably Bitcoin (BTC), have encountered profound uncertainty throughout this year. It is marked by a strict regulatory stance on crypto in the U.S. and actions from the Federal Reserve contributing to a challenging Bitcoin price landscape. Bitcoin is struggling to maintain a value above $30,000, and concerns have intensified regarding a potential covert U.S. campaign against crypto. This unease is further fueled by the actions of major players such as Microsoft (MSFT) and Elon Musk, whose decisions have the potential to impact the crypto market significantly.
Executive Order on AI: A Ticking Time Bomb for Crypto
Recent leaks suggest that President Joe Biden is considering an executive order on artificial intelligence (AI), which has sparked apprehension within the crypto community. Alexander Grieve, the head of government affairs at Paradigm, a Bitcoin and crypto-focused investment company, expressed these concerns on Twitter and shared a Semafor report, citing information from anonymous sources.
The report proposes that major tech giants like Microsoft, Google (GOOG), and Amazon (AMZN) may soon be compelled to disclose instances when customers exceed a specified threshold in purchasing computing resources. It characterizes computing power as a “national resource,” underscoring that activities such as Bitcoin mining, video game development, and running AI models like ChatGPT all necessitate substantial computational resources.
Bitcoin Mining, Energy Consumption, and Global Dynamics
Given that the Bitcoin network relies on miners who validate transactions using high-powered computers, the annual electricity consumption of the network surpasses that of some smaller nations.
Notably, since China’s ban on Bitcoin mining in 2021, the United States has become the primary location for Bitcoin miners, further emphasizing the global impact of these developments.
Paradigm’s Bold Move: A Crypto Policy Lab
In a significant update on September 27, Paradigm revealed the creation of a Policy Lab, described as a pioneering group that will assemble crypto experts to generate cutting-edge research, commentary, and advocacy on pivotal policy issues confronting crypto and other emerging technologies. Additionally, a Research Hub is set to address specific policy questions relevant to the crypto ecosystem’s future.
Paradigm, recognized for its proactive involvement in regulatory and policy matters, recently filed an amicus brief supporting the crypto exchange Coinbase in its ongoing legal dispute with the Securities and Exchange Commission (SEC). This demonstrates the company’s commitment to actively shaping the regulatory landscape in favor of the crypto industry.
White House Perspectives: Crypto, Compute Capacity, and “Operation Choke Point”
Alexander Grieve speculates that the White House perceives technology jobs, development talent, and energy as scarce national resources, suggesting a zero-sum perspective, particularly concerning crypto. He posits that viewing compute capacity similarly and implementing reporting on its usage may result in political and media pressure directed at cloud service providers serving major players in the crypto industry. Grieve refers to this potential scenario as “Operation Choke Point” for computing power, drawing parallels to historical events.
“Operation Choke Point 2.0”: Financial Sector Retreat from Crypto
Some within the crypto industry have labeled the retreat of traditional financial service sectors from the crypto market in 2023 as “Operation Choke Point 2.0,” drawing explicit connections to the original Operation Choke Point initiated by the U.S. Department of Justice in 2013. The initial operation aimed to dissuade banks from associating with high-risk businesses, such as firearm dealers and payday lenders, suspected of fraud and money laundering.