Bitcoin sets new daily transaction record amid Ordinals trend as crypto miners face potential energy tax

Data from CryptoCompare shows that the price of the flagship cryptocurrency Bitcoin (BTC) started the week moving from around $27,500 to a $29,500 high before it started plunging amid rising transaction fees for BTC transactions. BTC is now back to $27,500.

Ethereum’s Ether, the second-largest digital currency by market capitalisation, started the week slightly above the $1,800 mark and quickly moved to test its resistance around $2,000, before being impacted by a crypto-wide sell-off that saw it move back to $1,850.

This past week the flagship cryptocurrency Bitcoin registered a new daily transaction record, processing more than 682,281 transactions in a single day, more than in any other day in its entire 14-year history. Ordinals, a novel feature introduced in January, played a pivotal role in this growth.

The majority of these transactions were from Ordinals, which s enable the inscription of various types of data, including audio, art, and video games, onto individual Satoshis, the smallest unit of Bitcoin. This process results in the creation of unique digital assets, akin to Ethereum-based non-fungible tokens (NFTs).

The transaction record as Bitcoin’s dominance, which measures the cryptocurrency’s share in the broader market, has experienced a sharp increase amid the ongoing instability in the U.S. banking sector. Since early March, the dominance rate has surged from 42% to nearly 49%, a 22-month high.

The U.S. banking sector is facing a crisis as several regional banks have failed and banking stocks have plummeted. The Federal Reserve claims the sector is still sound, but Bitcoin is gaining market share potentially as a hedge against the dollar’s decline.

While Bitcoin’s dominance keeps on growing, cryptocurrency businesses have started to recover. Nasdaq-listed cryptocurrency exchange Coinbas revealed a net loss of $79 million in the first quarter of the year, down from a loss of $430 million in the same period of last year.

According to its quarterly results, Coinbase’s net loss per share amounted to $0.34 with results that surpassed analysts’ expectations, which predicted losses of $316 million or $1.45 per share.

Meanwhile Block, a fintech company led by former Twitter CEO Jack Dorsey, earned $2.116 billion from Bitcoin transactions on its Cash app in the first three months of 2023. This was an 18% increase from the previous quarter, when it made $1.83 billion from BTC sales.

The Cash app’s total profits rose to more than $931 million in Q1 2023, a 49% jump from the same period last year. Block’s gross profit for the quarter was $1.71 billion.

Crypto miners face potential 30% energy tax under White House plan

Over the week the CEA, a White House body that advises the president on economic policy, has put forward a proposal to impose a 30% tax on the energy costs of cryptocurrency mining companies, which it says are very high and have negative impacts on the environment and society.

READ MORE: Biden’s crypto mining tax simply wouldn’t work

According to the CEA, crypto mining operations contribute to pollution, higher energy prices, and increased greenhouse gas emissions, but do not create the same economic benefits as other energy-intensive industries. 

Meanwhile, Bitdeer Technologies Group, a prominent cryptocurrency mining technology company, and Druk Holding & Investments (DHI), the commercial arm of the Royal Government of Bhutan, have formed a strategic partnership to develop eco-friendly, carbon-free digital asset mining operations in Bhutan.

The two companies plan to establish a closed-end fund, estimated at up to $500 million, to raise capital for greenfield operations in Bhutan, with fundraising set to commence at the end of May.

Elsewhere in the world, leading venture capital firm Andreessen Horowitz (a16z) has submitted a detailed response to the UK Treasury’s consultation paper on the proposed regulatory regime for cryptoassets.  

The firm singled out the consultation’s core design principle of “same risk, same regulatory outcome” for the cryptoasset sector, emphasizing the importance of understanding that not all scenarios necessitate the same form of regulation to achieve equivalent regulatory outcomes.

Coinbase and Gemini launch global crypto derivatives platforms

The regulatory environment in the United States has long been criticized by cryptocurrency firms. This week, both Coinbase and Gemini announced the launch of offshore crypto derivatives trading platforms.

Coinbase’s new platform, the Coinbase International Exchange (CIE), will list Bitcoin and Ether perpetual futures contracts later this week. Perpetual futures contracts are a type of derivative that have no expiry date and track the spot price of the underlying asset.

The contracts on CIE will be denominated and settled in USDC, a stablecoin pegged to the US dollar. CIE has obtained regulatory approval from Bermuda to operate. 

Gemini’s new platform, the Gemini Foundation, is already live and offers Bitcoin perpetual futures contracts denominated and settled in GUSD, another stablecoin pegged to the US dollar. The Gemini Foundation is not available to customers in the US, the UK, or the EU.

Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.