Alright, it’s official that the debt ceiling limit of $31 trillion dollars has been extended for another 2 years until 1-Jan-2025. This will mean they are able to prevent themselves from defaulting on their debt obligations for the first time in history, which will create a catastrophic rippling effect towards the global economy if it happens.
The extension shouldn’t come as much of a surprise as the debt ceiling has been raised 78 times since 1960, but still we can’t ignore the negative consequences that it will bring, such as:
Increase in interest rates whereby banks will charge more interests from your outstanding loans to generating more revenue to repay their debt.
More government spending cuts that will increase debt repayments at the expense of reducing expenditure on military, healthcare, infrastructure and other government services.
For cryptocurrencies, this may sound like good news but crypto companies that are currently operating in the US may also be heavily impacted due to many of them took bank loans from the US banks to fund their businesses They either have to pay more interests and affecting their revenues, or potentially they will be getting lesser funding for their growth.
Thus, it won’t be much positive news overall for the crypto space in general if crypto startups in the US starts to crumble as continuous funding is needed to keep innovating for the growth of the crypto ecosystem. Moving to other crypto regulatory-friendly countries such as Dubai may be a viable option to sustain their business growth.
US Debt Ceiling Deal Blocks 30% Bitcoin Mining Tax: Congressman
But here’s some potentially good news for the crypto people after the debt ceiling bill has passed: The Digital Asset Mining Energy tax has been reportedly taken off the table.
The tax was first enacted back in March 2023 to tax on Proof-of-Work (PoW) mining, and Proof-of-Stake (PoS) validation [yes, you heard that right]. The proposed tax framework states that digital asset miners or validators must disclose information such as the amount of electricity they consume and the source of the electricity.
This tax will affect the heaviest towards the bitcoin miners whom are operating large ASIC mining farms in the US using coal-powered electricity. Conversely, the 30% tax will have significantly less effects for PoS validators than PoW miners as the computation requirement to validate blocks in the PoS blockchains are much lower than PoW.
Even though this tax has been implemented, it will also fuel the miners, validators and stakepool operators to find ways to use renewable energy sources and more energy-efficient hardware to promote green energy & reduce overall energy consumption, while also saving more money from paying taxes.
ETH Staking Centralization Concerns
A prominent figure in the Ethereum community, Sassano has raised concerns surrounding the centralization network control of the Ethereum blockchain by an entity called Lido Finance and has called upon other ETH staking services to promote better liquid staking protocols to encourage users to move away from staking ETH with Lido, thus promoting network decentralization.
For context, is an entity that enables any users to stake any amount of their ETH to secure the Ethereum network, then in return you’ll received another token called Staked ETH (stETH) which is basically ETH + ETH staking rewards already compounded into the stETH value, and you can use stETH to participate in the Ethereum DeFi ecosystem while earning rewards.
this chart, we can see Lido is controlling around 26% of the staked ETH, while a combined of 46% are held by Lido and three other popular exchanges such as Coinbase, BINANCE & Kraken. What Sassano is suggesting only solves a minor piece of the puzzle for the progression towards decentralization, as moving to other LSDs protocols or exchanges will still require users to give up custody of their ETH, thus posing centralization risks of losing funds that is not in your control.
The best method for decentralization, in Ethereum’s case, is solo staking, but would require a minimum of 32 ETH (~$60k) to do so and a knowledge barrier on how to run a validator node. A lower minimum requirement and simpler user experience would definitely convince more users to switch to solo staking.
Japan’s Largest Airline Group ANA Launches NFT Marketplace
weekly bits #7, I have covered an Argentinian airline company called Flybondi that integrates NFTs using the Algorand blockchain whereby the flight tickets are issued as NFTs. This time, we see another NFT use case from a popular Japanese Airline called All Nippon Airways (ANA) where they launched an NFT marketplace called ANA GranWhale NFT Marketplace that features aviation photography, digital collectibles of planes and pixelated art on the Ethereum blockchain.
The first NFT offered is a photo taken in June 2000 by a photographer named Luke Ozawa in Shimojishima Airport. The digital collectibles of the ANA planes are modelled in 3D and have background stories such as when it’s launched and when it’s performed the world’s first commercial flight. Furthermore, they introduced a pixelated art collection called that works commonly to what most NFT projects sells.
Also like most NFTs in the crypto space, they are very expensive! One Airbit can cost upwards of RM10k per NFT, while the photograph cost RM5k and the digital collectible cost RM250 & above. Honestly would prefer Flybondi’s NFT use case of issuing flight tickets instead of just collectibles.
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