Image Source: Pixabay
 

Crypto has had a quiet start to 2023, with both bitcoin and ether moving relatively flat since the beginning of the year. 

Bitcoin began 2023 above $16,300 and has moved somewhat higher in the past couple of days to trade now around $16,500. Ether meanwhile kicked off the year around $1,180 and is currently slightly up around $1,200. 

Predictions for the year ahead are obviously tricky. Much is reliant on the ongoing outlook for the global economy, and how the crypto sector absorbs and adapts to the challenges which emerged last year and will persist this year. 
 

UK gives foreign investors crypto tax exemption

A technical change to the rules over investment management in the UK has been amended to include crypto. The rules pertain to funds managed in the UK with investors that come from abroad.

The rule change will exempt those investors from any tax liabilities in the UK. The change is designed to promote the onshoring of cryptoasset investment management activities in the UK and can be seen in a wider effort by the UK Government to attract cryptoasset services to its shores.

The Financial Services and Markets Bill is currently making its way through parliament with potentially sweeping changes to the way crypto is regulated in the UK. This legislation, far from cracking down on crypto, is designed to make the UK a hub for the market. 
 

Bitcoin’s energy consumption is still a problem in 2023

Data from Digiconomist suggests that bitcoin used more energy than Sweden in 2022. This created around 90 Megatonnes of carbon pollution, more than the entire saving created by electric vehicles (EVs) in the year. 

What’s clear here is bitcoin does have an energy problem. With several high-profile miners collapsing thanks to soaring energy costs, the big question comes over how the world’s longest-running cryptoasset can adapt to the changing economics and politics of energy consumption we face. 

Digiconomist points out that cleaner energy is beginning to account for more of the bitcoin network, with natural gas rising as a proportion of consumption. But renewables overall have fallen as a percentage of the energy mix since 2020. With the Ethereum network totally transformed by The Merge, now operating with 99% less energy, the big question for bitcoin is how it can transition to a more sustainable mining future. 
 

Ether transactions power ahead of bitcoin

Ether transactions far outweighed bitcoin in 2022, according to data from Ycharts and Nasdaq. Like the energy consumption issue mentioned above, it sets an interesting backdrop for the year ahead for the two largest cryptoassets in the world. 

Ether saw 338% more transactions than bitcoin, with more volatile activity compared to bitcoin over the course of the year. This would suggest that the way people transact ether is more practical whereas bitcoin transactions are more deliberate and methodical. 

The use cases for both cryptoassets at this juncture are very different. Bitcoin is the original cryptoasset and has fierce defenders who see it as effectively an alternative monetary system waiting to be adopted by the world. Ethereum meanwhile is a platform that underpins a wide array of different crypto financial projects and ideas, with Ether the crypto that greases the wheels of that innovation.

More By This Author: