GZ News — Jack Dorsey Forms Bitcoin Legal Defense Fund, Crypto Mining Runs on Renewables
Ground Zero News covers the most recent news from the crypto and blockchain space.
Jack Dorsey forms a legal fund to protect Bitcoin developers from lawsuits
Jack Dorsey, the former CEO of Twitter and one of the most prominent Bitcoin advocates, has teamed up with the industry experts Alex Morcos and Martin White to form a Bitcoin Legal Defense Fund. [1]
In an open letter to all Bitcoin Developers, Jack Dorsey, Alex Morcos, and Martin White formed the groundwork for a non-profit entity that aims to minimize legal headaches that discourage software developers from actively developing Bitcoin.
“The main purpose of this Fund is to defend developers from lawsuits regarding their activities in the Bitcoin ecosystem, including finding and retaining defense counsel, developing litigation strategy, and paying legal bills.”
Bitcoin Legal Defense Fund Board
The news was well-received by the general crypto community. Since crypto is not regulated, developers can feel threatened by the legal system that they do not fully understand. Some of the developers are staying out of the crypto space not due to their limited coding skills, but due to uncertainty arising from the poor regulation practices. The situation is even worse for the individual developers who operate outside of established companies, working mostly as contributors to the open-source community.
The year 2021 saw a large increase in crypto-based lawsuits, as the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Treasury Department announced more than $120 million in penalties aimed at digital currency exchanges and other service providers that officials said weren’t complying with federal markets regulations and anti-money-laundering requirements.[2]
“Regulators — in particular the SEC — think that the laws and regulations are crystal clear and that they’re very easy to interpret. But for those of us on the other side of the table that are working in the industry and its ecosystem, the laws aren’t clear, and it’s very difficult to figure out how to apply them.”
Kristin Smith, executive director of the Blockchain Association
There were two major cases surrounding the large crypto firms last year:
- BitMEX was ordered to pay $100 million in August 2021, for illegally operating a crypto exchange and violating anti-money laundering guidelines in the USA. [3]
- Poloniex was charged by the SEC in August 2021, for operating an unregistered digital asset exchange. Poloniex agreed to pay more than $10 million of settlement charges. [4]
What these two cases taught us is that despite having significant funds available for the court battle, as well as a team of legal-savvy lawyers, both BitMEX and Poloniex failed to win the court cases.
Now consider the legal know-how of an average crypto developer and his chances in fighting the lawyers of SEC.
But things might change for the better, as Jack Dorsey, Alex Morcos, and Martin White open doors to volunteer and part-time lawyers interested in defending Bitcoin developers in court cases. The board of the Fund will be responsible for determining which cases and defendants will it help defend. At the time of writing, the Fund is not taking donations or gathering money.
Renewables power the crypto mining in Costa Rica
Bitcoin has been under a lot of scrutinies lately due to the high amount of power consumption required for mining operations. There are reports indicating that Bitcoin mining consumes as much power as entire countries, and while this may be true, it doesn’t necessarily mean that Bitcoin mining is as bad for the environment as it may sound [5].
To understand how Bitcoin mining affects the environment, and why the reports claim that mining is a major contributor to climate change, we have to establish one key fact first: Energy consumption is not equal to carbon emissions.
Carbon emissions are a result of burning fossil fuels. Period. The amount of carbon emissions in the atmosphere is directly proportional to the amount of burnt fossil fuels. It has nothing to do with electric power generation or consumption. In fact, we could burn all the coal, oil, and natural gas in the world without producing any electric power whatsoever. On the other hand, we could also produce terawatts of electric power without burning any coal, oil, or natural gas.
So why all the fuss about the power consumption required for mining?
Because a lot of today’s mining is powered by electricity generated from thermal power stations.
- A thermal power station is a power station in which heat energy is converted to electricity.
- In a thermal power station, fossil fuel is used to boil water, which produces steam, which drives a turbine connected to an electrical generator. [6]
To put it simply — thermal power stations convert heat to electricity. In order to create heat, they burn an insane amount of fossil fuels. But this (still) has nothing to do with Bitcoin mining.
However, if a certain region generates all its electricity from thermal power plants, and there happens to be a mining operation nearby, then yes, the mining operation runs on electricity generated from burning of the fossil fuels. But the same is true for all the electrical appliances in that region. From office printers and TVs to traffic lights and electric boilers.
The electricity would be generated from fossil fuels with or without the nearby mining operation.
And that is why crypto mining in Costa Rica is such a big deal. The power doesn't come from the thermal power station, but from a renewable source, meaning that the amount of burnt fossil fuels is equal to zero.
The hydroelectric power plant located at the Poas River uses its generating capacity to power Bitcoin mining operations at net-zero carbon emissions. The 3 Megawatt power capacity is enough to power 650 mining rigs, owned by a total of 150 customers. This means that the cost of mining would remain unchanged even if carbon taxes would be enforced upon the mining operation, which could spark trouble for the mining operations running on electricity produced from the thermal power stations.
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Cheers,
- The Ground Zero team
References:
- Bitcoin Legal Defense Fund, Jack Dorsey, Alex Morcos, Martin White, January 2022. Available at: https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-January/019741.html
- ‘Massive wake-up call’: Crypto faces growing legal crackdown, Kellie Mejdrich, August 2021, Politico. Available at: https://www.politico.com/news/2021/08/17/cryptocurrency-legal-crackdown-505595
- Federal Court Orders BitMEX to Pay $100 Million for Illegally Operating a Cryptocurrency Trading Platform and Anti-Money Laundering Violations, August 2021, CFTC.gov. Available at: https://www.cftc.gov/PressRoom/PressReleases/8412-21
- SEC Charges Poloniex for Operating Unregistered Digital Asset Exchange, August 2021, SEC.gov, Available at: https://www.sec.gov/news/press-release/2021-147
- Bitcoin Energy Consumption Index, January 2022, Digiconomist.net. Available at: https://digiconomist.net/bitcoin-energy-consumption/
- Thermal power station, January 2022, Wikipedia. Available at: https://en.wikipedia.org/wiki/Thermal_power_station
