Bitcoin Mining Myths Busted

Common Myths associated with Bitcoin Mining

#1: Bitcoin is Illegal

It is said that in many countries, Bitcoin is illegal. However, it is not valid. A few countries have placed a ban on Bitcoins, such as China, Bangladesh, Morocco, Egypt, Iraq, and Algeria. It is also the case that in the majority of countries Bitcoin might not be legalized and unregulated. However, anyone in these countries can freely buy, sell, mine, and use Bitcoin if they want to.

Also, the U.S. IRS considers Bitcoin or cryptocurrency a digital asset like stocks and trades. Its usage has been regulated, and now they have also imposed taxation depending on how and for how long one holds the crypto, marking the regulation of Bitcoin and asserting that it is not illegal everywhere except for a few countries across the globe.

#2: Bitcoin is a Bubble

A lot of people think that Bitcoin (BTC) is a bubble that will collapse and cause investors to lose a lot of money. Indeed, some investors in Bitcoin do so speculatively in the hopes of making significant profits, but this does not prove that the market is in a bubble. Despite significant variations in prices throughout its 14-year existence, Bitcoin has continuously shown that it is resilient and capable of recovering. Bitcoin has reached new all-time highs by enduring every price pattern of rise and fall.

Many supporters of Bitcoin argue that these price cycles are a regular occurrence for developing markets, viewing them as a plus rather than a disadvantage. New technologies often go through price cycles as the market works out their actual value through a process called price discovery. Supporters of Bitcoin anticipate less severe price fluctuations and longer time spans between them as the currency develops and becomes more widely used globally. It is also expected to lead to more stable pricing in the future.

#3: Bitcoin has no intrinsic value

In its most fundamental financial form, intrinsic value is intended to offer a precise evaluation of an asset independent of market value. It is said that Bitcoin does not hold any real value on its own, which is a total myth. However, intrinsic value isn’t appropriate for many assets other than stocks and businesses because it uses metrics like cash flow. It also applies to Bitcoin, as well as gold and other commodities, without an underlying cash flow.

Its supply, limited to 21 million in the real world, is alone a massive driving force in itself, raising its value. If one were to apply a more general definition, one could argue that the value of Bitcoin comes from its uniqueness, its reputation as the very first decentralized digital currency, and its large user, developer, and mining community worldwide, all of which have helped it grow to become an asset surpassing over $1.4 trillion at its peak.

#4: Bitcoin Mining is Less inclined toward Sustainability

The cryptocurrency sector is making headway in addressing environmental problems despite the ongoing dispute. Although there is still debate on Bitcoin’s energy usage, new data from the Cambridge Bitcoin Electricity Consumption Index indicates a drop in greenhouse gas emissions. There is growing agreement among regulatory bodies that sustainable practices are necessary, and this is reflected in their quest for greener Bitcoin mining methods.

Furthermore, the industry’s use of energy-efficient technologies and renewable energy sources, including hydropower, wind, and solar power, highlights its commitment to environmental responsibility. Ethereum’s recent attempt to switch to proof-of-stake, an efficient consensus method, represents a broader commitment to lowering the environmental impact of cryptocurrencies.

#5: Bitcoin wastes Energy in high amounts

Bitcoin is mined using specialized gear that demands high computational work and consumes Energy; it has to be agreed upon. However, this Energy cannot be characterized as waste because it is extremely helpful in securing the network. Many people asserted that the energy source miners are frequently connected to the national grid, which gets its electricity from non-sustainable sources. However, the dynamics of the market have forced Bitcoin mining to look for the least expensive energy sources and sustainable means.

Bitcoin mining’s energy has definitely been a concern for many in the past few years as it requires a lot of energy. However, it’s also true that there have been advancements that are eliminating the risks associated with energy consumption. Bitcoin is considerably efficient in electricity use. However, other means that utilize energy in the highest amount are global banking systems, which are conniving ATMs, transaction machines, banking systems, etc. However, they are not doing much about it. Bitcoin mining is moving towards greener mining, and therefore, it is not a bad idea to mine it. There will be even more developments in the future that will evidently reduce the energy-intensive mining that has been occurring throughout the last few years.

#6: Bitcoin compromises security as it is mainly used for Illicit activities

Bitcoin was the first ever cryptocurrency to address the double-spending issue, eliminating the prominence of trustless transactions amongst peer-to-peer cryptocurrencies. It is required to take control of 51% of the network in order to carry out the hacking or malicious activity and execute the attempt to take control of the majority of the network itself by one body versus the millions of users participating in the Bitcoin network is next to impossible or highly unlikely. Every Bitcoin transaction is verified and then added to the public blockchain, which maintains the immutability and privacy of the entire Bitcoin network.

It has been discovered that several of the largest banks in the world have helped criminals launder trillions of dollars. It is valid to some extent that in the early days of Bitcoin, there were a few websites that accepted only Bitcoin as a mode of transaction, and criminals utilized these sites for illegal purposes. Still, then, it was also strictly looked upon, and it eventually stopped. Now, with the publicly verified ledgers of the Bitcoin network, increasing popularity, and increasing network difficulty, the focus of carrying out illicit activities on the Bitcoin network has shifted away drastically.