The crypto industry had a rough go of it in 2022, with crashing cryptocurrency prices and a series of catastrophic bankruptcies.
Since last January, the global crypto market cap has sunk nearly 65%, falling from $2.2 trillion to $803 billion, according to CoinMarketCap. It had previously reached a peak of almost $3 trillion in November 2021.
Chad Harris
Chad Harris, chief commercial officer of Riot Blockchain, which is building a crypto mining facility in Corsicana, Texas, felt the change in industry sentiment this year, he said at a recent Texas Blockchain Summit.
“Two years ago, this audience was packed,” he told attendees in November. “Today this is an audience full of passionate people who believe that they can actually facilitate what they tell the public. I think it’s important because every single time one of us fails in a disastrous way, it affects every one of us in this room.”
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The challenging year included the collapse of cryptocurrencies Luna and Terra, as well as the bankruptcies of key crypto lenders Voyager and Celsius Network in July. November saw two more high-profile companies bite the dust as crypto platform FTX filed for bankruptcy, leading crypto lender BlockFi to follow suit.
Bitfarms in Saint Hyacinthe, Quebec, is shown on March 19, 2018. Bitcoin is a cryptocurrency and worldwide payment system.
The latest in the string of calamities came on Dec. 21 when Austin-based crypto mining company Core Scientific filed for Chapter 11 less than a year after going public last January, brought down by rising electricity rates and the falling price of Bitcoin.
So what does all of that mean for a state that has openly embraced crypto companies?
“The sentiment is we’re disappointed in FTX, but we’re resolved and optimistic about the future of the industry,” Texas Blockchain Council president Lee Bratcher said the summit. “We’re rolling up our sleeves and moving forward.”
In September, crypto-mining data center operator Compute North, which had two facilities in Texas, filed for bankruptcy protection. The struggling company sold its Big Spring operation to Foundry Digital in November.
While Compute North was the state’s only notable crypto bankruptcy this year, some Texas crypto miners have had to curtail operations to deal with the downturn, Bratcher said.
“I can’t say names, but it’s a small number,” he said. “Most are at full steam.”
The Texas Blockchain Council leader said funding for crypto projects has dried up significantly, and he expects that to continue into 2023. He said if current conditions of falling crypto prices and rising energy costs continue, there could be one or two more bankruptcies in the new year.
“But we are bullish on the future,” he said. “I think the worst is behind us.”
Jackie Sawicky, a self-described environmentalist who is protesting Riot Blockchain’s new North Texas facility, said she thinks the worst is still to come for the industry.
“This is not just a bubble,” she said. “It’s collapsing. It is a dying industry. The problem is a lot of these things can’t be undone. There are real-world consequences for people who invested with these companies.”
The valuations of the largest cryptocurrencies don’t make sense for an asset “whose real economic use is yet to be established,” wrote Oxford Economics senior economist Tamara Basic Vasiljev in a recent report. Bitcoin is trading at $16,720 in spite of being down 65% this year.
“The crypto market is still plagued by the accusation that it is a supersized Ponzi scheme — as long as it remains hard to define an economic case for the existence of cryptocurrencies it will be a challenge to defend a price level for any of them,” Vasiljev wrote.
Sawicky said crypto companies are made to consume resources, like electricity, yet they don’t produce any useful products.
Wes Cummins, CEO of Applied Digital in Dallas, pointed out that it’s been a rough year for tech companies overall. Facebook’s stock is down 66% this year, while Amazon’s fell 50% and Google’s slid about 40%.
“It’s cleaning out the pumps and the frauds,” Cummins said.
Going forward, Bitcoin will likely exert even more dominance in the cryptocurrency market, while smaller coins, like Luna, will fall away, which would be a positive development, Cummins said. Pricing site CoinGecko found that about 40% of the more than 8,000 cryptocurrencies listed on its site in 2021 have since been deactivated or delisted, becoming “dead coins.”
That means consumers are likely to turn to platforms offering better consumer protection.
“The people who got burned with FTX may be done,” Cummins said. “But a lot will stay involved.”
A look at new laws in Virginia, U.S. that started Jan. 1
Virginia sales tax
Virginia has eliminated a 1.5% tax on groceries, diapers, tampons and personal hygiene products. Local municipalities can still impose a 1% levy on groceries.
Taxes in other states
Thanks to large budget surpluses, about two-thirds of the states approved permanent tax cuts or one-time rebates last year. Several of those will take effect in January.
Income tax cuts mean less money will be withheld from workers’ paychecks in Idaho, Indiana, Kentucky, Mississippi, Missouri, Nebraska, New York, North Carolina and South Carolina. An Arizona income tax rate reduction to a flat 2.5% also will take effect in January, a year before originally scheduled because of strong state revenues.
Iowa will revamp its income tax brackets as a first step toward an eventual flat tax, and it will stop taxing retirement income.
Kansas will reduce its sales tax on groceries. Virginia will lower the tax on groceries and personal hygiene products. Colorado also will remove taxes from hygiene products, but will impose a 10-cent fee on plastic bags as a precursor to their elimination in 2024.
Other states are providing tax incentives for law-and-order professions. Rhode Island will exempt military pensions from tax. Georgia will offer a tax credit for donations to local law enforcement foundations.
But not all taxes will be going down. A voter-approved “millionaire tax” will take effect in Massachusetts, imposing a 4% surcharge on income of more than $1 million.
Wyoming is taking steps to collect taxes more quickly. Producers of coal, oil, gas and uranium will have to pay taxes monthly, instead of up to 18 months after extraction. The change comes after some counties had difficulty collecting millions of dollars owed by coal companies that went bankrupt.
Virginia minimum wage
The Virginia minimum wage increased from $11 an hour to $12 an hour.
Minimum wage workers received a pay raise in 23 states as a result of laws passed in previous years, some of which provide annual inflationary adjustments.
Criminal justice measures across U.S.
Elsewhere, a new law in Illinois is supposed to eliminate cash bail for people accused of crimes, but a judge put that on hold in late December after 64 counties challenged it as unconstitutional. Requiring bonds to be posted has long been a way to ensure people who are arrested show up for their trials, but critics say the system penalizes the poor. Eliminating cash bail would put Illinois in a group of states including California, Indiana, New Jersey, Nebraska and New York that have prohibited or restricted the practice.
Another area where social justice meets criminal justice is relaxing marijuana laws.
In November, voters made Maryland the 21st state to legalize recreational use by adults. That begins on July 1, 2023. As an interim step at the start of the year, possession by adults of up to 1.5 ounces of cannabis will become a civil offense punishable with a maximum fine of $100.
In Connecticut, some provisions of a 2021 law that legalized recreational marijuana also kick in, including automatic expungement of convictions for possession of less than 4 ounces of marijuana that were imposed from 2000 through September 2015. According to the National Organization for the Reform of Marijuana Laws, 21 other states have expungement laws.
Alabama will become the 25th state where it will be legal to carry a concealed handgun without a permit.
A new Missouri law will prohibit homeless people from sleeping on state land without permission. Violators could face up to 15 days in jail and a $500 fine after an initial warning. The law also prohibits state funding from being used for permanent housing for homeless people, instead directing it toward temporary shelters and assistance with substance use and mental health treatment.
Abortion access across U.S.
After the U.S. Supreme Court overturned the 1973 Roe v. Wade ruling in June, abortion access became a state issue. Laws in place in 13 states, most of them controlled by Republicans, ban abortion at all stages of pregnancy, with varying exceptions. Meanwhile, more liberal states have been extending abortion protections.
Laws taking effect in January are not wholesale policy changes but are intended to make abortion more accessible in California and New York. Abortion already is legal in those states through viability, which is about 24 weeks gestational age.
California will allow trained nurse practitioners, midwives and physician assistants to provide abortions without supervision from a physician. In New York, a law dealing with multiple facets of health care requires private insurers that cover births to also cover abortion services, without requiring co-payments or co-insurance.
A new Tennessee law, adopted in May, will bar dispensing abortion pills by mail or at pharmacies, instead requiring them to be given with a physician present. But advocates on both sides of the issue believe the effect will be minimal because a ban on abortions throughout pregnancy went into effect after the Supreme Court’s ruling.
— Associated Press
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