Q2 2022 Recap: Bitcoin Adoption Notable Events
Aug 8, 2022

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Since the early days of CEX.IO, bitcoin has been a focal point of the products and services we’ve built. From pioneering the first bitcoin mining pool, Ghash.io, to opening up the first credit card on-ramps for market participants of all backgrounds, we’ve always led by example with our inclusivity.

As the first publicly adopted cryptocurrency and an asset with an over 40% dominance in the crypto market, bitcoin remains a beacon for the entire crypto industry. Not only was bitcoin the first cryptocurrency to be recognized as legal tender, but it is also what the first crypto futures were based on. Additionally, bitcoin is considered to be the cryptocurrency that’s enjoyed the most global adoption. As a result, major events that affect bitcoin may impact the narrative around the cryptocurrency market writ large. 

In the second quarter of 2022, the crypto market experienced a switch to a prevailing bearish attitude. The bitcoin price declined by over 50% in Q2, pulling the rest of the market with it. Recent market conditions attracted significant attention to bitcoin price performance, along with events like bitcoin selling by LFG to save the UST peg. But bitcoin has also seen a major move in adoption during this period from the wider market and regulators around the world.

Below, we assembled some of bitcoin’s notable events in Q2 2022 that may influence its further adoption.

Regulations

The Central African Republic makes bitcoin a legal tender

Following El Salvador, the Central African Republic (CAR) has adopted bitcoin as an official currency, becoming the second country in the world to do so. Before bitcoin, the only official currency of CAR was the CFA franc, which is used in six central African countries, and eight west African ones. CFA franc is guaranteed by France and pegged to the Euro. As a result, some experts claim that bitcoin adoption can be considered a move toward greater monetary independence.

A few months after adopting the bitcoin bill, Faustin Archange Touadéra, the president of the Central African Republic, announced the creation of “Sango coin” and “Crypto island.” These initiatives aim to tokenize the country’s natural resources and attract new investors. In addition, CAR officials are considering a plan to waive income and corporate taxes for those investing in local mining, natural resources, and other CAR industries using bitcoin.

Currently, most Central Africans do not have access to the internet and therefore cannot accept bitcoin for payments. However, backers of CAR’s crypto adoption claim that it may change soon. The CAR has signed a deal with neighboring Cameroon to share its fiber optic network as soon as 2023. 

Panama tries to give crypto legal status

In April 2022, the National Assembly of Panama passed a bill allowing for the private and public use of crypto assets, including the option to pay taxes with cryptocurrencies. The bill also legalized crypto trading, allowed for the issuance of new payment systems, and permitted the tokenization of precious metals.  

However, in June 2022, the president of Panama, Laurentino Cortize, refused to sign the bill despite being in favor of it. The bill was sent back to the National Assembly to add certain AML measures. Panama is considered a major tax haven in the world, and experts suggest that this initiative may strengthen Panama’s position in this field. 

The bill doesn’t limit itself to bitcoin. In addition, it also permits crypto assets such as Ethereum, Litecoin, Stellar, XRP, IOTA, Algorand, XDC Network, and Elrond. Although Panama’s crypto law recognizes these cryptocurrencies, they won’t be legal tender per se. This means it won’t be obligatory for businesses to accept them.

Bitcoin becomes tax-free in Germany if it’s sold after one year

In May 2022, Germany’s Federal Ministry of Finance released a 24-page document, which formally defined major blockchain concepts such as mining, staking, and airdrops within the context of the country’s tax system. This decree has become the first nationwide tax guidance on cryptocurrency. 

According to this document, individually held crypto is not taxed if held for over a year. In addition, crypto enthusiasts don’t need to pay taxes if cumulative profits during the reporting period are less than 600 Euros. Local experts claim that this guidance document may help Germany become an attractive country crypto-tax-wise. 

Exchange-traded funds (ETF)

Bitcoin exchange-traded funds (ETF) are pools of bitcoin-related assets offered on traditional exchanges by brokerages that can be bought or sold like stocks. Bitcoin ETFs allow people to invest in crypto and take advantage of its price movement without owning the underlying asset.

ETFs are considered one of the major factors of bitcoin adoption by the wider market. Bitcoin ETFs are already available in a range of jurisdictions such as Canada, Germany, Sweden, and Switzerland. However, some leading financial centers such as the US and UK chose to forego a similar adoption for the time being. In Q2 2022, both futures-based and spot bitcoin ETFs have been launched in several new jurisdictions, expanding their availability.

First spot bitcoin ETF in the Asia-Pacific region

In May 2022, Sydney-based ETF Securities, in conjunction with Switzerland’s 21Shares, launched the first spot bitcoin ETF in the Asia-Pacific region. The same day, Sydneysiders Cosmos Asset Management launched its own bitcoin ETF. New ETFs started trading on Cboe Australia. These launches come five years after Australian regulators were first approached with the idea of launching crypto ETFs in their country.

ProShares launches short bitcoin ETF

In June, ProShares launched the first inverse ETF on bitcoin in the U.S. The new ETF started trading on the New York Stock Exchange (NYSE) under the ticket BITI. With this ETF, ProShares aims to offer investors a way to take advantage of the downward movement of the bitcoin price. BITI is based on the reversed performance of an index of Bitcoin futures. ProShares was also behind the launch of the first bitcoin ETF in the U.S. back in October 2021. 

ProShares’ BITI is not the first short bitcoin ETF in the world, but it is the first of its kind in the U.S. The first short bitcoin ETF was launched on Toronto Stock Exchange in April 2022 by Canadian company Horizon ETFs. It is noteworthy that both ProShares and Horizon ETFs used the same ticker, BITI, for their short bitcoin ETFs. However, they ​​have no affiliation with each other on this point.

SEC approves Teucrium’s bitcoin futures ETF 

In April 2022, the U.S. Securities and Exchange Commission (SEC) approved Teucrium’s bitcoin futures ETF filed under the Securities Act of 1933 (‘33 Act). Although SEC had already permitted several bitcoin futures ETFs launched by ProShares, VanEck, and Valkyrie, all of them were filed under the Investment Company Act of 1940. At the same time, the SEC rejected more than a dozen applications for spot bitcoin ETFs. 

It is considered that spot bitcoin ETFs can be filed under the ‘33 Act. Experts suggest that approval of Teucrium’s ETF may weaken SEC’s argument to deny spot bitcoin ETFs, and could lead to their launch in the U.S shortly. 

Mining

According to the University of Cambridge, the total annual power consumption of Bitcoin mining is assumed to be around 145 TWh, which is approximately 0.32% of total global energy consumption. Furthermore, annual bitcoin’s energy consumption has grown more than tenfold in the past five years. Because of that, a lot of ecology activists are worried about the impact of further bitcoin mining on the environment. 

However, the Bitcoin Mining Council’s report of Q2 2022 estimates the global bitcoin mining industry’s sustainable electricity mix (hydro, wind, solar, nuclear, geothermal, etc) reached 59.5%, showing a 6% year-on-year increase. This makes bitcoin mining one of the most sustainable industries in the world. 

Some experts suggest that the bitcoin mining industry may even become one of the drivers of the adoption of renewable energy sources in the future. Here are a few events in Q2 2022 that may increase the percentage of sustainable mining in the industry, and fuel the adoption of renewables in certain countries.

Uzbekistan legalizes solar-powered cryptocurrency mining operations

In May, Uzbekistan issued a new decree allowing companies to mine bitcoin and other cryptocurrencies using solar energy. In addition, this law will exempt all crypto operations by domestic and foreign companies from income tax.

The Uzbekistan government wants miners to power their mining farms by installing their own solar panels. Alternatively, should mining companies choose to be connected to the country’s existing power grid, they risk paying double the regular price or more during peak consumption periods. Miners are not required to obtain certain licenses but must be registered by the newly formed Uzbek National Agency for Perspective Projects, according to the decree.

Tesla, Block, and Blockstream partnered to mine bitcoin in Texas using solar power

Blockstream and Block collaborated to build a pilot crypto mining facility in Texas that will be powered by Tesla’s batteries and solar installations. According to Blockstream’s CEO Adam Back, this mining farm is designed to be a proof of concept for 100% renewable energy bitcoin mining at scale. 

The mining facility will have an open dashboard to make real-time operational and financial information publicly available. This information will include energy consumption and hashrate, informing the public whether or not the facility can fund the further expansion of solar power.

Mawson takes a stake in Tasmania Data with plans for a 100% renewable mining farm 

Australian bitcoin mining company Mawson Infrastructure picked up 33% of Tasmania Data Infrastructure (TDI). Remarkably, the deal took place in exchange for about 1,975 mining rigs, as miners have begun tapping alternative sources of funds to help their business grow.

TDI is developing a data center in Australia to mine bitcoin with 100% renewable energy. The mining facility is expected to have up to 35 megawatts (MW) of energy infrastructure by the third quarter and a potential expansion of capacity to 100 MW. Mawson will have the right to host its own bitcoin mining infrastructure in the facility with up to 10 MW.

Conclusion

It’s important to emphasize that these are only a few major events of bitcoin adoption that took place in the second quarter of 2022. For example, Strike integrated with Shopify to introduce bitcoin lightning payments for the platform’s merchants. In turn, El Salvador hosted an annual meeting of the Alliance for Financial Inclusion (AFI) and promoted the adoption of bitcoin to 32 central banks and 12 financial officials representing emerging economies. Events in Q2 2022 show that bitcoin could continue to gain more acceptance from the wider market despite its recent price performance.

If you want to discover more bitcoin notable events in Q2 2022, check our CEX.IO COMPASS report where our team examines the recent performance of digital assets across the crypto ecosystem.

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