Canada-based global investment research firm BCA Research has identified several factors that pose a long-term threat to bitcoinAward.
The energy-intensive nature of bitcoin mining and potential regulatory barriers could hamper bitcoin’s progress to the point where cryptocurrency could stop “losing its value over time,” says BCA Research, according to a Bloomberg report on Monday.
A Bloomberg article recently called bitcoin mining is a “dirty business”, although CoinDesk columnist Nic Carter called the analysis “incorrect”. And US Treasury Secretary Janet Yellen said last month that bitcoin is a “highly speculative asset” and an “extremely inefficient” way of conducting monetary transactions.
BCA Research’s top market strategist, Peter Berezin, wrote in a report released on Friday that the cost and slowness of bitcoin transactions make it “unsuitable as a medium of exchange”, further warning that environmental, social and governance-focused (ESG) funds are likely to Avoid companies that are associated with the best cryptocurrency.
“When ESG funds start to flee [b]itcoin, the price will start a downward spiral. Stay away, ”Berezin noted.
According to the research company, governments will work against bitcoin in an attempt to avoid losing billions of dollars in revenue from seigniorage – the difference between the nominal value of money and the cost of producing it.
But Berezin’s warning is probably exaggerated, as large listed US companies have been investing in bitcoin in recent months as a way to hedge against inflation and a devaluing dollar. In particular, the American electric car manufacturer Tesla, a company in Fortune 500, revealed a $ 1.5 billion bitcoin investment last month, raising hopes for more corporate engagement.
At the same time, regulations for cryptocurrencies are seen as positive for institutional adoption, and only a few nations have or are plans to take in, extreme restrictions on digital currencies.