The week in review: Tyler Winklevoss’ $3m “Bitcoin Pizza Moment”
What do Steven Seagal, the Bitcoin halving and Tyler Winklevoss have in common? Not a lot aside from the fact they all made headlines in the crypto world this week. Here’s all the latest on these and much, much more.
New Zealand’s new proposal on crypto tax regulations
New Zealand’s tax authority has issued new proposals on their Goods and Services tax-related (GST) policy in regard to cryptocurrencies. Earlier this week, New Zealand’s Inland Revenue Department (IRD) released a paper including proposals on the improvement and simplification of tax invoice requirements and exclusion of cryptocurrencies from specific GST provisions.
According to the paper: “The definitions used for money or financial services as “exempt supplies” (meaning they are not subject to GST) did not contemplate crypto-assets, meaning GST may be imposed on certain types of crypto-assets, but not others – depending on their particular purpose and design. This inequitable GST treatment is unintentionally favouring certain types of crypto-assets over others and likely resulting in a distortion in the crypto-asset marketplace.”
Essentially, the country’s tax system sets out to ensure tax rules don’t create barriers for crypto-related developments. The regulator proposes to exempt cryptocurrencies from both the GST rules and financial arrangement rules, while crypto-related services (exchange services and mining) will continue to adhere to the existing GST and income tax rules. In addition, users of certain crypto assets will have to pay income on unrealised gains and losses.
The regulator suggests simple, clear, and defined tax rules will contribute to the further growth of the already fast-growing crypto sector in the country. While New Zealand moves to become a more crypto-friendly country, IRD Commissioner Naomi Ferguson has made it clear the government doesn’t consider crypto to be a currency. “[…] because crypto-assets are not issued by any government, they are not legal tender anywhere.”
Top crypto miners feel pressure ahead of impending Bitcoin Halving
With Bitcoin’s halving event just months away, two of the largest Bitcoin mining equipment manufacturers have raised the stakes in the race to roll out top-of-the-line machines.
Bitmain, a Beijing-based mining giant, has launched its latest AntMiner S19 and S19 Pro models, boasting computing power as high as 110 terahashes per second (TH/s), with an energy cost of 29.5 watts per terahash (W/T).
According to the firm’s specifications, the two models would be the most profitable Bitcoin mining devices on the market. These devices are closely followed by their Shenzhen-based rival’s version named WhatsMiner M30S by MicroBT.
Bitmain has held historical market dominance, but the release of MicroBT’s M20 series in 2019 has enabled the new kids on the block to sneak in on the market share. According to MicroBT’s major distributor, Pangolin Miner, the M30S (priced at $2,430 apiece) boasts a computing power of 86 TH/s with an energy cost of 38 W/T and uses 8-nanometer chips supplied by Samsung. The firm said devices will be shipped between March to May, with large pre-orders having to wait till June.
Equally, concern surrounding whether or not Bitmain can deliver on a large scale is mounting. The prices and order/delivery dates for Bitmain’s S19 models haven’t yet been announced. At the moment, Bitmain’s older AntMiner S9 model is still one of the most widely used miners.
With the Bitcoin halving approaching in May, older models like the S9 will become unprofitable unless we see a dramatic increase in the Bitcoin price. Miners will have to upgrade or risk losing money on expensive, inefficient equipment.
Steven Seagal under siege for promoting ICO
The Securities and Exchange Commission (SEC) is out for justice. This week, the US regulator charged American actor Steven Seagal for promoting an initial coin offering (ICO) without disclosing he was paid for it. He’s been ordered to pay back over $330,000 to the commission. Because no one is above the law.
In March 2018, Seagal was contracted by ICO project “Bitcoiin2Gen” (B2G) to promote the sale on his social media channels, while also appearing as a brand ambassador in the project’s marketing efforts.
Despite having been promised $250,000 in cash and $750,000 in B2G tokens, the SEC’s disclosure indicates he only received $175,000 from the promotional deal. Seagal agreed to settle charges with the commission, thereby paying almost $330,000. A settlement that is sure to leave exit wounds in his bank account.
The SEC specifically targeted the actor for failing to disclose that his endorsement of the project was paid for, as this directly contravenes regulations.
Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit said: “Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation.”
Tyler Winklevoss’ $3 million “Bitcoin Pizza Moment”
Remember the time Laszlo Hanyecz bought two pizzas for 10,000 BTC ($97 million today)? In 2010, the programmer offered users on a BitcoinTalk forum the Bitcoin in exchange for two pizzas. A teenager accepted the Bitcoin and sent Hanyecz two pizzas from Papa John’s.
Tyler Winklevoss, a Bitcoin billionaire investor and co-founder of Gemini, a cryptocurrency exchange, bought the world’s most expensive tickets to space and likened it to his “Bitcoin Pizza Moment.” The purchase was made back in January 2014 and at the time, Winklevoss acquired a ticket for Virgin Galactic’s passenger-carrying spaceship for 312.5 BTC, worth around $250,000 at the time. Today, it’s worth around $2.7 million (28 February 2020).
Another mining blunder in Ukraine
Last year we reported two separate attempts of employees using their powerful work computers to illegally mine crypto. Now in Kyiv, investigators have found another example of an individual using work machines to sustain an illegal crypto mining operation. What happened to playing minesweeper when you’re bored?
The accused miner was an IT specialist who held executive positions in the State Judicial Information Systems. The Kyiv Prosecutor’s Official official Facebook page announced earlier this week that it concluded a pre-trial investigation in collaboration with the State Bureau of Investigation.
The defendant has been accused of illegally using network equipment and systems to mine crypto with malware installed on the machines. He also allegedly provided placement to third parties on the office’s servers in exchange for money, including three online stores. It’s unknown how much or what kind of crypto the individual managed to mine, but he now risks up to six years in prison. Ouch.