Saudi Press

Saudi Arabia and the world
Tuesday, Oct 07, 2025

Regulation: The solution to Bitcoin’s risks and unrealized benefits

Regulation: The solution to Bitcoin’s risks and unrealized benefits

Bitcoin continues to ride waves of popular interest and market volatility. But behind the swings is an unwavering reality: The largest species of cryptocurrency doesn’t measure up to its promised benefits as a peer-to-peer network, a uniquely quick and efficient payment system, or a store of value.

Bitcoin’s risks, meanwhile, are sizable. The creation and use of Bitcoin have been associated with a concentration of power among relatively few operators and owners, high energy consumption, market opacity, significant price volatility, and illicit and illegal transactions.

Together, these risks and unrealized rewards argue for enhancing cryptocurrency regulation, which currently ranges around the world from nonexistent or partial regulations to prohibitions. Discussion and action need to focus on:

* the intersection of cryptocurrency and the traditional financial system

* consumer protection

* financial stability

* public security (i.e., countering money laundering, the financing of terrorism, and other illegal activities)

Theory and practice


Distributed ledger technology is key to the promotion of cryptocurrencies like Bitcoin, which was launched in 2008. The technology enables network members, called miners, to authenticate financial transactions. The work entails solving mathematical “proof of work” problems, and miners are rewarded with newly created or “mined” encrypted Bitcoin. In this way, network users can transact directly with their peers without being monitored or controlled by a central bank or trusted financial intermediaries such as commercial banks. Bitcoin’s approach is thus “trustless,” in that it does not require trust on the part of users in a third party.

In practice, mining operations are increasingly difficult and require investing in vast computing power. Not everyone can be a miner. At present, the top five mining pools control 64 percent of total hashrates (the computing power needed to mine and process Bitcoin transactions). A few mining pools could influence the process by delaying or denying the verification of transactions, undercutting the notion of a democratized payment system.

Miners congregate in regions where electricity is relatively cheap or accessible due to lax regulatory oversight. Cambridge University’s Bitcoin Mining Map shows that more than 80 percent of global mining activity is located in remote areas of four countries:

* China: more than 65 percent of hashrates, primarily in areas like Inner Mongolia and Xinjiang, though the Chinese government has been cracking down on mining operations this year

* Russia: 6.9 percent

* Kazakhstan: 6.2 percent

* Iran: 3.8 percent

The concentration of hashrates in countries lacking in transparency has heightened the opaqueness of these mining operations. (As a point of reference, 7.2 percent of operations are located in the United States.)

These regions also tend to produce electricity using coal or other fossil fuels, making Bitcoin and similar cryptocurrencies “dirty money.” The annual usage of electricity for Bitcoin mining is comparable to Norway’s total electrical usage and matches the carbon footprint of Morocco, according to the Digiconomist Bitcoin Energy Consumption Index.

For twelve years, the Bitcoin buzz has been that it is quicker, less costly, and more efficient than conventional means of payment. But Bitcoin payments can only be made with a limited number of merchants and remain a sliver of those merchants’ sales: only 5 percent of their transactions.

Relative to credit cards, it also takes longer to authenticate and finish Bitcoin transactions: Bitcoin processes 4.6 transactions per second on average, compared to Visa’s 1,700-plus per second. Miners can reject a transaction with a fee deemed too low. A refund? Forget about it. Bitcoin payments are irreversible, excluding redress for error or fraud.

Bitcoin ownership, like Bitcoin mining, is concentrated. An estimated 1,000 individuals—known as whales—own 40 percent of the Bitcoin market. Whales are in a position to influence or manipulate the market to the disadvantage of most other participants.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Syria Holds First Elections Since Fall of Assad
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
UK, Canada, and Australia Officially Recognise Palestine in Historic Shift
New Eye Drops Show Promise in Replacing Reading Glasses for Presbyopia
Dubai Property Boom Shows Strain as Flippers Get Buyer’s Remorse
Top AI Researchers Are Heading Back to China as U.S. Struggles to Keep Pace
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
UAE-US Stargate Project Poised to Make Abu Dhabi a Global AI Powerhouse
Trump and Starmer Clash Over UK Recognition of Palestinian State Amid State Visit
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
Saudi Arabia Signs ‘Strategic Mutual Defence’ Pact with Pakistan, Marking First Arab State to Gain Indirect Access to Nuclear Strike Capabilities in the Region
Sam Altman sells the 'Wedding Estate' in Hawaii for 49 million dollars
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
Kuwait opens bidding for construction of three cities to ease housing crunch.
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
Could AI Nursing Robots Help Healthcare Staffing Shortages?
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Did the Houthis disrupt the internet in the Middle East? Submarine cables cut in the Red Sea
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Tether Expands into Gold Sector with Profit-Driven Diversification
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
Israeli Airstrike in Yemen Kills Houthi Prime Minister
After the Shock of Defeat, Iranians Yearn for Change
YouTube Altered Content by Artificial Intelligence – Without Permission
Iran Faces Escalating Water Crisis as Protests Spread
More Than Half a Million Evacuated as Typhoon Kajiki Heads for Vietnam
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Cristiano Ronaldo Makes Surprise Stop at New Hong Kong Museum
×