Hello and welcome to this week's Overbit Insights. This week is a critical week for the future of cryptocurrency in the United States, as Treasury Secretary Janet Yellen and the White House fight as Senators are at odds about handling cryptocurrency taxation, sparking a strong lobbying war from the Treasury Secretary and the White House.

According to two people who spoke on the condition of anonymity to share details of private conversations, Yellen met with lawmakers on Thursday to express her opposition to the effort led by Senate Finance Committee Chairman Ron Wyden (D-Ore.) and two Republican senators to weaken the legislation's proposed cryptocurrency overhauls. Yellen lobbied Wyden about the matter, sources said.

Last month, the White House and Sen. Rob Portman (R-Ohio) agreed on a proposal to impose stricter tax compliance for Bitcoin dealers and cryptocurrency investors to help pay for the bipartisan infrastructure measure. The agreement drew harsh condemnation from Bitcoin investors and the large US Cryptocurrency Exchanges and Companies, who claimed it would give the Biden administration broad authority to effectively kill the developing sector of cryptocurrencies.

Some senators planned to pass the bipartisan bill on Thursday night, but the debate stalled, and the cryptocurrency debate remained one of the outstanding issues.

As the standoff between Wyden and the White House appeared to deepen on Thursday night, Portman and Sen. Mark R. Warner (D-Va.) proposed a competing proposal as a potential solution. The White House stated publicly late Thursday that it supports the Portman-Warner approach because it would do less to limit the executive branch's new crypto powers.

Closing out today's edition of Overbit Insights, we pivot a bit to the technical side and cover one of the lesser-talked aspects of Ethereum's recent 'London' upgrade.

EIP-1559 has been the focal point of Ethereum's recent upgrade, and rightly so: the burn mechanism and redesigned fee structure not only seek to bring fees lower across the board but also work to make Ethereum a much more deflationary asset, akin to Bitcoin.

However, this wasn't the only 'Ethereum improvement proposal' or EIP in the London upgrade. Known as EIP-3554, this proposal aims to hasten the end of Ethereum mining as we know it.

Long talked about has been "Ethereum 2.0" - in which Ethereum upgrades its consensus mechanism to Proof-of-Stake (POS) and moves away from Proof-of-Work (POW).

In order to do so, the Ethereum network has to force miners to upgrade their software and switch to the new consensus mechanism. The way Ethereum developers have elected to do so is to introduce a so-called 'difficulty bomb', in which it becomes exponentially harder and almost impossible to mine Ethereum.

While you don't need a bomb to go off to roll out proof-of-stake mining, it helps move things along by closing the on-ramp to proof-of-work mining.

"It's a mechanism in Ethereum that makes it exponentially harder to mine," said Tim Beiko, the coordinator for Ethereum's protocol developers. "It's like we're artificially adding miners on the network, which raises the difficulty, making it harder for every other miner that's on the network to actually mine a block."

EIP-3554 moves up the timeline for this difficulty bomb, from the summer of 2022 to this December 2021. To anyone spectating, it certainly feels as if Ethereum is developing at breakneck speed at the moment. Considering the magnitude of these upcoming changes, watching as we get closer to this updated deadline will be fun.

In the meantime, there will surely be updates on the Ethereum front and elsewhere, and here at Overbit, we will always keep you posted with the latest. Thanks as always for reading!

Our publications do not offer investment advice and nothing in them should be construed as investment advice.  Our publications provide information and education for investors who can make their investment decisions without advice.
The information contained in our publications is not, and should not be read as, an offer or recommendation to buy or sell or a solicitation of an offer or recommendation to buy or sell any positions.  Our publications are not, and should not be seen as, a recommendation to use any particular investment strategy.
Risk Warning: Margin Trading carries a high level of risk to your capital and you should only trade with money you can afford to lose. Margin Trading may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary.