2023 was a standout year for Bitcoin. The asset is up over 150% year-to-date in U.S. dollar terms.
But aside from price alone, there were many significant developments that impacted Bitcoin in historic ways. This year saw epic banking collapses, fake news scandals, record high hashrates, rising transaction fees, new accounting rules, the election of a pro-Bitcoin president in South America, and further confirmation of Bitcoin mining being beneficial for the environment.
Here is the Bitcoin 2023 recap, with details on 7 of the most influential events for Bitcoin in 2023.
Banking Collapses Started a Rally
2023 saw more bank failures than any year in history. One of the first dominoes to fall was Silvergate Bank. Silvergate was known for providing banking services to many digital-asset-related companies.
Soon after Silvergate underwent a voluntary liquidation, three of the four largest banking collapses in U.S. history took place. The second, third, and fourth-largest banks ever to fail included First Republic Bank, Silicon Valley Bank, and Signature Bank, respectively. These banks had a combined total of $548.7 billion in assets.
Related reading: US Banking Crisis Wildfire Spreads
From March 10th to April 15th, bitcoin rose 50%, from $20,000 to $30,000. Many believe this was a flight to safety, as the traditional banking system suddenly seemed quite fragile.
A Fake Tweet Liquidated Shorts, Then Longs
On October 16th, A Cointelegraph intern made a fake post on X about Blackrock’s Spot ETF being approved. This led to a huge green candle followed by a red candle after the post was corrected. Shorts were liquidated on the way up, followed by longs being liquidated on the way down.
However, bitcoin continued to rally into year-end. While the price of bitcoin was around $28,000 after the fake Tweet was corrected, bitcoin ended the year at around $42,000.
Hashrate Hits a Record High
The hashrate, or amount of computing power spent securing the Bitcoin network, continues to reach new record highs. Bitcoin’s hashrate is currently hovering 520 EH/s, down from a record of 608 EH/s on December 23, according to data from BitInfoCharts.
Some have speculated that the most recent spike in hash rate could be due to institutions and nation-states wanting to acquire BTC without moving the market. It could also be caused by a battle between miners to acquire more bitcoin before the halving in 2024. Bitcoin miners have increased their investments substantially, buying new mining rigs and securing more energy sources.
Ordinals Led to Rising Transaction Fees
Bitcoin Ordinals inscriptions, or NFTs on the Bitcoin blockchain, have resulted in soaring fees for sending BTC on the base layer. Average transaction fees were $38 as of December 17th. This has led to a heated debate within the community.
Some say Ordinals amounts to a DoS attack on Bitcoin, with so many transactions spamming the network. Each inscription counts as a transaction, meaning that the minting and trading of these NFTs creates a massive backlog in the mempool.
Others say this simply encourages adoption of layer-2 solutions like the Lightning Network, so Ordinals can be seen as positive. One thing’s for sure: miners aren’t complaining. With fees so high, miners who process these transactions are definitely enjoying the extra income.
Argentina Elects a Pro-Bitcoin President
Javier Milei, a pro-Bitcoin and far-right populist figure, won the Argentinian elections in November. Argentina experienced inflation of more than 140% over the past year, so it’s clear why they adopted a change in leadership. The country could soon adopt a Bitcoin standard as well.
There has been much speculation that Milei could follow El Salvador’s Nayib Bukele in making bitcoin legal tender within the country’s borders. Milei has stated publicly that he sees central banking as a scam and would like to abolish Argentina’s Central Bank. What he has planned for Bitcoin in Argentina remains to be seen. Bitcoin rallied by up to 3% after the news of his victory in the elections.
New FASB Accounting Rules for Bitcoin
This event is well-known, but much less often discussed than the topic of Spot ETFs. It deserves more coverage because it may have even greater implications in terms of corporate/institutional adoption.
On December 13th, the FASB finalized new rules that will allow corporations to recognize “fair value” changes to their bitcoin holdings. The Financial Accounting Standards Board (FASB) has now officially adopted “Fair Value Accounting” for bitcoin. This could encourage corporations to adopt bitcoin as a treasury reserve asset. The rules go into effect for fiscal years beginning after December 14, 2023.
Under the previous rules, corporations had to mark down their unrealized losses on bitcoin, but could not mark up their gains. Now that’s no longer the case. It’s widely believed that this change will attract corporations, helping them consider holding bitcoin on their balance sheets.
Bitcoin’s Energy Usage Further Confirmed as Being Green
There were several studies published in 2023 showing that Bitcoin’s large power consumption is actually a good thing for the electrical grids. Most of the electricity used is renewable or stranded, meaning it would have been wasted otherwise.
Related reading: Bitcoin ESG Compliance Narratives on Rapid Rise: Report
The flexibility of miners helps grid operators. The ability to use excess power when its available and cut power usage at a moment’s notice by turning off the machines makes the grid much more stable. Plus, being electric, miners themselves are zero-emissions machines.
While all of this was previously known, having additional evidence provided was a welcome occurrence for the Bitcoin community. Perhaps the old “Bitcoin is boiling the oceans” narrative will finally come to an end.
Bitcoin 2023: Conclusion
In the end, 2023 marks a cornerstone moment in Bitcoin’s history. The network keeps growing stronger as legacy financial system continues to fail. In 2023 more good news started circulating about the network’s energy usage. New regulations were enacted that could help corporations adopt bitcoin as a treasury reserve asset. And most importantly, Bitcoin survived yet another year, despite being declared “dead” at least 474 times.
