Moody’s mentioned that municipalities can lower your expenses by utilizing blockchain-based platforms to challenge bonds and for presidency operations, however doing so comes with doable dangers that embody cybercrime and working in regulatory uncertainty.
Municipalities may have the ability to minimize as much as 35% of administrative prices over the life cycle of a bond by one estimate, the agency mentioned in a report revealed on Wednesday.
Blockchain adoption for bond issuance on the municipality degree may take a while, though some tasks are already underway, Moody’s mentioned. Nonetheless, it added that “a number of latest municipal debt gross sales recorded on the blockchain with parallel record-keeping symbolize an preliminary small step towards incorporating blockchain within the municipal bond issuance course of.”
The report outlines a collection of professionals and cons for various kinds of crypto-related actions for municipalities.
On the one hand, “the immutable nature of blockchain additionally enhances transparency and auditability,” permitting governments to streamline companies and even allow cell voting in some circumstances. On the opposite, that comes with potential dangers, like cyber crime and “uncertainties surrounding regulatory and authorized frameworks and the way forward for digital belongings,” Moody’s mentioned.
Native governments have benefited from extra income from increasingly more bitcoin mining corporations trying to arrange store in North America, notably within the state of Texas.
One website constructed by Argo Blockchain in Dickens County “accounted for $17 million, or 6% of the county’s $283 million property tax base as of the tip of 2022,” Moody’s mentioned.
On the flip facet, relying an excessive amount of on income from mining corporations is dangerous, contemplating the volatility related to the trade and the potential environmental impacts.
The bitcoin mining trade was devastated final yr as bitcoin costs declined and energy prices shot up, thinning margins for corporations.
“Since crypto mining firm Core Scientific filed for chapter in December 2022, the as much as $11 million per yr town of Denton, Texas anticipated to obtain in a cope with the corporate is now in query,” Moody’s mentioned.