Commercial Awareness Update – W/C 12th June 2023

BHUTAN’S INNOVATIVE ECONOMIC STRATEGY – CONCILIATING CRYPTOCURRENCY MINING AND SUSTAINABLE DEVELOPMENT

Cryptocurrencies have long been criticised for their devastating environmental impact, primarily due to the excessive energy consumption in their mining process.

Bitcoin has been singled out for its staggering carbon footprint, estimated to be ten times higher than the total energy usage of Google in a year and on par with that of the US government.

However, a surprising revelation has emerged from Bhutan, a small rural economy known for its commitment to sustainable development and pursuit of Gross National Happiness (GNH).

Bhutan has quietly been employing digital technologies and cryptocurrencies in a sustainable and economically efficient manner, grabbing recent headlines for its groundbreaking approach.

Background

Bhutan’s ethical, economical operation is founded on its abundant supply of affordable hydroelectricity. Hydroelectric power, cheaply produced in Bhutan and capable of powering energy-intensive computers, has facilitated solving complex equations necessary for cryptocurrency mining.

This strategic use of Bitcoin and blockchain technologies has not only maximised profitability for Bhutan but has also set an example for other rural economies seeking economic growth and independence.

By capitalising on their most vital resources, such as hydroelectricity, these weaker economic powers can emulate Bhutan’s cost-effective financial operations and harness the potential of digital currencies for sustainable long-term growth without compromising ecological values.

Bhutan’s state-owned company, Druk Holding & Investments, has set an ambitious goal of raising $500,000 through carbon-free cryptocurrency mining. Analyst Jaran Mellerud suggests that Bhutan could become the “biggest Bitcoin miner per capita in the world.” This innovative economic strategy aligns with the approach taken by El Salvador, another country embracing cryptocurrencies.

Cryptocurrency and sustainable development

El Salvador’s Bitcoin Office recently announced plans to construct the world’s largest Bitcoin mining farms worth $1 billion, powered entirely by sustainable wind and solar energy.

Moreover, El Salvador intends to leverage its abundance of active volcanoes to generate clean and renewable energy for Bitcoin mining. By utilising the heat from these volcanoes to produce steam and drive turbines, the country aims to create an environmentally friendly and cost-effective solution.

While Bhutan and El Salvador’s endeavours have so far yielded more successes than challenges, it is essential to acknowledge the volatility of cryptocurrencies like Bitcoin. These countries must exercise caution and not rely solely on unpredictable variables for their solvency. The value of cryptocurrencies can fluctuate dramatically, potentially posing risks to their economic stability. However, their strategies’ potential rewards and positive environmental impact cannot be ignored.

Bhutan and El Salvador’s initiatives offer valuable lessons for other nations. They demonstrate that economic development and sustainability can coexist and reinforce each other. By embracing digital currencies and strategically utilising their unique resources, these countries have paved the way for a new paradigm in economic growth.

They serve as pioneers, inspiring other nations to explore the transformative power of digital currencies while staying true to their ecological commitments. Both countries exemplify that even with limited resources and economic power, innovative investments and the strategic use of technology can drive rapid growth and foster independence.

They have turned potential challenges into opportunities by leveraging their strongest assets, such as renewable energy sources. Moreover, Bhutan and El Salvador’s successes have the potential to encourage countries with similar economic environments to explore the revolutionary potential of digital currencies.

Rural economies often need more support and access to traditional financial systems. Embracing cryptocurrencies can provide them with new avenues for economic growth, attracting investments and enabling participation in the global digital economy. Bhutan’s dedication to sustainable development and El Salvador’s commitment to renewable energy demonstrates that economic progress can be achieved without compromising ecological values.

As the world grapples with the urgent need for sustainable practices, Bhutan and El Salvador are beacons of hope and inspiration to other nations. Their endeavours highlight the potential for digital currencies to be harnessed as tools for economic growth while paving the way towards a greener future.

Article written by Mahault Dignet

THE RENTERS (REFORM) BILL

The government published A Fairer Private Rented Sector in June 2022. The white paper proposed the modernisation of the named sector, of which there are 4.6 million households.

The proposals included the establishment of a new property ombudsman, that all tenancies be made periodic, that notices for rent reviews should be doubled, and that ‘no-fault’ evictions should no longer apply to the sector.

On 17^th May 2023, the Renters (Reform) Bill was introduced to Parliament, incorporating most of the proposals per its preceding white paper. Some of these provisions will be applicable in Wales, and all will affect new tenancies except purposely built student accommodation.

The Bill is depicted as a ‘once in a generation overhaul’ to ’empower renters to challenge poor landlords without fear of losing their home’.

Keywords

Assured Shorthold Tenancy – created on or after 28^th February 1997, unless otherwise specified by a landlord, is the most common type of private tenancy. It is granted by private landlords and letting agents. It gives a tenant the legal right to occupation for a fixed period, and the landlord retains the right to repossess the property after the fixed period without reasons given pending a Section 21 Notice.

Assured Tenancy – created before 28th February 1997. It is granted by a private landlord, registered private or social provider. It permits a dwelling house to be let separately to individual or joint tenants, conditional on the property’s use as the principal home.

Periodic Tenancy – a rolling tenancy without a fixed end date. It is created at the end of an AST so long as the same tenant occupies the same property.

Section 21 Notice – otherwise known as a ‘no-fault’ eviction notice or an ‘accelerated possession procedure’, apply to ASTs. The statutory notice period is two months. It cannot be served within the first four months of occupation and is only utilised if extended notice periods are not in place. The landlord need not evidence grounds for repossession, making it difficult for tenants to challenge. The tenant must vacate the property within a stipulated period.

Some critical takeaways from the Bill

The following, among others, may be enacted should the Bill receive Royal Assent:

1. The extirpation of ASTs, with the replacement being ATs.

• This means that the no-fault eviction notice will be abolished, as the Tenancy it applies to will be defunct.

2. The Bill will replace fixed-term tenancies with periodic equivalents to prevent tenants from being ‘trapped’ by long-term tenancies.
3. The imposition of a property ombudsman in alleviating the caseload of local and county courts, with the capability to make legally binding decisions in tenant-landlord disputes. All private landlords must accede to this public body.
4. Landlords can no longer opt out of legislative measures designed to mitigate rent increases when setting market rent. Instead, landlords must follow the statutory procedure of a single (annual) rent increase, with two months’ notice given, except in circumstances whereby ‘relevant low-cost tenancies’ are accorded by registered providers, that is, by local councils and housing associations.
5. The establishment of new discretionary grounds for repossession (dispensable only on stringent conditions being met) to include:

• The consistent accumulation of (serious) rent arrears for which a four-week eviction notice period is required. The courts will be bound to grant the request for repossession, irrespective of whether the arrears have been cleared.
• Nuisance or annoyance causing tenants. A court must utilise the test of reasonableness when faced with such requests, although it is not mandatory to grant them.
• The landlord wishes to move into or sell the property, with ‘landlord’ encompassing close family members.

6. The imposition of criminal sanctions on landlords for compliance failure concerning the inappropriate use of tenancy types, possession notices and redress schemes.

Potential impact

Landlords are sceptical of the new discretionary grounds for repossession as they may prove problematic when the need to evict troublesome tenants arises. Tenants can challenge these new grounds; therefore, the burden of proof is on landlords, meaning additional uncertainty and costs. Conversely, the Bill widens the scope to allow conforming landlords to evict troublesome tenants lawfully.

Under the new regime, tenants can resist statutory rent increases through tribunals without fear of retaliatory evictions. Given the ongoing economic crisis, said oppositions are likely to overwhelm the court system, thus contradicting one of the aims of the Bill.

Tribunals could reduce passing rent and rent increases to below market value, decreasing rental yields, with landlords further exposed to significant financial loss. Several of the Bill’s provisions may prove counterproductive as some landlords may be persuaded to exit the private lettings market, thereby worsening the plight of home shortages.

Preparation by landlords in anticipation of the Bill’s enactment (before next year’s general election) is critical due to unfamiliarity with the new regime and its weighty implications for landlords.

Inevitably, tenant-landlord disputes will likely spiral during the Bill’s infancy, for which either party may seek advice and representation. Landlords may also need to procure finance to remediate potential or existing circumstances determined unlawful under the new regime. Therefore, property and finance lawyers and portfolio managers look set to undergo busier periods.

All that being said, the likely protracted debate process in Parliament, owing to the brevity of the implications for the private housing sector, would imply that further amendments are pending in navigating and diminishing some of the issues mentioned in the government’s welcomed bid to address the sector’s current power imbalances.

Article written by Aqua Koroma