09/12/2023 0 Comments

1. US Senator says Bitcoin mining could boost energy grid resilience

Texas Senator Ted Cruz has voiced support for Bitcoin mining operations in the U.S., emphasizing its potential to enhance the resiliency of energy grids during times of crisis.

Cruz lauded the beneficial influence of Bitcoin mining on the energy industry, specifically focusing on its positive impact in the Lone Star State. But the former GOP presidential candidate’s endorsement comes at a critical time for Texas, which recently experienced its second-hottest summer on record.

Texas subsequently suffered an energy crisis, exacerbated by the sector’s high electricity consumption. Riot Platforms and other large-scale miners like Marathon Digital Holdings were forced to halt operations during past emergencies, affecting their profitability and sparking debates over their role in the state’s energy landscape.

The state’s power grid operator awarded Riot $31.7 million in energy credits to incentivize the Bitcoin miner to reduce its operations.

Cruz, however, maintains that Bitcoin can play a pivotal role in conserving energy resources. He noted that Bitcoin mining machines can swiftly power down in crisis, effectively becoming emergency reservoirs of power.

He explained that Bitcoin miners’ ability to divert energy resources to essential needs, such as hospitals and homes, makes them necessary.

Positive reactions from Bitcoin advocates

Dennis Porter, CEO of the Satoshi Act Fund, a non-profit organization advocating for favorable Bitcoin mining policies, praised Cruz’s stance on Bitcoin.

Porter further highlighted the growing acceptance of Bitcoin among politicians, describing it as a winning issue. He noted that politicians recognize the potential of aligning with Bitcoin to attract new voters and donors while positioning the U.S. as a leader in innovative technologies.

2. Crypto outflows on the rise as investors bet against Bitcoin

Cryptocurrency markets are seeing a resurgence of bearish sentiment, marked by four consecutive weeks of outflows from digital asset investment products, accompanied by a notable increase in investor interest in short Bitcoin positions.

In its weekly report, CoinShares disclosed that cryptocurrency investment products experienced outflows of $59 million over the past week. This adds up to $294 million in outflows over the last four weeks, equating to 0.9% of the sector’s total assets under management (AUM).

On the other hand, investors piled heavily into the short-Bitcoin (BTC) investment products. Per CoinShares, these products saw their single most significant inflow since March, with inflows worth $15 million.

The negative sentiments become more pronounced when considering the trading volume of crypto investment products. According to the data, trading volumes dropped significantly by 73% to just $754 million from the $2.8 billion recorded in the prior week.

Bitcoin leads outflows

Per the report, Bitcoin took the most hit with outflows worth $69 million last week, bringing its month-to-date flows to $72.4 million.

BTC investment products have been experiencing a bearish streak since the U.S. Securities and Exchange Commission (SEC) delayed its decision on the avalanche of spot BTC exchange-traded fund (ETF) applications before it. While Grayscale scored a pivotal victory that renewed hope of an SEC approval, investors have mainly remained cautious.

Meanwhile, other assets like Ethereum (ETH) and Solana (SOL) recorded outflows of $4.8 million and $1.1 million, respectively.

This outflow brings ETH’s flows to a negative of $108m, representing 1.6% of Assets Under Management. CoinShares stated that this flow trend shows that ETH is the “least loved digital asset amongst ETP investors this year.”

On the other hand, altcoins like XRP continue to record inflows, with last week’s flow reaching $700,000.

Across countries, Germany took the most hit while Canada and the United States followed closely. Germany recorded $20 million in outflows, while Canada and the United States saw $17.6m and $12.3 million, respectively.

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3. Apocalypse POW: Bitcoin and the end of days

Annihilation commencing. Whether through poorly conceived boot up instructions to a novel AI, a global war between desperate nation states, or the final rug pull of our fragile ozone layer – the end of the world hasn’t felt this tangible since school children ducked and covered under desks in the nuclear psychic ashes of the post-WW2 era. Eschatological preachers now claim the end times without needing the Mayan calendar on hand to back them up, with the Covid pandemic still a livid scar on the fragile socially-driven economies that make up our global village.

When everything is gone, what will remain? For doomsday preppers, tech enthusiasts, and hedge fund managers making the biggest hedge of all – the answer is crypto, in particular Bitcoin, with its time-tested Proof of Work (PoW) economics. But why? Why in a world of scavengers and sawn-off shotguns would the world’s largest decentralised ledger have any use at all? The answer breaks down into two parts: what Bitcoin is, and what it has gone on to narratively represent in the global economic consciousness.

Bitcoin, to date, has performed excellently in the face of macro-economic squalls. Its birth, remember, was the result of a crisis. Nakamoto’s original zeal was born out of the horror felt seeing state treasuries around the world, following the UK Chancellor Alistair Darling’s lead, massively devaluing their fiat currencies in order to plug the liquidity crisis in the global banking system – and in doing so, playing god with the value distribution among the societies they were elected to lead.

The average citizen saw their life savings reduced dramatically to cover the losses of the irresponsible and the criminal. A system the public had played along with, and paid into, was altered to maintain the status quo and entrench wealth inequality in every aspect of society. Bitcoin has always been, in effect, an alternative to ‘when things go wrong’.

And so it has continued to prove. In Venezuela, Zimbabwe and Turkey, whose economies and national currencies continue to struggle, crypto ownership is on the rise. In Russia and Ukraine, where war rages, crypto is seen as a safe haven. In both cases, Bitcoin is a global asset, supported by a network that reaches far beyond any locality, even one the size of a country. Crypto’s most recent bull run happened against the backdrop of a global pandemic. If a pillar in the current system fails, Bitcoin rises on the back of it. It currently sits pretty as the ultimate ‘out of context’ asset, a decentralised, deracinated system that works no matter what happens in a country. Should a state’s central systems architecture suffer a cyberattack, the ledger still runs. If global warming floods a nation’s land, destroying its economy, value held in BTC by its citizens will remain. And if a country rampantly inflates its currency to protect its merchant class…oh wait, that one already happened. Bitcoin will always function and have value, oftentimes regardless of which government rises and falls and – crucially – irrespective of how cold they are towards it. Then again, if the immense industrial power of the United States was ploughed into upkeep of the Bitcoin ledger – this changes things. The brute hash force an entity like the U.S could bring to bear if committed would very quickly upend the current Bitcoin dynamic, and force others to participate for fear of them seizing the network for themselves.

Bitcoin’s censorship resistance and pseudonymous security means that as an exchange of value, it remains viable even if a dictatorship were to rise and attempt to stamp it out or seize control. There is nothing a small nation state could do to affect the global integrity of the network, but a fast acting U.S or China with its energy reserves intact could threaten the network without adequate competition – competition that would be sorely lacking in the result of a massive network disruption event. Despite BTC’s global network status, nodes are still far too heavily concentrated in specific areas of the world and held by too few operators, and if one major miner survives and the rest don’t – total seizure of the network is on the table, albeit the inevitable hard fork designed to maintain the time-space continuum of the ledger.

Even in total blackout, however, as long as a few nodes exist somewhere, the network will sustain. It might require a hard fork to reduce difficulty (the original BTC timeline conceived with Moore’s law fully in mind and probably not expecting computing power to fall), but even in the event of a truly global apocalypse – the Bitcoin network should survive. With the use of the Bitcoin satellite network, SMS services being developed, even radio, plus the ability to make offline transactions – even internet outage wouldn’t spell the death of the ledger. Certainly not any more than it would spell the death of every major banking and financial institution.

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