Narrative Goldmine

Bitcoin Value Proposition

32 min read

Properties

Type
  • Note
Status
  • stable
Generated
  • by: process:vault-migrate/1.0 · at: 2026-09-22T12:41:58.55607396Z

High level analysis

  • It seems possible that eight value propositions are therefore emerging:
    • Bitcoin the speculative asset (or greater fool bubble [66]). Nations such as the USA, who own 30% of the asset have bid up the price of the tokens during a period of very cheap money, and this has led to a high valuation for the tokens, with a commensurately high network security through the hash rate (mining). This could be a speculative bubble, with the asset shifting to one of the other valuations below. There is more on this subject in the money section later.
    • Gambling, the “Financial nihilism use case”, is well explained by Travis Kling in a twitter thread. “Number go up” is clearly the predominant use case at this time for both Bitcoin and crypto. Kling’s analysis paints a vivid picture of the current socio-economic climate, where financial nihilism—stemming from stifling cost of living, dwindling upward mobility, and an untenable ratio of median home prices to median income—fuels speculative gambling within the crypto space. This atmosphere encourages individuals to invest in highly speculative assets with the slim hope of substantial returns, akin to purchasing lottery tickets. In this context, Bitcoin and other cryptocurrencies become vehicles for extreme risk-taking, driven not by a belief in their fundamental value but by the desperation and desire for a quick financial win in a system perceived as increasingly rigged against the average person. Kling’s observations suggest that for many, the gamble on cryptocurrencies is less about informed investment and more about the desperate swing for the fences, embodying a form of financial nihilism that sees traditional avenues of wealth accumulation as blocked or insufficient. This speculative gamble is further fueled by the allure of significant gains, regardless of the inherent risks or the long-term sustainability of such investments.
    • twitter link to the render loading below https://twitter.com/Travis_Kling/status/1753455596462878815
    • Bitcoin the (human) monetary network, and ‘emerging market’ value transfer mechanism. This will be most useful for Africa (especially Nigeria), India, and South America. There is no sense of the “value” of this network at this time, but it’s the aspect we need for our collaborative mixed reality application. For this use the price must simply be high enough to ensure that mining viably secures the network. This security floor is unfortunately a ‘known unknown’. If a global Bitcoin monetary axis evolves (as in the Money chapter later) the network would certainly require a higher rate than currently, suggestive of a higher price of token to ensure mining [67].
    • Bitcoin as an autonomous AI monetary network. In an era where AI actors perform tasks on behalf of humans in digital realms such as cyberspace, these AI actors will require a reliable and efficient means of transaction. AI agents can perform, transact and negotiate, and execute work contracts in near real-time. For this use, the primary requirement is not a high token price, but rather a high level of network security and scalability that can support an enormous volume of transactions.
    • The Lightning Network of Bitcoin might be a starting point but the robustness of the system, against potential AI exploits, is yet to be confirmed. As AI systems become more complex and autonomous, there is an increasing need for decentralized AI governance mechanisms that can prevent the concentration of power and ensure ethical AI development and deployment. Bitcoin can serve as a basis for this, providing a decentralized, transparent, and immutable record of AI decisions and actions. Furthermore, Bitcoin’s proof-of-work consensus mechanism could potentially be adapted to enforce AI adherence to agreed-upon rules or norms. In this context, Bitcoin’s value extends beyond its token price and into its potential contributions to AI governance and ethics.
    • This is Bitcoin as an AI economy. It’s notable that scaling solutions like Cashu and or RGB and Client Side Validation are likely required in addition to more established technologies like Lightning and Similar L2; this technical landscape isn’t quite ready. -
    • Bitcoin as a hedge against future quantum computation. It has been argued that the advent of quantum computers could threaten the security of many existing cryptographic systems. Bitcoin’s open-source nature allows for the integration of post-quantum cryptographic algorithms, safeguarding it against quantum threats. In this sense, investment in Bitcoin might also be seen as an investment in a future-proof monetary network. This assertion depends on the assumption that Bitcoin’s protocol will adapt in time to incorporate such cryptographic advances before quantum computing becomes a real threat to its integrity. The practical implementation of these technologies might see a shift in the network’s dynamics, the hash rate, mining cost, and token value.
    • Bitcoin’s value in terms of ‘sunk opportunity cost’. This refers to the value that could have been generated if the resources invested in a particular activity had been utilised elsewhere. In the context of Bitcoin, this includes the investments made in mining equipment, power, facilities, and the hiring of skilled personnel to maintain the operations. The sunk opportunity cost of Bitcoin can be substantial. It can be argued that the value of Bitcoin must take this cost into consideration, as the resources could have been allocated to other productive sectors or investments [68]. Of course, there remains the infamous sunk cost fallacy, which refers to the tendency of individuals or organizations to continue investing in a project or decision based on the amount of resources already spent, rather than evaluating the current and future value of the investment. This indeed tends to lead to a cyclical boom and bust dynamic in the industrial mining communities. The ultimate fallacy would occur if miners or investors continued to invest in mining equipment and operations solely because of the resources that have already been spent on them, and the asset simply crashes to nothing from here. It’s a shaky justification because it assumes the future is the same as the past. -
    • Bitcoin as a flexible load in power distribution systems, and methane mitigation ‘asset’, and ‘subsidised heater’ for varied applications such as growing and drying. Again there is no price against this, but we can perhaps grossly estimate it at around half the current hash rate if 50% of the network is currently green energy. This would imply a price for the asset roughly where it is now (ie, not orders of magnitude higher or lower). -
    • The 2023 global bank runs have awoken some companies to the risks of access to cash flows in a potential crisis [69]. Access to a small cache (in corporate treasury terms) of a highly liquid & tradable asset could allow continuity of payroll in a ‘24/7’ global context. This could avoid or at least mitigate the panic which ensues in companies when banks are forces to suddenly wind up their operations.
    • Amusingly Ben Hunt suggests in an online article that the true value of Bitcoin can be couched in terms of it’s value simply as ‘art’. He posits that at this time the narrative is simply so seductive and powerful that people (being people) are choosing to value their involvement in the economics of the space as they might a work of art. It’s a fascinating idea, and intuitively, probably it’s right.

Case studies

Demand Paradox

  • Despite the common perception of energy scarcity, the energy sector often grapples with a shortage of demand rather than supply. This stems from the design of electrical grids, which are built to accommodate peak usage periods, leading to significant underutilisation during off-peak hours. This inefficiency results in suboptimal returns on infrastructure investments and economic losses.
  • Bitcoin mining emerges as a unique solution to this demand paradox. Due to its inherent flexibility, mining operations can dynamically adjust their energy consumption based on realtime grid conditions and market prices. This adaptability stems from the interruptible nature of the mining process, allowing miners to seamlessly pause and resume operations without incurring substantial losses. Consequently, miners can function as a responsive load, absorbing excess energy during periods of low demand and curtailing consumption during peak demand, thereby optimising grid utilisation.

Enhancing Grid Stability and Balancing

  • The ability of Bitcoin miners to rapidly modulate energy consumption positions them as valuable partners for grid operators. During periods of peak demand or grid instability, such as those caused by extreme weather events or unforeseen power plant outages, miners can curtail their operations and sell power back to the grid. This rapid response capability, unmatched by other energy-intensive industries, contributes significantly to grid stability and resilience, mitigating the risk of blackouts and ensuring a reliable energy supply.

Fostering Renewable Energy Integration

  • Bitcoin mining also plays a pivotal role in accelerating the integration of renewable energy sources like wind and solar power. The location-agnostic nature of mining operations allows them to be established in close proximity to renewable energy generation sites, even in remote locations with limited grid connectivity. This provides a consistent and reliable demand source for the often intermittent output of renewable energy, enhancing project viability and incentivising further investment in sustainable energy solutions. For instance, in the Panhandle region of Texas, where transmission infrastructure constraints limit the evacuation of generated renewable energy, Bitcoin miners are absorbing surplus power and contributing to the economic sustainability of renewable energy projects.

Facilitating Environmental Remediation

  • Furthermore, Bitcoin mining offers potential solutions for environmental challenges. A notable example is the utilisation of mining operations to power specialised plants designed to consume waste coal, a significant environmental hazard. By providing a stable and predictable demand for electricity, Bitcoin mining operations enable the economic viability of these plants, facilitating the remediation of polluted land and water tables. Stronghold Digital Mining, for instance, operates in Pennsylvania, where they utilise waste coal to generate electricity for Bitcoin mining while simultaneously contributing to environmental cleanup efforts. This is heavily contested.

Empowering Off-Grid Communities

  • In regions with limited or no access to the traditional electrical grid, Bitcoin mining can serve as a catalyst for electrification and development. By increasing the base load demand on minigrids, which often struggle with low utilisation and financial unsustainability, mining operations improve their economic viability. This enables minigrid operators to reduce energy costs for local communities and expand access to electricity, fostering positive social and economic outcomes. Gridless, a company operating in Africa, exemplifies this approach by deploying Bitcoin mining operations to enhance the financial sustainability of mini-grids and empower rural communities.

A Converging Future

  • The trajectory of Bitcoin mining and the energy sector suggests a future of increased collaboration and integration. Vertical integration, wherein miners become energy producers or energy companies engage in mining, holds significant potential for both sectors. This convergence would optimise energy utilisation, enhance grid stability, and drive innovation in both industries. As Bitcoin mining continues to evolve, its role in shaping a sustainable and efficient energy landscape will become increasingly prominent.

Congo

Gridless

  • In the course of researching this book we see most opportunity for change in Africa. As an example the company ‘Gridless’ began by examining different energy sources in Africa and exploring opportunities for larger energy generation and grid-connected energy. However, they found that the real benefit of gridless energy was in providing energy to places that were not well connected and did not have a good grid. They contacted mini-grid providers all over East and Southern Africa to learn about their problems. A mini-grid is defined as a project that generates energy under 2 megawatts, often under 1 megawatt. They discovered that these providers had to overbuild for the community, resulting in stranded energy. The company found a way to utilize this stranded energy by placing Bitcoin miners on it and paying the mini-grid providers for it. They tested this method and found it to be successful. Additionally, they implemented a system to automate and remotely turn off the power during periods of high usage to make the grid more efficient and sustainable. This solution provided a win-win-win situation for the company, the mini-grid providers, and the communities they served.
  • The company utilizes Bitcoin miners to create space for other activities and to increase access to affordable energy for communities and small businesses. As energy usage increases in the community, the company decreases their usage of miners and moves them to other locations. This is outlined in their contract s with partners. The company is currently testing this method and has encountered some challenges, such as losing internet connection at one of their sites and poor rainfall affecting the amount of water flowing into turbines. They have found that building a lean operation with flexible and adaptable staff is crucial, as well as creating processes and systems to manage variables. The company also faces unique environmental factors such as lightning strikes, which require them to turn off their operations temporarily.
  • Gridless suggest that those who are critical of opportunities like this often come from a place of privilege and do not understand the consequences of their actions in places like Africa where access to electricity and other resources is limited. They argue that these critics, who are often from the West, have blinders on and cannot see the impact of their actions on a global scale. They suggest that more people need to travel and have diverse experiences in order to change their perspective on Bitcoin and its potential to support human flourishing in underprivileged areas. They also mention that gridless plans may become a case study for the positive impact of Bitcoin mining on economic opportunities, particularly in rural Africa.
  • Stranded: How Bitcoin is Saving Wasted Energy and Expanding Financial Freedom in Africa

Chinese Belt and Road Expansion in Ethiopia -

  • Last spring saw the appearance of cargo containers near substations linked to the Grand Ethiopian Renaissance Dam. These containers, filled with high-powered computers, signalled the arrival of Chinese Bitcoin miners, seeking new grounds post-Beijing’s expulsion.
  • Ethiopia has emerged as a significant player in Bitcoin mining, largely due to the influx of Chinese companies after China’s ban on the industry in 2021. This growth positions Ethiopia as a new hub for Bitcoin mining, potentially rivaling Texas’s electricity capacity. The country has become one of the world’s top recipients of Bitcoin mining machines, with a state power monopoly striking power supply deals with 21 Bitcoin miners, the majority of which are Chinese.
  • twitter link to the render loading below https://twitter.com/addisstandard/status/1758384767173538291
  • The country offers ultra-low electricity costs, attributed to its renewable energy sources, making it an attractive destination for Bitcoin miners. This is further supported by the construction of the $4.8 billion Grand Ethiopian Renaissance Dam, which is expected to power these mining operations.
  • Despite banning cryptocurrency trading, Ethiopia greenlighted Bitcoin mining operations starting in 2022. This move is seen as part of Ethiopia’s strategy to foster closer relations with China and to leverage the mining sector for economic gains amid global regulatory scrutiny over the energy-intensive nature of Bitcoin mining. -
  • Many Chinese companies have contributed to the construction of the Grand Ethiopian Renaissance Dam. This collaboration underscores the deepening ties between Ethiopia and China, with the dam playing a crucial role in powering Bitcoin mining operations that could offer a new lease on life for Chinese miners looking to regain their footing in the sector. -
  • However, the benefits and costs of welcoming miners are difficult for regulators to calculate. While it can be a great source of earnings, miners can strain electricity grids during times of peak demand. Countries like Kazakhstan and Iran have faced challenges after initially welcoming the industry due to its heavy energy consumption. -
  • Russian Bitcoin mining firm BitCluster has constructed a massive 120MW mining farm in Ethiopia, powered by the Grand Ethiopian Renaissance Dam. This project signifies a move towards sustainable and eco-friendly Bitcoin mining, showcasing the potential of harnessing renewable energy for such operations. -
  • Additionally, the concept of clean Bitcoin mining to strengthen the economy is being explored. Ethiopia, with its abundant renewable energy resources, could potentially add between 4 billion every year to its GDP by dedicating its excess energy to Bitcoin mining activities. This approach would not only mitigate the risks associated with dollarized economies but also provide a sustainable model for cryptocurrency mining.

Machankura

  • Mobile phone users in Nigeria, Tanzania, South Africa, Kenya and five other African countries can now send and receive bitcoin without a smartphone or Internet connection. Just a basic feature phone and text code will suffice, thanks to a digital wallet from software developer Ngako. No internet connection and low power handsets means using SMS and the Lightning network, with the phones SIM acting as the wallet private keys.

El Salvador

  • El Salvador became the first country in the world to adopt Bitcoin as legal tender. El Salvador’s adoption of Bitcoin was a historic moment in the world of Bitcoin and was met with a mix of excitement and scepticism. On June 9, 2021, the country’s Legislative Assembly approved a bill introduced by President Nayib Bukele to make Bitcoin a legal tender alongside the US dollar, which has been used as the country’s official currency since 2001.

  • President Bukele, who has been a vocal proponent of Bitcoin, stated that the adoption of Bitcoin was a way to promote financial inclusion and stability in the country, where more than 70% of the population is unbanked or underbanked. In a tweet, he stated, “Bitcoin will have the same value as the US dollar. We will support both. They will have the same power of purchase and will be accepted in the same way.”

  • The move was met with a lot of media attention and reaction, with some praising it as a bold and innovative step, while others raised concerns about the volatility of Bitcoin and their potential impact on the economy. President Nayib Bukele himself has faced criticism for his handling of political power and some of his actions have raised concerns about the potential for abuses of power. In 2021, President Bukele faced widespread criticism for his handling of the legislative process and his use of the military to secure the Legislative Assembly building during a political standoff with lawmakers. This led to allegations of intimidation and a violation of democratic norms, and raised concerns about his willingness to use force to achieve his political goals. Additionally, President Bukele has faced criticism for his use of social media to communicate with the public and his tendency to bypass traditional media outlets, which has raised concerns about the potential for censorship and the manipulation of information. With that said he seems much loved in the country, and the previously appalling safety statistics of the nation have radically improved.

  • In addition to the adoption of Bitcoin as legal tender, El Salvador has also proposed the issuance of a Bitcoin-backed bond to finance various public works projects and promote the use of Bitcoin. The bond would be denominated in Bitcoin and would allow investors to directly participate in the country’s development while also supporting the growth and adoption of Bitcoin.

  • Another ambitious project that has been proposed by President Bukele and his administration is the creation of “Bitcoin City”, a new city that would mine Bitcoin at the base of a dormant Volcano, and offer considerable tax benefits to holders. The city would serve as a hub for innovation and a showcase for the potential of Bitcoin, and would offer a wide range of services, including housing, healthcare, education, and entertainment.

  • There has been a significant increase in the adoption of Bitcoin in El Salvador (to around 12%) and apparently increased inward investment to the country. Many businesses, both small and large, have started accepting Bitcoin as a form of payment, and there has been a growing interest in Bitcoin among the general population. Additionally, the government has been actively promoting the use of Bitcoin through various initiatives. There have also been efforts to educate the public about Bitcoin and its potential benefits, including increased financial security and reduced transaction fees compared to traditional banking systems.

  • Overall, the adoption of Bitcoin in El Salvador has been positive, far outstripping the number of people in the country with traditional bank accounts, and has the potential to greatly impact the country’s economy and financial sector. However, it is important to note that there are still challenges to overcome, such as regulatory and infrastructure limitations, as well as ongoing concerns about the volatility and stability of Bitcoin.

  • Somewhat surprisingly the IMF have de-escalated their previously highly critical assessment of the move, toward a more concerned and conciliatory tone: [“Bitcoin’s risks should be addressed. While risks have not materialized due to the limited Bitcoin use so far---as suggested by survey and remittances data---its use could grow given its legal tender status and new legislative reforms to encourage the use of crypto assets, including tokenized bonds (Digital Assets Law). In this context, underlying risks to financial integrity and stability, fiscal sustainability, and consumer protection persist, and the recommendations of the 2021 Article IV remain valid. Greater transparency over the government’s transactions in Bitcoin and the financial situation of the state-owned Bitcoin-wallet (Chivo) remains essential, especially to assess the underlying fiscal contingencies and counterparty risks.“]

  • In terms of economic impact, it is still too early to determine the full effects of the adoption of Bitcoin in El Salvador. However, it is expected to have a positive impact on financial inclusion and stability, as well as reducing the reliance on traditional banking systems. The use of Bitcoin has the potential to lower transaction fees and increase financial security, which could be particularly beneficial for those who do not have access to traditional banking services.

  • Overall, the adoption of Bitcoin in El Salvador marks a significant step forward in the mainstream acceptance and adoption of Bitcoin and has the potential to set a precedent for other countries to follow. However, it is important to monitor the situation and assess the long-term impacts on the economy and financial sector.

  • Their official Bitcoin page shows the accumulation.

Emerging use cases (AI holding text)

Innovative Pilot Project Using Landfill Methane Emissions for Powering Data Processing

Summary

  • Introduction
  • Vespene Energy, a biogas renewable energy developer, and Viridi Energy, a renewable natural gas platform, have launched a pilot project at a municipal landfill in Marathon County, Wisconsin.
  • The project involves converting landfill methane gas into electricity for various on-site uses, including data processing.

Project Details

  • Technology and Process
    • Utilizing highly-efficient energy generation equipment, the project transforms methane, a natural landfill byproduct, into electricity.
    • This electricity is used for several on-site applications, notably for powering data centers.
  • Environmental and Economic Impacts
    • The initiative aims to reduce greenhouse gas emissions.
    • It also generates revenue, which supports Viridi’s investment in constructing a state-of-the-art Renewable Natural Gas (RNG) facility at the landfill.
    • The RNG facility, expected to be fully operational by the second half of 2024, will produce the equivalent of three million gallons of gasoline annually.

Key Statements

  • Adam Wright, Vespene Energy
    • Emphasized the economic and scalability benefits of Vespene’s technology in monetizing landfill gas while reducing emissions.
  • Dan Crouse, Viridi
    • Highlighted the immediate environmental benefits and the role of the project as a bridge while the RNG facility is being built.

Larger Context

  • Methane Emissions and Landfill Management
    • Landfill decomposition generates methane, a potent greenhouse gas.
    • Many U.S. landfills lack proper methane management systems.
    • Recent studies suggest that landfill methane emissions might be significantly higher than previously estimated.
  • Challenges in Traditional Energy Projects
    • Traditional grid-connected landfill energy projects face high costs and long lead times.
    • Over 70% of the U.S.’s approximately 2,600 municipal landfills lack a viable use for the methane they produce.

Innovative Solutions

  • Vespene’s Unique Approach
    • Vespene’s technology allows for an alternative method to destroy emissions, turning a challenge into a revenue source.
    • The approach provides a short-term revenue stream and a transition to grid interconnection for participation in EPA’s Renewable Fuel Standard Program.

Title: Environmental Impact Comparison: Bitcoin, Gold, and Banking

Introduction

  • This article presents an analysis by Hass McCook comparing the environmental impacts of Bitcoin, gold mining, and the banking industry.
  • The comparison aims to provide a more nuanced understanding of Bitcoin’s environmental impact relative to other industries.

Bitcoin’s Environmental Impact

  • Energy Consumption: Bitcoin consumes about 120 TWh annually, which is 0.25% of the energy wasted globally each year or 0.5% of the world’s grid electricity.
  • Carbon Emissions: Using the global average grid figure of 0.6 tons of CO2 per kWh, Bitcoin mining emits approximately 70 Mt of CO2 annually.
  • Renewable Energy Trends: There is a trend towards Bitcoin mining using a combination of stranded, waste, and renewable energy sources.

Gold Mining’s Environmental Impact

  • Production: In 2020, around 3500 tons of gold were mined and 1300 tons were recycled.
  • Energy Use and CO2 Emissions: Mining and refining each kilogram of gold for jewelry uses about 79.9 MWh and produces up to 35 tons of CO2.
  • Total Impact (2020): Gold mining industry used 265 TWh of energy and produced 145 Mt of CO2.

Banking Industry’s Environmental Impact

  • Energy Consumption: In 2014, the banking system (including branches, ATMs, and currency production) was estimated to use 660 TWh. Assuming a 1-2% annual increase, this could be around 700 TWh.
  • Carbon Emissions: The banking system is estimated to produce about 400 Mt of CO2 annually.

Comparative Analysis

  • Scope of Comparison: The article notes the difficulty in making direct comparisons due to the different scopes and impact areas of each industry.
  • Relative Impact: Bitcoin’s consumption and emissions are less than half of the gold mining industry and less than one-fifth of the banking sector.
  • Energy Use vs Pollution: The article distinguishes between energy use and pollution, emphasizing the importance of considering both aspects in environmental impact assessments.

Conclusion

Title: Bitcoin Mining Supporting Renewable Energy Development

Introduction

  • A new study led by Cornell researchers proposes using Bitcoin mining to support the development of renewable energy projects.
  • It focuses on the precommercial phase of wind and solar farms, suggesting potential profits through Bitcoin mining.

Study Details

  • Publication: The study, titled “From Mining to Mitigation: How Bitcoin Can Support Renewable Energy Development and Climate Action,” was published in ACS Sustainable Chemistry & Engineering.
  • Authors: Conducted by Apoorv Lal (doctoral student) and Fengqi You (Professor in Energy Systems Engineering at Cornell), with contribution from Jesse Zhu (Western University, Canada).

Key Findings

  • Profitability in Texas: Texas, with 32 planned renewable projects, could see combined profits of $47 million from Bitcoin mining.
    • The Aktina Solar and Roseland Solar Projects, each with 250 MW capacities, could gain a maximum profit of $3.23 million.
    • The Western Trail Wind project, with 367 MW, showed potential profitability of $2.65 million.
  • Performance in Other States: California ranked second in profitability. Colorado, Illinois, Iowa, Nevada, and Virginia also showed potential despite fewer installations.
  • Energy Availability and Location: The study emphasizes the importance of steady energy availability and strategic location of mining farms to maximize productivity.

Policy Recommendations

  • Incentives for Clean Mining: Proposes economic rewards for environmentally responsible cryptocurrency mining, like carbon credits for avoided emissions.
  • Profit Reinvestment: Suggests policies encouraging miners to reinvest profits into infrastructure development, creating a cycle for renewable energy expansion.

Environmental Considerations

  • Mitigating Environmental Costs: Acknowledges environmental costs of cryptocurrency mining, like metal depletion and hardware obsolescence.
  • Potential for Positive Impact: Indicates ways to mitigate some environmental costs of cryptocurrency mining and promote renewable energy investments.

Conclusion

Title: Bitcoin Mining’s Increased Renewable Energy Usage

Introduction

  • A report released on January 18, 2024, by ESG analyst Daniel Batten highlights a significant surge in sustainable energy use in Bitcoin mining.
  • The report is based on data from the BEEST model and analyzes publicly available information.

Key Findings

  • Renewable Energy Usage: The sustainable energy usage in Bitcoin mining has reached 54.5%, a 3.6% increase over 2023.
  • Methane Mitigation: Off-grid Bitcoin miners are using methane emissions for electricity generation, reducing environmental harm.
  • Emission Mitigation: The Bitcoin network mitigated 7.3% of its emissions without relying on offsets, a notable achievement across industries.
  • Expansion of Renewable Mining: The expansion includes Tether’s hydro mining in Latin America and more methane-mitigating mining sites.
  • Geographical Shift: Following mining bans in China and strict regulations in Kazakhstan, miners moved to regions with greener grids in North America or sustainable off-grid locations.
  • Improvement in Emission Intensity: On-grid Bitcoin miners have seen a 29% improvement in emission intensity compared to 2021.

Implications

Title: The Advantages of Bitcoin

Introduction

  • Bitcoin.com’s article explores the multiple benefits of Bitcoin, emphasizing its potential to revolutionize various aspects of finance and personal freedom.

Key Benefits of Bitcoin

  • Permissionless Nature: Bitcoin allows transactions without needing permission from any authority, enhancing financial independence.
  • Immunity to Seizure: Being decentralized, Bitcoin assets are less susceptible to seizure by governments or other entities.
  • Censorship Resistance: Bitcoin transactions cannot be censored, ensuring freedom of transactions.
  • Decentralization: Bitcoin operates on a decentralized network, reducing reliance on central authorities.
  • Limited Supply: Bitcoin has a capped supply of 21 million coins, safeguarding against inflation.
  • Open Source: The open-source nature of Bitcoin fosters transparency and collective development.
  • Anonymity and Privacy: Bitcoin provides a degree of anonymity in transactions.
  • Promoting Democracy: By decentralizing control over money, Bitcoin can potentially support democratic movements.
  • Push System for Transactions: Bitcoin operates on a push system, giving users control over their transactions.
  • Real Money Qualities: Bitcoin exhibits properties of real money like divisibility, portability, and durability.
  • Accessibility: Bitcoin is accessible to anyone with an internet connection.
  • Transparency: The blockchain technology behind Bitcoin offers transparency in transactions.
  • Freedom: Overall, Bitcoin is presented as a tool for financial and personal freedom.

Conclusion

Title: Bitcoin’s Adoption in El Salvador: A Boon for the Unbanked

Introduction

  • El Salvador has become the first nation to formally adopt Bitcoin as legal tender.
  • This move could significantly benefit the unbanked population in the country.

Background

  • Legal Status of Bitcoin Globally: Bitcoin is legal in most nations, tolerated in many, and outlawed in a few.
  • El Salvador’s Decision: The country’s adoption of Bitcoin marks a significant change in its global reputation.

Bitcoin and Remittances

  • Economic Dependence on Remittances: A large portion of El Salvador’s GDP comes from remittances sent by citizens working abroad.
  • Current Transfer System: Traditional methods like Western Union are centralized, regulated, and often inconvenient for those in rural areas.
  • Bitcoin as an Alternative: Cryptocurrencies like Bitcoin enable easy fund transfers via mobile phones, bypassing the need for physical transfer services.
  • Direct Use for Goods and Services: Bitcoin can be used just like the US dollar in El Salvador for transactions.
  • Benefits for the Unbanked: About 70% of El Salvador’s citizens lack basic bank accounts. Bitcoin provides a secure way to save and potentially earn interest without a traditional bank account.

Challenges and Risks

  • Volatility of Bitcoin: The cryptocurrency’s price is highly volatile, posing risks for those relying on it as a primary asset.
  • Control by “Whales”: Large holders of Bitcoin could significantly influence its market price.
  • Deflationary Nature: Unlike traditional currencies, Bitcoin’s supply is capped, which could lead to falling prices over time.
  • Environmental Concerns: Bitcoin mining’s environmental impact is a factor to consider in its adoption.

Alternatives and Considerations

  • Stablecoins as an Option: Stablecoins like Tether, pegged to the US dollar, offer the benefits of cryptocurrency without the volatility.
  • Economic and Social Implications: The adoption of Bitcoin in El Salvador could have profound economic and social impacts, especially for the unbanked population.

Conclusion

Title: Bitcoin and the Inflation Crisis in Argentina

Introduction

  • The article from Cointribune discusses Argentina’s surging inflation rate, reaching 100% in February 2023, and the increasing adoption of Bitcoin as a response.

Argentina’s Economic Situation

  • Inflation Surge: Argentina’s inflation rate hit 100%, the highest since 1991.
  • Impact on Currency: The Argentine peso’s value is rapidly declining.
  • Government Statistics: The Consumer Price Index (CPI) rose by 13.1% since the year’s start, but the government’s data reliability is questioned.
  • Public Struggle: Citizens like Irene DeVita express the hardships faced due to the collapsing currency.

Bitcoin’s Role

  • Store of Value: Despite recent falls against the U.S. dollar, Bitcoin has maintained better value against the peso.
  • Protection Against Inflation: Bitcoin is increasingly viewed as a hedge against inflation, attracting individuals and companies.
  • Global Adoption: High inflation countries, like Nigeria and Argentina, are turning to Bitcoin. Chainalysis ranks Turkey and Argentina just below Nigeria in cryptocurrency adoption.
  • Monetary Sovereignty: Amidst a banking sector liquidity crisis, Bitcoin is seen as a bastion for monetary sovereignty.

Conclusion

Title: U.S. Treasury Report on DeFi: Fiat Still Preferred by Criminals Over Crypto

Decentralized Finance (DeFi) Overview

  • DeFi is decentralised finance, and might only exist because of partialregulatory capture of Bitcoin. If peer-to-peer Bitcoin secured yield andloans etc were allowed then it seems unlikely that the less secure andmore convoluted DeFi products would have found a footing. DeFi has beencommonplace over the last couple years, growing from essentially zeroto $100B overthe last two or three. It enables trading of value, loans, and interest(yield) without onerous KYC. If Bitcoin’s ethos is to develop at a slowand well checked rate, and Ethereum’s ethos is to move fast and breakthings, then DeFi could best be described as throwing mud and hopingsome sticks. A counter to this comes from Ross Stevens, head of NYDigwho saysit“The concept of decentralized finance is powerful, noble, and worthyof a lifetime of focused effort.”. This may be true in principle, butcertainly isn’t the case as things stand.
  • According to a recent JPMorgan industry insider report, around 40% ofthe locked value on the Ethereum network is DeFi products. It ischaracterised by rapid innovation, huge yields for early adopters,incredibly high risk, and a culture of speculation which leads toproducts being discarded and/or forked into something else in thepursuit of returns. Ethereum also allows miners of the blockchain tocheat the system.piet2022extracting
  • Much of the space is now using arcane gamification of traditionalfinancial tools, combined with memes, to promote what are essentiallypyramid schemes. Scams are very commonplace. Loss of funds though codeerrors are perhaps even more prevalent.
  • The Bank for International Settlements have the stated aim of supportingcentral banks monetary and financial stability. Their 2021 report onDeFi noted the followingkey problems.
    • ..a “decentralisation illusion” in DeFi due to the inescapable need for centralised governance and the tendency of blockchain consensus mechanisms to concentrate power. DeFi‘s inherent governance structures are the natural entry points for public policy.
    • DeFi’s vulnerabilities are severe because of high leverage, liquidity mismatches, built-in interconnectedness and the lack of shock-absorbing capacity.
  • These are two excellent and likely true points. European Parliament VicePresident Eva Kaili made this samepointat the World Economic Forum, so clearly regulators are aware of the lackof meaningful distribution in DeFi. In addition access to DeFi is‘usually’ through web.0 centralised portals (websites) which are just asvulnerable to legal takedown orders as any other centralised technology.Given who the major investment players seem to be in this ‘new’financial landscape it seems very likely that regulatory capture iscoming. The seemingly unironic trend towards CeDeFi (centraliseddecentralisedfinance)illustrates this.
  • With this said, it is notable that in the wake of the FTX debacle andunwinding of counter party risk across the whole extended ecosystem, itis DeFi which seems to have fared best, suggesting there might be aviable product here in the end. Circle and DeFi infrastructure labUniswap have recently published a paper which asserts that use of thetechnology could de-risk foreign exchange markets.Adams2023 It feelsregrettably close to the endless broken promises of ‘blockchain forremittance’ which have circulated for adecade.sood2019implementation; @bechtel2022future They estimate thatit may be possible to cut the costs of cross border remittances by 80%This is a big claim and time will tell.
  • There are more recent DeFi on Bitcoin contenders, but these arevulnerable to the sameattacksand problems in the main.
  • There is likely no use for this technology for small and medium sizedcompanies on the international stage, at least until the proposed Forexintegrations appear. It is far more likely that reputation would bedamaged. It’s possible to getloans(by extension business loans) out of such systems at relatively lowrisks. The best ‘distributed’ example of this is probably Lend, atHODLHODL, which is a peer-to-peer loanmarketplace. AtomicFinanceleverages discrete log contractsamongst other more edge uses of Bitcoin, to provide financial serviceswithout custody of the users’ Bitcoin. It is possible to make theargument that between hodlhodl loans, taro asset issuance, boltzexchange, and lightning escrow that all of the “classes” of DeFi smartcontract can be serviced already by Bitcoin alone, but this tech isfringe at best.
  • Many more custodial options exist for loans (CASA, Nexo, Ledn, Abraetc). These might not really fit the definition of DeFi at all. Many ofthese centralised DeFi companies (CeDeFi) have imploded in the wake ofthe Terra/Luna collapse since they were generating yield from oneanother and ultimately Terra. The maxim seems to be that if you don’tknow how the system is monetised then you are likely the product. Asmentioned, DeFi itself weathered the recent market turmoil comparativelywell and it’s possible that as these products evolve they may be usefulto companies who have Bitcoin and stablecoins on their balance sheetlong term. Dan Held maintains an onlinespreadsheetwhich compares these products.
  • Functionality: DeFi aims to automate and make traditional finance more accessible through decentralized applications (dApps).
  • Capabilities: These tools enable activities like loans and interest earning on savings, without middlemen and while maintaining user privacy.
  • Risks and Challenges: DeFi tools are experimental and have been prone to hacks and misuse for laundering money.

Case Study: Tornado Cash

  • Use by North Korean Hackers: The Lazarus Group reportedly used Tornado Cash, a coin mixer, to launder over $96 million after hacking the Harmony Bridge protocol.
  • Controversial Sanctions: The Treasury Department sanctioned Tornado Cash in August, raising debates over financial privacy rights.

Key Findings from the Treasury Report

  • A report by the U.S. Treasury Department addresses the use of decentralized finance (DeFi) by criminals, highlighting that fiat currency remains the primary medium for illegal activities.
  • Criminal Use of DeFi: The report acknowledges that ransomware attackers, thieves, scammers, and others are exploiting DeFi services for transferring and laundering illicit proceeds.
  • Compliance Issues: Many DeFi applications fail to adhere to U.S. anti-money laundering and countering the financing of terrorism (AML/CFT) regulations.
  • Fiat Currency Usage: Despite the rise of crypto in illegal transactions, the report notes that money laundering, proliferation financing, and terrorist financing predominantly occur with fiat currency or traditional assets, not virtual ones.

Treasury’s Approach to Crypto and DeFi

  • Improving AML/CFT Framework: The Treasury is working to refine its approach to AML/CFT in the crypto world.
  • Engagement for Responsible Innovation: The department plans to collaborate with the private sector to support responsible innovation in DeFi.

Conclusion

Title: Virunga National Park’s Bitcoin Mining Initiative: Conservation Meets Cryptocurrency

Introduction

  • The article discusses Virunga National Park in the Democratic Republic of Congo and its unique approach to conservation through Bitcoin mining.
  • It highlights the park’s efforts to generate revenue and support its conservation activities using renewable energy-powered cryptocurrency mining.

Virunga National Park: Overview

  • Location and Importance: Virunga National Park is located in eastern Congo, known for its endangered mountain gorillas and rich biodiversity.
  • Challenges: The park faces numerous challenges, including militia activity, deforestation, and a lack of consistent government support.

The Bitcoin Mining Initiative

  • Initiation: The park started Bitcoin mining in September 2020, primarily due to the loss of tourism revenue caused by various crises, including kidnappings, Ebola, and the COVID-19 pandemic.
  • Operation: The mining operation is powered by a hydroelectric power station on the mountain, using shipping containers filled with powerful computers.
  • Profit and Use: The proceeds from Bitcoin mining are used to pay park salaries and support infrastructure projects like roads and water pumping stations.

The Role of Emmanuel de Merode

  • Background: Emmanuel de Merode, the director of Virunga National Park, played a pivotal role in initiating the Bitcoin mining project.
  • His Approach: He focuses on building a sustainable economy tied to the park’s resources, aiming to turn the park into a positive asset for the community.

Challenges and Risks

  • Environmental and Social Concerns: The mining operation, while powered by renewable energy, raises questions about the long-term sustainability and social impact of such projects.
  • Instability and Threats: The park operates in a volatile region with frequent violence and militia activities, posing significant risks to the project and its staff.

Conclusion

Graph View

Backlinks