In this patch of your weekly Dispatch:
- Musk and Saylor form an energy consumption group
- Dalio and Icahn join the crypto space
- The first Nexo Governance Vote
The Big Idea
Introducing the Bitcoin Mining Council
Well Elon is back. Early this week, Elon announced that he had met with representatives from eight of the leading North American Bitcoin mining companies around energy concerns. Michael Saylor clarified that he had facilitated the meeting, which focused on standardizing energy use disclosures and advocating for greener energy mixes.
Markets reacted positively, with Bitcoin jumping at the news. Bitcoin Twitter was a little more skeptical.
First, they didn’t love the idea of closed-door meetings facilitated by two billionaires with a group of powerful mining interests. PTSD from the New York Agreement, much? Second, they worried that this group – which decided to formalize and call themselves the Bitcoin Mining Council – would start to act like de facto leaders of Bitcoin. It got tense.
Things calmed a bit when a number of attendees – including the heads of Argo and Galaxy Digital mining – went on the record to say that the only goal that had been agreed upon was transparency in sharing energy use data.
As long as the group strictly defines its goals – and those goals don’t involve changing core aspects of Bitcoin – it seems likely to be a positive force for Bitcoin in an increasingly ESG world.
The Latest In…
Since our last letter, we have gotten much more information out of China. The Vice Premier mentioned a possible Bitcoin mining ban in a speech Friday, which led to the weekend’s follow-on price crash. Part of the reason was that miners in China seemed to be taking this a lot more seriously – actually market-selling Bitcoin to give themselves more ability to make quick decisions. Now, some Bitcoiners are wondering if this could be a powerful force for decentralizing hash rate out of China. In the meantime, this week, we saw the first proposal (from Inner Mongolia) for what this ban might look like. This is a situation to watch.
The Latest In…
Last week and weekend were really rough, we’re not gonna lie. This week, however, saw a return of some positive energy. One of the drivers of that was the announcement that a number of billionaires who were formerly critics turned pro. Ray Dalio told the CoinDesk Consensus crowd that he owned some Bitcoin (and also made a full-throated case for why we were likely to continue to see currency devaluation). The legendary corporate raider and activist investor Carl Icahn told Bloomberg he thought crypto was here to stay and that, while they hadn’t allocated yet, he was looking to move into Bitcoin, Ethereum, and the whole ecosystem in a big way (which he said meant in the $1B to $1.5B range). Tom Brady even followed up his laser eyes from last week with a surprise Consensus talk with FTX CEO Sam Bankman-Fried.
The Latest In…
The regulation story around crypto in the US tends to be more about reading tea leaves than getting real policy.
- Gary Gensler testified before Congress this week and reiterated previous points that DeFi and crypto as a whole may need their own dedicated regulatory body
- The new head of FinCEN — a former employee of Chainalysis — said that Steve Mnuchin’s midnight unhosted wallet rule wasn’t being rushed
- Fed governor Lael Brainard and Fed Chair Jerome Powell both discussed stablecoins and the issues they might cause with CBDCs
It feels, frankly, like the calm before the storm when it comes to a new, Biden-era set of US regulatory policies. This doesn’t mean they’ll be bad. In fact, there’s much to suggest that this cohort is taking these issues more seriously than their predecessors. But it still feels like something big is brewing.
The Week’s Most Interesting Data Story
Stablecoins Surge as Bitcoin Falls
Here’s something fascinating. Since Bitcoin started falling in mid-April, the supply of stablecoins has absolutely surged. Tether up $14B+, USDC up nearly $10B. What’s interesting is trying to understand exactly why. One possibility is that this represents a flight to safety, as traders pulled their capital from BTC to wait out the downward move. Another possibility is that they were giving themselves access to dry powder to be in a position to countertrade cascading liquidations. In either case, the implication is that rather than removing their capital from the ecosystem entirely, people who were getting nervous about the markets simply moved to another part of crypto. This makes reentry easier and perhaps suggests less painful bear periods in the future.
What the Community Is Discussing
Oh Soulja Boy, this isn’t the way.
The billionaire financiers keep coming, and they’re not just looking at Bitcoin anymore.
Nexo This and Next Week
- The right of a NEXO Token holder to vote. Brought to you by Nexonomics. A lot of decisions are made behind closed doors that shouldn’t be. As announced earlier this week, the first Nexo Governance Vote is taking place on June 7. We are putting a big proposal up for a vote and asking you, as a community, to choose how you would like to receive your reward for being a NEXO Token holder: by earning up to 12% p.a. interest on your NEXO Tokens daily, or by receiving a once-a-year dividend. Save the date.
- We can smell that Miami air already. We’re taking over Bitcoin 2021 next week, where we’ve gone big on the arts and even bigger on the talks. One of our co-founders – but we’re not telling you which one – is speaking at the Putting Your Bitcoin To Work panel on Whale Day, June 3. Needless to say, we are super excited.
What to Watch for Next Week:
- Will Elon use the Mining Council to shift the narrative again?
- Will US regulatory rumblings grow?
- Will ETH build more institutional momentum?