link to tweet
“Bitcoin is still not suitable as an investment. It does not generate any cash flow (unlike real estate) or dividends (stocks), cannot be used productively (commodities), and offers no social benefit (gold jewellery).”
Bitcoin. Is. Money.
It is not a cash-flowing “productive asset.” You cannot analyze the discounted cash flows. You cannot eat it, and you cannot wear it.
Of course, money is notably absent from the ECB’s list, but surely not even they would deny the value of money.
As far as having no productive use, or offering no social benefit, myself, many Austrian economists, and empirical history would contend that having sound money at the economic base layer of society is indeed productive, and offers vast social benefit.
Bitcoin is open, accessible, permissionless, neutral, censorship resistant, global, digital, and scarce. If you’re not fortunate enough to live in a place where property rights, rule of law, and relatively low inflation are the norm, the social benefits of such an asset are quite apparent.4
“The mining of Bitcoin using the proof of work mechanism continues to pollute the environment on the same scale as entire countries.”
The conversation surrounding Bitcoin’s energy usage — like the conversation surrounding energy usage in general — is notably one-sided, always highlighting the costs but never considering the benefits.
It is easy to get baited into explaining how bitcoin mining utilizes a higher mix of sustainable energy than any country on earth,5 or how it’s providing an economic use for previously wasted natural gas that was being flared into the atmosphere,6 or how it’s helping to stabilize the grid and lower energy prices for consumers in Texas,7 or how it’s bootstrapping electrification efforts in Africa.8
And all of these things are wonderful, and true, and possibly make bitcoin the most environmentally friendly investment one can make.
But the larger point is that energy consumption is not bad. It is synonymous with human flourishing.9
Bitcoin provides a service that the world has decided is valuable. Like anything of value, it costs energy to produce or obtain.
Bitcoin’s energy usage is the very thing that keeps it decentralized and secure, which in turn are the very things that make it valuable. It is a feature, not a bug.
“It is incredibly ironic that the crypto unit that had set out to overcome the demonised established financial system should need conventional intermediaries to spread to a broader group of investors.”
When we say Bitcoin is open and permissionless, we mean it.
That means anybody can use it however they like, and nobody else can stop them.
Bitcoin does not have a board, or a CEO, trying to secure partnerships or designing a go-to-market strategy.
Bitcoin did not choose Wall Street. Wall Street chose bitcoin.
1 https://www.thecipherbrief.com/report-an-analysis-of-bitcoins-use-in-illicit-finance
2 https://www.chainalysis.com/blog/2024-crypto-money-laundering/
3 https://www.unodc.org/unodc/en/money-laundering/overview.html
4 https://bitcoinmagazine.com/culture/check-your-financial-privilege
5 https://bitcoinminingcouncil.com/wp-content/uploads/2022/10/2022.10.13-BMC-Presentation-Q3-22-Presentation.pdf
6 https://crusoe.ai/energy/index.html
7 https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/022323-bitcoin-miners-flocking-to-texas-want-to-stabilize-ercots-volatile-renewables
8 https://gridlesscompute.com/
9 Allen Farrington and Sacha Meyers, Bitcoin Is Venice, 222
Satoshi Emails Released
Bitcoin enthusiasts this week got perhaps the most significant addition ever to the archives of Bitcoin’s pseudonymous inventor.
Martti Malmi, an early collaborator on Bitcoin with Satoshi, released their email history on Github, covering a significant portion of their email correspondence between 2009-2011.
Pete Rizzo has a great thread on some of the most important findings. Some of the highlights include:
- Satoshi recognizing micropayments and spam denial as obvious, early use cases
- A comparison of bitcoin to gold
- Planning for the eventuality of the network scaling to 100,000 nodes
- Speculation that bitcoin would be less energy intensive than the banking system it could ultimately replace
- An unwillingness to label bitcoin an “investment” on the bitcoin.org website, for fear of sounding promotional
Saylor Buys More
MicroStrategy announced on Monday that it had purchased an additional 3,000 bitcoins for $155 million, bringing their total stack to 193,000 bitcoins worth about $10 billion.
After yesterday’s 10% rally in the stock, MSTR is now the 2nd largest stock in the Russell 2000 with a market cap of $16.3 billion.
The company had a market cap of $1.2 billion when it initiated its bitcoin strategy in August, 2020.
Record ETF Volume as Price Crosses $60,000
The US-listed spot bitcoin ETF complex traded $7.7 billion in volume yesterday, amid a surge in price to as high as $64,000.
The volume figure sets a new record, eclipsing the $4.7 billion in volume from the first day of trading.
BlackRock’s IBIT alone saw a record $520 million inflow on Tuesday, taking in the second most money of any ETF in the market, behind only their own S&P 500 ETF, IVV.
The daily inflows on Tuesday of ~10,000 BTC are over 11x current daily issuance to miners of 900 BTC.
Daily issuance to miners is set to fall to 450 BTC in April at the halving.
Chart of the Week
