Greetings and salutations my fellow plebs. My name is Walker and this is The Bitcoin
Podcast. It's Wednesday, September 6, 2023. At the time of recording the Bitcoin
block height is 806503 and the value of one Bitcoin is still one Bitcoin. Today's
episode is the Bitcoin news roundup. I'm gonna go over the big stories, run
through some rapid fire news, then zoom out and give you some perspective. You can
find all the links and accounts mentioned in this episode via the article version
of the show which is linked in the show notes or by going to BitcoinPodcast.net
slash words. I'd like to thank everyone who has listened and subscribed to The
Bitcoin Podcast because I just passed 10,000 audio downloads of the show with
people listening from all over the world and that's pretty cool. Before I get
started on the news roundup for today I want to let you know that I've started
recording Bitcoin Talk episodes of The Bitcoin Podcast. You can watch the full
interviews at BitcoinPodcast.net, on Twitter at Walker America, YouTube.com
slash at Walker America or Walker America on Rumble. Did I say Walker America
enough times? Okay good. And of course you can always listen to these episodes
wherever you get your podcasts. Last week I released my discussion with Jeff Booth
and soon I'll be releasing my talk with Preston Pish. Without further ado, let's
get into the Bitcoin news roundup. FASB is for Bitcoin. Earlier today Bloomberg
Tax reported long-awaited Bitcoin accounting rules to capture rises dips.
Under new rules expected to be published by year-end, companies that hold or
invest in cryptocurrency will be required to report their holdings at fair
value, a measurement that aims to capture the most up-to-date value of an
asset including rebounds in value after prices dip. FASB stands for Financial
Accounting Standards Board. It's a private standard-setting body whose primary
purpose is to establish and improve generally accepted accounting
principles within the United States and in the public's interest. Via Bitcoin
Archive, long-awaited Bitcoin and crypto accounting reform has been passed in a
unanimous vote by FASB, allowing companies to use fair value measurement on
their books. This is huge. Previously companies could only value their Bitcoin
at the lowest price since they bought it, which meant they would have to record
losses but not the gains when the price recovered. James Lavish has a great
thread breaking down the previous rules that were applied to Bitcoin and I'll
link it in the article, but here's an illustrative example from James. A public
company uses some cash to buy $1 million of Bitcoin and lists the holding as a
digital asset on its balance sheet worth $1 million. Then the Bitcoin price
rises 20%. In its financials, the company cannot recognize this increase and must
maintain Bitcoin at $1 million. Then let's say Bitcoin falls 50% and now is
worth 60% of where the company bought it in its financials. The company must
recognize this decrease as an impairment in value and list its Bitcoin
holdings at $600,000 with a $400,000 loss. Even if Bitcoin trades back up, $600,000
would remain the carrying value for the company's balance sheet going forward.
The only way to recognize price recovery is to sell the Bitcoin and trigger a
capital gain. This is exactly what happened to MicroStrategy. Speaking of
MicroStrategy, Michael Saylor, Chairman of MicroStrategy, responded to the news
saying, fair value accounting is coming to Bitcoin. This upgrade to FASB
accounting rules eliminates a major impediment to corporate adoption of
BTC as a treasury asset. The fair value accounting rules kick in starting in
2025 and I suspect we're going to see a lot of forward-thinking companies
follow MicroStrategy's lead and put Bitcoin on the balance sheet.
Grayscale Pump On Tuesday, August 29th, Bitcoin enjoyed a nice little green candle.
After starting the day in the high $25,000 range, it pumped up above $28,000
before settling back into the low $27,000 range. A week later, we're back in the
high $25,000 range, so all's fair and love in Bitcoin. But what caused this price
action and prompted a plethora of fleeting green candle memes? Well,
Grayscale, which operates GBTC, the Grayscale Bitcoin Trust, previously filed
with the SEC to convert their Bitcoin trust into a spot Bitcoin ETF, but were
rejected. Grayscale then sued the SEC via Bitcoin Archive. The court ruled against
the SEC's rejection of a Bitcoin ETF, saying, the denial of Grayscale's proposal
was arbitrary and capricious, because the commission failed to explain its
different treatment for similar products. Here they're referring to Bitcoin
futures ETFs, which are trading right now. Understandably, people were very
excited about this news and by the fact that Bitcoin enjoyed a nice little pump
on this news, as it seemed that we're one step closer to seeing a spot Bitcoin
ETF approved, with the SEC running out of excuses to reject applications.
The SEC and the SEC, first Bitcoin ETF could be coming soon as court rules in
favor of Grayscale over SEC. The US Court of Appeals for the DC Circuit has paved
the way for Bitcoin exchange traded funds. As I and countless others have said
ad nauseam, it's not a matter of if, but when a spot Bitcoin ETF is approved, and
maybe that when is going to be a bit sooner rather than later thanks to this
ruling. Here's some added context in the situation as it relates to Grayscale
specifically, courtesy of Dove Maclaire. Don't forget how large GBTC is. They
hold over 600,000 BTC and was the single largest driver of the 2021 bull run from
a flow standpoint. Today's discount move from negative 26% to negative 17% is the
equivalent of 56,000 BTC returned to the AUM of GBTC if shares are marked to
market. And another one from Dylan. Last point on GBTC for now. Ignore what
Grayscale says. Their interest is in the status quo. No ETF approvals and continue
milking a 2% fee on 600,000 BTC. ETF approvals would mean either 1. Fee
dropping by 75% to 0.50%, 2. Massive outflows from trust. Either way, revenue
collapses. Grayscale loses from a BTC denominated revenue perspective unless
their AUM balloons at least 4x, assuming a 50 basis point fee. Not gonna happen.
Already holds 3% of BTC supply. BlackRock, Fidelity, etc. all want their share.
Management fee will be a race towards 0% to consolidate AUM. Zooming out from the
technical side a bit. While I love to see the SEC get schooled in court and this
decision is certainly worth celebrating, it's also worth putting in perspective,
which is exactly what Edward Snowden did on Noster. Here's what he said.
I know everybody's excited about the SEC losing in court and it is indeed an
important victory, but it's worth bearing in mind that Gensler knew he was
acting outside the law long before the verdict. The largest institutions care
less about what is legal than what they can get away with. Given how long it
takes to get the courts to rule, it's a reminder that in the context of the
government's own misconduct, there are limits to the utility of the law.
Security Budget Groundhog Day. As Bitcoin price continues to crabwalk
sideways, it seems like everyone is coming out of the woodwork to debate
Bitcoin's quote security budget problem. Now, it is my humble opinion that
Bitcoin does not have a security budget problem. Bitcoin is repricing the entire
world around us and that is extremely difficult for most people, even many
Bitcoiners, to understand. Jeff Booth breaks this down beautifully in the
Bitcoin talk we had together. I recommend you check it out. But instead of me
talking more about the security budget problem right now, I'm gonna read you a
note Lin Alden shared today on Noster, which summarizes the situation in a way
only Lin can. Here it is. We should change Bitcoin now in a contentious way to fix
the security budget. It's basically the same tinkering mentality that central
bankers have. It begins with an overconfident assumption that they know
fees won't be sufficient in the future and that a fix is going to generate more
fees. But some fixes could even backfire and create less fees or introduce bugs
or damage the incentive structure. The Bitcoin fee market a couple decades
out will primarily be a function of adoption or lack thereof. In a world
of 8 billion people, only a couple hundred million can do an on-chain
transaction per year or a bit more with maximal batching. The number of people
who could do a monthly transaction is one-twelfth of that number. In order to be
concerned that Bitcoin fees will be too low to prevent censorship in the future,
we have to start with the assumption that not many people use Bitcoin decades
out. Fedwire has about 100x the gross volume that Bitcoin currently does with
a similar number of transactions. But what will Bitcoin's fee market be if
volumes go up 5x or 10x, let alone 50x or 100x? Who wants to raise their hand
with a confident model of what Bitcoin volumes will be in 2040? What will someone
pay to send a $10 million equivalent on-chain settlement internationally?
$100 in fees per million dollar settlement transaction would be 0.01%.
$300 to get it in a quicker block would be 0.03%. That type of environment can
generate tens of billions of dollars of fees annually. The fees that people pay
to ship millions of dollars of gold long distances or to perform real estate
transactions worth millions of dollars are extremely high. Even if Bitcoin is a
fraction of that, it would be high by today's standards. In a world of billion
millions of people, if nobody wants to pay $100 to send a million dollar
settlement bearer asset transaction, then that's a world where not many people
use Bitcoin, period. In some months, the security budget concerned trends. In other
months, the fees will be so high only rich people can transact on-chain
concern trends. These are so wildly contradictory and the fact that both are
common concerns shows how little we know about the long-term future. I don't
think the fee market can be fixed by gimmicks. Either the network is desirable
to use in a couple decades or it is not. If three or four decades into Bitcoin's
life, it can't generate significant settlement volumes and gets easily
censored due to low fees, then it's just not a very desirable network at that
point for one reason or another. Some soft forks like Covenants can be
thoughtfully considered for scaling and fee density and it's good for smart
developers to always be thinking about low-risk improvements to the network
that the node network and miners may have high consensus positive view toward
over time. But trying to rush VC backed soft forks and using security budget
fud to push them is pretty disingenuous IMO. Anyway, good morning.
Cambridge revises Bitcoin energy estimates. The Cambridge Center for
Alternative Finance CCAF recently revised their Bitcoin energy consumption
methodology. TLDR Cambridge now estimates that Bitcoin uses about 25% less
energy than previously stated. Why is this important? Because Cambridge data is
frequently used as the go-to resource for academics and less than academic
critics of Bitcoin's energy usage. Here's a couple of key points provided by
Daniel Baden. 1. CCAF model overestimated by 16.8% in 2021 and 10.2% in 2022. This is
in alignment with my previous research where I suggested earlier this year
their model was overestimating by 20.6%. 2. Clear evidence that Greenpeace USA's
claim that Bitcoin used as much energy as Sweden was incorrect and based on CCAF
historical overstatements. 3. CCAF say explicitly that based on new estimates
Bitcoin's energy use is comparable to tumble dryers in the US. 4. CCAF have not
yet revised their emissions estimates beyond the direct impact of revised
energy consumption. 5. They are still overestimating emissions by 67.6%
due to emission intensity calculations that are both overestimated and out of
date have not been updated since January 2022. This is an improvement upon the
previous estimates which were out 106%. Daniel has a bunch of other points and
analysis which you can access via the article version of this episode linked
in the show notes but I want to round out this segment with a quote from the CCAF
report directly. We decided to thoroughly reexamine the ASIC mining
hardware distribution generated by our previous CBECI model and cross-check the
results against other metrics from publicly available data. We found that
more recently released equipment appeared to be underrepresented and
equipment nearing the end of its life cycle was overrepresented. We will
explore the consequences of these changes when applied retroactively. The
first and most noticeable discrepancy happens in 2021 where our previous CBECI
model estimated an electricity consumption of 104 terawatt hours, 15
terawatt hours higher than the revised model estimates, 89.0 terawatt hours. The
2022 estimate was adjusted downward by 9.8 terawatt hours from 105.3 to 95.5. To
put this in perspective the revised figure is comparable to the electricity
consumption of countries like Belgium 83 or to the Netherlands 113. The energy
use of tumble dryers in the US 108. Emerging concepts we have yet to
consider but could reasonably be expected to lower our emission estimates
include the potential to mitigate methane emissions by mining operations
co-locating next to oil fields and utilizing otherwise flared natural gas,
using and subsequently sealing orphaned gas wells, and mitigating methane
emissions from landfills but also extend to other novel concepts such as waste
heat recovery. It's been pretty amazing to see the narrative shift happening of
late around Bitcoin energy usage and the environment. I think in a couple of years
it's going to be a wildly unpopular and obviously foolish opinion to hold that
Bitcoin wastes energy.
Drain the exchanges. On August 31st the Bitcoin balance on exchanges reached a
five-year low of 2,238,653 Bitcoin according to data from Glassnode. This
suggests that people are truly listening to the endless urging of toxic
Bitcoin maximalists to get your Bitcoin off exchanges. It's important to point
out that data like this is not perfectly accurate. It may not reflect the
totality of Bitcoin on exchanges. Maybe some exchanges aren't counted in this
number from Glassnode so the actual number may be slightly different. But
what matters in my opinion is not the raw number of Bitcoin on the exchanges
but the trend. Over the last five years even though new Bitcoin are issued every
ten minutes of every single day the Bitcoin balance on exchanges is lower
than it was five years ago. That means more Bitcoin is off exchanges and in
self-custody than five years ago. That's a good thing especially as we see
massive institutional whales like BlackRock coming onto the scene ready to
gobble up Bitcoin and keep it safe for you.
Ms. El Salvador, Orange Pill's Miss Universe. Ms. El Salvador aka Miss Bitcoin, Alejandra Guajardo posted a photo on Twitter and
Noester last week saying, here I am trying to Orange Pill Miss Universe and Miss
Aruba. What would you like these beautiful and influential ladies to know
about Bitcoin? Some of the people who responded to her posts made the
suggestion to set the Miss Universe up with lightning wallets and post their
lightning addresses so people could send sats and show them the power of the
Bitcoin Lightning Network in the real world. Over the next few days Alejandra
posted multiple videos with the ladies showing them setting up Wallet of Satoshi
and later posted Miss Aruba's lightning address and Miss Universe's lightning
address. The next obvious step would be to get the Miss Universe set up on
Noester as well where they can receive sats on anything they post. I'm sharing
this story because I think it's amazing to see the ladies of Miss Universe
interacting with Bitcoin on social media for all to see. As Neil Jacobs pointed
out Bitcoin isn't just nerd money anymore. Like all great technological
advances it would never have begun without passionate nerds. But now Bitcoin
is for anyone who is open to learning. You don't need to be a technical expert
to interact with Bitcoin. It's as easy as downloading an app. Not only that but
Bitcoin might be the first real chance at bringing about world peace and I know
that's something the Miss Universe crowd can get behind. Shout out to Miss El
Salvador for being a wonderful ambassador for both Bitcoin and her
beautiful country.
Now for some rapid fire news. Via Bitcoin Archive, Oman's Minister of IT and
Communications inaugurated the launch of project with 200 megawatts of Bitcoin
mining. Via Glassnode, amount of hodled or lost coins just reached a five-year
high of 7,854,417 Bitcoin. Via Forbes, Nansen pointed to on-chain data showing
that some 90% of PayPal's PYUSD is currently held in wallets controlled by
the PYUSD issuer PAXOS with holdings on crypto exchanges accounting for 7% of
the total supply and only 3% held by traders. Via Glassnode, the number of
Bitcoin addresses holding one plus coins just reached an all-time high of 1,019,117.
Via Riot platforms, Riot produces 333 Bitcoin while realizing expanded
benefits of power strategy. August was a landmark month for Riot in showcasing
the benefits of our unique strategy, says Jason Les, CEO of Riot. Riot achieved
a new monthly record for power and demand response credits totaling 31.7
million dollars in August which surpassed the total amount of all credits
received in 2022. Via Glassnode, number of Bitcoin addresses holding 0.01
coins just reached an all-time high of 12,349,387. And via Bitcoin
Archive, citing Max DeMarco's documentary featuring me, Premier Bitcoin,
El Salvador to add Bitcoin education to all public schools next year.
To wrap up today's show, let's zoom out and talk about the passage of time and
time preference. In April 2024, Bitcoin will undergo another scheduled halving
where the amount of Bitcoin issued per block is cut in half from 6.25 Bitcoin
to 3.125 Bitcoin. In the current cycle, the amount of Bitcoin issued will be
1,312,500. In the next cycle, starting in April 2024 and ending around four years
later, the total amount of Bitcoin issued will be half that, 656,250. In the
cycle after that, only 328,125 Bitcoin will be issued and so on until the
maximum supply of 21 million Bitcoin has been issued around the year 2140. Now,
2140 sounds like a long ways away, and it is. Most of us will likely be dead by
then unless we figure out some wild anti-aging remedy that doesn't involve
using children as blood bags because that's just fucked up. But while 2140
is a long ways away, 2036 is not far away at all. On September 6, 2023, we are
closer to the start of 2036 than we are to March 2010, which is when Bitcoin
first started trading on exchanges. After the 2036 having, the Bitcoin block
reward will be 0.390625 Bitcoin per block, and the Bitcoin issued in that cycle
will be 82,031.25 VTC. In the fiat world and the crypto world, people are
constantly trying to convince you to think short term, to have a high time
preference. It's usually in an effort to catastrophize a situation and make you
act impulsively, either to pursue pleasure or avoid pain. Anyone who tries to
force you to pursue a particular course of action by pushing false urgency upon
you likely does not have your best interests at heart and is certainly not
thinking long term. So today, I just want to remind you to take a deep breath and
zoom out. Remember that you will die, but you're probably not going to die today.
So stack some sats, then go outside, get some sunlight and touch some grass. You'll
be okay.
And that's a wrap on this week's Bitcoin news roundup. If you're a Bitcoin only
company interested in sponsoring the Bitcoin podcast, head to Bitcoin Podcast
net. You can find me on Noster by going to primal.net slash Walker. If you want to
follow the Bitcoin podcast on Twitter, go to at TIT coin podcast and at Walker
America. You can also find the video version of this podcast at youtube.com
slash at Walker America and Walker America on rumble. Bitcoin is scarce. There
will only ever be 21 million, but Bitcoin podcasts are abundant. So thank you for
spending your scarce time to listen to another fucking Bitcoin podcast. Until
next time, stay free.