Re-sharing below the latest edition of #Web3 Weekly, my regular newsletter about decentralization. If you’d like to get it in your inbox every Sunday, subscribe here.
Let’s talk Bitcoin a minute. I usually try to be more ecumenical around here about covering different technologies, but Bitcoin in particular has so dominated the news lately, and it is so important to decentralization in general, a deeper dive seems in order.
As ever, full disclosure: I do own some BTC, and everything below is presented for informational purposes only, not as financial advice. If you crave the latter, please DYOR.
Also, a quick style note for grammar and usage sticklers: “Bitcoin,” with a capital b, is generally used to refer to the Bitcoin network and the growing ecosystem of businesses built upon it. Lowercase-b “bitcoin” is more appropriate for specific references to the network’s flagship token, as in stories about swings in its price. (In crypto world, this verbal distinction is also neatly illustrated by the capital-e Ethereum network and its lowercase-e token, ether.)
You’ll notice I also sometimes use ticker symbols like BTC or ETH as shorthand to refer strictly to the tokens. That’s just a tic left over from too many years covering the stock market. 🙃
OK. On to the latest Bitcoin-centric news:
- How green (or not) is Bitcoin? An excellent piece by New York Magazine’s Jen Wieczner delved into this question, which has been at the heart of BTC’s recent price weakness. As environment-focused criticism has mounted, heavy selling has followed. Wieczner points out that, yes, the Bitcoin network is undeniably power hungry, consuming about as much electricity as all of Switzerland. But there are also some less-discussed pros as well. Much of BTC miners’ power is generated from renewable sources. Also, high power costs and rising long-term prices for BTC could create powerful market incentives for adoption of green technology in the future — a dynamic environmentalists have sometimes struggled to create by other means. That is to say, in many industries, it is still often more expensive to switch to “green” practices versus the status quo. Not so for Bitcoin miners. Separately, podcaster Laura Shin did a must-listen episode on the relative environmental impact of Bitcoin versus the U.S. dollar. Her guests discussed how USD’s value been closely tied to the global energy trade since the 1970s, effectively incentivizing more fossil fuel consumption by default.
- BTC continued to plummet. Prices were down almost 30% for the week, and are down almost 50% from recent records above $65,000. Worries about environmental impact and the potential for a renewed regulatory crackdown in China have driven the selling. Much of the pressure seems to have come from retail investors, but analysts said on-chain data suggests institutions are buying the market dip.
- Bitcoin mining ground to a crawl. The Block reports that the Bitcoin network’s hash rate, or production of new tokens, has fallen by nearly 20% over the past week. The slowdown has been driven largely by a temporary cap on power consumption in China’s Sichuan province, where many of the world’s most active miners are based.
- An anonymous donor gave the University of Pennsylvania’s Wharton Business School $5 million in BTC.
- BlockFi flubbed the implementation of a promotional offer. As a result, some of the trading platform’s users received overpayments of bitcoin.
- Paul Krugman piled on. Riffing on the recent market plunge, the Nobel-winning economist used his New York Times column to reiterate his longstanding skepticism of bitcoin as a doomed fad.
- But David Rubenstein says “crypto is here to stay.” In remarks to CNBC, the billionaire co-founder of Carlyle Group said, “People in the markets want something other than just the traditional currencies we’ve had. Whether that’s right or wrong, it’s clearly something that the market wants.” Rubenstein said he hasn’t been buying tokens himself, but he is investing in infrastructure that enables new users to participate in crypto markets.
- A new question for crypto OGs: When electric lambo?
That’s it for now. Thanks for spending some time with the newsletter today! A full revision history of it, including earlier drafts, is available here if you’re interested. If you’d like to get updates like this in your inbox every Sunday, please join our email list here.