Ten31 Timestamp 773,177
Various macroeconomic indicators have continued to trend sharply in the wrong direction to kick off 2023. Consumer debt is ballooning in the face of well above average price inflation and mass layoffs at large companies, while the housing market continues its precipitous decline from the frenzied heights of 2021. While no company will be totally shielded from what looks to be an impending (or ongoing) recession, Ten31’s portfolio companies were built for the long haul and are broadly in strong shape, with solid liquidity to withstand near-term macro headwinds. Meanwhile, many of our investments have continued to see strong volumes and new user growth despite the noise as more individuals and businesses progressively realize bitcoin’s value proposition (sound, counterparty-free, uncensorable, programmable money) is even more powerful in times of increasing economic uncertainty. We continue to see compelling investment opportunities all around the bitcoin ecosystem and will look to keep leaning in while lower conviction capital runs for the exits.
Selected Portfolio News
Fold announced the launch of its enterprise API, which will allow banks, fintechs, and consumer cards to offer bitcoin rewards and loyalty programs:
Swan expanded its senior leadership team with several new hires and published details about its plans for the next few years, including international expansion, collaborative custody options, a lightning wallet, and more:
Members of the Fedi team made a trip to Guatemala to test the app and onboard local businesses as part of the Bitcoin Lake project:
River Financial published an update to their open-source Elixir Bitcoin library that includes Schnorr signature support:
Coinkite published an in-depth look at the security design of the new Coldcard Mk4 and the device’s use of secure elements.
Cathedra President and COO Drew Armstrong wrote the first piece in a two-part series on the interaction between bitcoin mining and debt capital markets.
David Layton, Unchained’s Director of Concierge Services, sat down with The Investor’s Podcast to discuss the importance of collaborative custody and Unchained’s exclusive focus on bitcoin.
Start9 developer BoBo Dread joined the Bitcoin Boomer Show to discuss the power of self-hosting with the Embassy.
Just a few weeks after a significant decline in network hashrate due to severe winter weather, the bitcoin network hit a new all-time high in network hashrate (~275 EH/s) and experienced a significant upward difficulty adjustment of 10.3%.
After months of struggles and speculation, Genesis Global officially filed for bankruptcy this week. Genesis’s parent company DCG suspended its dividend amid the turmoil. Coindesk, wholly owned by DCG, has engaged the investment bank Lazard Ltd. on evaluating a sale. Coindesk’s rumored valuation is $15-20 million USD.
American consumers’ credit card debt continued to balloon to all-time highs as credit card interest rates have gone vertical and the personal savings rate hovers near a 20+ year low. Against that backdrop, Discover Financial reported Wednesday that charge-offs rose to 2.4% in the fourth quarter of 2022, up sharply Q/Q.
In a further sign of underlying economic stress, US existing home sales declined 34% Y/Y in December and fell 18% overall for 2022 to reach the metric’s lowest level since 2010.
The US entered the latest iteration of its perennial debt ceiling standoff, prompting the Treasury Department to take “extraordinary measures” to continue paying interest and entitlement recipients.
Saudi Arabia signaled openness to settling international trade in non-USD currencies, including specific reference to the country’s strategic relationship with China.
The Bank of Japan announced it would maintain its yield curve control policy of holding the 10-year JGB at 50bps despite the unprecedented bond buying required to maintain the cap and Japanese consumer price inflation reaching a 41-year high.
The DOJ made waves this week with its enforcement action against little-known Hong Kong-based cryptocurrency exchange Bitzlato, which allegedly facilitated more than $700 million in illicit transactions despite associated wallets holding only $6 million at peak.
A new report revealed that hundreds of federal, state, and local law enforcement agencies have access without court oversight to a database of more than 150 million money transfers in the US and abroad, highlighting once again the dangerous surveillance embedded in the incumbent financial system.
The SEC unintentionally leaked personal information of over 650 people as part of an investigation of a cryptocurrency miner (failure to bcc strikes again).
Coindesk identified 196 members of Congress who received donations from disgraced former wunderkind Sam Bankman-Fried or other FTX executives.
The week also saw several more positive regulatory developments in various US localities, as Mississippi and Missouri both introduced bills to protect bitcoin mining and running a node.
Credit Suisse’s Zoltan Pozsar published an article examining growing challenges to the USD’s status as world reserve currency.
Upstream Data’s Black Box unit for small-scale mining was featured in a demonstration by African bitcoin education organization Bitcoin DADA.
CashApp enabled sending and receiving bitcoin over Lightning for all app users.