Ten31 Timestamp 792,963
Both bitcoin mining difficulty and the outlook for US national debt hit all-time highs this week, as Congress passed not only an increase but an outright suspension of the debt ceiling until January 2025. In exchange, the Kevin McCarthy-led Washington Generals extracted some small spending concessions that will do little to alter the increasingly parabolic path of federal debt, which is set to take another leg up in the near term as the Treasury issues a new ~$1 trillion slug of bills to refill its General Account.
Among the few upsides of the latest debt ceiling charade was the apparent tabling of the White House’s proposed new 30% excise tax on bitcoin mining (though passage of this measure was unlikely regardless). Mining also scored some local regulatory wins in Texas this week, including the failure of a bill that would have limited miner participation in demand response programs and a potential new tax incentive for mining with flared gas.
Portfolio Company Spotlight
Standard Bitcoin provides hosting services to commercial miners at on-grid industrial sites and off-grid abandoned oil & gas wells. The company works with local and state utilities to establish long-term power purchase agreements on-grid to drive required levels of throughput at rural substations, lowering power costs for local communities. Its off-grid sites use previously uneconomical, abandoned wells to power hosted miners, revitalizing these natural resources and mitigating leakage of harmful methane into the atmosphere, groundwater, and soil.
Selected Portfolio News
Samourai Whirlpool unspent capacity hit another all-time high this week, breaking 8,000 BTC for the first time:
Bitcoin Keeper rolled out the latest version of its app, introducing the first iOS wallet plugged into Samourai Whirlpool:
River Financial enabled a new automatic withdrawal feature:
Cathedra Bitcoin announced a partnership with 360 Mining to deploy more mining assets off-grid:
Media
NVK, Co-Founder and CEO of Coinkite, joined the Coin Stories podcast with Natalie Brunnell to discuss bitcoin self-custody, trade-offs among different setups, and the Coldcard.
Strike Founder and CEO Jack Mallers also sat down with Natalie to discuss Strike and the current state of the legacy banking system.
Market Updates
After more than a month of drama and political posturing, Congress voted to pass a bill – with the Orwellian title of the “Fiscal Responsibility Act” – to resolve the debt ceiling standoff. The bill will suspend the debt ceiling through January 2025 (coincidentally, just after the next election cycle) in exchange for some paltry near-term spending cuts.
Following passage of the deal, the US Treasury will shortly look to refill its nearly-exhausted General Account, which will have impacts on broader market liquidity that bear monitoring.
The latest jobs report surprised dramatically to the upside, with headlines suggesting the US added 339,000 jobs in May (~100,000 above consensus estimates). However, the picture is once again less rosy under the hood, with the Household survey diverging dramatically for a decline of 310,000 jobs.
Elsewhere, the ISM’s Manufacturing PMI declined M/M in May to 46.9 (with levels below 50 indicating contraction), the longest streak of <50 readouts since the Great Recession.
However, Cleveland Fed President Loretta Mester suggested there is no compelling reason to pause rate hikes at this time. Meanwhile, other Fed officials indicated the FOMC might “skip” another rate hike in June then resume afterward.
Bitcoin mining difficulty hit a new all-time high of over 50 trillion, as network hashrate continues marching upward toward 400 EH/s.
Investor purchases of US homes declined precipitously in the first quarter of 2023, with totals now coming in below pre-COVID levels.
Regulatory Update
The White House’s proposed DAME tax – which sought to levy a 30% excise tax on bitcoin mining – appears to have been taken off the table as part of the debt ceiling deal, a small consolation from Congress’s latest capitulation.
Bitcoin mining saw more good news in Texas this week, as a proposed bill to limit miner participation in demand response programs failed to advance in the state legislature. Additionally, the Texas House passed a new tax incentive for mining with flared gas.
West Virginia Congressman Alex Mooney introduced a new bill to prevent the Federal Reserve from launching a pilot program to test a CBDC.
The EU formally signed into law a new regulatory framework for entities interacting with cryptocurrencies, including new KYC/AML requirements.
The Bali Provincial Government announced it will prohibit foreign tourists from using bitcoin or other cryptocurrencies for payments.
Noteworthy
Forbes published a profile on Fiatjaf, the developer behind the Nostr protocol.
Prominent USD stablecoin issuer Tether announced an investment into a mining operation in Uruguay.
Blixt Wallet, a popular mobile lightning wallet, was suspended from the Google Play Store earlier this week. While the suspension appears to have been innocuous, the episode highlights the potential chokepoint that big tech app stores might represent in a more adversarial environment.
A black market for KYC verifications for World App – a wallet operated by the eyeball-scanning Worldcoin – has already started to develop in China, with credentials going for as little as $20.
Travel
Nashville BitDevs, June 13
Nashville Investing in Bitcoin Businesses Summit, June 14
Austin BitDevs, June 15
Nashville Lightning Summit, July 13-14
BitBlockBoom 2023, August 24-27