Ten31 Timestamp 806,208

ETF speculation was re-ignited this week on the back of an appeals court’s decisive ruling in favor of Grayscale in its suit against the SEC over ETF conversion of GBTC. Importantly, the ruling did not imply the imminent approval of Grayscale’s conversion or the approval of other spot bitcoin ETF products and may leave the SEC more avenues to delay such approvals, but the result clearly seems to move the process forward, as evidenced by Bloomberg’s ETF team raising their probability of spot ETF approval by year-end to 75%. While much of the mainstream financial press spent the week analyzing the implications of this court ruling, we note the week’s macro indicators continued to flash red, with both payrolls and job openings data heading south.  

Portfolio Company Spotlight

Giga Energy is a bitcoin miner and infrastructure provider focusing on stranded energy and waste gas opportunities. The company helps oil and gas producers use bitcoin mining to optimize production and monetize gas resources that would otherwise be wasted, through both proprietary mining deployments and the provision and operation of tailored power generation equipment including generators, data centers, and electrical infrastructure. Giga sits at the forefront of the convergence of the energy production and bitcoin mining industries, a trend we expect to gain notable momentum over the coming decade. 

Selected Portfolio News

Primal added a new set of configurable content moderation tools, including options for no moderation:

Unchained introduced full cross-tool interoperability to allow users to more easily port their vaults to external multisig coordinators:

River reduced its lightning channel capacity for better capital efficiency while noting a record number of transactions through their channels this month:

Peach released its latest update, which adds coin control and several UX improvements while open-sourcing the app’s code:

Media

Ten31 Managing Partner Marty Bent appeared on the BlazeTV Zero Hour show to discuss mainstream misconceptions about bitcoin. 

River CEO Alex Leishman joined the Kevin Rooke podcast to discuss the near-term future of the lightning network and River’s lightning operations. 

Market Updates

An appeals court ruled against the SEC in Grayscale’s lawsuit regarding its application to convert GBTC to an ETF vehicle. 

The market and many observers immediately read the ruling as a bullish signal for the approval of outstanding spot bitcoin ETFs, with Bloomberg’s ETF analysts subsequently raising their probability of approval in 2023 to 75% and to 95% by year-end 2024.

The SEC threw some cold water on the hype later in the week by delaying the processes for all outstanding applications, pushing deadlines back to mid-October. 

Most data on the macro front continued looking bearish this week. July’s JOLTS reading – which tracks reported job openings in the US – came in at 8.8 million, well below consensus expectations of 9.5 million and down notably M/M, indicating a loosening labor market.

August payroll data was slightly ahead of expectations, but the unemployment rate ticked up to a three-year high and payrolls for June and July were revised down. 

Commentary from the Dallas Fed’s latest manufacturing outlook survey pointed to significant pressure across a variety of industries.  

Regulatory Update

Amid the flurry of headlines surrounding the latest in the GBTC saga, the SEC quietly filed a sealed motion as part of its case against Binance. 

Noteworthy

A pseudonymous privacy advocate published two notable editorials this week regarding the unclear efficacy of Chainalysis’s heuristics. 

Cravath, one of the largest corporate law firms in the world, released a skeptical report on the defensibility of the recent Tornado Cash money laundering indictments. 

Twitter’s latest privacy policy suggests the platform may begin collecting users’ biometric data, employment history, and additional information ostensibly for “safety, security, and identification purposes,” again highlighting the importance of Nostr as a tool for censorship-resistant, privacy-preserving communication. 

Nucleus, a new proposal which aims to improve the capital efficiency and liveness requirements of multipeer lightning payments, was shared to the bitcoin developer mailing list. 

Travel

• TABConf, September 6-9

• Nashville Bit Devs and Meetup, September 12-13

• Global Bitcoin Summit @ Bitcoin Park, September 14-16

• Utah Portfolio Company Retreat, October

• Nostrville @ Bitcoin Park, November 8-10