Ten31 Timestamp 849,033
The US achieved its latest ignominious fiscal milestone this week, as annualized federal spending on interest payments finally surpassed annualized military spending following a parabolic jump kicked off by aggressive (and “temporary”) fiscal measures during COVID lockdowns. The increase represents more than a doubling of annual interest expense in just ~2 years and pulls forward even the most pessimistic timelines predicted by analysts as recently as 2022. Concerningly, this trend looks like an increasingly vicious cycle, as the CBO’s latest projections for the US’s total fiscal deficit for fiscal 2024 came in at $1.9 trillion, a $400 billion (+27%) increase vs prior forecasts from just a few months ago, with the upward revision driven largely by ballooning interest costs. While the US dollar is likely to remain the cleanest dirty shirt in the fiat hamper for some time to come – as suggested by the Japanese Yen’s latest violent drop to new multi-decade lows – we continue to view this fiscal profligacy as an ongoing formula for capital consumption, currency debasement, and a growing global appetite for better money.
Portfolio Company Spotlight
Strike is an emerging fintech and payments innovator leveraging the lightning network to allow consumers and merchants to send and receive payments instantly and cheaply in a wide variety of settings. Strike's offerings include a consumer app – now available in nearly 100 countries including the EU – for P2P payments, bitcoin purchases, global remittances, and more. Strike also offers a suite of APIs for merchants and enterprises to easily benefit from lightning’s low cost, near-instant settlement. The company has announced a variety of exciting new features over the last few months and continues to have one of the most robust pipelines of upcoming launches in the bitcoin ecosystem.
Selected Portfolio News
StatMuse rolled out a refreshed website and upgraded search features:
Fold increased its daily and monthly transaction limits:
Media
Strike Founder and CEO gave a keynote speech at the Bitcoin Prague conference earlier this month.
Ten31 Advisor and Zaprite Head of Business Development Parker Lewis appeared on the Digital Wildcatters show to discuss his new book Gradually Then Suddenly.
Fedi Co-Founder and CEO Obi Nwosu joined the Bitcoin Standard podcast to delve into the fedimint protocol.
Strike published a blog post highlighting the company’s new BOLT 12 Playground project, a testing environment for developers interested in BOLT 12 functionality on the lighting network.
Unchained released a new piece on strategies to protect bitcoin holdings from scams and criminals.
Market Updates
The Congressional Budget Office released its latest federal budget estimates for fiscal 2024 this week. The agency now projects a 2024 federal deficit of $1.9 trillion – a $400 billion upward revision from its prior forecast – as the US is now spending more on annualized interest payments than defense spending.
Following last week’s flattish CPI reading that sent equity indices to yet more new all-time highs, retail sales data for May came in below expectations this week.
Meanwhile, new housing starts and building permits – favored leading indicators for macroeconomic health – were down substantially again in May, with both metrics reaching new post-COVID lows.
Nvidia’s meteoric ascent continued to mirror the growth in US federal interest payments this week, as the GPU behemoth officially surpassed Microsoft to become the world’s largest company by market cap.
Less than two months after the Bank of Japan’s most recent $60+ billion intervention into currency markets to stabilize the USDJPY exchange rate, the Japanese Yen broke the 159 level for the first time since 1990 and is now below the level at which the BOJ previously intervened.
Elsewhere in Japan, Norinchukin Bank – the fifth largest bank in the country by assets – announced it had sustained heavier than expected losses on its sovereign debt holdings due to persistently high interest rates and that it will look to sell $63 billion of US and European government bonds.
Bankers in other overseas markets also continued looking for new ways to cope with elevated interest rates, including a new plan for a “hawkish cut” this summer from the Bank of England.
Regulatory Update
Following weeks of decidedly pro-bitcoin stump speeches and industry meetings from Republican Presidential candidate Donald Trump, new reports surfaced this week suggesting officials from the incumbent administration plan to attend a Congressional roundtable on “keeping bitcoin and blockchain innovation in the United States.”
The European Union Council indefinitely suspended its voting process on controversial surveillance measures informally dubbed “chat control,” which would have mandated bulk scanning of a wide range of digital messages, including encrypted communications.
Recently elected Argentine President Javier Milei tweeted his support for “free competition of currencies” including bitcoin (though how this will ultimately translate into policy in the country remains to be seen).
Noteworthy
OpenSats announced a long-term support grant for Calle, a pseudonymous developer who has contributed extensively to advances in Chaumian Ecash through his work on the Cashu protocol and who also recently was awarded a grant from Ten31.
Bitcoin mining pool Braiins launched its Mini Miner – which offers 1 TH/s in a plug-and-play form factor for $200 – at the Bitcoin Prague conference this past week.
Travel
Ten31 Tribe Event @ Bitcoin Park, July 24
Bitcoin 2024, July 25-27
BitcoinMENA, Dec 9-10