The American Century (?): Ten31 Timestamp 956,648
Regulatory capture, just as the Founders intended
They say that when one door closes, another opens, and professional Situation Monitors everywhere rejoiced that the lull in the Iran conflict gave way to plenty of AI fodder this week. For our purposes, perhaps the most noteworthy headlines on this front were OpenAI reportedly offering the federal government a 5% stake in the company while FERC issued a series of show-cause orders pushing the US’s grid regulators to accelerate new data center approvals. If it wasn’t already obvious after a year of the White House sidling up to lynchpins of the AI arms race and the semiconductor / power industries that support it, it should be pretty clear now that this is among the key vectors through which the Trump administration intends to “run it hot” to stimulate a resurgence of domestic industry and American advantage over would-be challengers (cough China). We can no doubt debate whether limiting access to frontier intelligence is the right path to actually achieving those goals long-term (to say nothing of the free speech implications thereof), and perhaps it’s true that open source models will soon render this advantage meaningless as “good enough” fast-followers draft off lab progress to commoditize the frontier (though we think there are strong arguments that that’s far from a foregone conclusion).
In any case, though, the plan seems to have been laid out in increasingly explicit detail, which will have broad implications for overall fiscal policy and favored industries from here, probably regardless of what happens in November. (As an aside, memory bros may also want to ask themselves what happens when their favored bottleneck input becomes the tall poppy blocker to pushing this agenda forward). Longtime readers may recall that this is fundamentally a bitcoin-focused newsletter, but we’d argue that all these themes – China, Iran, manufacturing, rare earths, industrial policy, frontier models, all of it – are ultimately deeply relevant to bitcoin’s future, as all these epochal shifts will not only necessitate certain “creative” actions from a dominant but historically-indebted superpower facing a titanic demographic cliff over the next decade, but also insofar as they signify key pillars in the shift to an emergent new dollar system that may strongly favor assets like bitcoin (which, incidentally, the President of the United States owns in size your humble author can scarcely imagine).
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Selected Portfolio News
Strike secured its MiCA license, allowing the company to offer its full suite of products across all 27 EU member states under a single, permanent regulatory framework:
While officially launching in Spain and Italy:
Maple AI launched its native app on Windows, making the product available on all major platforms:
Coinkite announced major new firmware updates for its flagship products:
Market Updates
Recently minted Iran analysts updated their resumes to reflect their newfound expertise in AI this week, starting with a Monday morning announcement from South Korea’s government that Samsung and SK Hynix – two-thirds of the memory oligopoly currently printing unprecedented margins on the AI wave – have agreed to a half-trillion dollar capex plan for new fab capacity buildouts over the next decade.
That timeline may not be quick enough for scrappy little startups like the Apple Computer Company, which is now seeking White House approval to source alternative memory supply from CXMT, a Chinese supplier officially blacklisted by the Department of War.
While it won’t help the memory tightness, President Trump announced that leading logic chip producer TSMC will double the size of its planned investment in its Arizona facility – which was already slated at $100 billion – while claiming that the US’s share of global semiconductor manufacturing will rise to 50% by the time he leaves office (which we read as an implicit confirmation that the President will be seeking several more terms).
At the same time, the Federal Energy Regulatory Commission (FERC) issued show-cause orders to all six FERC-regulated regional grid systems regarding their speed of new interconnect approvals for large loads (i.e. hyperscalers and neoclouds). The orders are explicitly intended to speed up regulatory approvals for new data center proposals, the latest sign of the strategic importance the current administration ascribes to the AI buildout.
And on that note, the saga of OpenAI’s relationship to the White House – which has been advancing from “u up?” texts to something more serious since CFO Sarah Friar’s trial balloon comment about a federal backstop last year – continued escalating, with the company reportedly proposing that the government take a 5% stake, which would be worth over $40 billion at the frontier lab’s most recent private valuation.
While CEO Sam Altman has reportedly pitched this as a way to “share AI upside with the public,” if you squint hard, it might look a little like imperial tribute to keep the Praetorian Guard off the company’s back. In any case, Caesar Aurantius appears to have been satisfied for now with steps taken by rival frontier lab Anthropic, as the company was allowed to re-release its previously restricted Fable 5 model back into the wild on Wednesday (though tokenmaxxers quickly complained that this version appears to have been nerfed vs the original release).
Cleveland Fed President Beth Hammack threw cold water on everyone’s good time, lamenting that all this AI funny business is driving a resurgence of inflation, which could potentially force the Fed to hike benchmark interest rates soon.
But after similarly talking tough on inflation over the past couple months, new Fed Chair Kevin Warsh suggested this week that forward inflation expectations have actually come down over the past month, potentially giving the central bank more breathing room on rate hikes (wait, I thought we weren’t doing forward guidance anymore?).
Meanwhile, the surprisingly weak latest jobs report (which included a solid downward revision to last month’s numbers) probably won’t create much incremental appetite for hikes at the next meeting.
For what it’s worth, a new paper from payroll and ops giant Ramp suggested that AI appears to be correlated with increased hiring at companies that are aggressively adopting it, even when controlling for some obvious confounds (e.g. higher-adopting companies are already likely to be faster-growing, etc).
But whatever your level of bullishness on AI or bearishness on its inflation and employment impact, Meta CEO Mark Zuckerberg did his part to briefly drive some mean reversion for both sides, as new reports suggested Meta might be pivoting to selling some of its compute capacity to third parties rather than consuming it internally. Later reports also indicated that Zuck has told employees that the company’s progress with agentic AI has been slower than expected.
Basically everything related to AI absolutely nuked on these headlines, with semiconductor ETFs down 10%+ on Thursday, and more exotic bets dropping even harder. As always, the market seems to have gotten meaningfully ahead of itself on its interpretation of both of these developments, as a later report from SemiAnalysis and tweet storm for Meta AI Chief Alexander Wang suggested basically the opposite of investors’ kneejerk interpretations, but them’s the breaks of making 30% in a day on the latest loss-making Sri Lankan “AI bottleneck” endorsed by your favorite anonymous anime avatar.
But never fear, the AI buildout is likely still here, as the Department of War just appointed leading venture capitalist Marc Andreessen to its newly reorganized Defense Policy Board.
Yet another “Democratic Socialist” won a Congressional primary this week just in time to ring in America’s 250th birthday. You could try showing this voting bloc recent data from Bank of America indicating that recent payroll gains have disproportionately benefited the lower-income cohort, but we suspect that an honest desire to empower the oppressed proletariat may not be the key force driving this recent trend.
US money supply seems to be inflecting right alongside growing class struggle politics (funny how that works), with M2 hitting another new all-time high in June on 5.6% Y/Y growth, good for the fastest pace since July 2022.
At the same time, the USDJPY cross – a key FX rate influencing a wide variety of positioning worldwide – hit a new 40+ year low of nearly 163 before a sudden reversion that may or may not have been the BOJ’s latest intervention.
Now that you’ve cleared your palette on all that content totally unrelated to Iran, we regret to inform you that there was still at least one noteworthy pair of headlines out of the Gulf this week, as Saudi Arabian oil exports have now ramped up to 90% of their prewar levels.
In a pretty striking dichotomy, though, Iran is reportedly struggling to find buyers for its 58 million barrel backlog of unsold crude products, with 90% of its backlogged exports still sitting on the water with no clear destination. Reports indicate that Chinese independent refiners – the key end market for Iranian oil before the war – appear reluctant to resume aggressive purchases for now despite temporary US sanctions relief.
Back in the Western Hemisphere, after months of hints to this effect, the US officially said it will not renew the USMCA trade agreement with Mexico and Canada, potentially setting up a tough negotiating backdrop for the US’s neighbors.
While the US scores wins on AI and international leverage, the domestic private credit backdrop has continued to look shaky, with sector poster child Blue Owl reporting investor withdrawal requests from two of its key funds at 19% and 38%. These figures, while striking, are actually down slightly Q/Q, though it’s unclear if we’ve seen a global or just a local top.
Elsewhere in the market’s favorite exotic credit punching bags, leading bitcoin treasury company Strategy established a new “Digital Credit Capital Framework” intended to stabilize its preferred stock complex with stronger cash buffers and more programmatic guidance on issuance and buybacks of its various tranches. The move led to a 21% rebound in STRC on the week (screenwriters getting a little heavy-handed here), though MSTR common stock briefly touched below 1x NAV.
Other corporate digital assets names also had a big week, with BlackRock, Visa, Mastercard, Coinbase, Stripe, and nearly 140 other companies announcing the launch of OpenUSD, a new stablecoin that the players will look to integrate into their core products and which will share rewards from reserves with users.
Time will tell how well this rollout proceeds, but we’d note that an early look at the basic specs suggest it’s the latest validation of exactly the technical direction of travel we outlined earlier this year (TLDR: it is not bullish for “blockchain technology”).
Bitcoin finally gave the “58k Gang” (hey guys, a message for you) the moment they’ve been waiting for, as the orange coin dipped to the $58,000 level for a couple days before rebounding above $60,000 again later in the week.
We won’t try to embark on the fool’s errand of calling a bottom, but we’d just note that bitcoin held in long-term hold addresses just hit another all-time high, a typical precondition for prior bear market bottoms, and various other on-chain metrics point in a similar direction.
Regulatory Update
As part of his annual asset mix disclosure, President Trump reported owning more than $50 million in bitcoin in self-custody (though this was for year-end 2025, so we’ll have to wait and see if he was able to maintain diamond hands through this year’s volatility).
The President also suggested that bitcoin and other digital assets should not face the same capital gains tax regime as equities or other investments (a view that may be particularly close to his heart following his reported ~$1 billion in crypto gains last year).
Noteworthy
The Bitcoin Policy Institute published a detailed report highlighting the financial influence of the CCP and China-adjacent actors on various media campaigns opposing the US’s data center buildout.
IBM unveiled a new chip spec that doubles the transistor density of their prior design from 2021, keeping Moore’s Law directionally alive (even though its status as the first “sub-1 nanometer” commercial design is a bit of a marketing maneuver more than a literal physical description).
The Wall Street Journal ran a feature on JP Morgan ramping up its investments and involvement in American defense spending, with deals and financing worth $1.5 trillion through 2035.