Ten31 Timestamp 756,414
The macro environment remained choppy through August and September, with rates continuing to rise dramatically, the yield curve’s inversion widening, and equities giving back some brief gains to return toward YTD lows. September saw the Fed continue on its path of aggressively attempting to fight inflation with another 75bps hike of the Federal Funds Rate, bringing the target to 3-3.25%. The FOMC projects the rate will be between 4-4.5% by year-end, though some market observers have flagged that ongoing hikes seem increasingly difficult given the outstanding public debt balance. Amid the headwinds, bitcoin has continued to consolidate in the $18,000-$22,000 range, but the network keeps performing with outstanding reliability, demonstrating one of the characteristics that we believe makes bitcoin the premier long-term safe haven asset.
Against this backdrop of macro uncertainty, the Ten31 team has continued to actively deploy capital into high quality companies and take part in major community events. At BitBlockBoom in Austin last month Grant Gilliam joined Matt Odell to discuss Strike with Jack Mallers, and then they both joined Marty Bent, Adam Curry and Ryan Gentry for a live RHR as the final segment of the conference. The Ten31 team went on appear at the Baltic Honeybadger Conference in Riga, Latvia, where Marty Bent MC’d several discussions. Matt Odell continued helping with local, on the ground efforts to push bitcoin forward, including the Beef Initiative Conference in Colorado and Grassroots Bitcoin in Nashville. These events have underscored once again that the organic growth of bitcoin’s network, user base, and value proposition are proceeding rapidly regardless of price headwinds, so we remain very bullish despite the bear market.
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We’ll continue helping to grow the bitcoin community with Ten31’s next in-person Tribe event on November 17th in Austin, which will coincide with that month’s Austin BitDevs session. The last Tribe meeting in Nashville was a very valuable event for all attendees, and we hope to see everyone again this time around for another great set of discussions. Stay tuned for additional details.
Fund II New Investments
Strike is an innovative fintech platform using bitcoin and the Lightning Network to develop a suite of tools to facilitate superior payments and financial service experiences for consumers and merchants. The company offers a wide array of consumer financial products through its app and recently launched debit card, and is in the early stages of rolling out its merchant API to allow major retailers to seamlessly offer Lightning-based payment rails in stores across the country. Ten31 led Strike’s Series B round, and Grant Gilliam will be joining the Board of Directors.
Debifi is building a non-custodial lending platform to provide institutional-grade liquidity for P2P loans collateralized by bitcoin. The project is an extension of the Hodl Hodl platform (though with a separate team), seeking to target institutional lenders and borrowers. As with Hodl Hodl, Debifi will not rehypothecate bitcoin collateral, and will offer borrowers one key in a transparent multisig quorum while loans are outstanding.
Selected Portfolio News
Strike launched the waitlist for its Visa debit card, which will enable customers to spend and earn rewards through their Strike accounts anywhere Visa is accepted:
Impervious released the Alpha version of their P2P browser built on Lightning, which allows for messaging, document collaboration, video calls, and more:
Unchained Capital expanded its automated trading platform to several additional states and lowered purchase minimums from $50,000 to $5,000 for all users:
Peach launched the beta version of their European P2P bitcoin exchange, accessible via mobile app:
Swan acquired Specter Solutions, a popular open source wallet software platform enabling intuitive self-custody:
Swan also rolled out Swan Advisor Services, a new platform that allows financial advisors to manage trading and custody of clients’ bitcoin:
LNMarkets, a Lightning-native trading and derivatives platform, announced plans to move its hosted services from AWS to Nodl’s cloud infrastructure:
Bitnob launched in Kenya, allowing the country’s population of 53 million+ to access Lightning-based remittances settled instantly into M-pesa accounts:
Samourai Wallet announced its latest software update, which includes an improved UI for collaborative transactions and JoinBot, a new feature providing an automated, always-online participant for collaborative transactions:
River Financial eliminated fees for recurring DCA purchases:
In the wake of GitHub deleting TornadoCash developer accounts, Start9 rolled out a package for Gitea, which allows users to anonymously self-host Git for open source software collaboration:
Balitc Honeybadger Conference: Grant Gilliam participated in a panel discussing venture capital in the bitcoin space.
BitBlockBoom Conference: Matt and Grant sat down with Jack Mallers at BitBlockBoom to discuss the latest developments at Strike and Jack’s philosophy on changing the payments landscape with Lightning.
Rabbit Hole Recap: Matt, Marty, and Grant joined Adam Curry and Ryan Gentry at BitBlockBoom.
The Bitcoin Standard Podcast: Matt Odell joined Saifedean Ammous to discuss bitcoin privacy best practices.
Matt Hill, CEO and co-founder of Start9, discussed the benefits and tradeoffs of bitcoin nodes built on Raspberry Pi hardware on the Stephan Livera podcast.
Brent Whitehead, co-founder of Giga Energy, spoke with John Vallis on the Closing the Loop podcast about Giga and bitcoin’s ability to harness stranded energy.
The US Treasury Department added Tornado Cash, an open source privacy project running on Ethereum, to its list of sanctioned entities. In turn, a variety of centralized services including Coinbase, Circle, Infura, and GitHub began restricting activity of addresses associated with Tornado Cash contracts, outright locking down the funds and personal data of many users.
Meanwhile, Ethereum completed its long-awaited hard fork (the “Merge”) to a chain with a Proof-of-Stake consensus mechanism, which comes with its own serious risks of centralization and further censorship. The Merge leaves bitcoin as the only Proof-of-Work chain with any meaningful market cap.
Network hashrate has continued climbing to all-time highs even as ongoing macro headwinds have suppressed the dollar price of bitcoin, leaving hash price near historic lows, a particularly challenging dynamic for miners who are overleveraged or higher on the power cost curve.
Poolin, formerly the fourth largest mining pool, appeared to be nearing insolvency as it froze withdrawals to pool members. In response, miners quickly shifted hashrate elsewhere, causing Poolin’s share to decline from above 10% to under 5% over a few days.
In more positive mining news, publicly traded Riot Blockchain was able to curtail significant electricity usage in response to grid stress from Texas’s July heat wave, earning $10mm in credits and offering a case study for mining’s positive impact on grid infrastructure.
Russia appeared to become more outspoken in its desire to use cryptocurrency to facilitate cross-border transactions outside the reach of Western sanctions; this comes after the country’s energy minister expressed openness to trading in bitcoin earlier this year. Iran also established a regulatory framework to allow for import payments through bitcoin.
Legacy financial institutions continue to show growing interest in offering bitcoin-linked products, as BlackRock announced a spot bitcoin trust for institutions and a partnership with Coinbase to offer trading and custody. Elsewhere, Fidelity is reportedly considering adding bitcoin trading capabilities to its 34 million retail brokerage accounts.
The White House released its previously announced report on bitcoin and cryptocurrency mining. The document does not recommend any specific measures, but notes the potential need to “limit or eliminate” energy-intensive mining consensus mechanisms; that said, it also acknowledges bitcoin mining’s positive impact on methane emissions.
Shortly after Ethereum’s Merge, SEC Chair Gary Gensler reiterated in a Congressional hearing that proof-of-stake tokens should likely be treated as securities.
Senators Toomey and Sinema introduced a bill to provide tax exemptions to cryptocurrency transactions under $50 or netting less than $50 in capital gains. A previous version of this bill set the thresholds at $200.
The Washington, DC Attorney General’s office opened up a lawsuit against prominent bitcoin advocate and former Microstrategy CEO Michael Saylor, alleging Saylor and Microstrategy failed to pay $25 million in district taxes.
NYDIG announced Wolf, a New York-based accelerator focused on incubating projects and developers in Lightning and bitcoin-linked DeFi.
Following pressure from various governments and interest groups, Visa, Mastercard, and American Express announced plans to implement new merchant codes for tracking gun purchases.
Ledger hardware wallets are now available at Best Buy stores throughout the US.
Arcane Research published a deep dive on the interactions between bitcoin mining and the energy industry.
Blockware Solutions and Riot Blockchain teamed up for a report that considers the potential evolution of the bitcoin transaction fee market over time and debunks some common misconceptions about bitcoin security.
Bitcoin and macro analyst Nik Bhatia provided an update on his “time value of Lightning” framework for the formation of bitcoin-native capital markets.
Ten31 Tribe Event in Austin, November 17 (concurrent with BitDevs)
Nashville Bitcoin Meetup, October 12
TABConf, October 12-15
Bitcoin Amsterdam, October 12-14
Austin BitDevs, October 20
Bitcoin for India, November 5-6
Adopting Bitcoin (El Salvador), November 15-17
Africa Bitcoin Conference (Accra, Ghana) December 7-9
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