Gm miners,
Adam Haynes (Simple Mining CEO) sat down with Preston Pysh on the Bitcoin Fundamentals Podcast👇
You can watch the episode here:
This week has been nothing short of eventful.
Here is a quick rundown:
• Trump + Melania meme coins
• SAB 121 repealed (much easier to custody BTC on balance sheet)
• Larry Fink hints at $700,000 Bitcoin
• Trump signed “crypto” executive order
What is in this executive order?
Notably:
A working group tasked to develop a clear federal regulatory framework on digital assets and evaluate the creation of a “national digital assets stockpile.”
Anything related to the creation of a CBDC is terminated.
David Sacks is leading this working group.
Lots to unpack here.
For starters, this may not have been the Strategic Bitcoin Reserve many of us were expecting.
This is what he said in Nashville over the summer:
“Strategic national BITCOIN stockpile”
People seem to be split into two camps:
This is great
This is not good
Zooming out, there are two ways to look at this.
Strategic Bitcoin Reserve is Good
1) Bitcoin is the best-performing asset ever. Bitcoin can “hedge against mounting debt.”
If the government can’t be fiscally responsible and get spending under control, Bitcoin can only do so much.
Nonetheless, it does something.
Bitcoin can also function as a modern, non-sovereign reserve asset.
2) This also mitigates foreign risk. We don’t want rival nations to stockpile Bitcoin, bypass sanctions, and abandon the US dollar financial system.
This is game theory.
The strongest nation financially wins. American soil should be the world capital of Bitcoin custody. It is imperative to have more Bitcoin than everyone else.
3) Bitcoin mining incentivizes renewable energy adoption by monetizing stranded or excess energy. A Bitcoin reserve would encourage domestic energy innovation and reduce dependence on foreign energy sources.
Bitcoin mining in the US would help establish this stockpile and maintain strategic control over network hashrate. China should not have more hashrate than the US.
If you are a US citizen, you should point your hash to an American pool.
4) The United States should be the crypto capital of the world.
Establishing a SBR would send a clear message. One that the US embraces technological and monetary innovation.
This could increase global investment and position the country at the cutting edge of Bitcoin disruption.
Strategic Bitcoin Reserve is Bad
1) This would undermine the strength of the dollar.
The US dollar is the global reserve currency, supported by its economy, deep capital markets, and geopolitical dominance.
A SBR could signal a lack of confidence in the current monetary system and destabilize markets.
This could imply a potential shift toward a Bitcoin-backed dollar standard, which could alarm creditors and implode Treasury markets, raising borrowing costs globally.
2) It is too early politically.
Congress is unlikely to pass legislation authorizing a SBR.
Any unilateral action by the executive branch to establish a SBR could be undemocratic and politically unpopular, alienating Bitcoin.
A reserve could be perceived as a wealth transfer to Bitcoin holders, exacerbating public resentment and fueling opposition from those who do not hold Bitcoin.
3) It is unnecessary to force this.
The US dollar remains the world reserve currency and the US economy is the most dominant in the world.
The need for a Bitcoin reserve is not urgent, as the dollar is not under immediate threat of de-dollarization or collapse.
Publicly acquiring Bitcoin at scale would also drive up prices significantly, costing the US government hundreds of billions or even trillions of dollars.
This might encourage adversarial actions (think 6102).
It would be much cheaper to set a price cap, ban private ownership, and force conversion of US-held Bitcoins.
The US could expropriate BTC held on domestic exchanges. They could nationalize miners. They could hike capital gains taxes and require BTC payment. They could arrest wealthy Bitcoin whales.
This would be cheaper than open market operations. But nobody wants to talk about that.
Ok we have laid the cards on the table.
Another distinction is buying vs. formally declaring holdings.
Trump advocated for establishing the stockpile with Bitcoin lawfully seized by the Federal Government.
The Bitcoin Proposals advocate for acquiring ~210,000 BTC (BPI), to 1 million BTC (Lummis), to 4 million BTC (RFK Jr).
Option No. 1 is far easier than option No. 2, as the legislative process is far simpler.
The recent executive order sounds like option No. 1 (formally declaring holdings).
This brings us to the content of the strategic stockpile.
Let’s take the position that the US holding Bitcoin is good (even if it just means formally classifying the current holding as a stockpile).
How do you feel about “other cryptos” being in this stockpile?
Should Ethereum and XRP (God forbid) be in the stockpile?
Should Solana and Trump’s meme coins be in the stockpile?
If you don’t know the answer to these questions, you should watch this video:
There is no point in stockpiling anything other than Bitcoin because every other asset is printed out of thin air.
Disingenuous crypto actors (cough cough Ripple/XRP) are the greatest threat to the strategic BITCOIN stockpile.
These actors aggressively throw millions at politicians, desperately attempting to get a slice of the pie and pump their bags.
The ideal outcome is the truth comes to light.
Ripple is notoriously pro-CBDC, something explicitly prohibited in the executive order.
The working group will conduct the proof-of-work and present a report to the President.
If bribing and shady business are involved, we could get crypto garbage in the stockpile.
If the motives and aspirations are genuine, Bitcoin's superiority will be recognized.
Will the Treasury Secretary do the due diligence?
El Salvador certainly figured it out:
Zooming out again, it's hard to deny the benefit of the shifted Overton window.
Hate it or love it, this is what Bitcoin integrating into the global fiat financial system looks like.
Question:
Ultimately, the point of this letter is to upgrade your understanding of Bitcoin mining and equip you with “below the surface” knowledge.
To save you time. What information will save you the most time?
Have a good weekend✌️