Warming Up

From the President of Russia to Kamala Harris, there are signs that Bitcoin’s former enemies are warming up to the orange coin.

Beaver Bulletin · August 14, 2024 · By Andrew Throuvalas

1. Vladimir Putin signed legislation this month making it legal to mine Bitcoin in Russia. 

Seems odd, right? After all, Putin signed a law two years ago banning Russian citizens from using bitcoin as a domestic means of payment, which is common fare for more centralised, less freedom-centric countries.

But it makes a lot of sense. While the Russian government still doesn’t want its citizens using bitcoin as freedom money, Bitcoin mining specifically can prove advantageous for the state.

“We have certain competitive advantages here, especially in the so-called mining,” said Putin back in January 2022. “I mean the surplus of electricity and the well-trained personnel available in the country.”

The law signed this month gives registered Russian entrepreneurs and legal entities the right to mine. Unregistered entities may also mine BTC so long as their energy consumption does not exceed a certain limit.

The bill’s passage follows another law signed in late July legalising bitcoin’s use for cross-border payments.

With its own mining fleet and international economy built around the network, Russia can now leverage Bitcoin to bypass trade sanctions placed on it by Western financial institutions imposed in the aftermath of its war with Ukraine.

It just goes to show that all governments – even those most likely to hate Bitcoin – are eventually forced to embrace it.

2. Marathon Digital goes full MicroStrategy, issuing USD $250 million in convertible debt to buy BTC. 

It was only a matter of time. As the world’s largest bitcoin mining company, Marathon already earns and saves in BTC. Last month, the company announced that it had purchased USD $100 million in BTC, and assumed a “full HODL strategy” for its 20,000 BTC stockpile..

The latest move takes Marathon into the realm of MicroStrategy – the world’s largest corporate bitcoin owner – whose leadership frequently champions the benefits of buying BTC with responsible leverage.

As a public company, Marathon and MicroStrategy get to play things extra safe. By issuing convertible notes, investors in Marathon can pay down their debt many years later for either cash, common stock, or a combination of both.

This flexibility allows the firms to issue unsecured debt at interest rates that are far below the standard market rate. Marathon, for example, is only paying 2.125% in annual interest before its notes mature in September 2031.

For context, BTC has averaged a 61% compound annual growth rate over the past ten years. So if history is any indicator, paying 2% interest to hold bitcoin for years could prove one of the most no-brainer investment moves of the decade. 

3. Canadian crypto exchange ezBtc was found guilty of gambling away CAD $13.5 million in customer funds. 

The B.C. Securities Commission ruled last Wednesday that a third of the assets on the ezBtc platform – which operated between 2016 and 2019 – had been diverted to founder David Smillie’s personal accounts on gambling sites.

That included over 935 BTC that Smillie told customers were being held safely in cold storage. In one case, the founder started gambling away a customer’s coins just 14 minutes after he deposited his money to the platform.

It just goes to show that centralised companies can’t be trusted to safekeep your money – least of all, “crypto” exchanges.

Remember: the safest place to buy Bitcoin without having to trust anyone with your money is Beaver. 

4. Democrats might be turning pro-Bitcoin.. The Kamala Harris presidential campaign is making tentative steps to make amends with Bitcoiners after the political left repeatedly attacked Bitcoin for years.White House staff met with major executives from multiple Bitcoin exchanges last week, where the companies reportedly “yelled at” the government for all of the damage their policies have done to their line of work.

The government denied any conspiracies that they were trying to cut off banking access for their firms. Yet when surveyed on a live call, almost all industry heads agreed they’d been denied banking access due to White House policies.Some attendees – including SkyBridge Capital’s Anthony Scaramucci – thought that the meeting was a sign of “steady progress.” Certain pro-Kamala optimists have already launched an industry advocacy group to support the Harris campaign. Yet others like the Winklevoss twins are extremely sceptical that the Democrats’ pro-crypto engagement is anything but pandering for votes. 

“Shouldn’t it be Harris4Crypto, instead of Crypto4Harris?” tweeted Cameron Winklevoss on Friday.

The community grew more pessimistic on Tuesday as Bloomberg revealed that Harris has already hired anti-crypto Biden administration members as her economic advisors.

“There are no new plans for Harris’ campaign to announce sprawling new policy on cryptocurrency,” the report said. 

Meanwhile, Bitcoin’s price remains suppressed at CAD $83,100 as the asset trades in line with Trump’s odds of election victory. According to Polymarket, those odds have increasingly favoured Harris in recent weeks. 

Stay humble,

Andrew