May 26, 2021 | Issue #170

MUST READS

A Bitcoin Mining Council?

After last week's hissy fit around environmental concerns, Elon Musk seems to have changed his tune (a bit).

Over the weekend, Elon Musk, Michael Saylor, and a cabal of "leading" Bitcoin miners in North America... agreed to form the Bitcoin Mining Council to "promote energy usage transparency and accelerate sustainability initiatives worldwide."

Yeesh, fellas.

Look, we get it, you both own billions of dollars worth of the asset. We all know that somewhere on a spreadsheet you have a stop loss that would really hurt if it was triggered...

But causing a short-term bottom in Bitcoin's price with a "mining council" seems like a cut the nose to spite the face. It's a slippery slope.

As Marty Bent puts it, "this is the opposite of owning the framing."

No offense, but we aren't the biggest fan of two individuals who have been convicted of fraud running the narrative around Bitcoin.

We like Saylor and Musk as much as the next guys, but we thought the point was not to have a "face" of Bitcoin. Now, to be fair, perhaps this isn't as ominous as it sounds (here's Nic Carter explaining why), but some part of this just doesn't feel right.

Let's also not forget that BlackRock, which is using its voting power to push ESG (the same company forcing Exxon to clean up its act), owns a 15% stake in Microstrategy (MSTR) and a 4% stake in Tesla (TSLA). Perhaps there's an alternative motive? A behind-closed-doors threat? It's quite a stretch, we know, but it's certainly possible.

Coinbase in Talks to Buy Asset Manager Osprey Funds

Coinbase is in the process of acquiring asset management firm Osprey Funds, according to two people with knowledge of the deal.

Osprey, which is known for its Bitcoin fund (OBTC), was in the news recently for launching a fund specializing in Polkadot – an alternative public blockchain to Ethereum.

Why would an acquisition make “strategic sense" for Coinbase here?

Adding asset management capability would increase subscription/recurring revenue
Increasing COIN’s custody business
Complementing COIN’s prime brokerage business

TLDR: The company undoubtedly wants to play a leading role in areas adjacent to their current offerings, such as funds that allow exposure to the price of Bitcoin without having to buy BTC directly. Furthermore, funds such as Osprey’s are regulated, making them suitable for high-level institutional investors.

Galaxy Digital Continues Its M&A Streak

Galaxy Digital (GLXY) announced that it has bought Vision Hill Group for an undisclosed sum. Vision Hill develops market intelligence products such as hedge fund indices and a buy-side database for institutional clients.

The deal follows a string of recent acquisitions including BitGo, DrawBridge Lending, and Blue Fire Capital.

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DEEP DIVE

The Limits to Blockchain Scalability

After a couple tweets from Elon around scaling DogeCoin went viral, Vitalik Buterin released a post exploring why no, you can't just speed up block times and increase block size.

Vitalik: 1
Elon: 0

A Data-Driven Analysis of the May 2021 Crypto Crash

The recent sell-off has been painful in the short-term. But over the long-term, a stronger foundation is being built. A big shift is occurring, and some of the biggest criticisms of Bitcoin are potentially being torn down.

Here's another perfectly timed piece from the team at CoinMetrics fueled by data, not headlines.

Related Reading:

Addressing Common Criticisms about Ethereum

Here's an awesome Reddit post that directly addresses the common criticisms of Ethereum.

"This space is rife with misinformation, FUD, and downright lies. I hope this encourages people to think critically and find accurate information for themselves."

The Only Escape Route Left For Your Money

There's a massive market shift coming. And most American's are woefully unprepared...

With all the hysteria going on in today’s “bull market,” a plan for protection is more important now than ever before. It's time to prepare.

This is what I'm doing to protect my family and my finances - I recommend you do the same.

REGULATORY FRONT

U.S. Treasury Calls for Stricter Cryptocurrency Compliance with IRS

The U.S Treasury Department is looking to require all cryptocurrency transactions with a fair market value of more than $10,000 to be reported to the IRS.

We suspect it's going to be very similar to existing cash reporting requirements; where it only applies to businesses receiving physical cash payments.