Bitcoin Mining Shifts to US

The biggest crypto news and ideas of the day

Oct. 13, 2021

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Today’s must-reads

Top Shelf

INSIGNIFICANT STABLECOINS? The Financial Stability Board (FSB) has found that the $133 billion stablecoin industry is currently not being used at a significant scale for mainstream payments. The Bank for International Settlements-funded entity mentioned this finding in a report about enhancing cross-border payments.

‘CRYPTOIZATION’ PARANOIA? The International Monetary Fund (IMF) is worried about the “cryptoization” of the developing world. In its “Global Financial Stability Report,” released Tuesday, the global financial institution ranked crypto among COVID-19 and climate change among the top “challenging transitions” for the global economy. Crypto presents “significant risks and is an inadvisable shortcut” for developing countries trying to boost their economies, the IMF wrote.

MINING SHIFTS: The U.S. has become the world’s leader in bitcoin mining following the renewed crackdown on the industry in China, the Cambridge Centre for Alternative Finance (CCAF) said. The latest CCAF data shows the U.S accounting for 35.4% of the global hashrate – the world’s total computational power used to mine bitcoin – as of the end of August, more than doubling from 16.8% at the end of April. Kazakhstan and Russia followed the U.S. with shares of 18.1% and 11%, respectively.

AWAITING APPROVAL: Jewel, a proposed Bermudian bank and aspiring stablecoin issuer that is looking to provide services to digital asset businesses worldwide, has hired Nick Lepetsos, a veteran of First Western Trust Bank, as CEO. He is coming on board at a time when the proposed bank is waiting to see whether its application for a banking license in the British island territory of Bermuda will be approved. Separately, publicly traded crypto broker Voyager Digital is awaiting approval from French regulators to operate in Europe.

SPORTS, COMEDY, FORGERY: Dapper Labs, the creators of NFT breakout success NBA Top Shots, has partnered with NBA star Kevin Durant’s sports media company Boardroom and his investment firm Thirty Five Ventures for a two-year content deal. Comedy collectibles startup Jambb has raised $3.5 million to build a comedian-focused NFT marketplace on the Flow blockchain. Hashmasks, a digital art collective, is the producer of the recently announced NFT project by Wolfgang Beltracchi, the infamous German art forger who recreated and sold the works of famous artists for over 30 years.

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Putting the news in perspective

The Takeaway

Surveillance Trumps Policing When Politics Fails
We are witnessing a real-time demonstration of the way a failing political order can lead to the imposition of Orwellian surveillance as a last-gasp desperation move. That’s the only honest way to assess the Biden administration’s almost unspeakably bad proposal to require that all U.S. banks report data to the IRS about any account with more than $600 in annual deposits and withdrawals.

The rules do not include individual transaction reporting, but would require reporting total annual inflows and outflows for the vast majority of accounts in the U.S. The only comparable power grab in living memory was the secret surveillance of U.S. citizens’ communications by the National Security Agency. It should be deeply embarrassing to all Americans that our lawmakers are even considering imposing this new financial surveillance apparatus. As another nauseating index of political dysfunction, this rule isn’t even being considered on its own merits. Instead, much like recent half-cocked crypto reporting rules, it’s being crammed through as a pay-for in the big infrastructure bill, practically guaranteeing that it would be drafted hastily and with minimal debate.

It’s utter madness, not just as policy, but as politics for Biden’s Democrats. The party already has a reputation as proponents of the nanny state, and here they are lobbying for more surveillance at a moment when Americans are so deeply distrustful of government that they’re going to their literal deathbeds refusing to take a safe, effective vaccine against a deadly virus. Publicizing the $600 threshold seems particularly suicidal for the Dems, making absolutely explicit that they want to spy on the little guy, too.

Republicans, it must be said, are also deeply culpable in this travesty, though they have, as usual, outmaneuvered and outsmarted the blundering, out-of-touch Dems into taking the brunt of the anger. It was the Republicans, remember, who rejected a provision in an earlier version of the bill that would have increased the enforcement budget of the IRS. That would have made it easier for the agency to investigate the high-end tax cheats who really matter. According to the Congressional Budget Office, it would have returned roughly $2.50 for every dollar of the increased IRS budget, without sweeping new surveillance powers.

On its face, then, increasing IRS enforcement was the right thing to do for America. It would have given investigators the resources to dig into specific suspicious individuals and activities, as opposed to the mass data gathering being proposed as an alternative now. But the Republicans decided their anti-tax stance meant not just supporting lower tax rates, but also making it easier for their richest donors to evade taxes entirely.

And so, thanks to this brew of different flavors of bad faith, we wind up with surveillance instead of enforcement. This rule should of course be opposed on principle – but it’s just one index of a much deeper, scarier downward spiral as distrust and bad faith grease the skids for the erosion of the privacy guaranteed by the Constitution. It will take a major change to escape that trap.

–David Z. Morris

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