‘Please, please president, we don’t want any more electricity’

Apart from the cryptocurrency-focused media, not many US news outlets have been providing this newsworthy coverage. The United States is home to more than 100 top cryptocurrency companies. In particular, the USA is home to the world’s second largest cryptocurrency exchange, Coinbase, which is a publicly traded company. Coinbase reported a USD 273 million profit in the fourth quarter of 2023. For the full year of 2023, it earned USD 95 million on USD 3.1 billion in revenue, while in 2022, it posted a loss of USD 2.6 billion. Apart from Coinbase, Marathon Mining, the largest US cryptocurrency mining operation, reported a staggering revenue increase of 229% to a record USD 387.5 million in 2023 from USD 117.8 million in 2022. Several policy proposals are before policymakers in the USA, trying to tackle issues related to the industry. 

In late July 2024, Nashville, Tennessee (USA) was the stage of the largest annual bitcoin gathering. The Bitcoin Conference 2024 had one speaker that everyone awaited with anticipation. Republican Party candidate and the former US President Donald J Trump is the first high-end political figure in the USA who agreed to address the bitcoin crowd. Trump’s appearance was announced a couple of weeks before, and at that very moment the issue of cryptocurrency and the surrounding industry slipped into the main discussion among the candidates for the November US elections.

Back on the green

So, the industry is back on the green, regulation is discussed in the US Senate and Congress and the mining industry is growing. How come that industry is not discussed that much on the main political stage? 

In Nashville, everything was ready for Trump’s appearance. The former president’s campaign trail advertised his appearance as one of the highlights of his July campaign. Anyhow, the crowd gathered at the Bitcoin Conference is not politically homogeneous. There are people on the complete opposite side of Trump’s proposed political spectrum. In the past, US cryptocurrency companies were one of the top contributors to the US Democratic Party (most prominently, Sam Bankman-Fried, now convicted, former CEO of the failed cryptocurrency exchange FTX).

Crypto vs bitcoin

Before I continue, let me give you a brief explanation. It is important, trust me.

In short, the cryptocurrency industry is divided into two strongly opinionated teams standing on opposite sides. Bitcoin adopters would almost never call themselves crypto enthusiasts. They consider other cryptocurrencies, cryptocurrency exchanges, and the entire idea of ‘blockchain technology changing the world’ to be false. For (true) bitcoiners, NFTs, meme coins, microtransactions, enormous overnight profits, and other ‘miraculous’ stories were considered nothing more than elaborate schemes for tricksters and scammers willing to sell innocent investors a story of the world-changing technology. And to be fair, that narrative kind of proved to be true. For years, US financial regulators have been waging war on cryptocurrencies and online cryptocurrency exchanges as ‘unregulated securities’ businesses. The US SEC has already won many cryptocurrency-related court cases for scam and fraud charges. On the other hand, the same regulatory agency has made a clear distinction between bitcoin and others. The SEC has officially stated that bitcoin cannot be considered a security but rather a commodity and that they will not pursue any bitcoin holders or bitcoin-only companies (in a court case back in 2019). This is thought to be due the decentralised nature of bitcoin. Unlike other cryptocurrencies, bitcoin does not have a CEO, headquarters, or hire anyone to work on its update. Bitcoin is simply an open-source protocol that handles digital value as unique information. Therefore, it cannot be defined as ‘a promise of profits’ to investors, which is the main argument of the famous Howey Test, a metric that has been used by the SEC to determine the scope of its work since the 1946 Supreme Court case.

This is the first point of difference recognised by regulators and one of the main arguments for Bitcoin as digital gold. Bitcoin can be used at a settlement level to create a future ‘digital gold standard’ mimicking the now abandoned ‘gold standard’ for the global economy. Bitcoiners argue that other cryptocurrencies and the industry as a whole have achieved a huge value transfer but fail to see any value creation (thus far). Court decisions worldwide have confirmed quite similar things.

Energy consumption in cryptocurrency

The second point of major disagreement between the two sides (crypto and bitcoin) is the way the industry is spending energy. Energy is the most frequently mentioned issue in the media coverage of cryptocurrency developments. You have heard and read numerous reports on the massive amount of energy used to mine (create) cryptocurrency and 99.5% of that energy is spent in bitcoin mining. The proof-of-work (PoW) algorithm, used in the bitcoin network for security reasons, requires miners to spend energy creating new bitcoins. Specialised mining equipment is often located near big power plants, and the pursuit of cheap electricity is the major driver of the industry. In contrast, the crypto industry, apart from bitcoin, has created a solution for such energy demand with the non-energy consuming Proof-of-Stake (PoS) algorithm for network security. Therefore, the crypto industry is now pointing to bitcoin as the sole reason why regulators are thinking about cryptocurrencies, as the green agenda worldwide becomes dominant. A couple of US legislators from the Democratic Party have filed several motions for a statewide ban on bitcoin mining as an energy demanding industry. As a counter-argument, bitcoiners say that the actual amount of energy spent for bitcoin creation gives it its power. In other words, energy spent in creation gives bitcoin an intrinsic value similar to physical gold. 

It is important that these distinctions have been clarified in order to understand the scope of Trump’s address. With that, back to Nashville.

News for crypto in the USA

One of my friends who was in the audience told me that people who normally are not interested in politics were ecstatic and wanted to hear the first address of the US president to the bitcoin crowd. President Trump took the stage at the Bitcoin Conference 2024 and gave the crowd all they wanted to hear, and a bit more. He said that the AI and bitcoin industries are similar as they need the same thing: electricity. He made a promise to the United States to ramp up electricity production by a couple of folds, clearly setting his agenda on the opposite side of Democrat’s calls for mining bans. We want all bitcoins in the world to be created in the USA, he said. ‘We will be creating so much electricity that you’ll be saying: Please, please president, we don’t want any more electricity…’ 

He immediately followed with the promise to relieve Mr Gary Gensler, the current chairman of the US SEC. Actually, he would do it on his first day in the office. He promised that the bitcoin and crypto industry would stay in the USA. But one of the most dazzling promises for all bitcoiners attending was his announcement that the USA might start accumulating bitcoins as for future global trade. The crowd was overwhelmed, as he confirmed that the idea of bitcoin as digital gold had finally received approval from the top policymaker, let alone the former (and possibly future) president of the United States. Later during the conference, plans were elaborated on how such a thing can be done. If true, this could indeed play a significant role in the worldwide adoption of bitcoin as a global store of digital value. Having in mind that the future global economy will certainly be digital, such a thing is actually quite possible and logical. Ultimately, it is a matter of political will to create such a strong global independent currency not related to the reigning central banking system. ‘Bitcoin will probably overtake gold (market), there was never anything like it… it’s not only a marvel of technology but the miracle of (human) corporation.’ To back that up, Trump reiterated that he would halt the development of the US Central Bank Digital Currency (CBDC).

Trump finished with the best wishes for all: ‘We will make America and bitcoin bigger, better, stronger, richer, freer, and greater than ever before… Have a good time with your bitcoin and your crypto and everything else you’re playing with.’ 

The moment he said it, the crowd suddenly became colder. They realised that he was not aware of the distinction between bitcoin and crypto. Actually, he might just populistically say what crowds want to hear, and the moment the script was taken off the teleprompter, he could not tell the difference between the two. 

This was for sure the event that launched issues surrounding bitcoin and cryptocurrency in the US elections race, as more and more young voters are getting to the polling stations and the idea of the independent global currency becomes not so utopian and high-end tech issue. In any case, we will have to wait and see which of those promises are actual future policies and which part plays the role of enchanting the masses. Open-source software, energy consumption, and consumer protection will be discussed in detail in the future.