Why the bipartisan embrace of cryptocurrency may not extend to Bitcoin – TechCrunch

Hello everyone, and welcome back chain reaction

On our Chain Reaction podcast this week, Anita and I chatted with Shaun Maguire of Sequoia Capital about why players are skeptical of NFTs and where decentralization really matters. More details below.

Last week was our inaugural newsletter and we chatted at length about the changes Twitter could make to expand its crypto business. At that point, I was – like many others – operating on the assumption that the Musk Twitter deal was doomed in the end, but low and here we are, we got a deal. Everything is approved at this point, but I can’t get rid of the feeling that something is going to kill this deal at the eleventh hour. If that happens, Twitter’s board or Musk will be in trouble to get a $1 billion fine to walk away from the deal, but I suppose we’ll see…this week, I’m looking at a controversial Bitcoin mining ban working its way up. Regulators in New York and what bills like this could mean for the No. 1 cryptocurrency’s political reputation.

To get this message in your inbox on Thursday, sign up for TechCrunch’s newsletter page. Follow me on Twitter while you’re at it!


Getty Images

hottest

The biggest skeptics of Crypto see plenty of reasons to criticize the industry, but overall at the heart of most complaints is the belief that cryptocurrency contributes little to society while burning huge amounts of energy.

While crypto-believers can squabble over the first point until they turn blue in the face, the latter is hard to deny. Bitcoin uses an estimated 204.50 terawatt-hours (TWh) of electricity annually at current rates according to the much-cited tracker by Digiconomist, and this number equals Thailand’s energy consumption. Meanwhile, Ethereum’s energy footprint is half the size but still comparable to Kazakhstan’s energy consumption. In 2018, the United States announced that its total electricity consumption was 4,222.5 TWh.

For some lawmakers, these numbers are hard to digest. This week, the New York State Assembly passed a bill that encrypted the task force. The bill prohibits the formation of crypto mining companies in the state that rely on non-renewable energy. Not particularly applicable to existing facilities. A similar bill is currently making its way through the Democratic-controlled Senate.

This is great for a whole host of reasons.

First, cryptography is becoming an increasingly partisan topic. Republicans are usually wary of regulating unregulated industries, and thus a number of key party figures have thrown their full support behind cryptocurrencies with few concessions. This includes future party leaders such as the governors of Texas and Florida. Meanwhile, most ardent critics of cryptocurrency seem to be Democrats, but that doesn’t mean it’s a partisan problem. President Biden’s recent cryptocurrency executive order was generally considered to be very space-friendly by industry insiders. Energy use appears to be the most prominent sticking point for many regulators considering blanket bans.

Another reason why this is interesting is that this bill really affects only a few major crypto networks, but this includes the two largest networks – Bitcoin and Ethereum.

These networks use something called a Proof of Work mechanism to secure their networks. The business in this case is mining that involves computers running around the clock to essentially solve math problems that protect the integrity of the blockchain, making it extremely expensive and technically challenging for hackers to flood the network for unauthorized transactions and steal tokens. The cryptocurrency generally appears to be moving away from proof of work, and most notably, Ethereum is deep in the process of moving its network toward a less energy-intensive consensus method. But it seems unlikely that Bitcoin will make its own transformation, indicating that regulatory maneuvers, such as the New York bills, are likely to be increasingly hostile toward Bitcoin (and a few smaller networks) specifically.

This could lead to an interesting scenario where the crypto industry increasingly finds tolerance prevailing among its current critics but Bitcoin finds itself increasingly politically isolated.

Bitcoin is already projecting its liberating determination a little more prominently than other blockchains. In recent industry events, it has become clear that in the midst of a thriving developer ecosystem for blockchain networks such as Ethereum and Solana, the Bitcoin network infrastructure philosophy is its increasingly more consistent component. Bitcoin’s continued resistance to criticism and calls for change may only encourage its proponents, but criticisms about the power consumption of the network are not going anywhere and further adoption may make this goal more visible to aggressive regulation.

Some politicians may grow to love cryptocurrencies but hate Bitcoin nonetheless.


This week’s pod

Hi, it’s Anita here. The second episode of our weekly Chain Reaction podcast just stopped, and this week, we’ve been so immersed in Elon Musk/Twitter news that we thought we’d take a couple more topics first to take our minds off Bird for a second.

I wrote earlier this week about how Fidelity, the largest retirement plan provider in the US, announced its plans to bring bitcoin into the 401(k) plans it manages for 23,000 companies. It’s a bold move by this current trading company as it legitimizes crypto as a long-term investment just a month after regulators tried to discourage retirement plan providers from doing exactly that. We started the podcast with some enthusiasm about who would benefit from the Fidelity movement, especially if it’s a bigger trend. Personally, I think the news is great for non-billionaires – you can read about why in the latest TC+ news here.

We also covered:

  • Coinbase CEO Brian Armstrong casts a shadow over Apple over its App Store policies
  • Elon Musk’s View of Twitter and What It Means for Web 3. We couldn’t get past this, especially because of Twitter’s position as a waterhole for the crypto community

Our guest interview this week was with Sean Maguire, an investor in Sequoia and of course a crypto Twitter personality. We talked to him about Sequoia’s recent crypto moves, the potential for a multi-chain future, and whether we will ever reach true decentralization at scale or end up in “Web 2.5” forever.

Subscribe to Chain Reaction on Apple, Spotify, or the alternative podcast platform of your choice to keep up with our news each week. Follow Twitter reaction chain.

Anita Ramaswamy


follow the money

Where startup money is moving in the crypto world:

  1. P2P exchange 0x gets $70M from Greylock Partners
  2. NFT startup Proof gets $10M from Alexis Ohanian’s 776
  3. Crypto TV startup Mad Realities raises $6 million from Paradigm
  4. African crypto app Afriex receives $10m from Sequoia China and Dragonfly Capital
  5. Gaming DAO Snackclub raised $9 million from Animoca
  6. DeFi Tonic gets $5M from Electric Capital and Move Capital
  7. Cricket NFT Rario platform raises $120 million from Dream Capital
  8. NFT Apeiron Gets $10 Million From Hashed
  9. NFT infrastructure company CXIP Labs to receive $6.5 million from Courtside Ventures and Wave Financial
  10. Crypto-banking firm Cogni earns $23 million from Hanwha Asset Management and CaplinFO

Additional analysis

Some crypto analysis from our TechCrunch+ subscription service:

Stablecoins are here to stay, but will they see wider adoption?

The total circulating supply of stablecoins has grown exponentially over the past year, but its future is not clear. Kraken’s chief legal officer said the subsidiary assets are in a “cambrian moment” as they gain a foothold in the market. But not everyone is a fan of stablecoins because they are in their infancy and have the potential to thrive in two completely different ways.

Artists like Harry Connick Jr. use Web 3 to connect with fans

Web3 has attracted people from all walks of life, from traditional finance analysts to software developers. But a fairly new group has entered the space over the past twelve months: artists. While there are financial incentives, some say these creators are diving deep into Web 3 for more than just a new source of income.

Jacqueline Milink


Thanks for reading! And again, to get this in your inbox on Thursday morning, sign up for TechCrunch’s newsletter page.

I wish you a nice weekend,
Lucas Matni

Leave a Comment

Your email address will not be published.