Why a Bipartisan Crypto Embrace May Never Extend to Bitcoin – TechCrunch

Hi everyone, and welcome to Chain reaction

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

Last week was our inaugural newsletter and we discussed at length the changes Twitter could make to grow its crypto business. At the time, like many others, I was assuming that a Musk Twitter deal was ultimately doomed, but low and behold, we have a deal. Everything has been approved at this point, but I can’t help but think that something is going to kill this deal at the eleventh hour. If that happens, Twitter’s board or Musk will face a $1 billion fine for backing out of the deal, but I guess we’ll see… This week I’m watching a controversial Twitter ban. bitcoin mining. New York regulators and what similar bills could mean for the political reputation of the #1 crypto coin.

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the hottest plug

Biggest crypto skeptics see plenty of reason to criticize the industry, but generally at the heart of most complaints is the belief that crypto contributes very little to society while burning massive amounts of energy.

While crypto believers might bicker over the first point until they’re blue in the face, the second is a little harder to deny. Bitcoin uses approximately 204.50 terawatt-hours (TWh) of electricity per year at current rates according to the oft-quoted tracker built by Digiconomist, this number is equal to Thailand’s electricity consumption. Meanwhile, Ethereum’s energy footprint is half the size but still comparable to Kazakhstan’s energy consumption. In 2018, the United States reported its total electricity consumption at 4,222.5 TWh.

For some lawmakers, those numbers are hard to swallow. This week, the New York State Assembly passed a bill that put the crypto team under arms. The bill blocks the formation of crypto-mining businesses in the state that depend on non-renewable energy. In particular, it does not apply to existing installations. A corresponding bill is currently being considered in the Democratic-controlled Senate.

It’s fascinating for a whole host of reasons.

For one thing, crypto is increasingly becoming a partisan topic. Republicans are generally wary of regulating unregulated industries, and as a result, a number of major party figures have thrown their full support behind crypto with few concessions. This includes potential future party leaders like the governors of Texas and Florida. Meanwhile, most of crypto’s staunchest critics seem to be Democrats, but that doesn’t mean it’s a party line issue. President Biden’s recent cryptocurrency executive order was generally considered very space-friendly by industry insiders. Energy use appears to be the most salient sticking point for many regulators considering sweeping bans.

The other reason it’s interesting is that this bill really only affects a handful of major crypto networks, but that includes the two biggest – Bitcoin and Ethereum.

These networks use what is called a proof-of-work mechanism to secure their networks. The job in this case is mining which involves computers working around the clock to basically solve mathematical problems that protect the integrity of the blockchain making it extremely expensive and technically difficult for hackers to overwhelm the network to perform unauthorized transactions and steal tokens. Crypto generally seems to be moving away from proof of work, notably, Ethereum is in the process of evolving its network towards a less energy-intensive consensus method. But Bitcoin seems unlikely to make its own transition, suggesting that regulatory maneuvers, like the New York bills, are likely to be increasingly antagonistic towards Bitcoin (and a few smaller networks) in particular.

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

Bitcoin already broadcasts its libertarian bent a little more prominently than other blockchains. In recent industry events, it’s become clearer that amid a burgeoning developer ecosystem for blockchains like Ethereum and Solana, the Bitcoin network infrastructure ethos is increasingly its element. the most harmonizing. Bitcoin’s continued resistance to criticism and calls for change can only embolden its proponents, but criticism of the network’s power consumption goes nowhere and further adoption can only make it a more visible target for aggressive regulation.

Some politicians may end up loving crypto but still hating bitcoin.

this week’s capsule

Hey y’all it’s Anita here. Our second episode of the weekly Chain Reaction podcast just dropped, and this week we got so wrapped up in Elon Musk/Twitter news that we thought we’d tackle two other topics first to distract ourselves from the bird app. for a second.

I wrote earlier this week about how Fidelity, the largest retirement plan provider in the United States, announced plans to integrate bitcoin into the 401(k) plans it administers for 23,000 companies. . It’s a bold move on the part of this incumbent, as it legitimizes crypto as a long-term investment just a month after regulators tried to discourage pension plan providers from doing just that. We kicked off the podcast with heated exchanges about who will benefit from Fidelity’s decision, especially if it takes off as a larger trend. Personally, I think the news is great for non-billionaires – you can read why in my latest article for TC+ here.

We also covered:

  • Coinbase CEO Brian Armstrong Throws Shade at Apple Over App Store Policies
  • Elon Musk’s bid for Twitter and what it means for web3. We just couldn’t ignore this one, especially given Twitter’s position as a watering hole for the crypto community.

Our guest interview this week was with Shaun Maguire, an investor at Sequoia and, of course, a crypto Twitter personality. We chatted with him about Sequoia’s recent crypto moves, the possibility of a multi-chain future, and whether we’ll ever achieve true decentralization at scale or end up getting stuck in “web 2.5” for all time.

Subscribe to Chain Reaction on Apple, Spotify, or your alternative podcast platform of choice to follow us every week. To follow Chain reaction on Twitter.

Anita Ramaswamy

follow the money

Where startup money is moving in the crypto world:

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

analysis added

Some additional cryptanalysis from our TechCrunch+ subscription service:

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

The total circulating supply of stablecoins has grown significantly over the past year, but its future is unclear. Kraken’s chief legal officer said the sub-asset is in a “Cambrian moment” as it gains a foothold in the market. But not everyone is a fan of stablecoins, as they are in their infancy and have the potential to thrive, in two very different ways.

Artists like Harry Connick Jr. use web3 to engage with fans

Web3 has attracted people from all walks of life, from traditional financial analysts to software developers. But a fairly new group has entered the space in the past 12 months: artists. While there are financial incentives, some say these creators are diving deep into web3 for more than just a new revenue stream.

Jacquelyn Melinek

Thanks for reading! And, again, to get this delivered to your inbox on Thursday mornings, you can sign up on TechCrunch’s newsletter page.

Have a good week-end,
Lucas Matney

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