Dispatch #17 -2021
May 28th, 2021
The Dispatch spent this past week listening to insightful speakers and panels at the Consensus 2021 conference. It was at Consensus that Ray Dalio declared “I have some of it,” while articulating a preference for Bitcoin over the US Dollar or bonds. The event was also a good example of how US regulators are engaging the crypto industry. The opening address was by Fed governor Lael Brainard and SEC Commissioner Hester Pearce also spoke. It’s a short conference impacted update this week.
- Federal Reserve Governor’s address at Consensus 2021
- Ray Dalio – I own Bitcoin
- Goldman’s lobbying chief joins Coinbase
- China bitcoin mining crackdown
- Only 4% of iOs users allow app tracking
- BITCOIN SCHOOL- on vacation this week!
Fed. Gov’s address to Consensus 2021
Governor Brainard’s address was an official Fed release that is worth reading, especially if you worry about regulatory risks. The universe of crypto naysayers jumped on this release as more evidence of a looming government crackdown. Part of the address is shown below with negative assertions highlighted by the Dispatch.
The Dispatch is unsurprised that the Fed will defend its monopoly to issue currency. That defense would inevitably include highlighting poor past experiences of alternative monies. To be fair to the Fed, there are instances today of poorly designed code – crypto currencies are computer code – leading to investors losses. Plus, the Tether reserve concern highlighted last week in Dispatch #16 further justifies the risks highlighted in the release. Overall, though, it was a balanced opening address that allowed both the bulls and the bears to assert their positions.
Ray Dalio – “ I have some bitcoin”
Ray Dalio’s view is significant because he has built his ~$160bn hedge fund, Bridgewater Associates, on a strategy of using leveraged bond positions to extract returns. Therefore, it’s notable when he states a preference for scarce assets like Bitcoin over bonds or cash.
Source: Twitter
Mr. Dalio did add that he continues see regulatory risks as Bitcoin and crypto markets become larger in value, challenging the governments’ monopoly on issuing effective currencies. The Dispatch agrees with this view, but sees the risk receding with each passing month as thousands more become crypto owners. Regardless, this is a factor that requires appropriate position size to manage risks.
Goldman’s chief lobbyist joins Coinbase
This is another example of subtle gains for the crypto corners. With each passing month and with more high-profile adopters from the world of sports, business and entertainment, the network effect and corresponding soft power increases. This The Block article provides more details of the Coinbase hire.
China bitcoin mining crackdown
Chinese provinces that were previously supportive of bitcoin-mining computers have turned cautious in recent months. The move started in March, when coal-producing Inner Mongolia province gave miners two months to stop activity, as this Fortune article explains. In April, a coal mining accident in Xinjiang province led to a statewide power curtailment-led reduction of bitcoin mining activity there. Most recently, hydropower surplus Sichuan province curtailed bitcoin mining due to low rainfall, and is now hosting a seminar to debate the effects of long-term curtailment. This The Block article points out that a Bitcoin mining crackdown has been discussed at the State Council level.
The drop in computing power (called hash power) from China-based computer networks (aka miners) should increase the use of renewable energy to support the bitcoin network. These two articles from Decrypt and The Block discuss how mining networks are looking to reduce their reliance on China. The downside is that network hash rate is often used in many quantitative trading models and a lower hash rate can feed through into lower prices, in the short term.
Only 4% of US iOS users allow app tracking – How bad is this for Facebook?
If you are an iPhone user, you may have noticed that you now have to agree to allow or not-allow apps to share your data. This happens when your apps are updated. Tracking is a core part of internet firms that rely on an ad-based revenue model. Facebook, Google and Twitter are some of the largest names in that space. Google works through a browser, so it may be less exposed to the iOS update, but others like Facebook could see a significant negative impact. They can no longer claim to serve advertisements based on a user’s personal preferences! This Mashable article has more details. This is a win for user privacy – hurray!
BITCOIN SCHOOL – Closed this week!
Stay safe and do reach out if you have any questions or comments about the material in this Dispatch.
Asi
Important Disclosures
| This is not an offer or solicitation for the purchase or sale of any security or asset. While the information presented herein is believed to be reliable, no representation or warranty is made concerning its accuracy. The views expressed are those of RockDen Advisors LLC and are subject to change at any time based on market and other conditions. Past performance may not be indicative of future results. |