Join me today for Episode 971 of Bitcoin And . . .
Topics for today:
- Microstrategy is Going Banking
- Scammed Again by FTX
- FBI Runs Altcoin Scam
- 2140 Foundation Launched to Support BTC Devs
#Bitcoin #BitcoinAnd
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https://cointelegraph.com/news/bitcoin-amsterdam-2024-misinformation-academia-media-regulations
https://www.coindesk.com/policy/2024/10/11/former-ftx-customer-says-hedge-fund-reneged-on-bankruptcy-payout-deal/
https://decrypt.co/285701/fbi-made-profit-ethereum-token
https://www.theblock.co/post/320655/microstrategy-trillion-dollar-valuation-bitcoin-bank-michael-saylor-bernstein
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https://www.nobsbitcoin.com/bitmain-launches-the-antminer-s21-plus-series/
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[00:00:00]
David Bennett:
Good morning. This is David Bennett, and this is Bitcoin and, a podcast where I try to find the edge effect between the worlds of Bitcoin, gaming, permaculture, podcasting, and education to gain a better understanding of all. Edge effect is a concept from ecology describing a greater diversity of life where the edges of 2 systems overlap. While species from either system can be found at the edge, it is important to note there are species in the overlap that exist in neither system, and that is what I seek to uncover. So join me in discovering the variety of things being created as Bitcoin rubs up against other systems. It is 9:0:1 AM Pacific Daylight Time. It is the 11th day of October 2024, and this is episode 971 of Bitcoin and the feds turn out to be shitcoiners.
Yep. They do. Fidelity's got a massive breach on their customer base. That's not good. What else do we got here? We've got, it does look like Michael Saylor might be entering into the banking game. This is what I had conjectured a couple of weeks ago. We'll get into all that. We've got some news out of Bitcoin, Amsterdam. Is there anything else going on here? Oh, yes. FTX is back in the news. Great. And then I've got a small mining story. But first, we've got to start with the Fidelity data breach exposing personal data of 77,000 customers.
And this is written by Danny Santana, but out of CNET, which I don't normally use as a news source, but today we're getting into it. Fidelity Investments has suffered a data breach. Whoop dee doo. And it has compromised the personal information of 77,000 customers, the company said in a notice. The breach occurred in August and is tied to 2 accounts recently opened with the asset management company according to the filing. It's not clear how these accounts allowed hackers access to customers data, however. Fidelity has not revealed what specific customer data was accessed by the thieves, but said after concluding its investigation that of course no customer accounts or funds were compromised in the breach.
We detected the activity on August 19th and immediately took steps to terminate that access. Fidelity declined to provide any further comments. Quote, Fidelity takes its responsibility to serve customers and safeguard information seriously. Yeah? Really? I call bullshit. And then they got a few paragraphs of what to do if you're included in the Fidelity breach. Honestly, it's the same shit anybody's ever gonna tell you. You know, Wells Fargo breaches. Any of these breaches, they basically say, you know, oh, they're offering you 2 years of credit monitoring and identity theft protection. And, you know, honestly, that's just in my opinion, that's just worse.
Okay. So you've allowed the people to abscond with 77,000 customers personal information of which you won't tell us what it is. And your response is to have us go and give all that information again to yet one more company that could be breached. This is the response. And it's always the response. Because there's literally nothing else they can do. All of these companies are massive honeypots. They this KYC business needs to go away. Will it? Probably not anytime soon. But we still we've got to work on it. We got to keep pressure on whoever it is that we need to keep pressure on to get rid of KYC.
And all of this comes out of the bank banking secrecy act. And we don't need it. It's it has clearly been a failure from the outset, has continued to be a failure. But we have to ask our question who is it a failure to well it's a failure to the customers but I guarantee you it's doing exactly what the people that put the bank secrecy act in place in the first place it's serving their needs quite well quite well. For installing fear in the in the populace? No. They don't care about that. That's honestly, nobody's scared of getting their shit lifted anymore. All of us understand we've already got all of our information is out there in the wind twisting. Right? But but they the people in power who have put k y c and know your customer and all that stuff into place they know our information that's what they want they don't care if thieves or anybody else actually gets a hold of the information that is not their priority it never was it is simply to tie you down by your identity which is one of the reasons why I say Nostr is very important and if you don't understand why I can't really spend the time to tell you about it here but it is a different style of digital identity and I highly recommend that you go find any Nostra client go to koracle. Social go to primal.net use domus use amethyst find any possible client that you can for Nostra just get an identity Just it it's it's easy to do. You will see how it's done when you first get into one of these clients if you've never been there before. Now, from Bitcoin Amsterdam, flawed research drives harmful Bitcoin policies.
We'll find out more about it from Josh O'Sullivan out of Cointelegraph. Speakers at Bitcoin Amsterdam 2024 conference have highlighted the far reaching consequences of misinformation in academic research on bitcoin. During the Beyond Resistance Money panel discussion on day 2 of the conference, speakers said that academic inaccuracies have misled and continue to mislead the media contributing to misguided government policies and harmful regulations the Bitcoin advocates detailed how flawed studies on BTC emissions and mining practices have driven enormous or rather erroneous narratives in journalism and policy making One important issue discussed was the role of flawed academic research in spreading misinformation about bitcoin.
Andrew Bailey, a professor at Yale NUS College and Senior Fellow at the Bitcoin Policy Institute highlighted a specific issue in an influential academic paper that inaccurately reported BTC emissions data and he said quote the problem I'm afraid is academics and the wrong or even damaging things that they say about bitcoin Academics have been wrong about Bitcoin but nobody reads this stuff. Right? Right? Bailey pointed out that the paper contains a unit error in the chart that has not ever been corrected even though it continues to be cited as factual he emphasized that such mistakes can have a lasting impact on public understanding of Bitcoin Bradley Retler, associate professor of philosophy at the University of Wyoming added that journalists often lack the time to verify or even deeply understand academic sources further spreading these inaccuracies.
According to Retler, the reliance on academic papers by journalists who may not have the resources to become subject matter experts contributes to the problem. So the journalists read the academic papers and they translate them into everyday parlance and the problem is when you start with crap you end up getting crap. Craig Warmke, a member of the Bitcoin Policy Institute warned that misinformation has real world implications particularly in the realm of policy making Policymakers and regulators don't have time to read these academic papers so they read the journalism and this has resulted in some attacks on BTC mining self custody as well as financial privacy.
Wermke stated that this pattern has resulted in restrictive proposed legislation especially in Sweden to tax the BTC mining industry out of existence He also said that there is an attack on software developers working on technologies that promote financial privacy. These are serious issues. The problem has bled through to journalism and to policy making and law enforcement and regulators and bad research on BTC and academia is largely to blame and so is the absence of the research. Warm key suggested that while academia has historically worked against bitcoin it is time for academics to start supporting the cryptocurrency that's the end of the article my commentary here is that I call it the academy, which is actually sort of what you should be calling it.
All colleges and universities around the world, not just in the United States, not just in the West, basically the academy means all colleges and universities anywhere in the world and the academy is in trouble. 1st and foremost they've got a major problem on their hands that's developing right now. Some colleges knew it was coming Some universities did too, and they prepared for it. They did well. Texas Tech University is one of them. UT is one of them. There's a and there's more than a few others, but most have not prepared well. Washington State University is one of those universities that did not prepare well. What am I talking about? The enrollment cliff.
We knew it was coming and it had nothing to do at all with student loans and and younger people in coming into college refusing to get student loans and therefore not going into college at all because they're just can't afford it and that's a whole different issue but it was because the populate that the amount of people that were available to go to college of college age were not present we've had a decline in population lots of people stopped having babies we did these guys saw it when they they saw the numbers 20 years ago they understood what was going to happen and the decline kept going kept going it only meant that when you get to college at 18, 19, and 20 years old, there wasn't going to be the amount of people to go into college to get the student loans.
Or if not get student loans to get the jobs that would give them the money to pay for tuition even though it would take them a lot longer. So there is that problem and it is causing budgetary issues everywhere not just Washington State University that's just an example you're going to see an evisceration of the academy and it's going to happen within the next 10 years. You're going to see whole colleges just say fuck it we can't do it anymore and my idea is to turn them into what old folks homes that's right assisted living centers You have a whole campus. You've got dormitories. You've got medical most of these places have some kind of medical facility. They have lunch rooms. They have cafeterias. They've got all manner of outdoor spaces. Perfect, perfect thing to do with these colleges and universities that did not figure this out is to just turn them into something that actually generates real money. On the other hand, we have this whole academic situation.
There's been several instances of academic papers showing up in peer reviewed publications that were written by AI or worse just absolute jibberish just complete just filled with nothing but jargon And somehow they got through the peer review process, which means that anywhere between 35 and sometimes more, I suppose, human beings read that paper, make remarks on that paper, send it back to the author, and then the author makes those corrections or does whatever tidying up needs to be done. Sends it back and those same people read it again. And they either send it back with more commentary or they publish it. The amount of papers that are just nothing but jargon, gibberish, bullshit that have gotten through and had to be retracted when somebody who really had their shit together read it and was going, this doesn't make any sense.
Then you know it took that it took somebody actually reading it in the publication a real scientist going the hell is this is stupid and it has caused nothing but embarrassment now there's something in this in this article that I wanted to point out. Yeah. Here it is. Let me read this to you again. Bailey pointed out that the paper contains a unit error in a chart. And it has not been corrected, even though it continues to be cited as factual. What they mean, if you don't understand what unit error means, is like they've got a chart in this whatever paper that Bailey's talking about. And there's a chart in this thing and it has probably a y axis and an x axis right? And the units that are used on whatever side or like it's either in the y axis units or the x axis units like like generally speaking y would be time and x would be amount so if there's a unit error then that means that they're using the wrong units like so there could be it could be a situation where it's a order of magnitude error. It should have been 10, but instead it's printed as a 100 units.
Or it could be like a gibberish unit, like, I don't know, 10 milligrams per mercury as a barometric pressure measurement. And if they use that in place of tons of c02 being produced, well, that would be a unit error. What exactly this unit error is is not the point. The fact of the matter is is that the fact that there's a unit error means that whatever that chart is saying is complete and utter crap. It doesn't mean anything. If you've ever seen somebody like, my my wife has this problem all the time with her students. They'll send in a chart, and the the axes aren't labeled. It's just a bar chart or a line chart. And it's like, well, what what does this even say?
That's how bad this stuff can get. But in academe when you've got peer reviewed publications that have error units in the chart and nobody's caught it or worse we know that it's there and they refuse to correct it this tells you the state of academic publication today and it is not good and a lot of this I do believe actually stems all the way back from the fact that these universities and colleges the the the academy itself is in big big trouble There's a lot of grants that are no longer being granted anymore because they're just running out of money. They can't afford to pay their staff. And now the colleges themselves are finding themselves in a, well, they don't have any students coming in.
It's a bad situation and it's causing really bad problems. So just be aware when you oh, another paper's come out saying that Bitcoin mining is crap or it's gonna kill us all. It's probably based on crap. It probably is. Now over to FTX. A customer from FTX is suing a hedge fund and says that the hedge fund reneged on the bankruptcy payout deal. This is out of CoinDesk Sam Reynolds. A California based former customer of FTX is suing hedge fund Olympus Peak alleging that the firm's bankruptcy claims purchasing desk withheld promised payments on a claim he had sold to it. In documents filed with the US District Court of Southern New York, Alexander Nicholas Gitz I can't pronounce that name. Says that he agreed to sell a $1,590,000 FTX bankruptcy claim at a 42% discount to Olympus Peak Trade Claims Opportunities Fund with an excess claim provision.
The agreement provided that if the claim is ultimately allowed in an amount that is greater than the claim amount, the buyer will purchase such excess claim amount by paying the excess claim amount multiplied by the purchase rate. This gentleman whose name I cannot pronounce agreed To the sale only because the purchase agreement contained a clause that expressly gave him the right to receive additional recovery in the event his claim was paid above par through the bankruptcy proceedings according to the filing. Grutsky attorneys write in the filing that the most recent FTX disclosure statement says that the claims similar to his are estimated to receive as much as 146% of their value in distributions, but they allege, Olympus Peak made clear that they would not be fulfilling their end of the bargain.
Quote, we disagree with your position that you have retained any economic interest in the claim, an Olympus Peek representative wrote to Gheerdsky. Olympus Peek did not immediately respond to a request for comment. In the early days of the FTX bankruptcy, claims were going for 13¢ on the dollar on bankruptcy marketplaces. So what's going on here is this guy got he he he had, like I don't know. Let's say what do you what do you say? A 100 $1,590,000. He sold it at a 42% discount. So he got, it as far as I can tell, he got that end of the cash. So he ended up getting a check for whatever the disc the post discount of $1,590,000 out of FTX bankruptcy.
But he's got a provision in there that says, look, man, if for whatever reason the payout ends up being higher, then you're going to pay me that extra money. And Olympus is saying that they're not going to hold up their end of that contract. And that's just sad. It's like when when somebody would 2 parties or multiple parties engage each other in a contract and they all sign it how is it that you can just say, you know what? I'm just not gonna do it. And I doubt very seriously that, Olympus is going to be held have their feet held to the fire. I I honestly don't think this guy's gonna get the rest of his money. So be aware, people have a tendency to renege on contracts, so you gotta make that shit ironclad.
FBI are shitcoiners. Yes. They are. And we have proof. The FBI made a profit from an Ethereum token they created to catch fraudsters. Decrypt, Andrew, Andrei Bogansky is writing this one. The most discussed coin on crypto Twitter over the past day arguably isn't Bitcoin or some novel asset rocketing to new heights. No. No. No. No. It's an Ethereum token created by the FBI to catch scammers and one that made the agency a profit before trading was disabled. The Department of Justice unveiled a sweeping criminal case against 14 individuals and 4 crypto firms Wednesday.
Gotbit, ZmQuant, CLS Global and MyTrade were all accused of misconduct related to market manipulation inflating tokens prices and volumes on demand. Over the course of the investigation, the DOJ identified around 60 cryptocurrencies allegedly manipulated by defendants watch trading bots. And that included a token created at the direction of law enforcement for a fake crypto company dubbed NEX fund AI, the DOJ said on Wednesday. The token was used to identify, disrupt, and bring alleged frauds fraudsters to justice according to the special agent in charge of the FBI's Boston division, Jody Cohen, who called the FBI's deception unprecedented in a press release.
On chain data shows that the FBI's token called NEXF was created in late May and that law enforcement apparently profited from the coin just before its trading was disabled 21 days ago. When a liquidity pool for NEXF was created on the decentralized exchange Uniswap, the token's developer supplied around 5 ETH in liquidity worth $12,000 at the time, alongside 50,000,000,000 NEXF. When 43,000,000,000 NEXF was removed from the pool months later, the wallet gained approximately 11 ETH in liquidity back that was worth $26,500 NOKIN the tote netting the token's developer a $14,500 profit. And 2 weeks after disabling NextF's ability to trade, the wallet shuffled $30,000 worth of Ethereum to a new wallet, and the sum has remained there ever since, apparently under the FBI's control.
Nick Vaman, co founder and CEO of blockchain visualization startup Bubble Maps described the FBI's apparent gains to decrypt as fairly negligible but it is a surprising result for a token designed to target fraudsters the FBI of course did not immediately respond to requests for comment in his statement though the DOJ said that 3 market makers have been charged with misconduct related to wash trading NexF meaning that all 3 had engaged with the fake coin according to a criminal complaint filed against a company called CLS one of the firms accused of market manipulation the FBI's fake token was traded artificially for its last few weeks CLS traders allegedly bought and sold NexF among bots from August 23rd to sometime after September 5th CLS allegedly created 1,000 of dollars of fake trading volume for NexF until the FBI eventually pulled the plug as the DOJ's complaint states, quote, the trading function of the NEX fund AI token was disabled at the direction of law enforcement.
So, yes, the profit is negligible. But that if in my in my opinion, that does not matter. The FBI should not be engaged in this kind of entrapment. Not when they're going to build you know make a profit of it off of it so what is the fbi going to do with this $14,500 in obvious profit but further what about this $30,000 that they shuffled between wallets after this whole thing was done? See this this is an issue this is a real issue and I do not know how to even how to really wrap my head around it except that if this kind of behavior continues from the FBI what's to stop the FBI just going straight up shit coin now would this be actually good for bitcoin well it would certainly confuse the altcoin market and it would certainly so fear inside the altcoin market because at that point if a new coin comes up you don't know you have no idea if the FBI made it. In fact you we really don't know how many of the altcoins that are out there already were possibly created by law enforcement agencies we we know about next fund next fund ai are there more I don't know man in my opinion just stay away from shitcoins altogether.
Okay. I told you either last week or the week before, possibly even the week before that, that I think that MicroStrategy is basically going to dump out of all building of software for business intelligence and go straight up finance. Well, I seem to be right. The block and James Hunt is gonna make my case. MicroStrategy eyes $1,000,000,000,000 valuation in Bitcoin bank endgame Michael Saylor tells Bernstein. In a recent interview with analyst at research and brokerage firm Bernstein, Michael Saylor, founder and executive chairman of MicroStrategy said the company's endgame was to be the leading bitcoin bank.
MicroStrategy has aggressively acquired bitcoin since 2020, leveraging debt and equity to maximize returns and outperform many traditional investments. The firm's latest purchase of 7,420 Bitcoin announced last month took its holdings to 252,220 BTC currently valued at just over $15,000,000,000 against a total cost of around $9,900,000,000 $4,000,000,000 worth of debt. That's the equivalent of 1.2 percent of Bitcoin's total 21,000,000 coin supply, making micro strategy the largest corporate bitcoin holder in the world. Michael Saylor's thesis argues that bitcoin is the top performing asset of the 21st century. He sees it as a revolutionary form of digital capital offering a powerful hedge against inflation.
Saylor believes bitcoin's volatility attracts investors seeking high returns and over time it will become essential for institutional and retail portfolios. Now under Saylor's leadership the firm has certainly shown conviction in the thesis. So if it's right and MicroStrategy becomes a large company with 100 of 1,000,000,000 of dollars in Bitcoin what's the end game? Saylor sees MicroStrategy as a bitcoin bank in the core business of creating bitcoin capital market instrumentation across equity, convertibles, fixed income, and preferred shares.
Bernstein Digital Asset Lead Gautam Changi told clients on a Friday note quote this is the most valuable asset in the world. The endgame is to be the leading bitcoin bank or merchant bank or you could call it a bitcoin finance company. Saylor said. If we end up with $20,000,000,000 of converts $20,000,000,000 of preferred stock $10,000,000,000 of debt and say $50,000,000,000 of some kind of debt instrument and structure instrument will have $100,000,000 to $150,000,000,000 worth of bitcoin. The company trades at a 50% premium with more volatility in ARR we can build a company that has a 100% premium to $150,000,000,000 worth of bitcoin and build a $300,000,000,000 to $400,000,000,000 company with the biggest options market, the biggest equity market. And then we basically start to chew into the fixed income markets, and we just keep buying more bitcoin.
Bitcoin is going to go to $1,000,000 a coin. You know, and then we create a $1,000,000,000,000 company. The firm's strategy is based on its long term belief in bitcoin as the best deflationary money. If U. S. Capital markets allow MicroStrategy to raise funds through debt, equity and other instrumentation, it will happily scale in arbitrage between USD capital markets and bitcoin which Saylor expects to grow by 29% annually in his base case scenario, the Bernstein analyst said. Asked how scalable the firm's debt strategy was, I think it's infinitely scalable, Saylor replied, quote, I don't have any problems seeing how we could raise $100,000,000,000 more capital and then $200,000,000,000 after that. It's a $1,000,000,000,000 asset class going to 10,000,000,000,000 and then going to 100,000,000,000,000 The risk is very simple. It's bitcoin. You either believe bitcoin is something or you believe that it's nothing.
Chugani also noted Saylor's view that bitcoin's underlying average annual growth yield was attractive enough to continue making money on capital market arbitrages and not lend out bitcoin like a traditional banking model. Quote, my view is that it's much more intelligent to borrow $1,000,000,000 from the fixed income market and lend it to bitcoin at a 50% ar r with no counterparty risk than to reverse that and find someone willing to pay me 12 to 14%, Saylor said. The MicroStrategy founder argued that lending to individuals, corporations, and governments is much more risky than lending to Bitcoin, by which he means investing in Bitcoin, adding that the firm doesn't currently plan to lend out any of its Bitcoin holdings.
Quote, instead, we think it's a better idea to borrow $10,000,000,000 from people who would be eager to lend and give them a 100 basis point more yield, and then lend to Bitcoin for 30 to 50% interest with no counterparty risk. Once you get past the volatility and learn to manage it, the bear case scenario I foresee is bitcoin increasing by only 22% a year over the next decade. Who would pay you 22% interest? Jugani said that MicroStrategy believes it has bridged USD and Bitcoin markets by offering investable instruments, giving investors exposure to Bitcoin volatility through options and convertibles with downside protection.
But on the other hand, MicroStrategy benefits from low cost debt and attractive conversion premiums a model hard for smaller companies to replicate and larger firms to offer due to their diverse business focus. Bitcoin miner Mara is currently the 2nd largest corporate Bitcoin holder after MicroStrategy with holdings of 26,842 Bitcoin according to Bitcoin Treasuries Japanese investment firm, MetaPlanet, which has perhaps been mirroring MicroStrategy's playbook most closely, holds just 748.5 Bitcoin following its latest acquisition. Quote, every company in the crypto ecosystem, including all Bitcoin miners and exchanges like Coinbase, the Block, and Block should adopt Bitcoin as a treasury reserve asset.
They are destroying as much shareholder value with their balance sheets as they are creating with their p and l, Saylor said. Quote, we're gradually winning over companies like Semler Scientific and Marathon, which have taken a new stance, and I expect to see more Bitcoin miners and exchanges follow suit over time. Okay. This is exactly what I thought was going to happen, and it looks like I was right. So I'm not gonna toot my own horn. Let's go ahead and run the numbers. West Texas Intermediate Oil is down a half a point, but still chilling out at $75.50. Brent Norsee is down 0.42 to 7907.
Natural gas down almost 2 points. Gasoline is up a third to $2.15 a gallon. Shiny metal rocks doing well. Gold, wow, dude. 1.44 percent to the upside. Chilling out at $26.77.30. Silver is up 1.7. Platinum is up 1.8. Copper is up 1 a quarter. And palladium is the only one in the red, but, basically, it's just moving sideways. Biggest loser in, ag today is gonna be what is it? What is it? It's gonna be coffee. 1% to the downside. Biggest winner is 3 sorry. Chocolate, 3.11% to the upside. Most of the ag is in the red today. Live cattle in the red, down a quarter. Lean hogs in the green, 0.88 percent of the upside, and feeder cattle basically moving sideways.
In legacy, equity markets are doing well, I guess. Dow is up over a half point. S and p is up 0.4. Nasdaq is up 0.07. And the S and P Mini swinging for the fences, 1.4 to the upside. And we've got some green candles today on Bitcoin. We're back up to $62,350 and no. I'm not gonna say it. 58 k. $1,230,000,000,000 is the market cap, and we can still only get 23.3 ounces of shiny metal rocks with our 1 Bitcoin of which there are 19,000,000 766,000, 17.99 of, and fees are skyrocketing today. And I got something to say about that. 0.2 BTC in fees on average on a per block basis. Now check this shit out. There's now 117 blocks carrying 247,000 transactions waiting to clear at high priorities of 51 satoshis per vbyte. Not 5.
Not 15. 51. 51 satoshis per vbyte. We have not seen prices this high for this and and honestly these are sustained prices This isn't something like it's just like a little bump in the road. It's going down a little bit, but these prices have actually been in the double digits for a couple of days. What does this tell me? This is actual real life organic purchasing of bitcoin by people in retail that know how to actually buy bitcoin. This is these are real transactions. I'm I'm looking at mempool.space. I don't see as many data transactions as I normally see it. A data transaction is that ordinals crap. Really tiny amounts of of, you know, like, data, but the they're paying really high fees for it. That's that ordinals trading stuff, and that seems to be dying off a little bit. I'm seeing honest to god transactions for the first time in quite a while.
I generally speaking, I've seen 8. I've seen you know 2 satoshis per vbyte. For like the last 3 weeks we've had insanely low fees. Then we get this huge dump yesterday. We go back down into 58 ks gang territory and I just I I'm getting really sick of the 58 k thing. I'm getting sick of people saying, yay, celebrating 58 k, memeing about 58 k. I'm done with it. But, yes, we got back down there again. Maybe it's the final retest of 58 ks. I don't know. But then all of a sudden, we see the slow chugging, grinding, ramping up of the Bitcoin price from this low. I think it was at 58 1,600 I think it it might have gotten all the way down to 58,000 and like $100 something like that but we see this slow grind over the last I don't know 20 hours or so may longer than that of the bitcoin price coming back up now it's at 62,314.
All right. So I think that the between what I'm seeing in the price charts and what I'm seeing with these high much much higher prices for getting your transaction through, I think what we're actually witnessing is real honest to god purchasing a Bitcoin by plebs in retail on the open market. That's my thoughts on that. Now from Nobel Buterin, which was yesterday's show, I got oh, wait. Hold on. FOMO Metronic. Yeah. FOMO Metronic with a 1,001 says, oh, gives me a little smiley emoji. Thank you, brother. God's death with 537. Thank you, sir. No. Thank you. User 115-56842 with 500 says something meaningful, squeeze your sats softly.
Wartime with 333 gives me 3 fire emojis. Oh, Aggie Chote with a 100 says, whoop de doody day. Pies to plead, my friend, with a 100 says, thank you, sir. No, thank you. And Nostra Gang with a 100 says, boost. That's the weather report. Welcome to part 2 of the news you can use the 2,140 foundation has launched support for open source bitcoin development. 2140 which is by the way if you're wondering why people name these things like Jan 3, Samson Moe's company like what was it 1031 these are all something to do with dates about Bitcoin. And 2041 is the proposed year at which the subsidy of Bitcoin mining will actually cease. And there will be no more Bitcoin reward. You'll everything will have to be done on a fee basis only to actually support the network. So 2140 is a new nonprofit organization in Amsterdam, cofounded by bitcoin developers Jose Baker and Ruben Somsen, dedicated to supporting open source bitcoin research and development.
Quote, our mission is to provide protocol veterans with long term stability through employment in our Amsterdam office and to onboard aspiring contributors. Cryptocurrency exchange, OKX, has provided initial multiyear grant to support the 2140 Foundation's efforts to enhance the security, resilience, and maintainability of the Bitcoin network. Quote, we're happy to announce a grant to 2140 Foundation, a Bitcoin developer foundation. This funding will support the foundation's multi year effort to foster long term security, resilience, and maintainability of the bitcoin network through sustained development, innovation, and collaboration among developers and contributors, said OKX in a press release.
I also want to mention Open Sats and HRF who in the past have funded either Rubin and I individually and have also been instrumental in helping us get this thing off the ground. As a personal shout out, I want to mention Mike Schmidt from Brink, said Josie Baker during the announcement. Open source Bitcoin contributors interested in working with 2140 in Amsterdam can reach out at hello at 2140.dev. The numbers, 2141.dev. That's hello at 2140.dev. Just drop them an email if you're interested in getting, you know, information on how to apply for a grant. That's hello at 2140.dev. The foundation is currently launching a fellowship program designed to provide mentorship and hands on experience for aspiring full time contributors.
More details about the program will be released later. You can support the organization here. And here is a link to 2140. Devforward/donate. That's the numbers 2140. Devforward/donate. So, there you go, man. We've got so we've got a 3rd player in the space. So that makes HRF grants, OpenSats grants, now 2140, Foundation grants, and Arthur Hayes Family Foundation or his, family office. Oh what's the name of that thing oh god oh it's a maelstrom so there's at least 4 granting institutions that are supporting either bitcoin open source development or like stuff like Nostr this this is amazing I I cannot wait until we get to 10 granting agencies because this is what we need this is how we win Alright. Here here's a mining story out of Bitcoin Magazine, Nicholas Hoffman.
I just entered the Bitcoin mining lottery. Let's let's find out. So many people are mad about stuff like BitAxes. I it's just I don't understand the ire. I don't get it. It's like you're just being dumb when you buy one of these things. I disagree, but whatever. Let's read this from from Nicholas Hoffman. When I first came into Bitcoin, in 2017, I had changed my Twitter handle to Nick can't mine. It was a joke I thought was funny at the time since I didn't have the resources to mine BTC in high school. But today, I officially became Nick can mine. The other week, I got gifted a bit axe, a fully open source and very small Bitcoin miner while attending the Human Rights Foundation Bitcoin Summit in Nashville.
It's a pretty neat device that allows you to connect to a mining pool or you can solo mine on your own. Setting up the device was fairly easy. Tinkering with it was fun and having the ability to hold a miner in the palm of my hand felt pretty cypherpunk. It felt cool. Like a cool way to introduce someone to mining on a very small scale. This is what I've been saying man. Come on Nick. Give me some credit here, pal. Of course, by connecting this miner to a pool, I wouldn't stand to gain any real profit as this miner is negligible compared to what power is actually needed today to profitably mine BTC. But solo mining with this machine is where things get a bit interesting.
Earlier this summer, BitX Solo miner actually beat the odds and mined a solo block earning the block reward of 3.25 BTC currently worth over $205,000 data shows this miner had mined consistently with 500 gigahash or sorry gigahashes per second worth of hashrate for a week for weeks and then had increased its hashrate up to 3 terahashes right before the block was found, which somewhat encourages me knowing that my bidax is currently mining at over 634 gigahashes per second. But I'm not getting my hopes up considering I don't have more hash rate to add and the odds of finding a block with this little hash rate is around 1 in 1,200,000 per day according to the solo ckad ckpooladmin doctor ck still I got this machine for free so I thought why not plug it in and see what happens I'll deal with the power bill later when I see how much it is and reevaluate if this is worth it to keep running Having used it, I probably wouldn't have purchased 1 based on the economics of a DeLone since I wouldn't be able to make my money back unless I hit the lottery.
But I would maybe purchase 1 just to have a fun toy. The odds of me finding a block is 0.001% per day, but it honestly just feels fun to have running in hopes of finding a solo block. I can keep my bidax running 247 if I want to since it only requires a 5 volt power cord plugged into a normal electrical socket to operate. I've got it set up right here on my desk next to my monitor. Together with a new cold card queue that I just got I couldn't stop thinking about how cool it would be to win a solo block mining with this and have the b that BTC reward sent to a brand new bitcoin wallet this would mean there is no public record of me receiving either the bit ax nor the cold card apart from this article and I'd have some sweet KYC free bitcoin all right all right so nicholas has a good take on why why would you want a bitaxe nick is looking at it as just for fun and the possibility of, you know, getting a block reward.
Honestly, that's, in my opinion, that is only 1 tenth of of if you're interested in this kind of thing, why you might consider getting something like a bid ax to teach you how to mine to to give you a reason to go interact with the mining the various mining interfaces like how do you monitor your miner how do you plug into a pool How do you switch pools? Can you use any of the template stuff going on like, what was it? Ocean just released datum and that so that's going to be come out. And then we've got stratumv2. How do you do that?
Well, without a miner, you you kind of I mean, unless you want to emulate a miner, but nobody's gonna do that. You I think it really means something if you have the device in your hand. You're using electricity that you're paying for it. It's sitting on your desk and you can see it running. I think it takes something like that physicality for you to go, you know what? I what does jumping pools look like? How do I automate that process? If, like, you know, how do you get a situation where your miner can jump a pool if you are monitoring the all these different pools and find out that one miner has over 47% of all the mining hash rate? How do you automate that? You're never gonna know unless you actually do the mining stuff And you don't need now you don't need to actually buy a used s19.
You can just get a bit axe and you'll have just the the you'll have everything that you need to be able to engage with all of these with that entire ecosystem I engage with start 9 and my node my bitcoin full node my lightning node on a daily basis I don't know a damn thing about mining which is the only reason that I want to get a bitaxe And I also think it would be fun. I just think that Nicholas is kind of missing the boat on the rest of the story and the rest of the story is the amount of knowledge that you would gain by learning how to do all this might actually you never know change your life not because you want a block but because you know how to mine that's probably going to be important later and speaking of mining bit main has launched the antminer s 21 plus series At the Bitcoin Amsterdam 2024 conference, Bitcoin miner manufacturer Bitmain announced not 1, but 2 new machines, the Antminer s 21+hyd for hydro I suppose and the Antminer S21 plus the Antminer S21 +hyd is said to deliver a hash rate of 319 terahashes per second and an efficiency of 15 joules per terahash.
Not not bad. The s 21 plus model promises, 216 terahashes, so essentially a 100 terahashes less per second with the power efficiency of 16.5 joules per terahash. They will be shipping these products in the 1st and second quarter or somewhere around the 1st to second quarter of 2025. The firm also showcased its latest products featuring the air cooled Antminer s 21xp, the oil cooled s miner 21xpim, which I assume means immersion, and the water cooled container Antrack, a n t r a c k. And that's a nice looking rack, brother. That's a nice looking rack. Let's see. What's up? Oh, last thing up, Phoenix Wallet version 2.4.0 and server 0.4.0, new open protocol for async LSP.
This is a major release for Phoenix Android, iOS, and server, which is known as Phoenix D. The it it makes these products compatible with the new open protocol now being used by async LSP. Quote, today, we have moved our LSP to a new open source protocol with an open source implementation replacing the previous proprietary closed source LSP protocol that we've been using since the beginning of Phoenix. So they basically just opened everything up for everybody in the world. Upgrading to mobile 2.4.0 and Phoenix d 0.4.0 is required for liquidity features such as on the fly liquidity and on chain deposits as well as manual liquidity requests.
Outgoing on chain and off chain payment should still work without the upgrade. Quote, there are some minor UI differences, but no functional change. The fee schedule is unchanged. This new protocol will allow for even more on chain efficiency in the future. So stay tuned. And that'll do it for the show today, man. You guys have a wonderful weekend. I gotta get. I gotta jump. I'm gonna bail. I'll see you on the other side. This has been Bitcoin and and I'm your host, David Bennett. I hope you enjoyed today's episode and hope to see you again real soon. Have a great day.
Good morning. This is David Bennett, and this is Bitcoin and, a podcast where I try to find the edge effect between the worlds of Bitcoin, gaming, permaculture, podcasting, and education to gain a better understanding of all. Edge effect is a concept from ecology describing a greater diversity of life where the edges of 2 systems overlap. While species from either system can be found at the edge, it is important to note there are species in the overlap that exist in neither system, and that is what I seek to uncover. So join me in discovering the variety of things being created as Bitcoin rubs up against other systems. It is 9:0:1 AM Pacific Daylight Time. It is the 11th day of October 2024, and this is episode 971 of Bitcoin and the feds turn out to be shitcoiners.
Yep. They do. Fidelity's got a massive breach on their customer base. That's not good. What else do we got here? We've got, it does look like Michael Saylor might be entering into the banking game. This is what I had conjectured a couple of weeks ago. We'll get into all that. We've got some news out of Bitcoin, Amsterdam. Is there anything else going on here? Oh, yes. FTX is back in the news. Great. And then I've got a small mining story. But first, we've got to start with the Fidelity data breach exposing personal data of 77,000 customers.
And this is written by Danny Santana, but out of CNET, which I don't normally use as a news source, but today we're getting into it. Fidelity Investments has suffered a data breach. Whoop dee doo. And it has compromised the personal information of 77,000 customers, the company said in a notice. The breach occurred in August and is tied to 2 accounts recently opened with the asset management company according to the filing. It's not clear how these accounts allowed hackers access to customers data, however. Fidelity has not revealed what specific customer data was accessed by the thieves, but said after concluding its investigation that of course no customer accounts or funds were compromised in the breach.
We detected the activity on August 19th and immediately took steps to terminate that access. Fidelity declined to provide any further comments. Quote, Fidelity takes its responsibility to serve customers and safeguard information seriously. Yeah? Really? I call bullshit. And then they got a few paragraphs of what to do if you're included in the Fidelity breach. Honestly, it's the same shit anybody's ever gonna tell you. You know, Wells Fargo breaches. Any of these breaches, they basically say, you know, oh, they're offering you 2 years of credit monitoring and identity theft protection. And, you know, honestly, that's just in my opinion, that's just worse.
Okay. So you've allowed the people to abscond with 77,000 customers personal information of which you won't tell us what it is. And your response is to have us go and give all that information again to yet one more company that could be breached. This is the response. And it's always the response. Because there's literally nothing else they can do. All of these companies are massive honeypots. They this KYC business needs to go away. Will it? Probably not anytime soon. But we still we've got to work on it. We got to keep pressure on whoever it is that we need to keep pressure on to get rid of KYC.
And all of this comes out of the bank banking secrecy act. And we don't need it. It's it has clearly been a failure from the outset, has continued to be a failure. But we have to ask our question who is it a failure to well it's a failure to the customers but I guarantee you it's doing exactly what the people that put the bank secrecy act in place in the first place it's serving their needs quite well quite well. For installing fear in the in the populace? No. They don't care about that. That's honestly, nobody's scared of getting their shit lifted anymore. All of us understand we've already got all of our information is out there in the wind twisting. Right? But but they the people in power who have put k y c and know your customer and all that stuff into place they know our information that's what they want they don't care if thieves or anybody else actually gets a hold of the information that is not their priority it never was it is simply to tie you down by your identity which is one of the reasons why I say Nostr is very important and if you don't understand why I can't really spend the time to tell you about it here but it is a different style of digital identity and I highly recommend that you go find any Nostra client go to koracle. Social go to primal.net use domus use amethyst find any possible client that you can for Nostra just get an identity Just it it's it's easy to do. You will see how it's done when you first get into one of these clients if you've never been there before. Now, from Bitcoin Amsterdam, flawed research drives harmful Bitcoin policies.
We'll find out more about it from Josh O'Sullivan out of Cointelegraph. Speakers at Bitcoin Amsterdam 2024 conference have highlighted the far reaching consequences of misinformation in academic research on bitcoin. During the Beyond Resistance Money panel discussion on day 2 of the conference, speakers said that academic inaccuracies have misled and continue to mislead the media contributing to misguided government policies and harmful regulations the Bitcoin advocates detailed how flawed studies on BTC emissions and mining practices have driven enormous or rather erroneous narratives in journalism and policy making One important issue discussed was the role of flawed academic research in spreading misinformation about bitcoin.
Andrew Bailey, a professor at Yale NUS College and Senior Fellow at the Bitcoin Policy Institute highlighted a specific issue in an influential academic paper that inaccurately reported BTC emissions data and he said quote the problem I'm afraid is academics and the wrong or even damaging things that they say about bitcoin Academics have been wrong about Bitcoin but nobody reads this stuff. Right? Right? Bailey pointed out that the paper contains a unit error in the chart that has not ever been corrected even though it continues to be cited as factual he emphasized that such mistakes can have a lasting impact on public understanding of Bitcoin Bradley Retler, associate professor of philosophy at the University of Wyoming added that journalists often lack the time to verify or even deeply understand academic sources further spreading these inaccuracies.
According to Retler, the reliance on academic papers by journalists who may not have the resources to become subject matter experts contributes to the problem. So the journalists read the academic papers and they translate them into everyday parlance and the problem is when you start with crap you end up getting crap. Craig Warmke, a member of the Bitcoin Policy Institute warned that misinformation has real world implications particularly in the realm of policy making Policymakers and regulators don't have time to read these academic papers so they read the journalism and this has resulted in some attacks on BTC mining self custody as well as financial privacy.
Wermke stated that this pattern has resulted in restrictive proposed legislation especially in Sweden to tax the BTC mining industry out of existence He also said that there is an attack on software developers working on technologies that promote financial privacy. These are serious issues. The problem has bled through to journalism and to policy making and law enforcement and regulators and bad research on BTC and academia is largely to blame and so is the absence of the research. Warm key suggested that while academia has historically worked against bitcoin it is time for academics to start supporting the cryptocurrency that's the end of the article my commentary here is that I call it the academy, which is actually sort of what you should be calling it.
All colleges and universities around the world, not just in the United States, not just in the West, basically the academy means all colleges and universities anywhere in the world and the academy is in trouble. 1st and foremost they've got a major problem on their hands that's developing right now. Some colleges knew it was coming Some universities did too, and they prepared for it. They did well. Texas Tech University is one of them. UT is one of them. There's a and there's more than a few others, but most have not prepared well. Washington State University is one of those universities that did not prepare well. What am I talking about? The enrollment cliff.
We knew it was coming and it had nothing to do at all with student loans and and younger people in coming into college refusing to get student loans and therefore not going into college at all because they're just can't afford it and that's a whole different issue but it was because the populate that the amount of people that were available to go to college of college age were not present we've had a decline in population lots of people stopped having babies we did these guys saw it when they they saw the numbers 20 years ago they understood what was going to happen and the decline kept going kept going it only meant that when you get to college at 18, 19, and 20 years old, there wasn't going to be the amount of people to go into college to get the student loans.
Or if not get student loans to get the jobs that would give them the money to pay for tuition even though it would take them a lot longer. So there is that problem and it is causing budgetary issues everywhere not just Washington State University that's just an example you're going to see an evisceration of the academy and it's going to happen within the next 10 years. You're going to see whole colleges just say fuck it we can't do it anymore and my idea is to turn them into what old folks homes that's right assisted living centers You have a whole campus. You've got dormitories. You've got medical most of these places have some kind of medical facility. They have lunch rooms. They have cafeterias. They've got all manner of outdoor spaces. Perfect, perfect thing to do with these colleges and universities that did not figure this out is to just turn them into something that actually generates real money. On the other hand, we have this whole academic situation.
There's been several instances of academic papers showing up in peer reviewed publications that were written by AI or worse just absolute jibberish just complete just filled with nothing but jargon And somehow they got through the peer review process, which means that anywhere between 35 and sometimes more, I suppose, human beings read that paper, make remarks on that paper, send it back to the author, and then the author makes those corrections or does whatever tidying up needs to be done. Sends it back and those same people read it again. And they either send it back with more commentary or they publish it. The amount of papers that are just nothing but jargon, gibberish, bullshit that have gotten through and had to be retracted when somebody who really had their shit together read it and was going, this doesn't make any sense.
Then you know it took that it took somebody actually reading it in the publication a real scientist going the hell is this is stupid and it has caused nothing but embarrassment now there's something in this in this article that I wanted to point out. Yeah. Here it is. Let me read this to you again. Bailey pointed out that the paper contains a unit error in a chart. And it has not been corrected, even though it continues to be cited as factual. What they mean, if you don't understand what unit error means, is like they've got a chart in this whatever paper that Bailey's talking about. And there's a chart in this thing and it has probably a y axis and an x axis right? And the units that are used on whatever side or like it's either in the y axis units or the x axis units like like generally speaking y would be time and x would be amount so if there's a unit error then that means that they're using the wrong units like so there could be it could be a situation where it's a order of magnitude error. It should have been 10, but instead it's printed as a 100 units.
Or it could be like a gibberish unit, like, I don't know, 10 milligrams per mercury as a barometric pressure measurement. And if they use that in place of tons of c02 being produced, well, that would be a unit error. What exactly this unit error is is not the point. The fact of the matter is is that the fact that there's a unit error means that whatever that chart is saying is complete and utter crap. It doesn't mean anything. If you've ever seen somebody like, my my wife has this problem all the time with her students. They'll send in a chart, and the the axes aren't labeled. It's just a bar chart or a line chart. And it's like, well, what what does this even say?
That's how bad this stuff can get. But in academe when you've got peer reviewed publications that have error units in the chart and nobody's caught it or worse we know that it's there and they refuse to correct it this tells you the state of academic publication today and it is not good and a lot of this I do believe actually stems all the way back from the fact that these universities and colleges the the the academy itself is in big big trouble There's a lot of grants that are no longer being granted anymore because they're just running out of money. They can't afford to pay their staff. And now the colleges themselves are finding themselves in a, well, they don't have any students coming in.
It's a bad situation and it's causing really bad problems. So just be aware when you oh, another paper's come out saying that Bitcoin mining is crap or it's gonna kill us all. It's probably based on crap. It probably is. Now over to FTX. A customer from FTX is suing a hedge fund and says that the hedge fund reneged on the bankruptcy payout deal. This is out of CoinDesk Sam Reynolds. A California based former customer of FTX is suing hedge fund Olympus Peak alleging that the firm's bankruptcy claims purchasing desk withheld promised payments on a claim he had sold to it. In documents filed with the US District Court of Southern New York, Alexander Nicholas Gitz I can't pronounce that name. Says that he agreed to sell a $1,590,000 FTX bankruptcy claim at a 42% discount to Olympus Peak Trade Claims Opportunities Fund with an excess claim provision.
The agreement provided that if the claim is ultimately allowed in an amount that is greater than the claim amount, the buyer will purchase such excess claim amount by paying the excess claim amount multiplied by the purchase rate. This gentleman whose name I cannot pronounce agreed To the sale only because the purchase agreement contained a clause that expressly gave him the right to receive additional recovery in the event his claim was paid above par through the bankruptcy proceedings according to the filing. Grutsky attorneys write in the filing that the most recent FTX disclosure statement says that the claims similar to his are estimated to receive as much as 146% of their value in distributions, but they allege, Olympus Peak made clear that they would not be fulfilling their end of the bargain.
Quote, we disagree with your position that you have retained any economic interest in the claim, an Olympus Peek representative wrote to Gheerdsky. Olympus Peek did not immediately respond to a request for comment. In the early days of the FTX bankruptcy, claims were going for 13¢ on the dollar on bankruptcy marketplaces. So what's going on here is this guy got he he he had, like I don't know. Let's say what do you what do you say? A 100 $1,590,000. He sold it at a 42% discount. So he got, it as far as I can tell, he got that end of the cash. So he ended up getting a check for whatever the disc the post discount of $1,590,000 out of FTX bankruptcy.
But he's got a provision in there that says, look, man, if for whatever reason the payout ends up being higher, then you're going to pay me that extra money. And Olympus is saying that they're not going to hold up their end of that contract. And that's just sad. It's like when when somebody would 2 parties or multiple parties engage each other in a contract and they all sign it how is it that you can just say, you know what? I'm just not gonna do it. And I doubt very seriously that, Olympus is going to be held have their feet held to the fire. I I honestly don't think this guy's gonna get the rest of his money. So be aware, people have a tendency to renege on contracts, so you gotta make that shit ironclad.
FBI are shitcoiners. Yes. They are. And we have proof. The FBI made a profit from an Ethereum token they created to catch fraudsters. Decrypt, Andrew, Andrei Bogansky is writing this one. The most discussed coin on crypto Twitter over the past day arguably isn't Bitcoin or some novel asset rocketing to new heights. No. No. No. No. It's an Ethereum token created by the FBI to catch scammers and one that made the agency a profit before trading was disabled. The Department of Justice unveiled a sweeping criminal case against 14 individuals and 4 crypto firms Wednesday.
Gotbit, ZmQuant, CLS Global and MyTrade were all accused of misconduct related to market manipulation inflating tokens prices and volumes on demand. Over the course of the investigation, the DOJ identified around 60 cryptocurrencies allegedly manipulated by defendants watch trading bots. And that included a token created at the direction of law enforcement for a fake crypto company dubbed NEX fund AI, the DOJ said on Wednesday. The token was used to identify, disrupt, and bring alleged frauds fraudsters to justice according to the special agent in charge of the FBI's Boston division, Jody Cohen, who called the FBI's deception unprecedented in a press release.
On chain data shows that the FBI's token called NEXF was created in late May and that law enforcement apparently profited from the coin just before its trading was disabled 21 days ago. When a liquidity pool for NEXF was created on the decentralized exchange Uniswap, the token's developer supplied around 5 ETH in liquidity worth $12,000 at the time, alongside 50,000,000,000 NEXF. When 43,000,000,000 NEXF was removed from the pool months later, the wallet gained approximately 11 ETH in liquidity back that was worth $26,500 NOKIN the tote netting the token's developer a $14,500 profit. And 2 weeks after disabling NextF's ability to trade, the wallet shuffled $30,000 worth of Ethereum to a new wallet, and the sum has remained there ever since, apparently under the FBI's control.
Nick Vaman, co founder and CEO of blockchain visualization startup Bubble Maps described the FBI's apparent gains to decrypt as fairly negligible but it is a surprising result for a token designed to target fraudsters the FBI of course did not immediately respond to requests for comment in his statement though the DOJ said that 3 market makers have been charged with misconduct related to wash trading NexF meaning that all 3 had engaged with the fake coin according to a criminal complaint filed against a company called CLS one of the firms accused of market manipulation the FBI's fake token was traded artificially for its last few weeks CLS traders allegedly bought and sold NexF among bots from August 23rd to sometime after September 5th CLS allegedly created 1,000 of dollars of fake trading volume for NexF until the FBI eventually pulled the plug as the DOJ's complaint states, quote, the trading function of the NEX fund AI token was disabled at the direction of law enforcement.
So, yes, the profit is negligible. But that if in my in my opinion, that does not matter. The FBI should not be engaged in this kind of entrapment. Not when they're going to build you know make a profit of it off of it so what is the fbi going to do with this $14,500 in obvious profit but further what about this $30,000 that they shuffled between wallets after this whole thing was done? See this this is an issue this is a real issue and I do not know how to even how to really wrap my head around it except that if this kind of behavior continues from the FBI what's to stop the FBI just going straight up shit coin now would this be actually good for bitcoin well it would certainly confuse the altcoin market and it would certainly so fear inside the altcoin market because at that point if a new coin comes up you don't know you have no idea if the FBI made it. In fact you we really don't know how many of the altcoins that are out there already were possibly created by law enforcement agencies we we know about next fund next fund ai are there more I don't know man in my opinion just stay away from shitcoins altogether.
Okay. I told you either last week or the week before, possibly even the week before that, that I think that MicroStrategy is basically going to dump out of all building of software for business intelligence and go straight up finance. Well, I seem to be right. The block and James Hunt is gonna make my case. MicroStrategy eyes $1,000,000,000,000 valuation in Bitcoin bank endgame Michael Saylor tells Bernstein. In a recent interview with analyst at research and brokerage firm Bernstein, Michael Saylor, founder and executive chairman of MicroStrategy said the company's endgame was to be the leading bitcoin bank.
MicroStrategy has aggressively acquired bitcoin since 2020, leveraging debt and equity to maximize returns and outperform many traditional investments. The firm's latest purchase of 7,420 Bitcoin announced last month took its holdings to 252,220 BTC currently valued at just over $15,000,000,000 against a total cost of around $9,900,000,000 $4,000,000,000 worth of debt. That's the equivalent of 1.2 percent of Bitcoin's total 21,000,000 coin supply, making micro strategy the largest corporate bitcoin holder in the world. Michael Saylor's thesis argues that bitcoin is the top performing asset of the 21st century. He sees it as a revolutionary form of digital capital offering a powerful hedge against inflation.
Saylor believes bitcoin's volatility attracts investors seeking high returns and over time it will become essential for institutional and retail portfolios. Now under Saylor's leadership the firm has certainly shown conviction in the thesis. So if it's right and MicroStrategy becomes a large company with 100 of 1,000,000,000 of dollars in Bitcoin what's the end game? Saylor sees MicroStrategy as a bitcoin bank in the core business of creating bitcoin capital market instrumentation across equity, convertibles, fixed income, and preferred shares.
Bernstein Digital Asset Lead Gautam Changi told clients on a Friday note quote this is the most valuable asset in the world. The endgame is to be the leading bitcoin bank or merchant bank or you could call it a bitcoin finance company. Saylor said. If we end up with $20,000,000,000 of converts $20,000,000,000 of preferred stock $10,000,000,000 of debt and say $50,000,000,000 of some kind of debt instrument and structure instrument will have $100,000,000 to $150,000,000,000 worth of bitcoin. The company trades at a 50% premium with more volatility in ARR we can build a company that has a 100% premium to $150,000,000,000 worth of bitcoin and build a $300,000,000,000 to $400,000,000,000 company with the biggest options market, the biggest equity market. And then we basically start to chew into the fixed income markets, and we just keep buying more bitcoin.
Bitcoin is going to go to $1,000,000 a coin. You know, and then we create a $1,000,000,000,000 company. The firm's strategy is based on its long term belief in bitcoin as the best deflationary money. If U. S. Capital markets allow MicroStrategy to raise funds through debt, equity and other instrumentation, it will happily scale in arbitrage between USD capital markets and bitcoin which Saylor expects to grow by 29% annually in his base case scenario, the Bernstein analyst said. Asked how scalable the firm's debt strategy was, I think it's infinitely scalable, Saylor replied, quote, I don't have any problems seeing how we could raise $100,000,000,000 more capital and then $200,000,000,000 after that. It's a $1,000,000,000,000 asset class going to 10,000,000,000,000 and then going to 100,000,000,000,000 The risk is very simple. It's bitcoin. You either believe bitcoin is something or you believe that it's nothing.
Chugani also noted Saylor's view that bitcoin's underlying average annual growth yield was attractive enough to continue making money on capital market arbitrages and not lend out bitcoin like a traditional banking model. Quote, my view is that it's much more intelligent to borrow $1,000,000,000 from the fixed income market and lend it to bitcoin at a 50% ar r with no counterparty risk than to reverse that and find someone willing to pay me 12 to 14%, Saylor said. The MicroStrategy founder argued that lending to individuals, corporations, and governments is much more risky than lending to Bitcoin, by which he means investing in Bitcoin, adding that the firm doesn't currently plan to lend out any of its Bitcoin holdings.
Quote, instead, we think it's a better idea to borrow $10,000,000,000 from people who would be eager to lend and give them a 100 basis point more yield, and then lend to Bitcoin for 30 to 50% interest with no counterparty risk. Once you get past the volatility and learn to manage it, the bear case scenario I foresee is bitcoin increasing by only 22% a year over the next decade. Who would pay you 22% interest? Jugani said that MicroStrategy believes it has bridged USD and Bitcoin markets by offering investable instruments, giving investors exposure to Bitcoin volatility through options and convertibles with downside protection.
But on the other hand, MicroStrategy benefits from low cost debt and attractive conversion premiums a model hard for smaller companies to replicate and larger firms to offer due to their diverse business focus. Bitcoin miner Mara is currently the 2nd largest corporate Bitcoin holder after MicroStrategy with holdings of 26,842 Bitcoin according to Bitcoin Treasuries Japanese investment firm, MetaPlanet, which has perhaps been mirroring MicroStrategy's playbook most closely, holds just 748.5 Bitcoin following its latest acquisition. Quote, every company in the crypto ecosystem, including all Bitcoin miners and exchanges like Coinbase, the Block, and Block should adopt Bitcoin as a treasury reserve asset.
They are destroying as much shareholder value with their balance sheets as they are creating with their p and l, Saylor said. Quote, we're gradually winning over companies like Semler Scientific and Marathon, which have taken a new stance, and I expect to see more Bitcoin miners and exchanges follow suit over time. Okay. This is exactly what I thought was going to happen, and it looks like I was right. So I'm not gonna toot my own horn. Let's go ahead and run the numbers. West Texas Intermediate Oil is down a half a point, but still chilling out at $75.50. Brent Norsee is down 0.42 to 7907.
Natural gas down almost 2 points. Gasoline is up a third to $2.15 a gallon. Shiny metal rocks doing well. Gold, wow, dude. 1.44 percent to the upside. Chilling out at $26.77.30. Silver is up 1.7. Platinum is up 1.8. Copper is up 1 a quarter. And palladium is the only one in the red, but, basically, it's just moving sideways. Biggest loser in, ag today is gonna be what is it? What is it? It's gonna be coffee. 1% to the downside. Biggest winner is 3 sorry. Chocolate, 3.11% to the upside. Most of the ag is in the red today. Live cattle in the red, down a quarter. Lean hogs in the green, 0.88 percent of the upside, and feeder cattle basically moving sideways.
In legacy, equity markets are doing well, I guess. Dow is up over a half point. S and p is up 0.4. Nasdaq is up 0.07. And the S and P Mini swinging for the fences, 1.4 to the upside. And we've got some green candles today on Bitcoin. We're back up to $62,350 and no. I'm not gonna say it. 58 k. $1,230,000,000,000 is the market cap, and we can still only get 23.3 ounces of shiny metal rocks with our 1 Bitcoin of which there are 19,000,000 766,000, 17.99 of, and fees are skyrocketing today. And I got something to say about that. 0.2 BTC in fees on average on a per block basis. Now check this shit out. There's now 117 blocks carrying 247,000 transactions waiting to clear at high priorities of 51 satoshis per vbyte. Not 5.
Not 15. 51. 51 satoshis per vbyte. We have not seen prices this high for this and and honestly these are sustained prices This isn't something like it's just like a little bump in the road. It's going down a little bit, but these prices have actually been in the double digits for a couple of days. What does this tell me? This is actual real life organic purchasing of bitcoin by people in retail that know how to actually buy bitcoin. This is these are real transactions. I'm I'm looking at mempool.space. I don't see as many data transactions as I normally see it. A data transaction is that ordinals crap. Really tiny amounts of of, you know, like, data, but the they're paying really high fees for it. That's that ordinals trading stuff, and that seems to be dying off a little bit. I'm seeing honest to god transactions for the first time in quite a while.
I generally speaking, I've seen 8. I've seen you know 2 satoshis per vbyte. For like the last 3 weeks we've had insanely low fees. Then we get this huge dump yesterday. We go back down into 58 ks gang territory and I just I I'm getting really sick of the 58 k thing. I'm getting sick of people saying, yay, celebrating 58 k, memeing about 58 k. I'm done with it. But, yes, we got back down there again. Maybe it's the final retest of 58 ks. I don't know. But then all of a sudden, we see the slow chugging, grinding, ramping up of the Bitcoin price from this low. I think it was at 58 1,600 I think it it might have gotten all the way down to 58,000 and like $100 something like that but we see this slow grind over the last I don't know 20 hours or so may longer than that of the bitcoin price coming back up now it's at 62,314.
All right. So I think that the between what I'm seeing in the price charts and what I'm seeing with these high much much higher prices for getting your transaction through, I think what we're actually witnessing is real honest to god purchasing a Bitcoin by plebs in retail on the open market. That's my thoughts on that. Now from Nobel Buterin, which was yesterday's show, I got oh, wait. Hold on. FOMO Metronic. Yeah. FOMO Metronic with a 1,001 says, oh, gives me a little smiley emoji. Thank you, brother. God's death with 537. Thank you, sir. No. Thank you. User 115-56842 with 500 says something meaningful, squeeze your sats softly.
Wartime with 333 gives me 3 fire emojis. Oh, Aggie Chote with a 100 says, whoop de doody day. Pies to plead, my friend, with a 100 says, thank you, sir. No, thank you. And Nostra Gang with a 100 says, boost. That's the weather report. Welcome to part 2 of the news you can use the 2,140 foundation has launched support for open source bitcoin development. 2140 which is by the way if you're wondering why people name these things like Jan 3, Samson Moe's company like what was it 1031 these are all something to do with dates about Bitcoin. And 2041 is the proposed year at which the subsidy of Bitcoin mining will actually cease. And there will be no more Bitcoin reward. You'll everything will have to be done on a fee basis only to actually support the network. So 2140 is a new nonprofit organization in Amsterdam, cofounded by bitcoin developers Jose Baker and Ruben Somsen, dedicated to supporting open source bitcoin research and development.
Quote, our mission is to provide protocol veterans with long term stability through employment in our Amsterdam office and to onboard aspiring contributors. Cryptocurrency exchange, OKX, has provided initial multiyear grant to support the 2140 Foundation's efforts to enhance the security, resilience, and maintainability of the Bitcoin network. Quote, we're happy to announce a grant to 2140 Foundation, a Bitcoin developer foundation. This funding will support the foundation's multi year effort to foster long term security, resilience, and maintainability of the bitcoin network through sustained development, innovation, and collaboration among developers and contributors, said OKX in a press release.
I also want to mention Open Sats and HRF who in the past have funded either Rubin and I individually and have also been instrumental in helping us get this thing off the ground. As a personal shout out, I want to mention Mike Schmidt from Brink, said Josie Baker during the announcement. Open source Bitcoin contributors interested in working with 2140 in Amsterdam can reach out at hello at 2140.dev. The numbers, 2141.dev. That's hello at 2140.dev. Just drop them an email if you're interested in getting, you know, information on how to apply for a grant. That's hello at 2140.dev. The foundation is currently launching a fellowship program designed to provide mentorship and hands on experience for aspiring full time contributors.
More details about the program will be released later. You can support the organization here. And here is a link to 2140. Devforward/donate. That's the numbers 2140. Devforward/donate. So, there you go, man. We've got so we've got a 3rd player in the space. So that makes HRF grants, OpenSats grants, now 2140, Foundation grants, and Arthur Hayes Family Foundation or his, family office. Oh what's the name of that thing oh god oh it's a maelstrom so there's at least 4 granting institutions that are supporting either bitcoin open source development or like stuff like Nostr this this is amazing I I cannot wait until we get to 10 granting agencies because this is what we need this is how we win Alright. Here here's a mining story out of Bitcoin Magazine, Nicholas Hoffman.
I just entered the Bitcoin mining lottery. Let's let's find out. So many people are mad about stuff like BitAxes. I it's just I don't understand the ire. I don't get it. It's like you're just being dumb when you buy one of these things. I disagree, but whatever. Let's read this from from Nicholas Hoffman. When I first came into Bitcoin, in 2017, I had changed my Twitter handle to Nick can't mine. It was a joke I thought was funny at the time since I didn't have the resources to mine BTC in high school. But today, I officially became Nick can mine. The other week, I got gifted a bit axe, a fully open source and very small Bitcoin miner while attending the Human Rights Foundation Bitcoin Summit in Nashville.
It's a pretty neat device that allows you to connect to a mining pool or you can solo mine on your own. Setting up the device was fairly easy. Tinkering with it was fun and having the ability to hold a miner in the palm of my hand felt pretty cypherpunk. It felt cool. Like a cool way to introduce someone to mining on a very small scale. This is what I've been saying man. Come on Nick. Give me some credit here, pal. Of course, by connecting this miner to a pool, I wouldn't stand to gain any real profit as this miner is negligible compared to what power is actually needed today to profitably mine BTC. But solo mining with this machine is where things get a bit interesting.
Earlier this summer, BitX Solo miner actually beat the odds and mined a solo block earning the block reward of 3.25 BTC currently worth over $205,000 data shows this miner had mined consistently with 500 gigahash or sorry gigahashes per second worth of hashrate for a week for weeks and then had increased its hashrate up to 3 terahashes right before the block was found, which somewhat encourages me knowing that my bidax is currently mining at over 634 gigahashes per second. But I'm not getting my hopes up considering I don't have more hash rate to add and the odds of finding a block with this little hash rate is around 1 in 1,200,000 per day according to the solo ckad ckpooladmin doctor ck still I got this machine for free so I thought why not plug it in and see what happens I'll deal with the power bill later when I see how much it is and reevaluate if this is worth it to keep running Having used it, I probably wouldn't have purchased 1 based on the economics of a DeLone since I wouldn't be able to make my money back unless I hit the lottery.
But I would maybe purchase 1 just to have a fun toy. The odds of me finding a block is 0.001% per day, but it honestly just feels fun to have running in hopes of finding a solo block. I can keep my bidax running 247 if I want to since it only requires a 5 volt power cord plugged into a normal electrical socket to operate. I've got it set up right here on my desk next to my monitor. Together with a new cold card queue that I just got I couldn't stop thinking about how cool it would be to win a solo block mining with this and have the b that BTC reward sent to a brand new bitcoin wallet this would mean there is no public record of me receiving either the bit ax nor the cold card apart from this article and I'd have some sweet KYC free bitcoin all right all right so nicholas has a good take on why why would you want a bitaxe nick is looking at it as just for fun and the possibility of, you know, getting a block reward.
Honestly, that's, in my opinion, that is only 1 tenth of of if you're interested in this kind of thing, why you might consider getting something like a bid ax to teach you how to mine to to give you a reason to go interact with the mining the various mining interfaces like how do you monitor your miner how do you plug into a pool How do you switch pools? Can you use any of the template stuff going on like, what was it? Ocean just released datum and that so that's going to be come out. And then we've got stratumv2. How do you do that?
Well, without a miner, you you kind of I mean, unless you want to emulate a miner, but nobody's gonna do that. You I think it really means something if you have the device in your hand. You're using electricity that you're paying for it. It's sitting on your desk and you can see it running. I think it takes something like that physicality for you to go, you know what? I what does jumping pools look like? How do I automate that process? If, like, you know, how do you get a situation where your miner can jump a pool if you are monitoring the all these different pools and find out that one miner has over 47% of all the mining hash rate? How do you automate that? You're never gonna know unless you actually do the mining stuff And you don't need now you don't need to actually buy a used s19.
You can just get a bit axe and you'll have just the the you'll have everything that you need to be able to engage with all of these with that entire ecosystem I engage with start 9 and my node my bitcoin full node my lightning node on a daily basis I don't know a damn thing about mining which is the only reason that I want to get a bitaxe And I also think it would be fun. I just think that Nicholas is kind of missing the boat on the rest of the story and the rest of the story is the amount of knowledge that you would gain by learning how to do all this might actually you never know change your life not because you want a block but because you know how to mine that's probably going to be important later and speaking of mining bit main has launched the antminer s 21 plus series At the Bitcoin Amsterdam 2024 conference, Bitcoin miner manufacturer Bitmain announced not 1, but 2 new machines, the Antminer s 21+hyd for hydro I suppose and the Antminer S21 plus the Antminer S21 +hyd is said to deliver a hash rate of 319 terahashes per second and an efficiency of 15 joules per terahash.
Not not bad. The s 21 plus model promises, 216 terahashes, so essentially a 100 terahashes less per second with the power efficiency of 16.5 joules per terahash. They will be shipping these products in the 1st and second quarter or somewhere around the 1st to second quarter of 2025. The firm also showcased its latest products featuring the air cooled Antminer s 21xp, the oil cooled s miner 21xpim, which I assume means immersion, and the water cooled container Antrack, a n t r a c k. And that's a nice looking rack, brother. That's a nice looking rack. Let's see. What's up? Oh, last thing up, Phoenix Wallet version 2.4.0 and server 0.4.0, new open protocol for async LSP.
This is a major release for Phoenix Android, iOS, and server, which is known as Phoenix D. The it it makes these products compatible with the new open protocol now being used by async LSP. Quote, today, we have moved our LSP to a new open source protocol with an open source implementation replacing the previous proprietary closed source LSP protocol that we've been using since the beginning of Phoenix. So they basically just opened everything up for everybody in the world. Upgrading to mobile 2.4.0 and Phoenix d 0.4.0 is required for liquidity features such as on the fly liquidity and on chain deposits as well as manual liquidity requests.
Outgoing on chain and off chain payment should still work without the upgrade. Quote, there are some minor UI differences, but no functional change. The fee schedule is unchanged. This new protocol will allow for even more on chain efficiency in the future. So stay tuned. And that'll do it for the show today, man. You guys have a wonderful weekend. I gotta get. I gotta jump. I'm gonna bail. I'll see you on the other side. This has been Bitcoin and and I'm your host, David Bennett. I hope you enjoyed today's episode and hope to see you again real soon. Have a great day.
Challenges Facing Academia
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