Why a bipartisan embrace of crypto might never touch Bitcoin – TechCrunch

Hello everyone and welcome back Chain reaction

In our week-long chain reaction podcast, Anita and I talked to Shaun Maguire of Sequoia Capital about why players are skeptical of NFTs and where decentralization really matters. More details below.

Last week was our inaugural newsletter and we talked extensively about the changes Twitter could make to expanding its crypto business. At the time, I, like many others, was operating under the assumption that a Musk Twitter deal was finally doomed, but low and lo and behold we have a deal. Everything was approved at this time, but I can’t get over the feeling that something is going to kill this deal in the eleventh hour. If that happens, Twitter or Musk’s board will be awaiting a $ 1 billion fine for abandoning the deal, but I guess we’ll see … This week, I’m seeing a controversial ban on Bitcoin mining that is making inroads. New York regulators and what bills like this could mean for the political reputation of cryptocurrency’s No. 1 currency.

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the hottest take

Crypto’s biggest skeptics see many reasons to criticize the industry, but generally at the heart of most complaints is the belief that crypto contributes very little to society while burning large amounts of energy.

Although believers in cryptography might dispute the first point until they are blue in the face, the second is a little harder to deny. Bitcoin uses an estimated 204.50 tera-hours (TWh) of electricity per year at current rates according to the quoted frequency tracker built by Digiconomist, this number equals Thailand’s energy consumption. Ethereum’s energy footprint, meanwhile, 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 had the team’s cryptography at gunpoint. The bill blocks the formation of cryptographic mining companies in the state that depend on non-renewable energy. In particular, it does not apply to existing facilities. A corresponding bill is currently going through the Democratic-controlled state Senate.

This is fascinating for a lot of reasons.

On the one hand, cryptography is becoming an increasingly partisan issue. Republicans are often wary of regulating unregulated industries, and so several important party figures have given their full support to cryptography with few concessions. This includes future party leaders such as the governors of Texas and Florida. Meanwhile, most of the most ardent critics of crypto seem to be Democrats, but that doesn’t mean it’s a matter of partisan line. President Biden’s recent cryptocurrency executive order has generally been considered very space-friendly by industry experts. Energy use seems to be the highlight for many regulators seeking absolute bans.

The other reason why this is interesting is that this bill only affects a handful of major cryptographic networks, but it includes the two largest ones: Bitcoin and Ethereum.

These networks use something called a working test mechanism to protect their networks. The work in this case is mining which involves computers working all day to solve essentially mathematical problems that protect the integrity of the blockchain, which makes hackers extremely expensive and technically difficult to overwhelm the network to make transactions. unauthorized and steal tokens. Crypto seems to be generally far from working proof, especially Ethereum is deep in the process of transitioning its network to a less energy-intensive consensus method. But it seems unlikely that Bitcoin will make its own transition, suggesting that regulatory maneuvers, such as New York accounts, are likely to be increasingly antagonistic to Bitcoin (and some smaller networks) specifically.

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

Bitcoin already conveys its libertarian leaning a little more prominently than other blockchains. In recent industry events, it is becoming increasingly clear that in the midst of a thriving developer ecosystem for blockchains such as Ethereum and Solana, the Bitcoin network infrastructure philosophy is increasingly its most harmonizing element. Bitcoin’s continued resistance to criticism and calls for change can only embolden its followers, 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 love cryptocurrencies but hate Bitcoin.

this week’s pod

Hello everyone, it is Anita here. Our second episode of the weekly podcast Chain Reaction has just dropped, and this week we were so immersed in Elon Musk / Twitter news that we thought about addressing two other topics first to clear our minds of the bird app for a moment. second.

Earlier this week I wrote about how Fidelity, the largest provider of retirement plans in the United States, announced its plans to take bitcoin to the 401 (k) plans it manages for 23,000 companies. It’s a bold move by this trader because it legitimizes cryptography as a long-term investment just a month after regulators tried to discourage retirement plan providers from doing just that. We started the podcast with some lively back-and-forth about who will benefit from the Fidelity movement, especially if it takes off as a major trend. Personally, I think the news is great for non-billionaires; you can read why in my latest for TC + here.

We also cover:

  • Coinbase CEO Brian Armstrong overshadows Apple for its App Store policies.
  • Elon Musk’s offer on Twitter and what it means for web3. We couldn’t skip this one, especially because of Twitter’s position as a water well for the crypto community.

Our guest interview this week was with Shaun Maguire, a Sequoia investor, and of course a cryptographic Twitter personality. We talked to him about Sequoia’s recent cryptographic movements, the possibility of a multi-chain future, and whether we will achieve true large-scale decentralization or end up trapped in the “web 2.5” forever.

Subscribe to Chain Reaction on Apple, Spotify or your alternate podcast platform of your choice to stay up to date with us every week. Go on Chain reaction on Twitter.

Anita Ramaswamy

follow the money

Where does startup money move in the crypto world:

  1. The 0x P2P exchange gets $ 70 million from Greylock Partners.
  2. NFT Proof startup receives $ 10 million from Alexis Ohanian’s 776.
  3. Crypto TV startup Mad Realities gets $ 6 million from Paradigm.
  4. The African cryptographic application Afriex captures $ 10 million from Sequoia China and Dragonfly Capital.
  5. Gaming DAO Snackclub raises $ 9 million from Animoca.
  6. The DeFi Tonic platform receives $ 5 million from Electric Capital and Move Capital.
  7. Cricket NFT Rario platform raises $ 120 million from Dream Capital.
  8. The NFT game Apeiron captures $ 10 million from Hashed.
  9. NFT infrastructure with CXIP Labs receives $ 6.5 million from Courtside Ventures and Wave Financial.
  10. Cryptographic banking startup Cogni earns $ 23 million from Hanwha Asset Management and CaplinFO.

analysis added

More cryptographic analysis from our TechCrunch + subscription service:

Stable currencies are here to stay, but will they see a wider adoption?

Stablecoins’ total current supply has grown significantly over the past year, but the future is unclear. Kraken’s legal chief said the sub-asset is in a “Cambrian moment” as they consolidate in the market. But not everyone is a fan of stable currencies, as they are in their infancy and have the potential to grow, in two very different ways.

Artists like Harry Connick Jr. are using web3 to interact with fans

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

Jacquelyn Melinek

Thanks for reading! And again, to receive this in your inbox on Thursday mornings, you can subscribe to the TechCrunch newsletter page.

Have a great weekend,

Lucas Matney

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