What might we see? • The Register
Analysis The 2024 presidential election tipped the United States into a new era of uncertainty, but one thing’s for sure: The crypto industry was triumphant.
Hundreds of pro-crypto lawmakers were elected earlier this month, alongside Donald Trump’s victory in the presidential race. The cryptocurrency industry reportedly spent millions of dollars (in fiat currency, ironically) supporting candidates and platforms advocating for policies that could expand the Bitcoin-driven cryptocurrency sector.
Shortly after Trump’s election victory, Bitcoin advocates from the non-profit Satoshi Action Fund sent out an email congratulating the industry, while CEO Dennis Porter talked up legislative priorities alongside the promise that “our team will have direct lines to senior government officials” in the coming years.
That naturally raises the question of what sort of policies the cryptocurrency world would like to see enacted in Trump’s second term behind the Resolute desk. We pinned Porter down to discuss the matter between events in his busy schedule.
Priorities in the crypto community aren’t unified, Porter told us in a phone interview.
“You have a lot of excitement around the strategic Bitcoin reserves, but I think it’s also important that the folks in Washington, DC get some of the more basic structures across the finish line,” Porter said, referring to legislation like FIT21, which is designed in theory to place some basic regulatory structures on the crypto world and assign government bodies to manage the rules.
Porter admitted that the Trump team hasn’t said anything about supporting market definition legislation or other basic structure rules for Bitcoin and its relatives – “but, I mean, they’ve got to be supportive of the market structural legislation,” he suggested.
One area that Trump has expressed support for publicly is the aforementioned “strategic Bitcoin reserve” – an idea that the US federal government should invest in Bitcoin as a store of value similar to the gold reserve or other commodities.
“There’s clear signaling from the Trump camp – which will soon be the Trump administration – that they’re very interested in this policy,” Porter observed. “Trump endorsed that type of legislation at the Bitcoin conference right after Senator [Cynthia] Lummis introduced her legislation, the Bitcoin Act of 2024.”
That Act, which hasn’t budged since being introduced in the Senate in late July, would establish a program to allow the Department of the Treasury to buy as much as one million Bitcoins over five years, with a minimum holding period of 20 years before any coins in reserve could be sold, swapped, auctioned “or otherwise disposed of for any purpose other than retiring outstanding Federal debt instruments.”
Bitcoin dreams vs Bitcoin realities
Crypto opponent Molly White – who recently wrote about what Trump’s win could mean for the crypto industry – isn’t so sure Porter’s hopes, or the industry’s plans, match up with the reality of crypto’s history.
“There’s this industry talking point that, you know, we just want clear, responsible regulation,” White told The Register. “That’s pretty much the line you’ll get from anyone who’s working on this stuff.
“When you actually look at what they have supported in the past and how they have reacted to various proposals that would add more clarity or define stuff, the crypto industry basically unilaterally opposes it,” White added.
White cited FIT21 as an exception to the crypto industry’s general opposition to regulation, but noted a significant caveat: the bill reduces the Securities and Exchange Commission’s (SEC) authority over cryptocurrencies. It does so by excluding “investment contract assets” from the definition of federal securities – effectively narrowing the SEC’s jurisdiction over digital assets.
No regulations have changed that would prevent another FTX from happening. And now the crypto industry is actually trying to reduce regulations.
“They want regulation inasmuch as they want their interpretation that crypto assets do not fall under the SEC and therefore are not regulated by the SEC,” White explained. “I don’t think most reasonable people would say that that’s regulation in any sort of normal sense.
“If you look at it, no regulations have changed that would prevent another FTX from happening,” White added. “And now the crypto industry is actually trying to reduce regulations.”
As for the strategic Bitcoin reserve, White said she doesn’t think the idea will get very far – especially Trump’s vision of it, which differs significantly from what most of the crypto community supports. There she’s referring to the policy espoused by Lummis and Trump’s pick for Secretary of Health and Human Services, Robert F Kennedy, Jr, who made his pitches shortly before Trump announced his idea at a Bitcoin conference in Nashville, Tennessee, in July.
RFK Jr’s proposal would have led to the US buying as many as four million Bitcoins at the rate of 550 a day, while also pointing out that Trump previously called the digicoins a scam.
Trump, on the other hand, promised to use Bitcoin seized by the federal government as part of investigations into crimes involving stolen bitcoins, or those used for illegal purposes.
“[Trump’s idea] doesn’t even make sense. He’s talking about it as like, these are Bitcoins that were stolen from you, and so we’re gonna keep them,” White observed. “Once court cases are over and the assets are firmly forfeited, they’re usually sold and then returned to victims.”
That wouldn’t happen, presumably, under Trump’s plan. Though White acknowledged that return programs often end up with Bitcoin going unclaimed by people who wish to remain anonymous.
No matter how you swing it, White told us, “I don’t have much faith that either [BTC reserve proposal] will come to pass.”
But what about the environment?
Cryptocurrency mining using proof-of-work – the technique used by Bitcoin and many of its derivatives to verify transactions and create new coins – is incredibly energy and water intensive. Digiconomist’s Bitcoin Energy Consumption, run by data scientist Alex de Vries, estimates that a single Bitcoin transaction eats up the same amount of electricity as the average US household uses in almost a month.
When asked how the crypto community plans to address all that energy consumption and electronic waste generated – which will only grow if Bitcoin becomes more popular – Porter had two recommendations.
First, the Satoshi Action Fund is pushing for the use of orphaned oil and gas wells – of which there are more than 120,000 across the country – to generate energy for Bitcoin mining. Many of those wells are leaky, and many also lack a custodian to keep seals working properly and prevent the emission of methane and other greenhouse gasses. If we were to put mining operations at those abandoned wells we could eliminate some of that spillage, argued Porter.
“Ultimately, that’s really good for the environment in a number of different ways,” Porter told us. “You have the reduction of methane going into the atmosphere. Additionally methane can leak into the groundwater and cause contamination.
“The chance that the next EPA administrator could come in and actually do something about it would be, I think, a huge win for the environment,” Porter added. He’s confident that Satoshi Action will have a willing ear at the EPA – Porter’s cofounder, Mandy Gunasekara, spent several years at the EPA, part of it as chief of staff in the latter year of Trump’s first presidency.
Second, Porter advocates for attaching Bitcoin mining operations to renewable energy facilities to avoid curtailing energy from sources like wind and solar during periods of underutilization. When asked why we shouldn’t prioritize energy storage modules like batteries for times of excess need, Porter told us batteries are expensive, and also need additional infrastructure to support the distribution of power.
Much better to just slap a mining rig in there to eat up that excess juice, he argued.
“I guess that’s sort of an argument, that it’s better than literally nothing at all,” White explained when asked what she thought about burning leaking methane or using excess renewable energy on Bitcoin mining. “But it doesn’t actually change the fact that these gasses are being burned for this purpose.”
White doesn’t believe the argument for deploying cryptocurrency mining infrastructure at renewable or abandoned wells is a compelling one – especially given crypto miners already have thin margins and tend to try to mine as cheaply as possible.
That, and White believes Trump is unlikely to pay much attention to greening the Bitcoin mining process.
“Bitcoiners who are pro-Trump and also think that environmental causes will be followed under Trump just need to look at some of his appointments who are talking about basically reinvigorating the entire US oil industry,” White observed. “If any Bitcoin renewable projects do well in the next couple of years, I think it will be largely incidental.”
In the meantime, expect Bitcoin’s energy footprint to grow if, as Porter suggested, “Bitcoin is very undervalued” and could reach “upwards of $13 million per coin.”
“Roughly 60 percent of the price value will ultimately end up as electricity costs, so for a $100k Bitcoin that means the electricity cost per coin could be $60k, which comes down to 1,200,000 kWh per BTC at 5 cents per kWh,” Digiconimist’s de Vries told us in an email. “I should however warn against simply multiplying this with a factor ten to get the impact for a $1m Bitcoin. Such a steep increase would certainly massively boost energy consumption.”
Bitcoin’s value rallied in the wake of Trump’s election, but it hasn’t managed to hit $100k yet. And it’s falling again, losing nearly $7,000 in value in the past five days.
If Bitcoin wins, most of us stand to lose
Porter’s wishes for a Bitcoin-fueled future are, like much of the crypto industry’s projects, just that: wishes. Bitcoin strategic reserves are largely untested outside of countries like El Salvador, which has seen financial gains since Trump’s election on the price rally, but which saw its credit downgraded prior to BTC’s rally. Mining at abandoned wells is largely theoretical too, as is using curtailed renewable energy to mine.
In the meantime, all this Bitcoin advocacy is pushing the price – and the energy footprint – up.
The only blessing in the 2022 cryptocurrency wipeout was that people without crypto investments were pretty much entirely insulated from the carnage.
White is also concerned that a pro-crypto regime could weaken the barricade between the crypto industry and the rest of the economy if the Trump administration legitimizes it with new policies.
“The only blessing in the 2022 cryptocurrency wipeout was that people without crypto investments were pretty much entirely insulated from the carnage,” White wrote in her blog post shortly after the election. With Trump’s pick for Treasury Secretary a big proponent of Bitcoin, that legitimization could mean that future crypto volatility will begin to affect the broader US economy. That shakiness has already shown itself as the price of Bitcoin fell this week.
“I fear we may soon wave goodbye to such a firewall as Trump’s crypto-enthusiastic administration and the new Congress allow crypto to enmesh itself within the broader financial and banking system,” White predicted.
Whether any of this comes to pass, of course, is just as easy to predict as Bitcoin’s day-to-day price. Like many things with the Trump administration, mercuriality is the only real rule. ®
