State of the Coin: Bitcoin and the 12 Steps (ft. @AriZonanHODL)
State of the Coin: Week ending 2021-12-17
Stay up to date on Green Candle by subscribing to our newsletter and following us on Twitter, Instagram, and YouTube!
In our Friday articles, we take a deep dive into the current state of Bitcoin. We previously published a series debunking the FUD surrounding Bitcoin - you can find those links at the bottom of this article. Every Friday we will continue to publish brief State of the Coin newsletters to keep subscribers up to date on BTC with both on-chain analytics and off-chain news from the Bitcoin industry. For full disclosure, Brandon and Daniel are strong believers in Bitcoin and both have allocated portions of their portfolios to BTC (HODL baby).
Check out the video version here!
Let’s take a look at this week’s State of the Coin
A look off chain:
Ledn announces BTC-backed mortgages: Ledn, a Bitcoin lending platform, announced Wednesday that they have raised $70 million in a Series B financing round, bringing the platform into a $540 million valuation. They also announced their roll-out of a new bitcoin-backed mortgage product, which will allow customers to use their bitcoin to purchase real estate. In a statement to Bitcoin Magazine, they said: “Clients will be able to blend an equal amount of Bitcoin and property collateral as part of the mortgage loan… This unique collateral structure, which relies on the stability of real estate to buffer against the volatility of Bitcoin, was designed to provide clients with a generous window to service their Bitcoin collateral during times of high market volatility.” While the product is currently in “pilot mode,” they expect to launch the product broadly to its U.S. and Canadian customers early next year.
90% of bitcoin have been mined: On Sunday we reached the 90% landmark for BTC - that is, 90% of the 21 million bitcoin that will ever exist have now been mined into circulation. All 21 million bitcoin are expected to be mined by 2140, at which point it is assumed that miners will continue securing the network and processing transactions based on network transfer fees.The current block reward is 6.25 bitcoins per block mined, which will decrease to 3.125 bitcoins per block following the next halving (expected in May 2024). Bitcoins current inflation rate is ~1.8% and, after the next halving, this will likely be ~1.1%. Compare that to what we’re seeing with fiat currencies around the world.
More U.S. politicians getting into Bitcoin: Francis Suarez, the mayor of Miami, Florida, announced in November that he would receive part of his salary in BTC. He now appears to be going one step further: adding BTC to his retirement account. In a recent interview with Real Vision’s Samuel Burke, when asked whether he would invest his 401k in bitcoin next year, Suarez replied, “Oh yeah! Definitely.” Scott Conger, mayor of Jackson, Tennessee announced that all public employees in Jackson would soon have the option to invest in BTC through their 401k. Speaking of politicians and Bitcoin, former South Carolina Governor candidate John Warren is now mining bitcoin through a new business venture he formed with four other founding partners, GEM Mining. According to the AP report, “Warren said GEM has raised more than $200 million in institutional capital from banks, hedge funds, endowments and pension funds to operate more than 32,000 machines to mine Bitcoin.” The company also said it has over 9,000 machines fully operational and mined more than 400 bitcoin in the past nine months.
Russian central bank to ban BTC: According to a Reuters report on Thursday, the Russian central bank is seeking to prohibit citizens from investing in bitcoin and cryptocurrency out of concerns the activity would pose risks to the country's financial stability. "The central bank is now in talks with market players and experts about a possible ban," the report said. "If approved by lawmakers, it could apply to new purchases of crypto assets but not to those bought in the past, said one of the financial market sources, who requested anonymity due to the sensitivity of the matter." Russia’s attitude toward Bitcoin has always fluctuated, however the country has long sought to increase financial surveillance over their populace - something that is hard to do with BTC. Interestingly, Russia was a prime destination for miners and mining equipment banned from China over the summer. If they ban purchasing, will they also ban mining?
Macro Backdrop: The U.S. Federal Reserve released November’s economic data, confirming what many of us already knew - inflation is still running hot. Indeed, the consumer price index (CPI) rose 6.8% year over year, the largest spike in four decades. In response to this news, the Fed announced that they will speed up their taper on bond purchases and expect to see three interest rate hikes in 2022. Time will tell whether this pans out, but I have serious doubts we’ll see any significant rate hikes heading into midterm elections. Outside of the U.S., other news should be giving Americans pause. Last week we noted that Russia and India will be settling mutual deals in Rubles and Rupees rather than the USD and this week the Global Times reported that Myanmar is electing to settle international deals in the Chinese Yuan rather than the USD. Hot inflation at home and faltering trust in the USD abroad is worrisome, to say the least.
Guest Writer
This week @AriZonanHODL was incredibly kind and took the time to share his story with us. If you don’t already, please give him a follow!
The 12 Steps and Bitcoin
What in the world do the 12 steps have to do with bitcoin?
Well, I, like many others, see themselves in bitcoin. Maybe not themselves per se, but their areas of expertise, past experiences, or backgrounds. Which leads me to my background. I grew up a pretty normal kid growing up in the 90’s. Great family, great church, good friends. I got no complaints. My problem was I didn’t know the party ended after college and took things too far. I landed myself in a treatment center with nothing but my own disappointment and regret.
But what I found there has given me more benefits than my addiction ever cost me. The 12 steps of AA. It's a way of life. It’s helped millions out of the grip of life long addiction. It has been adapted to countless other recovery groups and is known by many outside of the rooms of AA.
But again, what do the 12 steps have to do with bitcoin?
At the heart, the 12 steps is about admitting that the current structure of life isn’t working and it needs to change. Step 1 says that we admit our lives have become unmanageable. The origin of bitcoin is the moment Satoshi Nakamoto looked around at the structure of the world and decided things needed to change. He understood that our current circumstance had become unmanageable. Bitcoiners have this mind change too as they are orange pilled.
They see in their own lives the unmanageability of the cost of living going up every year with no abatement. They see the brokenness of our current institutions and political circus we are supposed to call leadership. They have the coming out of the matrix moment just like any addict does when they have their moment of clarity.
Some of the next steps deal with taking an inventory of oneself. In order for your business to run well, you must take an inventory. Any business that doesn’t perform an inventory check every now and again would have major problems. Same thing with a person. Same thing with money. Bitcoin is about keeping a constant inventory to maintain absolute immutability every second of every hour of every day for the rest of time. That is how bitcoin maintains its 21,000,000 hard cap and why people trust its monetary system above all others.
The ending steps deal with living out the principles of the 12 step program. In AA it’s not enough to go through the recovery process and leave to go about your life. It's time to give back. It’s time to find the next addict and help that person go through the 12 steps. Not only will you get to see some of the coolest stuff you can imagine but it helps the person stay clean.
I think it’s the same way in bitcoin. We didn’t find ourselves here to keep it to ourselves. Not something like bitcoin. We have found the solution to the world's unmanageability and insanity. We see the future as something bright and exciting and want others to join us. We spread the message. We defend the doctrine. We fight for the cause.
It’s time for the world to recover. It’s time for bitcoin.
We’re always looking for guest writers! If you or someone you know would like to be featured on State of the Coin as a contributor, let us know! You can email us at greencandleit@gmail.com or DM us on Twitter (@Greencandleit)!
A look on chain:
Let’s take a look at on-chain data from Glassnode!
Price update: In a tough week we’re seeing prices in the September range of $46-48k. Keep panic selling on omicron news anons, I’m here for your coins. As of this writing, in the last week, BTC’s USD price is down 1.8%; in the last month, it is down 20.5%; in the last year, BTC price is up 123.3%.
S2F Model Update: Although price currently remains below stock-to-flow model projections, the model has historically performed well immediately prior to halving events (see red circles below). The model has a predicted USD value of $121k in March of 2024, when the next halving event is expected to occur. Remember, BTC is a long term investment, not a “get rich quick” vehicle. To learn more about the S2F model, check out this article by PlanB.
200 Week Moving Average: I’ve decided to include a quick view of price vs the 200 week moving average. Some use this moving average as a (very) rough floor model.
SOPR: The Spent Output Profit Ratio (SOPR) is computed by dividing the realized value (in USD) by the value at creation (USD) of a spent output. Or more simply: price sold / price paid. Values greater than 1 indicate that coins are being sold for profit (typically bullish) and values less than 1 indicate coins are being sold at a loss (typically bearish). SOPR continues to hover close to 1 - in my opinion, this is bullish given the volatility over the last few weeks. Even when we see dramatic drops in price, we don’t see large downward spikes in SOPR - people are not selling at a loss when price drops suddenly.
Terrible Take of the Week
This week’s terrible take of the week comes from Peter Schiff (@PeterSchiff), who continues to do mental gymnastics to explain the gold sell-off during 40-year high inflation. Strong take.
BTC Meme of the Week
What would the BTC community do without memes? Every week on State of the Coin, we feature our favorite meme of the previous week. If you create or see a meme that you like and want us to consider featuring it, tag us on Twitter or instagram (both @Greencandleit)! This week we’re featuring a meme from the Bitcoin Meme Library (@bitcoinmemelib). Give them a follow to see more!
New to Bitcoin and looking to learn more? Check out our introductory series, where we walk through common misconceptions about the world’s leading cryptocurrency!
Stay up to date on Green Candle news by subscribing to our newsletter and following us on Twitter, Instagram, and YouTube!
Happy Friday everyone - get after it this weekend!
Dan and Brandon
Do you want to HODL BTC in a tax-advantaged retirement account? Check out Choice by Kingdom Trust! Click the banner below to find out more!
Disclosure: The authors of this writing hold positions in cryptocurrency mentioned in this article. That cryptocurrency is Bitcoin. The article was written by Daniel Kuhman, Brandon Keys, and occasionally a guest writer; it expresses the author's own opinions. They are not receiving compensation for it. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock or cryptocurrency. None of the authors of this article are financial advisors. We encourage all readers to do further research and do your own due diligence before making any investments.