Cheap electricity is king

Join thousands of others who receive this daily analysis of crypto markets & news in their inbox every morning - subscribe now.

Access to cheap electricity is highly underrated.

Recently in China, a man was sentenced to 3.5 years in prison and fined 100,000 yuan for stealing cheap electricity from a local train station to run a Bitcoin mining facility. The man only owned 50 mining rigs, which mined approximately 3.2 BTC throughout the life of his operation.

This means that someone went to jail for 3.5 years in exchange for mining less than $20,000 in Bitcoin — the punishment rarely fits the crime. While theft of cheap electricity is likely to continue, the more interesting mental exercise is around state controlled electricity.

At some point, governments will realize the advantage they have in areas where they own or influence the power companies. This cheap electricity allows them to produce cryptocurrencies at a lower cost than competitors, while also gaining access to a highly portable & divisible asset that is less likely to be sanctioned in an enforceable way.

Reports have actually started to surface that North Korea has been engaging in numerous activities, including mining, to build a balance sheet of different cryptocurrencies. As with most things, the fringe individuals and organizations are the first to embrace the new activity or technology.

It may be crazy to consider today, but imagine if Bitcoin became the global reserve currency. There would be a major rush for nation states to accumulate as much Bitcoin as they possibly could. This accumulation would occur via financial purchase, legal or illegal seizure, and different mining activities. In this scenario, it wouldn’t surprise me if we saw billions of dollars deployed to build the largest mining facilities in the world, at advantageous locations, where the government had unique advantages/economics due to their relationship or ownership of the power source.

As I have said many times before: If data is the new oil, computing power is the new steel. One of the most important inputs into sustainable computing power is the cost of electricity.

In the future, those with the cheapest electricity will be king.


The “Off The Chain” podcast has been downloaded 100,000+ times in 120 countries. You can listen to the latest episode with Andy Bromberg, President of Coinlist now: Click here for Off The Chain podcast


PwC is backing a USD stablecoin cryptocurrency in challenge to Tether: PwC is backing a cryptocurrency—specifically, a so-called stablecoin backed by the U.S. dollar. The accounting firm is partnering with Cred, a decentralized lending startup that’s developing a new stablecoin pegged to the dollar. PwC will offer its accounting expertise to ensure Cred’s dollar-backed coin “can provide 100% transparency and value substantiation.” Read more.

A16z, Binance and more back Oasis Labs' new blockchain incubator: Blockchain startup Oasis Labs has teamed up with some notable venture capital firms and hedge funds to launch a new technology startup incubator. The Oasis Startup Hub will focus on aiding firms building "privacy-first computing on blockchain" platforms. Accel, a16z crypto, Binance Labs, Pantera Capital and Polychain Capital will all provide support for the program. Read more.

United Arab Emirates to allow ICOs as corporate funding option: The United Arab Emirates plans to introduce initial coin offerings next year to provide companies with a fresh way to raise money, the head of the securities regulator said on Monday. In ICOs, companies issue cryptocurrency tokens to investors, in much the same way as they issue shares in an initial public offer of equity. Read more.

Binance Labs invests millions in blockchain auditing platform CertiK: Binance Labs, the incubator wing of the Binance cryptocurrency exchange, has invested in a smart contract and blockchain audit startup. Called CertiK, the firm seeks to help secure smart contract and blockchain platforms through a formal verification process. The team has already begun working on ensuring existing blockchain platforms do not contain bugs that could lead to a loss of funds or other vulnerabilities. Read more.

Binance to disclose crypto listing fees, donate 100% to charity: Binance, currently the world's largest cryptocurrency exchange by trading volume, has announced that it will now disclose all cryptocurrency listing fees and donate the funds to charity. According to a company blog post published Monday, token projects seeking to be listed on the exchange will continue to be allowed to propose their own listing fees. The exchange will neither dictate such fees nor impose a minimum pricing level, the post indicates.

IBM's food blockchain is going live with a supermarket giant on board: IBM is taking its food-tracking blockchain into production, making it one of the largest enterprise projects to achieve that milestone, and has signed European supermarket giant Carrefour to use it. Announced Monday, the commercial launch of IBM Food Trust means that large players, as well as small and medium-size enterprises in the food industry supply chain, can now join the network for a subscription fee ranging from $100 to $10,000 a month. Read more.

European securities regulator to report on ICO rules by 2019: European regulators are determining whether to regulate ICOs as securities sales on a case-by-case basis. European Securities and Markets Authority chair Steven Maijoor told the European Parliament economic affairs committee that some ICOs resemble financial instruments, which would place them within a specific regulatory framework. However, the regulator is still analyzing how best to regulate ICOs which do not fall within that bucket. Read more.

UK telecom regulator wins grant to study blockchain: The U.K. is sponsoring research into organizing and managing phone numbers by the national telecom regulator. The Regulators' Pioneer Fund announced on Friday that it would award nearly £700,000 (just under $915,000) to Ofcom, the national telecommunications regulatory authority, "for a project that uses blockchain technology to improve U.K. telephone number management." Read more.

If you enjoy reading “Off The Chain,” click here to tweet to tell others about it.

Nothing in this email is intended to serve as financial advice. Do your own research.