It’s full steam ahead as El Salvador taps into geothermal power for Bitcoin mining. What could be next on President Bukele’s Bitcoin bucket list? Meanwhile, another flurry of institutional adoption makes it a bullish week for crypto, Twitter might be integrating the Lightning Network, and more. Here are the top crypto stories to come out of last week.
El Salvador, Bitcoin, and volcanoes: a crypto love story
It’s official! Bitcoin is now legal tender in El Salvador, with the Central American country becoming the first in the world where retailers will be legally obliged to accept the cryptocurrency as payment. President Nayib Bukele's proposals to embrace cryptocurrency were approved by congress last Tuesday night, with lawmakers voting 62 to 12 in favour of the plan. People won't be forced to use Bitcoin, and the US dollar will remain the country's official currency.
It seems the country’s bullish attitude could already be paying dividends in the space, with President Bukele tweeting that it would use geothermal power produced by their volcanoes in a bid to make Bitcoin mining more energy efficient.
Bitcoin mining, the method for bringing security to the blockchain and minting new coins, has been labeled as damaging to the environment. While the energy consumption of mining isn’t wasteful and is more efficient than traditional banking, it’s still a contentious topic
President Bukele said that he directed the president of state-owned electricity company LaGeo to “offer facilities for Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanoes.”
Bitcoin mining, the method for bringing security to the blockchain and minting new coins, has faced criticism recently for using energy. While the energy consumption of mining isn’t wasteful and is more efficient than traditional banking, it’s still a contentious topic. Could El Salvador change the narrative?
I’ve just instructed the president of @LaGeoSV (our state-owned geothermal electric company), to put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos 🌋
This is going to evolve fast! 🇸🇻 pic.twitter.com/1316DV4YwT
— Nayib Bukele 🇸🇻 (@nayibbukele) June 9, 2021
More Bitcoin adoption from major financial institutions
The Basel Committee, the arbiter of international banking standards, have formally recognised Bitcoin as an asset class, proposing rules for banks to hold the cryptocurrency that put it in the highest risk category. Bitcoin saw an immediate jump in price of $2,000 on the announcement, rising 5% in under 2 hours.
The Basel Committee’s recognition is a major milestone for bitcoin into the world of traditional finance. But that wasn’t the only foray into traditional finance for bitcoin yesterday, with two major players announcing moves into the space. Victory Capital, which manages nearly $160 billion in assets, announced they will launch a private fund for accredited investors that will track the Nasdaq Crypto Index (NCI).
State Street, the second oldest bank in the US, also announced plans to launch a “multi-asset platform” that will support cryptocurrency trading, citing rapidly-rising customer demand.
How soon can we say that Bitcoin has gone officially mainstream?
Square completes $100 million investment for crypto inclusion and education
Payments company giant Square, has allocated the final $25 million of its $100 million investment in minority and underserved communities. This is yet another example of a crypto cause, and this time it’s one that aims to empower and give agency to people.
Of the remaining $25 million, $5 million has been portioned off to create The Bitcoin Endowment, a new fund that aims to increase and improve Bitcoin education and adoption; the fruits of which will help antidote fear, uncertainty and doubt (FUD).
The first grant recipient of The Bitcoin Endowment is Black Bitcoin Billionaire, an organisation focussed on equipping Black communities with education on Bitcoin and building wealth. A further $10 million was sent to the Entrepreneurs of Color Fund, which helps further business diversity, while the remaining $10 million went to international organisations that support underserved communities.
Square’s CEO Jack Dorsey, has been on a roll lately, and further hinted this week that he’s aiming to bring the power of crypto to his other business, Twitter, by integrating with it the Bitcoin layer 2 payments Lightning Network. The Lightning Network is a second layer on the Bitcoin blockchain, which enables cheaper and faster transactions.
While it’s unclear what this integration with Twitter could mean, the most likely possibility is the use of micropayments.
From El-on to El-off: Musk will have ‘no role’ in Bitcoin Mining Council
The Bitcoin Mining Council (BMC) is a newly established group of energy-conscious North American Bitcoin mining companies, committed to efficient mining practices. Hints of the forum were first made by Elon Musk in a tweet he put out in May, labeling it as “potentially promising.” But while many expected the billionaire to be a key part of the BMC, its debut took place without him.
It’s not known why exactly Musk won’t be joining in any official capacity. According to its founder, Michael Saylor, “The Bitcoin Mining Council is a voluntary and open forum of Bitcoin miners committed to the network and its core principles. We promote transparency, share best practices, and educate the public on the benefits of #Bitcoin and Bitcoin mining.”
The Bitcoin Mining Council is a voluntary and open forum of Bitcoin miners committed to the network and its core principles. We promote transparency, share best practices, and educate the public on the benefits of #Bitcoin and Bitcoin mining. Join us. 🙏https://t.co/vGPGD3TA5p
— Michael Saylor (@michael_saylor) June 10, 2021
The forum has been scolded as an attempt to centralise control over the mining industry, with suggestions that the group plans on imposing energy standards on its members. But the BMC dismiss this and say they’re “not designed to have ‘teeth’ or tell anyone what to do,” but rather encourage members to share their “energy mix” and power consumption for data and educational purposes.
This data could prove especially useful for Musk, as his company Tesla has revised its bitcoin policy. Earlier in May, the electric car company announced it would no longer be accepting bitcoin as payment, citing concerns over the digital currency's energy-intensive mining process. Yet, Musk shined a light on the way forward in a recent tweet, saying “when there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions."
Q: Where do eskimos keep their bitcoin?
A: In cold wallets, of course.