Tools for Humanity, the team behind Worldcoin, has raised a $115 million Series C led by Blockchain Capital with backing from a16z, Bain Capital Crypto and Distributed Global. Worldcoin is an open source protocol currently in beta that plans to create a digital ID system and universal basic income (UBI) for every person on the planet, was co-founded by OpenAI CEO Sam Altman. The project has reportedly on-boarded 2 million people, and has seen a black market for Worldcoin credentials emerge in China. Meanwhile, security firm Unciphered has allegedly found a way to hack into the popular Trezor T hardware wallet. Trezor said Unciphered did not share info about the potential vulnerability (standard “white hat” procedure), which appears to be a known issue called a “RDP downgrade attack.”
Fahrenheit Buys Celsius
Bankrupt crypto lender Celsius Network has found a buyer for its institutional loan book, mining unit and other assets valued upwards of $2 billion in Fahrenheit, a consortium of crypto firms including venture capital firm Arrington Capital and miner U.S. Bitcoin Corp. The bid was accepted by Celsius and a committee of its creditors, but is awaiting approval by regulators – a process the overseeing bankruptcy judge admitted would likely be filled with “roadblocks.” Backup buyers include the Blockchain Recovery Investment Consortium and NovaWulf, which planned to tokenize the lender’s equity. Fahrenheit’s acquisition is part of Celsius’ wider Chapter 11 bankruptcy process, which will also see the firm distribute its remaining liquid crypto to former users and custody account holders as well as a corporate restructuring.
Tech Expands
Austria-based crypto exchange Bitpanda is teaming with Coinbase to connect the U.S.-listed exchange with banks looking to offer digital assets to their customers in Europe. Coinbase will use Bitpanda Technology Solutions, a business-to-business infrastructure layer provider, to connect directly into banks and fintechs. Elsewhere, Web3-integrated browser Brave is using proof-of-attendance (POAP) NFTs to enable token-gated video calls on its video call platform. Finally, Stably, a stablecoin issuer, is using the novel Ordinals protocol and BRC-20 token standard to create an on-chain USD-denominated stablecoin on Bitcoin.
The Takeaway: Class to Culture War
This week CoinDesk published one of the most thought-provoking and balanced articles on Bitcoin mining I’ve ever read. The report is focused around the Greenidge bitcoin mining company in upstate New York, which was at the center of a protracted media cycle last year after environmental activists claimed the facility was boiling the waterways and poisoning delicate ecosystems. Those claims went on to influence an actual policy decision by Governor Kathy Hochul restricting bitcoin mining in the state.
The thing is, most of the worst claims about Greenidge were straight up wrong. CoinDesk’s Nik De, Doreen Wang and Cheyenne Ligon took a trip to Dresden, in Upstate New York, to take the temperature of the lake and speak to locals, finding that not a single lawmaker visited the rust-belt town or spoke to its mayor before drafting what is essentially a freeze on new bitcoin miners.
Most of the bitcoin mining debate today has centered around the Bitcoin network’s environmental impact. Greenidge became a lightning rod because before the company moved equipment into a deactivated coal-burning plant, meaning the miners weren’t just drawing on the state’s electricity that would have been produced anyway, but actively releasing “fresh” carbon into the atmosphere.
The Bitcoin network uses as much energy as a country like Norway, and trying to wrap your head around whether that is or isn’t “worth it” often comes down to your point of view on how you value permissionless money. Individuals can certainly make up their minds on the matter, but how a state should treat Bitcoin – for instance, whether mining should be encouraged or banned – is a societal-level conversation involving politicians, stakeholders and those affected.
In a behind the scenes account of how the story came to be, De wrote that he expected locals to hate the plant. They’d been told that Greenidge was pumping pollution into Seneca Lake and creating incessant noise at the plant reportedly created (a claim that was also debunked). Instead, De’s team found that many in the town and surrounding area supported the upstart business. Although Greenidge created a relatively small number, every job counts in a town like Dresden (population: 296).
In fact, the few complaints about Greenidge lodged by locals came from so-called “cottage people” – the wealthy out-of-towners with vacation homes on the lakeshore. Sure, as taxpayers these people have a right to be concerned about their property value, but should their opinion matter more? Because it seemed to.
And here layeth the nut: Beyond all the other intractable debates about Bitcoin mining potentially kicks up lies a class conflict. You all know the story: Bitcoin was born during the Great Financial Crisis, a tool that allowed anyone to access a semi-private electronic cash system where the money supply would always be verifiable – a total rebuke of banking and the Federal Reserve.
Over time, that narrative has gotten a little more complicated, especially as some of Bitcoin’s biggest supporters have become entrenched elites themselves essentially for making a few good trades a decade ago. There are now a lot of white-collar jobs based around analyzing bitcoin’s price performance and lobbying for new-fangled investment vehicles derived from bitcoin.
Bitcoin mining too has gone from something you could do on your home computer to becoming a highly-capital intensive industry, requiring the purchase of hundreds or thousands of specialized computers that draw electricity 24/7, if you want to compete on any meaningful scale. But the proof-of-work algorithm that makes Bitcoin also tethers it to the ground: these investments are being made in real communities.
Greenidge, for instance, has hired real, unionized electricians and created dozens of short-term construction jobs. The company has made a number of improvements into Dresden, including fixing up a children’s playground and other beautification efforts. Not all facilities operate their own coal-plant like Greenidge requiring as much labor, but many do create opportunities for people where opportunity doesn’t always come a-knocking.
If Greenidge is any indication, the real conversations we could be having around bitcoin mining and class will be increasingly consumed by another conflict: the Culture War. I’ve said for a while, perhaps being too reductionist, that Bitcoin is going to become a red-blue issue in the U.S., with Republicans increasingly endorsing it and Democrats disavowing. Although the network itself will likely always remain “credibly neutral,” the way we think about it, and politicize it, will fall along predictable lines. Many topics have traveled thus. Before climate change became a wedge issue in American politics, for example, it was a relatively non-partisan issue that many politicians agreed on the need to do something about.
Just yesterday, Florida Governor Ron DeSantis (R.) spoke about Bitcoin’s “threat to the current regime,” in an announcement event for his 2024 presidential campaign. Although modeling himself as a populist, DeSantis has the early support of monied technologists like Elon Musk and fellow PayPal Mafia member David Sachs. DeSantis is probably most well-known nationally for what’s been termed the “Don’t Say Gay” bill and a fight with Disney.
Something tells me DeSantis’ pledge to “protect” Bitcoin is as performative as his “ban” on central bank digital currency (CBDC) in Florida (before the Fed has even decided whether it’s worth fully studying a digital dollar). But it’ll still be enough to color some people’s impressions of crypto, furthering the type of political feedback loop that enabled environmentalists to lie about Greenidge’s ecological footprint and the Democratic government in New York to buy it whole cloth.
As my colleague Nik De said, “a conversation that doesn’t include the people most directly impacted can lead to wonky outcomes.” When the only two political parties of consequence are shadow boxing about fake internet money, the only people who can get a word in edgewise probably own a vacation home.
