Bitcoin Energy FUD: Is This It?

The anti-Bitcoin crowd likes to focus on BTC’s price when it’s crashing, but when it’s going up and to the right they switch to bashing mining instead. You know how it goes by now: Bitcoin mining uses more electricity than [insert randomly-selected country name here]. Oh, the humanity! 

Bitcoin’s energy use has always been and perhaps will always be controversial, at least for those who stubbornly fail to grasp the value of a secure and trustless payment network. However, there is now a growing belief that those power-hungry ASICs which keep the blockchain ticking along could in fact play a role in the green energy revolution.

A recent report co-authored by, among others, Nic Carter of Castle Island Ventures, looks into how Bitcoin miners can help with the establishment of a more efficient and stable power grid. It also shows how miners’ use of energy sources that would otherwise be wasted can in fact help reduce levels of atmospheric pollution.

Best of all however is the way in which Bitcoin mining could help bootstrap new, clean sources of energy generation that would otherwise struggle to establish themselves. The world is turning towards renewable energy and, although this is a good thing in many ways, the challenges posed by a lack of funding and intermittent supply are enormous. Perhaps, as they say, Bitcoin fixes this.

Today’s video summarises this report and digs into its findings to help you arm yourself against the naysayers. You can watch it here.

📈 Crypto Market Forecast 📈

There are two huge macro factors and two huge crypto factors that are likely to move the market this week. It’s worth noting that BTC’s correlation to stocks has been very low over the last few months. This seems to be changing now that institutional investors are getting involved because of spot Bitcoin ETF FOMO. The result is that BTC is more sensitive to macro. 

The first macro factor to watch out for is the CPI for November, which will be released this Tuesday. As most of you will know, a higher-than-expected CPI print could tank the markets, as it means that interest rates will stay higher for longer. Conversely, a lower-than-expected CPI print is likely to result in a big rally, as it means that rates will come down sooner. 

This ties into the second macro factor, which is the Fed’s meeting on Wednesday. Besides the fact that the CPI print will come out the day before, this meeting will be significant because the Fed will give an updated forecast on where it sees interest rates heading. Logically, a revision lower would mean a rally, and a revision higher would mean a crash. 

For context, the consensus is that the Fed is done raising interest rates and will soon begin lowering them. However, the abnormally strong employment figures for November suggest that the economy continues to be strong despite these higher rates. This could either mean a soft landing (Fed lowers rates with inflation) or the Fed staying higher for even longer. 

The first crypto factor to watch out for meanwhile is Binance ending support for BUSD, something that will happen this Friday. For reference, Paxos was ordered to stop minting BUSD by New York regulators earlier this year. It’s still possible to redeem BUSD for fiat via Paxos until next February, but it appears that Binance is accelerating the deadline for retail BUSD holders.  

The reason why you need to watch BUSD is because one billion of it is still in circulation on the BNB Smart Chain, with a few hundred million still in DeFi protocols. This could be bad news for BNB if there’s BUSD stuck somewhere that can’t be withdrawn or redeemed. The good news is that this probably wouldn’t have any effect on the rest of the crypto market. 

The second crypto factor to watch out for is one which could affect the entire crypto market, and that’s US politicians potentially passing a crypto terrorist financing bill. There have been many such initiatives lately, and it’s possible that one of them will make it through before their Christmas break begins on the 16th December. This could be bearish for crypto. 

On the other hand, however, politicians leaving for their Christmas break could be very bullish for crypto if they don’t manage to pass any anti-crypto legislation before then. It means that the crypto market will be able to breathe and focus on the spot Bitcoin ETF, which could be approved less than a month from now. 

Even so, it wouldn’t be surprising to see a pullback between now and then. Almost every indicator is flashing overbought, and derivatives trading is hitting all-time highs on many exchanges. A pullback would be a good sign, as it would allow these indicators to reset for even higher highs. But as the saying goes, the markets can stay irrational longer than you can stay solvent… 

💯 Deal of The Week 💯

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One of the best ones out there is Bybit. The exchange gives you access to hundreds of different crypto assets, gets industry-leading liquidity, provides automated trading tools and much more.

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👨‍⚖️ Code is Law 👨‍⚖️

Ladies and Gentlemen, the bull market vibes are so back! But, with their return come some of crypto’s craziest stories.

Over the past couple of weeks, we bore witness to two absurd tales relating to ‘crypto exploits’: one which seemingly seeks to redefine what hackers can negotiate for in exchange for protocol safety, and another which re-ignites the debate surrounding the ‘code is law’ philosophy.

Our first story involves the recent $47m exploit of popular multichain DEX and aggregator KyberSwap. Notably, the hacker behind the exploit sent an on-chain message to the KyberSwap team on 30th Nov that seemed to indicate that he (or she) wasn’t your run-of-the-mill exploiter.

For one thing, as Ambient Finance founder Doug Colkitt noted, the KyberSwap exploit is easily one of the “most complex and carefully engineered smart contract exploits” thus far. This indicates that the person behind the exploit is likely one of the most highly-skilled individuals in the industry or, as some speculate, is a team of sophisticated players.

Nevertheless, the meat of the absurdity that sets the KyberSwap exploit apart is the hacker’s demands. Specifically, they want to execute a complete takeover of Kyber – both the company and the protocol.

As part of this process, the hacker has asked for all documents related to the company’s structure, profits, revenue, assets, liabilities, and employee salaries. The fact that they know which documents to ask for indicates they aren’t just an incredibly smart tech geek, but may also have experience running and managing a company.

Frankly, the KyberSwap exploiter’s demands put all those before them to shame, even the infamous Mango Markets exploiter Avraham Eisenberg. More importantly, the deadline for these demands to be met is today – 10th December.

While there haven’t been any updates on the negotiations at the time of writing, recent interviews with the KyberSwap negotiation team seem to indicate that an acceptance of the hacker’s demands probably isn’t on the cards. 

As it stands, we believe the KyberSwap team would most likely bite the bullet and take the losses if it comes to it, especially since the team recently announced treasury grants as compensation for losses suffered by users. Watch this space.

Our second story, on the other hand, involves the legal conclusion of a criminal case filed against the Platypus Finance hackers – one that could trigger new-found boldness from DeFi exploiters, especially if they happen to be domiciled in France.

Specifically, a French court acquitted Mohammed and Benamar M of all criminal charges related to the Platypus hack, after the defendants argued they were simply ‘ethical hackers’ looking to farm a bounty from the exploit.

The court’s acceptance of their arguments seems quite absurd, especially when you consider that the hackers subsequently attempted to launder the funds using mixers. 

However, the legal nuance behind the court’s decision seems to be this - the supposed ‘theft’ involves the execution of a flash loan exploit - an attack which involves the hacker borrowing crypto from the protocol.

The judge reasoned that, once assets are borrowed, the loan legally transfers the ownership of the assets to the attacker under French law. There’s no theft if you’re legally the owner. Secondly, since the attack involved accessing a publicly available smart contract, the charges related to unauthorised access of a computer system also did not apply. 

While many metaphorically cast stones at the judge’s interpretation of the law, lawyers in the crypto industry seem to side with the reasoning. And, this doesn’t just seem to be a French law thing: even US law seems to have a concept which allows for the same legal logic.

The only recourse available to the Platypus Finance team seems to be to file a civil suit to mandate repayment of loans. 

Ironically, at the time of the hack, the Crypto Twitter account Autism Capital described the exploiters as “one of the dumbest hackers in recent history.” Given how things turned out, a rebrand to “one of the luckiest hackers in recent history” seems more appropriate. 

All in all, the French court’s acquittal of the hackers seems to be an embrace of the code is law philosophy. 

Coincidentally, the hacker behind the KyberSwap exploit seems to have a different approach to the code is law debate. In a recent TG interview with web3 security researcher Officer CIA, the hacker (aka ‘KyberSwap Director’) stated that he believes the true law ruling the crypto jungle is actually ‘might is right’ and not ‘code is law.’ Something I’m sure a lot of those reading this will agree on.

Nevertheless, the outcomes of both these exploits could undeniably set new precedents for what repercussions could result from a DeFi exploit. You can bet we’ll be watching both closely.

🔮 Video Pipeline 🔮

  • Top Crypto Apps in 2024: You Need These on Your Phone
  • Ethereum Update: Potential for ETH in 2024?
  • ECB Bitcoin: Conclusions on Emerging Country Adoption!
  • 2024 Crypto Predictions: Our Top 10 List!
  • Crypto Narratives Driving The Next Bull Run

🏆 What's New at This Week? 🏆

Best Decentralized Exchanges (DEXes) in 2024

DPEX Announces the Launch of SmartOTC: A Revolutionary Peer-to-Peer Decentralized OTC Platform

Cypherock Review 2024: The Safest Crypto Wallet?

Beginner’s Guide to Blockchain Technology

Cardano Review 2024: Updates You Don't Want to Miss!

M6 Labs: Airdrops & Bitcoin Season

📖 Quote of the Week 📖

Many people claim that investing in crypto is ‘risky’. But in reality, there is no investment on earth that comes without some degree of risk. Even the mere act of holding money in a bank account isn’t as safe as you might think. Therefore, the question shouldn’t be about ‘risk-free’ investments - it should be about taking risk and dealing with it well.

Successful investing is about managing risk, not avoiding it” - Benjamin Graham

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor. 

Guy Turner

Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.

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