Bitcoin continues to play a prominent role in US political debates.
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Crypto assets continue to make headlines and spark controversy as the 2024 presidential race continues to intensify and heat up. In addition to candidates quickly turning to and embracing the cryptocurrency industry (former President Trump is accepting crypto contributions and the Biden White House has made recent overtures to the industry), legislative efforts have accelerated. Congress, after years of inaction and deferring virtually all decision-making to US regulators like the IRS and SEC, has acted in a bipartisan manner seeking to address the issues facing the cryptoasset space. These efforts continue, even in the face of the White House's veto of an attempt to repeal SAB 121 that attracted bipartisan support in both chambers of Congress.
However, in June 2024, the efforts and approaches made to the cryptoasset sector took another dramatic turn. In comments made during and after meeting with major bitcoin mining organizations located in the United States, former President Trump expressed his wish that all remaining Bitcoin mined in the USA. The latest in a series of rapid-fire comments and pivots toward a more pro-crypto position from the former president has raised questions about 1) whether or not such a goal is even remotely possible, and 2) even if not, what the implications of such efforts are. they could be.
Let's take a look at some specific ways in which increased interest and investment in bitcoin mining in the US can have a significant impact on the broader crypto market.
Mining all Bitcoin in the US won't happen
As attractive as it may seem to some to centralize mining (and, by extension, the hashing and computing power behind it) in the United States, the likelihood of this happening is relatively small. According to an investigation by 3iQ The United States currently has the highest hash rate of a single nation at 38%. Achieving 100% global hash rate is logistically impossible, given the globally decentralized nature of the bitcoin blockchain, which is also a key strength of the cryptoasset, as it gives it the freedom to not be under the control of any government.
Furthermore, the United States was the largest beneficiary, in terms of hash rate, of the cryptocurrency mining ban enacted by China in 2021. Research from Coingecko indicates that the entire supply of bitcoins (21 million) will be mined this year. 2140, which means that approximately 90% of supply has been mined based on current hash rates, cost and logistics, and mining all remaining bitcoins exclusively in the US is prohibitive. That said, there are other ways this renewed (and positive) focus on bitcoin mining can benefit US policy decisions.
Cryptocurrencies can power a reinvented network
The conversation and debate around the US energy grid has been contentious, with supporters of fossil fuels and renewable energy sources finding little common ground with which to drive political conversations. Focusing on bitcoin mining and support for crypto assets in general requires a more objective conversation about US infrastructure and energy policy.
Specifically, and keeping in mind the goal of increasing the percentage of hashing power available to US miners, the United States would need to explicitly focus on increasing both energy production and export. The infrastructure spending that would result from this approach would include increased fossil fuel production, LNG terminals, the expansion of existing renewable energy projects and, most likely, a rebound in nuclear power plants. Combined, these efforts would reduce, through increasing supply, the biggest cost to miners (electricity), while allowing a more objective and sensible basis for further diversification of energy supply and network management. US.
Bitcoin Debates Will Lead to Greater Crypto Innovation
While debates around cryptoassets continue to focus on the development and role of bitcoin in the market, the fact is that the cryptocurrency sector has emerged far beyond bitcoin issues. Stablecoins, products and services marketed by some of the world's largest TradFi institutions, nation-states actively purchasing and establishing strategic reserves of bitcoins, and the potential of central bank digital currencies (CBDCs) have risen to dominant places in political debates. However, while this occurs, it remains important for policymakers to draft and debate policy actions that encourage innovation while safeguarding privacy and investor protection.
By bringing cryptocurrencies to the forefront of the 2024 presidential race, both candidates have highlighted the increasingly important role these assets will play in the future. Simply put, and especially as it relates to stablecoins, these instruments will form the future state of how dollar-based transactions and payments are made, even if within the US the conversation of the media remains focused on bitcoin and bitcoin-adjacent issues.
Regardless of how these conversations have been framed, it is worth having vigorous discourse and analysis of the role that cryptocurrencies will play.
