This Week In Bitcoin is a new segment covering the events of the week that occurred in the Bitcoin industry, covering all the important news and analysis.
This was the week of El Salvador. Since President Nayib Bukele’s announcement in Miami at Bitcoin 2021 that El Salvador would adopt bitcoin as legal tender, the internet has been ablaze. The country’s parliament has since made it official, voting with a supermajority in favor of the bill. There have also been talks of setting up mining operations in the country and allowing investors with 3 BTC or more to take up El Salvadoran residency, prompting other Central American countries to signal interest in following their lead. I have long said that the first country to officially adopt bitcoin will be a pioneer and this week El Salvador did just that.
In other news: Elon Musk and Michael Saylor’s “Bitcoin Mining Council” launched their mission statement, China’s crackdown on crypto continued, former US President Donald Trump dissed Bitcoin, several wallet and mining firms raised fresh funding and US inflation hit its highest rate since the 2008 financial crisis.
Yes, many bits of bullish news this week would appear to be related to El Salvador, with most Bitcoiners hearing the country’s name enough times in the last week to last a lifetime, but the fun has only just begun. The nation:
Announced Bitcoin’s adoption in the country to pass the bill.
Offered solutions to mining and investment.
And initiated a nationwide rollout.
All in less than a week, whereas something similar would take years in other countries wrapped up in bureaucracy. Countries such as Panama, and Argentina have expressed interest in following in their footsteps.
Besides that, Taproot has cleared it’s last hurdle over the weekend as it locked in, signaling a new chapter for Bitcoin. This “transition” was relatively smooth sailing compared to the blocksize squabbles of 2017, if you were paying attention back then. Then there is Michael Saylor and MicroStrategy raising more funds to buy bitcoin, and with the interest in the bonds they’re issuing being sky-high, there were rumors that the Fed would buy some as well.
Overall, it was a solidly bullish week in Bitcoin, and the news and major developments in the market are yet to be reflected in bitcoin’s price.
But not all news is good news. The “Bitcoin Mining Council” released their mission statement which possibly paves the way for centralization in mining. Not to mention Elon Musk is involved, who has proven time and time again that he might not have Bitcoin and the community’s best interests at heart.
Furthermore, India and China continued their onslaught on Bitcoin and the crypto market in general. Although no definitive steps have been taken, it is something to keep an eye out for. The International Monetary Fund (IMF) has been vocal about their disapproval of El Salvador’s bitcoin adoption and it’s likely that they are going to seek ways of attacking bitcoin and anyone associated with it, especially to dissuade more countries from following in El Salvador’s footsteps.
Taproot activation is a certainty at this point after it was locked in over the weekend. This soft fork will expand on Bitcoin’s smart contract flexibility, while offering more privacy in doing so, as covered in an extensive piece back in 2019. Taproot is set to activate in November and will greatly enhance Bitcoin’s current ecosystem.
El Salvador’s bitcoin adoption is a done deal. Investors such as Justin Sun have made it clear that they plan to set up shop in the Central American country as it opens up its borders and economy to Bitcoiners. The country’s plans to enable 100% clean bitcoin-mining through it’s geothermal volcanic power plants will quiet the haters who have (falsely) claimed bitcoin mining to be a large contributor to climate change and will pave the way for more miners to adopt green mining initiatives.
With US inflation hitting highs not seen since 2008, developing nations that have grown reliant on the US dollar as a reserve currency and hedge against inflation in their own countries are likely to favor bitcoin in the months and years ahead. This could prove bearish as everyone from the US government to the IMF, World Bank and others may push against Bitcoin and use their power and influence to combat bitcoin adoption.
What is most newsworthy, however, is the fact that El Salvador managed to announce and pass a bill with a supermajority vote in less than a week, showing their commitment to executing their plans and not just being “all talk.” Other nations are likely to follow, but El Salvador will be critical in establishing bitcoin as a “global standard” and showing the benefit of adopting it to other struggling and emerging economies, with African nations the most likely prospects to follow suit next.
Overall, the last week has been a truly game-changing one for Bitcoin. The price may not yet reflect that yet, and maybe won’t for a while, but Bitcoin is certainly becoming a household name and we are still in the early days. As many would agree, bitcoin’s price is highly undervalued at the moment.
This is a guest post by Dion Guillaume. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
Bitcoin is the official poster-boy for cryptocurrencies, and it has done a lot for the nascent sector. Being the first digital asset, it has singlehandedly lifted virtual currencies into global prominence by leading them to a trillion-dollar market in just twelve years. Little wonder the phrase buy BTC has become popular.
But the premier digital asset has been dogged by several issues lately due to its energy consumption and high volatility. Aiding and abetting crimes have also been stamped on it. These challenges have seen it drop in value from its all-time high (ATH) of $65K to $30,000, with major resistance at $40K.
However, things are looking up for BTC again, and this may be the right moment for investors to buy BTC.
1. Tesla Still Interested In BTC Payments
Tesla boss Elon Musk announced that the EV firm is still open to accepting Bitcoin payments in a Sunday tweet. However, he places a condition for this reconsideration, and that is if facts are backing BTC mining is done with 50% of clean energy and with a positive future trend.
This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.
When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.
This turn-around saw the price of Bitcoin rise 2% from the $35,000 resistance level to $37,960, bringing the embattled premier digital asset back into investors’ focus.
Musk has played a pivotal role in the adoption of Bitcoin, with his EV firm staking about 8% ($1.5 billion) of its cash reserves in the digital asset in early Feb.
This was seen as a watershed moment for digital assets. But he decided to discontinue accepting BTC as payments for his company leading to a massive selloff in the broader crypto market. Tesla subsequently accepting Bitcoin in the coming weeks could see the crypto asset shoot beyond the $40k mark leading to a revamp of the crypto market. This may be one of the best moments to buy BTC.
2. El Salvador Adopts Bitcoin as Legal Tender. Time to buy BTC?
Many world governments may be against Bitcoin replacing their fiat currency but not Latin American nation El Salvador. According to a new law passed by the country’s legislative arm, the American nation recognizes Bitcoin as a medium of exchange.
Sponsored by President Nayib Bukele, this milestone will enable Bitcoin to serve as a second legal tender besides the US dollars. Bukele bases his reasons on the digital asset’s decentralized nature, noting that Bitcoin could facilitate more financial inclusion for the country’s 70% unbanked adults. Added to this is the attraction of investments leading to a boom in tourism and economic empowerment.
Speaking on if Bitcoin mining would be carried out in the nation, Bukele said that crypto-mining could be done with 100% clean energy, thanks to its 20 active volcanoes spread across the country. This has seen him direct the country’s geothermal electricity company to create a plan that could allow the proof-of-work (PoW) protocol to be mined 100% renewable energy, affordably, and with zero emissions from the volcanoes.
So far, there is a new Bitcoin mining hub powered solely by volcanoes in the country. El Salvador is also planning to build internet infrastructures to enable rural areas to participate in the revolutionary technology.
Bitcoin has broken through the $38k resistance zone, trading at $39,083.55 at press time, showing a potential rally on the 20-day moving average (MA) support. The 200-day MA also points to a bull run indicating this may be a great time to buy BTC.
3. Basel Committee Recognizes Crypto As Legal Asset Class
Banking supervisory authorities The Basel Committee has recently recognized Bitcoin and crypto as a legal asset class, according to a proposal. This has drawn crypto into the mainstream financial landscape, lending more credence to the nascent industry.
However, the Basel Committee of apex banks is imposing a hefty 1,250% risk weight on the new asset class, noting that volatility is a major deterrent in banks holding these virtual currencies. Meanwhile, the CEO of Ledgermatic, Luke Sully, said that the risk weight could hinder the wide adoption of cryptocurrencies for a long time. According to Sully, this is due to the large capital requirements it would demand banks to offer crypto services. He, however, said that this is a win for the decentralized digital currency.
4. Bitcoin Mining Shutdown Could Herald Renewables Growth
Bitcoin miners have streamed to less energy-demanding areas to open up Bitcoin farms. This has seen Asian giant China and Middle East nation Iran being major Bitcoin mining hubs. But miners in China have largely utilized power from coal-powered electricity grids, bringing into focus the environmental damage this could have on the atmosphere in the long term.
Persistent questions on Bitcoin’s energy-guzzling PoW protocol have lent credence to these criticisms as data shows it uses more energy than small European nations. China’s recent sanction of crypto mining in its Inner Mongolia region could play out in favor of Bitcoin being mined with renewables.
Crypto mining with clean energy has already been in place before the ban by China. However, the exact share of BTC mining done through this process is disjointed. According to a
Cambridge University report, about 39% of crypto mining is done with clean energy. A separate report from the Bitcoin Mining Network puts the figure higher at 74.1%.
Even though this has not been determined, it proves without any reasonable doubt that miners are rapidly transitioning to renewables which could see Bitcoin begin to reclaim all its market cap in the coming days. A large portion of BTC mining done with renewables could help Bitcoin see positive price action making now the best time to buy BTC.
5. BTC breaks critical overhead resistance – back near highs soon?
Bitcoin has been struggling to breakthrough resistance at $38,000 and $40,000 but has scaled both of those heights over the past two days of trading.
The $38k resistance level was established in mid May and the two lower resistance levels in the near term. With both of those taken out, there is a strong possibility that momentum will take the price through $42,000. In the time it has taken to write this article the price has appreciated by nearly $1,000, with BTC currently trading at $40,900.
Reclaiming $42,000 is big news for bitcoin as the way ahead from there is pretty much resistance free until the price returns to the $50ks.
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With its president making it the first country to recognize bitcoin as legal tender, and inviting miners to set up shop among its volcanoes, El Salvador is currently at the epicenter of the Bitcoin universe. And even though these developments are relatively new, an embrace of BTC has been demonstrably underway in the country’s everyday use of bitcoin as a financial rail.
“Monthly bitcoin transfers of under $1,000 — a proxy for money sent to the country from Salvadorans working abroad — totalled $1.7 million in May compared to $424,000 a year earlier,” according to data from blockchain analysis firm Chainalysis, shared exclusively with Reuters. “Such transfers hit a peak of $2.5 million in March, though a comparison with the previous year was unavailable.”
Projects like Bitcoin Beach, a circular bitcoin economy established in the country’s El Zonte community, have already demonstrated how people in El Salvador can benefit from using bitcoin for everyday purchases. And the recent moves this month from its president will doubtlessly increase the use of Bitcoin on a state level. But this growing trend in smaller bitcoin transfers demonstrates that Salvadorans are finding Bitcoin as a critical tool for international remittances, upon which they are significantly dependent.
“El Salvador is heavily reliant on remittances,” per Reuters. “In 2019, transfers using traditional money totalled nearly $6 billion — around a fifth of GDP — one of the highest ratios in the world.”
If the technical infrastructure needed to facilitate bitcoin transactions is established, BTC can be an incredibly efficient method for sending and receiving remittances. It is free from the third parties and regulators that can hamper or collect fees on such payments and with additional layers like the Lightning Network, transactions can be near-instantaneous and incredibly cheap.
The President of El Salvador, Nayib Bukele, has invited bitcoin miners to take advantage of new facilities to be set up at a state-owned geothermal, electric company specifically for the industry.
“Our engineers just informed me that they dug a new well, that will provide approximately 95 [megawatts] of 100% clean, 0 emissions geothermal energy from our volcanos,” Bukele shared on Twitter. “Starting to design a full Bitcoin mining hub around it.”
The idea to use El Salvador’s volcanoes as a power source for Bitcoin mining apparently arose in a Twitter Spaces chat room hosted by Coin Metrics cofounder Nic Carter. The chat room held conversations around Bitcoin, mining, and how the largest cryptocurrency has a high penetration in developing countries, as Carter said in an interview.
Bukele’s moves might present opportunities for the Bitcoin mining industry at a particularly good time. Chinese miners, for instance, are experiencing a strong state crackdown on the sector, and might be encouraged to take advantage of El Salvador’s cheap and clean geothermal energy and relocate their rigs to Central America. Bitcoin mining acts as a purely free market and the geographic location of miners is determined in a game-theoretic way — while one country may ban it, another can always welcome it.
As Bitcoin 2021 wraps up, the announcement by Jack Mallers that El Salvador intends to adopt bitcoin as legal tender still resonates. Historical in scope, the announcement also comes with acknowledgements of the bitcoin community from the country’s president. One form of this acknowledgement is the donning of laser eyes, a meme created with my best friends. I believe this would be a good time to take a look at the origins of laser eyes, #LaserRayUntil100K and what led to the meme.
It all began when I was a Bitcoin Pleb with less than 300 followers. In April 2020, I found Bitcoin Twitter and joined the Pleb Army. I myself am Bitcoin Class of 2018, but I didn’t know that Bitcoin Twitter even existed at that time, let alone that it is populated with so many amazing people. The first account that I fell in love with on Twitter was American HODL. A toxic Bitcoin maximalist who would call out bullshit and scams, would have extremely insightful perspectives and, most importantly, he’d tweet perfect shitposts. A shitpost defined by Urban Dictionary is “any content on the internet whose humor derives from its surreal nature and/or lack of clear context. A meme’s humor comes from its repeatability, a shitpost is funny simply because it isn’t a predictable repetition of an existing form.” So, basically saying random shit to be funny and to encourage engagement from your community and/or haters. It felt like American HODL was absolutely the king shitposter on Bitcoin Twitter and I loved him for it.
One morning, a Bitcoin hater was commenting on a post by American HODL bashing his tweet. I decided to make a meme with the most basic of tools: the default Android photo editor application. I downloaded the appropriate image, created the meme and posted it under the nonbeliever’s comment. Before I knew it, I had a retweet by the AMERICAN HODL. Me, a Pleb, with maybe 30 followers was ecstatic. I now had a new mission: to meme.
I had always been the class clown, the jokester and always great with the quips. I also had a love for photo editing and drawing. With these talents and interests combined, I had found my new calling. I would become a part of the Bitcoin meme army. At this time, I was uncertain that a Bitcoin meme army even existed. This just so happens to be the time that two other memers came to my attention, Gregzaj1and Labra HODL. I had also been found by a legend by the name of RD_btc around this time who brought me into a meme group on Instagram. Greg and Labra quickly became my best friends on Bitcoin Twitter and we constantly challenged each other.
As months went on, we grew tighter while our group of memers grew larger. The Meme Factory(tm) was born. We didn’t have any agenda or goals other than to have fun, build each other up and help fine tune each other’s memes when requested. We all had our own styles and methods and absolutely complemented each other. We became a team of cyber hornets that attacked with imagery, humor and creativity. We uplifted the spirits in a bear market by poking fun at ourselves, shitcoiners and especially ridiculous no-coiners. We had inherited a mission to bond the community with memes!
On a smaller scale at the time, I enjoyed bonding the community with common avatars. I first did this in late November 2020. I started a campaign to create Christmas avatars for everyone in Bitcoin Twitter who would like one. I was soon overwhelmed, but I managed to create no less than 1,000 Christmas avatars for my fellow Bitcoin maximalists. Not only were we festive, we had a bond among our avatars, and it felt great to appear almost uniformed and separate from other subcultures.
This occurred again for New Years as I created avatars with fireworks and again when I assisted Yellow (ICOffender) on putting Hodlonaut helmets on Plebs who wanted to show support for the cat against the fraudster CSW.
This is the short backstory that led to what was to come.
Now let me take you to early February 2021. The price of Bitcoin is hovering around $42,000. The Meme Factory(tm) is doing what we do best, meme’n Bitcoin into the next world reserve currency. It’s at this time that Pedro requests that someone help him with a meme. He wanted laser eyes put onto a kangaroo to give his meme a little extra juice.
I gave Pedro’s meme some basic lasers… and then had an idea hit me like a bolt of lightning. I then proceeded to put laser eyes on everyone in The Meme Factory’s(tm) avatar. Well, not RD, he got derpy googly eyes. I posted all the laser eye photos to the boys and I said “When the day comes that we have to go to aggressive offensive meme warfare… We enact laser eyes!” We collectively decided that it would be awesome to rock the new avatars ASAP. I then voiced my thoughts to the crew “Trying to decide how we could kick off the laser eye campaign. #LaserRayUntil100K?”
This was the first time this hashtag had been shared. The meme-tards were onboard. Plan Marcus then suggested once the price hits $50,000 we start the campaign. The team was ready and the plan was set. We started the preparation by creating our memes beforehand and waited for the price to touch the $50K starting line. I reached out to one person that wasn’t part of The Meme Factory(tm), the one and only American HODL. I told him the plan and he responded with “I’m in!” The foundation was set.
February 16, 2021, the campaign officially began. The Meme Factory(tm) came out in full force. Within 72 hours, members of congress, celebrities and the vast majority of Plebs had donned Laser Eyes, while receiving prime time coverage from national mainstream media.
So, what happens after a $100,000 USD Bitcoin? Well … #LaserEyesUntilFiatDies, of course.