BTC Sessions - NEWS ROUNDUP: Kazakhstan Internet Blackout Drops BTC Hashrate ep226
Episode Date: January 6, 2022Kazakhstan internet blackout drops Bitcoin hashrate, Melania Trump wishes BTC a Happy Birthday, Goldman still sees $100k price target and more on today’s news roundup. 💪 SUPPORT THE SHOW: Shakepa...y is the easiest way to buy Bitcoin in Canada Sign up now and get $30 free after your first $100 purchase! https://shakepay.me/r/BTCSESSIONS ALSO search/subscribe to Shakepay on YouTube! LEDN Bitcoin backed loans – get $10 free with a savings balance of $75 or more for 15 consecutive days! https://start.ledn.io/btcsessions Get Wasabi wallet for Bitcoin privacy https://wasabiwallet.io/ Keystone Wallet: secure your Bitcoin! http://bit.ly/KeyStoneSessions BillFodl: get your wallet backups in solid steel. https://privacypros.io/btcsessions Bitrefill: use Bitcoin to purchase gift cards https://www.bitrefill.com/buy/?code=O04UMic9 Like what you see? BITCOIN TIPS: https://strike.me/btcsessions
Transcript
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Wasabi wallet and fairly private.
What is going on, everybody?
Welcome to the show.
Another news roundup first of the new year.
So I've said it another video since, but happy New Year to everybody.
Welcome back.
We got a bunch to talk about today.
We're going to be talking about the Kazakhstan internet outage
and how it affected Bitcoin hash rate.
We're going to be talking about Goldman Sachs and their price targets for Bitcoin
as well as the current dip and what is going on there.
Ray Dalio had more to say about Bitcoin.
We have a company that's going to be paying Bitcoin dividends,
all kinds of stuff going on.
So we're going to be touching on all of that.
As always, this is live.
Anything can happen.
So I defer to my good friend Bill here.
We'll do it live.
We'll do it live.
Do it live.
I'll write it and we'll do it live.
The thing sucks.
Now, if you haven't already,
please do hit like, subscribe.
share all of those things they help the channel so much it gets this content in front of more people
so please do that as always i am ben with the btc sessions and this is your daily session
all right before we dive in let's take a look at the bitbo dot io dashboard to see where we are
in the market right now we're sitting at 43 000 160 per coin single u s dollar will pick you up
2,317 sats.
Now, 90.1% of all Bitcoin have been mined.
And in terms of fees, I've been noticing they're a little bit higher as of late.
Currently, it's about 10 stats per byte to get it to the next block.
But one sat per byte, if you're willing to wait half an hour or more.
But we have seen that fluctuate a bit.
And I was making a tutorial on Monday.
And damn, I was trying to get through some transactions and I was making low fees.
and I had to use replaced by fee a number of times just to kind of speed things up because I was
waiting way too long.
So just be conscious of it.
If you're using a good wallet that has replaced by fee, something like blue wallet, green
wallet, sparrow spectra.
Most of them will allow you to bump the fee.
So just be conscious of that, be using, you know, something that you can save on fees with,
of course.
But get yourself a good wallet.
So you have some flexibility there.
should there be a bump in fees.
Outside of that, of course, I'm sure a bunch of you have noticed.
We've taken a dip.
It's not evident on the one day,
but if you zoom out to the seven day,
there was a decisive drop
kind of between yesterday and today,
kind of January 5th,
going into the 6th,
where we went from kind of like the 46K range,
almost 47,
and then dropped down to as,
low as 42 and a half.
We're around 425 for a bit.
And again, when you look out on the month, another dip of a few.
Now, of course, if you're if you're zooming out enough, then it shouldn't worry you.
And also if you're thinking long term, if you've got that low time preference in mind,
then it shouldn't be that big of a deal.
But just keep that in mind.
Now, what is the cause of this?
I mean, in short, degenerate gamblers.
Here's what I mean.
When Bitcoin fell below 43K, it led to 800 million in liquidation.
So what this means is people are using leverage, using Bitcoin as collateral to get loans to buy more Bitcoin.
The problem with that when you're gambling like that is when Bitcoin drops, not only did the new Bitcoin that you bought with a loan drop,
but the value of the collateral that you're using to back your loan also drops.
And if it drops far enough, then that means you have to provide more collateral
or sell your existing collateral to cover the losses.
And so when it dips far enough, then this is where you see those cascading liquidations
where people are like, I don't have other money to add as collateral.
So I'm forced to sell.
And so, you know, this will happen.
And part of me kind of gets the feeling like, good.
You know, if you're being too much of a degenerate, if you're being too risky,
then this is kind of what should happen.
It's the opposite of what happens in traditional markets because central banks will swoop in
and bail everybody out if things get too bad.
And when I say everybody, I mean, of course, like the people that are at the top that
are too big to fail.
I'm not talking about mom and pop businesses that make a few wrong turns.
say they get screwed and thrown to the wolves.
And Will Clemente was talking a little bit above this earlier.
He said, just so you're aware, and he had a chart, which is this is open interest.
So the number of contracts open, longing or shorting Bitcoin, betting that Bitcoin will either go up or go down.
Okay.
And so this is kind of today's wipeout is this little.
drop up top, which is just like a fraction of all of the open interest. There's a lot more open
interest that has kind of popped up over the past month. However, this isn't necessarily bullish
or bearish because for every long, there's also the opposite side of the trade. There's a short.
And so depending on which way things go, it can either have a huge move to the downside or to the
upside. So this chart doesn't capture what side of the trade most people are on or how much money
is on each side of the trade. It just kind of shows that there's a lot more people kind of betting
one way or the other. So I figured I'd touch on that before we do sponsors and get into the news.
I hope that was somewhat enlightening. And there is a, you know, Will did a few tweets here on it.
But if you want to dive in, you can follow them W. Clemente, the third.
on Twitter.
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With that, let's dive into what's been going on.
It was a big week.
Bitcoin's third birthday on the third.
So yeah, 13 years of Bitcoin, 13th anniversary.
Did you guys celebrate?
I was busy making a tutorial, actually.
I kind of had my head down for this one,
just kind of got to work and was doing a bunch of stuff.
I tried to pop into a couple streams.
I tried to pop at Tone Vaze,
had some people on. I was trying to watch.
There was some spaces and stuff.
But honestly, I didn't really get to see much.
I was just kind of busy with my tutorial.
So either way, I hope you had a good,
hope you had a good Genesis Day.
Somebody who celebrated that was interesting.
Melania Trump.
Is that a good thing?
She said, it is widely reported that Bitcoin's market cap
exceeds $1 trillion.
Of course, after,
She tweeted that it dipped below $1 trillion.
The day marks the 13th anniversary of the Bitcoin Genesis blog.
Happy anniversary.
Of course, she added the hashtag Melania NFT,
which of course sees shilling some trashy NFTs,
which are not worth looking at whatsoever.
But I do find it funny and rather ironic that the former first lady
was tweeting about Bitcoin's 13th anniversary
after her husband and former presidents.
said that he hated it and it undermines the U.S. dollar and everything. So I wonder if that
there was a conversation that was had or not. I'm guessing not. Let's move on. Yeah, so I was mentioning
about Kazakhstan. And so what's going on in Kazakhstan is kind of interesting on a, I guess,
geopolitical kind of front. So they have previously put state-imposed caps.
on the prices of energy, especially for stuff that has to do like fuel for cars and everything.
So they had these caps keeping prices artificially low.
Unfortunately, for them, this rarely works because the market can go in the opposite direction
and you can only fake low prices for so long.
And so what happened was the Kazakhstan government, they removed these, they removed the caps
on the prices for fuel.
And while, lo and behold, they basically doubled,
right? Because it wasn't the reality of
the market. It was an imaginary
price set by the government.
However, this is not information that,
you know, your average citizen would be
privy to. They wouldn't
quite understand kind of the
nuance of it. You can't
pretend that fuel
is less expensive than it actually
is. Or you, you can
only do that for so long. And so as this was removed, there's been massive uprisings. There's
been riots and everything. And actually, the standing government resigned. But not before
just doing a full internet blackout of the country. So here on a website called netblocks.org,
network data from net blocks confirm a significant disruption to the internet service of Kazakhstan
from the evening of Tuesday, the 4th of January, 2022,
progressing to a nation-scale communications blackout on Wednesday afternoon.
The disruptions come amid widening protests against sudden energy price rises
that started on the western weekend in the western town of Zinosen.
Hopefully I said that correctly.
And again, you can see they've got charts here of basically the internet connectivity in Kazakhstan,
just dropping off a clip going to just complete zero.
It did come back a while later when the president came on to give a televised speech
appealing to Russia for assistance to protect the state.
So they brought the internet back on for the speech and then killed it again immediately thereafter.
So what does this have to do with Bitcoin?
Well, they are the second largest concentration of Bitcoin hash rate,
next to second only to the U.S.
after the China exodus.
A lot of that hash rate,
a lot of the mining infrastructure
went to Kazakhstan because
of the low prices
for power, which as I'm
saying this out loud,
could that be because of the
state subsidies and the imposed
caps on the cost of power there?
I don't know, but
that would be an interesting thing because
then might that hash rate be on
the move again. So, yeah, effectively what this contributed to was a 10 plus percent drop in the
hash rate of the Bitcoin network. I saw as high as 13 percent quoted in some areas.
So just kind of a little breakdown here. Again, so Bitmain's platform said around 3 p.m.
UTC on that day
that the mines in Kazakhstan were facing
disruptions with network connectivity
and electricity and that it was
trying to connect to local staff.
Yeah, again,
net blocks saying
everything was cut off.
There's, you know,
the president was saying that this is a
terrorist threat
of all the protesters
and everything.
Yeah, I mean, it wasn't that great.
And then you can see,
see here, there's a chart of all of the different mining pools or or the top ones.
And you can see a range anywhere from three and a half percent drop in hash to as high as
22, almost 23 percent, depending on how much of their hash they had in Kazakhstan.
So the average here when this chart was made as of January 5th was about 10.5 percent drop in
in global hash rate.
Now, in the end, what happens will kind of depend on how Kazakhstan moves forward and what
happens with this internet blackout.
My guess is at some point, everything kind of comes back online.
But how do the local miners react to this?
It is very expensive to reallocate and move this type of infrastructure.
It took some time after China did its mining ban for it to reallocate.
to better jurisdictions.
So my guess is I don't think much of it's going to move.
However, I hope that a lot of miners there will begin to think more adversarially
and see this as a hurdle to clear, as a problem to solve.
And it can be solved with existing infrastructure.
Now, it's semi-centralized as are Internet service providers locally.
in Kazakhstan, but at least if the Kazakhstan government decides to shut off the internet,
it would still survive and all of those mines would continue working using stuff like
Starlink or using, so Starlink is the Elon Musk satellite-based internet.
The other option would be the Blockstream satellite, okay?
And I believe Samson Mao was talking on a couple of news programs about this, how if these
miners were using the Blockstream satellite, they actually wouldn't have been.
disrupted because they would have continued to get blocks.
The other thing that could be considered is creating some sort of a mesh network that you
would be able to basically a mesh network is creating a localized network using things like
Bluetooth and connecting to peers nearby.
And as long as at some point, some peer along the line has a route to the internet.
So maybe just across a border or something, then feasibly.
you could kind of daisy chain together to get access to the internet.
I don't know how feasible something like that is, but definitely worth a thought.
And again, with satellite infrastructure and mesh network infrastructure together,
you might be able to route around stuff like this where literally even an internet blackout
doesn't disrupt Bitcoin mining.
So we shall see.
Again, very interesting to see this, though.
and I think Bitcoin will continue to be kind of like water here.
It'll just go the path of least resistance and go around obstructions like this.
I should also note that Bitcoin itself continued to pump out blocks
regardless of what was going on in Kazakhstan.
So there's that.
Let's keep going here.
So Goldman Sachs, they still are projecting $100,000 Bitcoin.
And they're saying that,
because they believe that Bitcoin will continue to take a bite out of gold's store of value proposition.
Now, I'll say their timeline still to me seems pretty conservative.
Maybe they're just eating a little humble pie because they had big projections in the short term earlier last year.
And, you know, Bitcoin had kind of crab walked through 2021.
So here, I'll read a little bit here from Bloomberg.
Bitcoin will continue to take market share from gold as part of a broader adoption of digital assets,
making the often touted price prediction of $100,000 by advocates a possibility, according to Goldman Sachs.
Goldman estimates that Bitcoin's float-adjusted market capitalization is just under $700 billion.
That accounts for 20% share of the store of value market, which it said is comprised.
rise of Bitcoin and gold.
The value of gold that's available for investment is estimated at $2.6 trillion.
If Bitcoin's share of the store of value market were to hypothetically rise to 50% over the
next five years, and that's the part where I'm like, I mean, I think the store of value
thing, it being 50% of that in five years, that would be pretty awesome.
But I think it's going to take a bite of other markets.
But I digress.
Let's read a little bit further.
50% over the next five years, its price would increase to just over $100,000 per coin for a compound annualized return of 17 or 18%.
This is from Zach Pandel, head of global Forex and EM strategy.
Yeah.
So, I mean, my thoughts here are, Bitcoin.
doesn't typically move in that gradual upwards grind.
I mean, yes, last year was a little bit of a different story.
But I don't think that this kind of four-year having epoch is quite done yet.
I think there could still be some surprises in store in maybe the first half of this year.
if so, then, you know, I think Bitcoin will continue to be its volatile self.
And yeah, I think that $100,000 over five-year price target just on a specified market is a little off the mark.
Like we've got the Bitcoin bonds being rolled out by El Salvador shortly here, I believe this month.
and that's an interesting thing because if they have,
if they do the full $1 billion subscription,
which is what they're aiming for,
then other countries will probably take notice of that.
So we'll see how that happens because that may have a distinct effect on demand as well.
And there's not really more supply.
So we'll see.
We'll see.
But yeah, I don't know.
Goldman's still bulls.
Polish. Ray Dalio was talking the other day. He was talking to Preston Pish, actually. And he said,
allocating up to 2% of your portfolio to Bitcoin is reasonable. So I'll read a little bit here,
this on CNBC as well. According to billionaire investor Ray Dalio, it's reasonable for everyday
investors to hold a small amount of Bitcoin. How much exactly on a recent episode of we study
billionaires? And I was wrong. Not with Preston Pish. They were talking with
with the other hosts over there,
but he was specifically asked by William Green,
whether allocating one or two percent of one's portfolio to Bitcoin was reasonable.
He said,
I think that's right.
He said he owns a little bit of Bitcoin himself,
and he previously disclosed that.
He acknowledges that Bitcoin has pros and cons,
and though it has become prominent,
he told Green he has concerns about government outlawing their cryptocurrency
and about its use in ransomware attacks.
I'm not buying either of those arguments,
but, you know, to each their own.
he said that's in part why his stance on cryptocurrency isn't black and white.
He also touched on the fact that Bitcoin is seen as a digital gold and a hedge against inflation by its supporters.
He said it can be compared to gold because by design, there's a limited supply of Bitcoin.
I think over time, inflation hedged assets are probably likely to do better.
And that's why I'm not favorable to cash in those types of things.
So again, Dahlio still dabbling in Bitcoin.
Curious.
I think there's a few things that he's more concerned about than he should be.
Like, we've already seen what happens when one of the largest nation states on Earth bans Bitcoin.
And it turns out that basically nothing.
So, yeah, we'll see.
Let's keep going.
NASDAQ listed BTCS to pay dividend in Bitcoin.
So BTCS Inc, a NASDAQ listed blockchain technology company will make its next dividend
payment in Bitcoin in a first for U.S. markets, according to a Wednesday filing with the SEC.
Quote, we want to reward our long-term shareholders for their continued support and encourage
financial freedom by providing the means to enable direct ownership of Bitcoin and other
digital assets. This from the CEO, Charles Allen. Investors can opt in to the Bitcoin dividend,
which BTCS is calling a bivident. Okay. By March 6th.
16th of 2022, so they do have to opt in.
The dividends record, the dividends record date is set for the next day, and those who don't
choose to receive it in Bitcoin will get the traditional cash format instead.
VTCS is still evaluating whether this will be a one-off type of dividend structure or if
future bivend payments will be made.
I hope that doesn't become a thing.
Bividend, I don't want to be saying that all the time.
Okay, yes.
Interesting.
This kind of falls in line with other,
kind of the push that we've seen with Bitcoins
as a like a replacement for rewards points.
Because you have things like fold,
the shake pay, visa card.
I'm kind of losing.
There's a couple others like, oh,
God, Lolly.
Yeah, Lolly, where you get Sats back for shopping online.
We've seen this push the opposite of an adoption push that we would have seen in like 2014 and 2015,
where it's like, let's get all the merchants on so that they accept Bitcoin.
But then the likelihood of somebody walking into a brick and mortar store and wanting to pay in Bitcoin is few and far between.
Instead, we've seen this push of let's get people owning Bitcoin and thus curious about it.
And I think that's a far better tactic.
And I think that stuff like this, BTCS doing a dividend in Bitcoin is kind of interesting.
And I kind of hope to see more of it.
I think it's a far better tactic of getting people curious and using Bitcoin than trying to get a merchant to accept it, not own any.
And then just hope that somebody will pay in it, pay in Bitcoin as like a marketing schick.
Yeah, not so much.
I love this story here.
Next one.
This is from Bitcoin Magazine.
The Human Rights Foundation's Bitcoin Development Fund is granting 425 million Satoshes or 4.25 BTC to developers and educators dedicated to Bitcoin.
This is fantastic.
So it has announced its latest round of Bitcoin grants.
Where did that money go?
So a full Bitcoin will be awarded to.
Gerald Rodriguez, a Bitcoin Core developer, working on a new GUI or a new interface for Bitcoin Core.
There's a handful of half Bitcoin grants or 50 million SAT grants, one going to, and I'm so happy about
these first two, Farida from Togo. She said Togolese human rights advocate. So I got to meet her
at the Human Rights Foundation, Oslo Freedom Forum, in,
in Miami this year, which Alex Gladstein was nice enough to invite me to help, I guess, kind of co-host it.
And she was just so fantastic.
And I got to really quick tell her about how to use multisig and stuff like that, which she was like, oh, wow.
And so I'm super happy to see her get a grant.
Also, another one that I'm incredibly excited about is Arroyo Maboub.
And she was head of the women's robotics team in Afghanistan where basically women were not allowed to have bank accounts or manage money.
And she went around that using Bitcoin.
And I read about her in one of the first Bitcoin related books I ever read, The Age of Cryptocurrency by Paul Vinya.
And oh, God, I'm forgetting.
Anyway, two guys from the Wall Street Journal.
I feel bad for forgetting the other guy's name.
Anyways, that was one of the first case studies in the book about how Bitcoin can help people in different parts.
of the world was her story.
And so I found that really interesting.
And it was really great to be able to meet her and talk to her seven years after my first
foray into Bitcoin by reading about her.
Also, Sparrow Wallet, which I'm a huge fan of is getting one.
And author and educator Anita Posh, who I do have her book and I have read it as well.
And it is called, God, I'm forgetting the name, learn Bitcoin.
Yeah, easy.
easy enough title yeah anyways uh so yeah very excited about them again there's some 25 million
sat uh grants bolts which is a lightning service provider like a peer to peer exchange between
lightning and on chain which is awesome summer of bitcoin which is an internship program over summer
to learn about bitcoin open source development uh i'm not sure how to say this exon umia exonumia
uh and they're focused on translating bitcoin content into multiple the multiple african
languages and then blockchain comments, which is not-for-profit focused on Bitcoin and related
technologies and they're trying to get funding for learning Bitcoin from the command line,
which is awesome.
And then there's a translator and educator, Maron S. F. Estefanos, and her grant for Bitcoin
education will be for doing translation in the Horn of Africa, which is awesome.
for the little Bitcoin book and a whole bunch of other things about how to use Bitcoin.
Yeah, so that's that's super awesome.
See, I love people going out and trying to use, I guess, kind of the wealth that has been generated by being in Bitcoin to make the change they want to see in the world, which is just a fantastic thing.
And it should be noted that the donations here are coming from CMS Holdings, Gemini Opportunity Fund.
and Jameson Lop.
Just Jamison Lop.
I love that.
Kudos to Jameson for that.
Yeah.
Okay, let's start rounding this up.
A couple things.
So I'm going to do a new thing every week.
I'm going to do Bitcoin content of the week.
And I've just been tweeting this out,
but I asked everybody on Twitter,
hey, what was your favorite new piece of Bitcoin-related content this week?
and by and large, the thing that got most recommended is the latest Preston Pish podcast with Nick Carter.
And it says this week, Preston Pish and Nick Carter talk about global macro, Bitcoin mining, Web 3.0 and much more.
They get into Web 3.0 versus VC debate, tether being used as legal tender in Myanmar, all kinds of stuff.
So this came highly recommended. I've yet to listen to it because I've been a little busy.
but this is going to be in my year in the gym tomorrow morning.
And yeah, the plebs say, listen to this one.
Apparently it's a good one.
So check it out.
As far as what I've been up to this week, just kind of a quick recap,
I did a full tutorial on Nunchuk Bitcoin wallet,
which I've done before,
but they've had some crazy updates,
which make it that much more exciting.
So what is Nunchuk?
Basically, it is a desktop and now mobile wallet.
and it's kind of like a key management system so you can create a wallet in it,
which is just a hot wallet either on your phone or on your computer.
You can also import a cold wallet, so using a hardware device.
So on desktop, you can use Treasurer, Ledger, Cold Card, Keystone, and Bitbox, O2 are the current ones.
And then if you're on mobile, you can access the accounts that are allocated to any of those on your
on your desktop.
So you can see those.
But if you want to actually interact and spend from them,
you need to have the air-gapped keystone to do that.
Although I'm told that there will be kind of some more support around that as time goes on.
But you can also do multi-sig.
So you can use a combination of hot and cold wallets,
whatever you have at your disposal and create a multi-sig vault within.
And then here's the coolest thing that they added is collect.
multisig between you and other individuals.
And so how this works is you have keys on your devices.
Other people have keys on their devices.
And there's a baked-in encrypted messaging function where you can add contacts.
And then after you've added contacts, you can collaborate on a wallet together.
And each of you can contribute a key, create a multi-sig wallet, and then add funds to it.
And then when you want to spend, you can send a message to the group, which is all encrypted and goes directly to their nunchuck accounts.
You can say, yo, we're going to send out for this business purpose, for instance.
And it's going here.
This is the amount that I'm going to send.
And then you create the transaction and then you forward it to the group chat.
And people within that group chat that are part of that multi-sig vault can add their signatures and then broadcast the transaction or rather any person can broadcast.
once enough signatures have been collected.
And like baking this all in together as a singular app is what is needed.
It's pretty awesome in practice.
So I did a full video on covering all of that from doing a single sig hot wallet,
a single sick cold wallet, a multi-sig on your own,
and then a collaborative multi-sig between like my computer and my phone,
pretending that they're other,
they're different people.
So it's pretty wild.
It's a beast of a tutorial.
I go through everything.
It's like 50 minutes long.
But if you're looking to experiment with some new wallets, check it out.
It's pretty badass.
And then also, tomorrow, be sure to join me for Why Are We Bullish.
We've got Andy Flattery, Mike Hobart, Witt Gibbs from Compass Mining, Adam Semeca.
So it's going to be a blast.
I'm very excited.
All new guests to them.
the show. I'm trying to do more of that. I'm trying to get on people that you guys may not have
seen talk yet. And so getting some new faces in the room, very excited for this. We will be doing
that at 6 p.m. Eastern Time tomorrow. That's it, guys. That's it. Thanks for joining me, of course.
As always, please do like, subscribe, share, all those things super, super important. They really do
help about the show. So please do. If you want to help with the show in another way,
you can hit up the previously mentioned sponsors down below.
Shake pay, leaden, bit refill, keystone, bill funnel, all down below.
And if you really liked what you saw, you can always drop me a Bitcoin tip either on Twitter.
I do have that enabled or at my strike page, which is strike.
Dot me slash BTC sessions.
You get there, you type in any amount you want.
Hit the tip button.
You will be greeted with a lightning invoice.
Or if you tap to the right, a regular Bitcoin QR code.
With that, I'm out.
Have yourselves a wonderful.
day or evening, wherever you may be.
I'll see you guys next time for your daily session.
