The Breakdown - Crypto Is for the Dissidents and Disenfranchised

Episode Date: November 14, 2021

This episode is sponsored by NYDIG. On this edition of “Long Reads Sunday,” NLW reads two pieces: “Why Shouldn’t the Navajo Mine Bitcoin?” by William Foxley  “This Imprisoned Russian Artist Is Selling NFTs to Support His Family and Fellow Inmates” by Anna Baydakova NYDIG, the institutional-grade platform for bitcoin, is making it possible for thousands of banks who have trusted relationships with hundreds of millions of customers, to offer Bitcoin. Learn more at NYDIG.com/NLW. Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Join the discussion: https://discord.gg/VrKRrfKCz8   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with today’s editing by Adrian Blust, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Dark Crazed Cap” by Isaac Joel. Image credit: Tribalium/iStock/Getty Images Plus, modified by CoinDesk.

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by Nidig and produced and distributed by CoinDesk. What's going on, guys? It is Sunday, November 14th, and that means it's time for Long Reads Sunday. This week, we are reading two pieces, and while one is an op-ed as normal, one is actually just reporting. from CoinDesk, but as you'll see, I think it fits the theme. The first is by William Foxley and is called Why Shouldn't the Navajo mine Bitcoin. Will used to be a tech reporter for CoinDesk, but is now the multimedia director at Compass Mining. He writes, Navajo Nation is prime

Bitcoin mining country. While Texas and Wyoming have taken the limelight since China's Bitcoin mining ban, the groundwork for Bitcoin mining is already present in the American southwest. It's a good match, too. Bitcoin mining instead devises healthy economic growth the four corners region has desperately needed for generations. In 2017, Westblock, a firm from Calgary, Alberta, approached the Navajo about building a mining center on Navajo land. Earlier this year, the Canadian firm broke ground on an extension of the mine to double in size to 15 megawatts. Using energy sources from the area, the mine can spit out about 400 Bitcoin per year depending on network conditions. It's short-sighted to view Bitcoins as the only out of the only out of the

output of the mine, however. The mine creates prospects for multiple avenues of societal growth, including financial access and energy usage, both of which have been long-standing thorns in the Navajo's side, according to numerous in-person interviews with Navajo Nation members, tribal delegates, and government officials conducted as part of a recent documentary on the subject. And not in a selfish sense, but wholly in a self-interested sense. Bitcoin promises a sovereignty that Navajo and other First Nations have always been promised but have never received. The case for Bitcoin The Navajo Nation is the largest Native American reservation in the United States

and the second largest tribe by headcount at around 300,000 members. It's also one of the most impoverished communities in the U.S. A third of Navajos live under the poverty line while chronic unemployment has become the norm at around 48%. Much of this poverty has roots in the Treaty of 1968 with the U.S. government. Tribal delegate Amber Kanes-Bacrotti told Compass Mining. Its legacy is still very much alive, especially in the nation's relationship with the banking sector, she said.

Quote, were a nation working with the nation of the United States, but they will not recognize that sovereign-to-sovereign agreement when it comes to U.S. currency, Delegate Crotty said, they want complete control. This control is most often noticed in Native Americans under bank status or what is referred to as the buckskin curtain. In fact, Native Americans constitute the least represented American minority group in the U.S. banking system today.

This exclusion results not just in limited opportunity, but baked in structural disadvantages involving government-to-government interactions. It is especially feared that working with the U.S. banking system could harm the institutions of Navajo sovereignty, Crotty said. For example, is it in the Navajo nation's interest to interact with the politicized web of financial institutions backed by the dollar? Would doing so harm Navajo sovereignty as a nation within a nation? Regardless, the Navajo remain in an odd predicament as a nation. Its citizens are liable for federal taxes to be paid in dollars, but unable to access the myriad of financial tools created for that currency 2,000 miles away on the East Coast.

The situation has led to the Navajo exploring alternatives, Crotty said. Future challenges. Bitcoin adoption isn't without its challenges. One such difficulty Bitcoin miners face is the legacy of physical mining on the reservation and a history of exploitation and unemployment around the sector among its people. For many decades, the coal industry provided the Navajo Nation with high-paying jobs and financial support through royalties for our many programs and initiatives, Navajo Nation President Jonathan Nes wrote in a June 2021 letter to Congress. Quote, Now the mines are closed, the Navajo generating station NGS is shuttered, and all we're left with is an ecologically devastating and socially unhealthy mess that no one is

stepping up to fix. It's no question that Bitcoin mining is a confusing subject. Any locality with a history of earth-based mining will have questions. Although similarities are present, such as high energy usage. The term mining is better thought of as an analogy in this case. Bitcoin mining involves no earth extraction, no long-term health consequences or damage to local water tables. In reality, Bitcoin mining is a near-perfect alternative for locations with access to high-energy resources. Navajo land is full of both non-renewable and renewable resources such as coal, hydropower, natural gas, and sunlight. Moreover, Bitcoin mining's demand for low-cost, reliable base load energy incentivizes renewable sources, the local Navajo utility said.

And this demand for renewable energy is already playing out. The Navajo mine is powered by 59% renewable energy sources. Compare that to 19% for the U.S. energy grid itself. A digital alternative. For Bitcoin, then, the question becomes one of marketing. Can the Bitcoin industry convince the Navajo and other First Nations that Bitcoin is not only in their interest financially, but also in the best interest of their land? From the Bitcoin mining industry's perspective, the case is clear cut.

Financially, Bitcoin invites anyone to participate. Anyone can transact freely, enforce the rules with a node, or even earn Bitcoin by simply plugging into the network. Compare that to the incumbent financial system that has sidelined millions of Navajo since 1868. In terms of energy usage, Bitcoin mining incentivizes the use of energy at the source, a key differentiator compared to past energy consumers in megacities hundreds of miles away. Moreover, Bitcoin demands constant cheap energy, something that Navajo have in abundance through sunshine. The current mine is a great example, as the majority of its power is derived from renewable solar sources. In fact, it's even incentivizing further solar buildouts on the

reservation by consuming a steady baseload of energy. Yet for now, the story remains to be played out. Bitcoin has yet to gain the trust of the lion's share of the Navajo Nation, and education initiatives remain of importance. In the meanwhile, more mines are scheduled to come online in the coming months, and with greater Bitcoin mining adoption comes greater awareness of Bitcoin as an asset for self-sovereignty. So I want to jump over to the next piece, and all I'll say about that one is To be clear, this is not something that's necessarily a trend. It's more a proposal, a thought piece from Will Foxley. And I like that people are asking that question.

I like that this is now an option for disenfranchised groups like the Navajo to consider as they think about what's best for them and their communities. NIDIG sponsors this podcast, and they're helping CFOs, traders, and risk managers safely and securely integrate Bitcoin into their operations. Learn more about what NIDIG does and how they do it. at NIDIG.com slash NLW. That's NYDIIG.com slash NLW. Next up, though, a piece from Anna Bedaikova, who writes about Europe and Russia for CoinDesk. Her recent feature is called This Imprisoned Russian Artist is selling NFTs to support his family

and fellow inmates. Every morning, Pavel Skazkin wakes up at the command of correctional officers while the Russian National Anthem plays in the background. Four times a day, guards check on him. The correctional facility where he lives is not as strict as the penal. colony he was sent to at the age of 27, after he got caught with a package of marijuana and ecstasy. Inmates at his current residents can walk out of the guarded territory to attend their workplaces in a nearby town, as well as use internet-connected devices. In the latter option, he has found a creative outlet, a sense of purpose, and thanks to the flourishing NFT market, extra income to supplement his inmate's salary of $140 a month.

Skazkin, now 31, creates surreal digital art on an iPad and sells non-fungible tokens of the works under the handle Papa Swedes. a wordplay on his criminal charges, family story, and self-reflection after four years of incarceration. His art NFTs, too, are a form of reflection on his life and the nature of the Russian penal system. To help others suffering similar hardships, Skazkin has pledged to donate one-third of the proceeds from his NFT sales to Russia behind bars, a nonprofit dedicated to aiding inmates and their families. I know how hard it is, both to be in prison and to wait for your family member to get out, the artist told Kondesk in a phone interview. I'd like to help.

Skazkin's story is an unusually dramatic example of how the current wave of hype and speculation around NFTs sometimes provides new ways to support causes such as human rights, domestic violence victims, and independent journalism. Locked Art Skazkin started drawing his future NFT sketches while in the penal colony in Russia's Buriansk region 200 miles from his home in the Moscow area, where he was initially placed in 2017 after being sentenced to six years behind bars. All electronic communications and gadgets are forbidden in such facilities.

Three years into his term, Skazkin managed to successfully appeal for a lighter punishment and was transferred to the venue where he is serving his time now, also in Brienz. And he immediately started turning his drawings into digital art, he said. He sold his first prison-inspired NFT for modest prices on Hick et Nunk, a lesser-known NFT marketplace that runs on the TESOS blockchain, which has lower transaction fees than the dominant NFT platform Ethereum. That's how Skazkin got into the Russian-speaking NFT community and joined the telegram group of NFT bastards, a loose group of artists that this year sold.

NFTs to help Russian online media outlet Medusa. Then, NFT trader Ilya Orlov noticed a non-typical artist in the chat and thought he'd like to help. First thing we need to change in Russia is prisons, Orlov told CoinDesk in a joint interview with Skazkin. As long as we're torturing our own people this way, nothing can change for the better. We need to get people's attention on that, especially now when the information about torture in Russian colonies got public, Orlov added, pointing at the recent publication of blood-chilling video footage of inmates being tortured in one of Russia's penal colonies. Orlov is helping Skazkin to fund his NFT minting. With his inmate's salary of about $140 a month, the artist can hardly afford network transaction fees, the so-called gas fees, for creating these

tokens on the Ethereum blockchain. Therefore, a smart contract has been programmed to automatically split the proceeds from each NFT sale three ways. 33% will go to Papa Swedes himself, helping him support his wife and three children. 33% to Orlov for his assistance and 33% to Russia behind bars. Orlov said he believes Papa Swedes prospects are huge. In the West, people value and respect Russian pain and suffering, hence the popularity of Dostoevsky. I told Skazkin, you get free, we apply for a U.S. visa, and you make an exhibition in New York. Upon his release two years from now, Skazkin is planning to mint 72 or 66 plus 6 NFTs, has written on his page on foundation, a prestigious invite-only platform for NFT artists. Although 666 is the biblical number of the beast,

To Skazkin, 66 plus 6 is just a nice number, the artist told Coin Desk. He initially planned to do 666 NFTs until his prison term is over, but then realized he doesn't have enough time until his scheduled release in 2023, so 666 turned into 66 plus 6. The Weeds Back in 2017, Skazkin, a not-too-successful web designer by trade, worked in an illegal online shop hosted on ramp, a formerly popular Darknet marketplace shut down by the Russian authorities the same year.

One day he was hired to pick up a package of drugs and pass it to sellers who would then divide the batch into smaller parts and deliver those to online buyers. Skazkin was caught with that weed by the police and sent to jail for six years for drug trafficking. The prosecutor asked for a 10-year sentence, but Skazkin, a father of three, got six years. After serving part of his term, Skazkin managed to litigate and win a lighter punishment, even though he had no attorney to help him draft his court papers, he said. I studied in the prison library, read the laws, he said. When asked about his nickname, Skazkin said it's a portmanteau of several things. things. The nickname Papa stuck to him after he became a father of three. Weeds is a double entang.

It refers to Skazkin's drug-related crime. Also Kosciak, the Russian slang for a bad mistake or a screw-up is the same word as the one for a joint. Skazkin is candid about his criminal charges in prison experience. He definitely ended up in prison for the right reason, he said. However, he believes the sentence was overly harsh. His first NFT work on foundation, Hall of Shame, depicts a judge in a crying child in a courtroom, a metaphor on how he recalls his own trial. I felt like a kid, being punished for the sweets he'd stolen and there was nothing I could do. Whatever I had to say would sound like baby talk, he recalls. Spending several years in a Russian prison was a tough experience, but it changed him for the better, Skazkin said. I got my brain in the right place, got rid of many

complexes, useless thoughts, became more aware. The lesson came at a steep price, though. The penal colony near the city of Brionz, where he served three years is known as one of Russia's cruelest correctional facilities, infamous for beatings and torture of inmates. It was, you know, quite a school of humiliation, Skazkin said. Darknet education. It was working on the darknet that helped Skazkin to familiarize himself with the concept of crypto early on. Back in 2017, he already had some Bitcoin, he said. In prison, he could only get news about crypto from print newspapers and magazines, or from the rare mentions on the Russian state TV the inmates were allowed to watch, or from his family members who had come to visit. In 2017, I saw Bitcoin growing and was biting my

elbows because I was in that place, he said. In February of this year, Skazkin was reading popular to Mechanics magazine and saw a story about a famous meme-based NFT NANCat, which sold for a whopping 300 Eth worth about $590,000 at recent levels. I was like, what are these NFTs? Okay, I know what crypto is. I had a Bitcoin wallet, but this is also about drawing, Skazkin said. He decided he would create his own NFT as soon as he got to the internet. Olga Romanova, head of the nonprofit Russia behind bars, said the organization has been raising money with crypto donations for five years now, and no less than 30% of all donations now come in crypto. Russia behind bars is accepting Bitcoin, ether, light coin, and XRP, its website says. And FTs, however, are something new for the advocacy

group. Can't say I understand digital art, but I understand people who got in trouble but weren't broken, kept growing and trying to support their families, as well as other prisoners, Romanova said, this doesn't happen very often and this alone deserves attention and support. So guys, obviously very different context, very different worlds, but still this common thread of Bitcoin, of crypto being for the marginalized, the disenfranchised, a tool to reclaim power that has been lost. It's the theme that got me ultimately into this space and one of the things that keeps me the most excited about it. So I love hearing stories like this and seeing perspectives like this. So thanks to both of the writers that I featured today and thanks to you guys for listening. until tomorrow, be safe and take care of each other. Peace.