The Breakdown - New York's Latest Anti-Crypto Action

Starting point is 00:00:04 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 nexus.io, near NFTX, and produced and distributed by CoinDesk. What's going on, guys? It is Saturday, June 4th, and that means it's time for the weekly recap. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dig deep. into the conversation. Come join us on the Breakers Discord. You can find a link in the show notes or go to Bit.ly slash breakdown pod. Also a disclosure, as always, in addition to them being a sponsor of the show, I also work with FTX. And one more thing, and we only have this a couple more times because it is

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Starting point is 00:01:32 All right, so to the weekly recap. A couple of days ago, I implored you to decide intentionally what to care about and what not to care about and to save your energy for the fights that matter. Well, right now, the soundtrack of the moment for us New York Bitcoiners is New York. I love you, but you're bringing me down. So what are we discussing? Well, first is this tweet from the New York State Attorney General Latisha James from earlier this week. The cryptocurrency market is extremely unpredictable.

Starting point is 00:02:00 Just last month, the market reached record lows and investors lost hundreds of billions. New Yorkers should be cautious and think twice before putting their hard-earned money into this unstable market. I mean, guys, just where to start. First of all, the market reaching record lows. You can only imagine the ratios of people pointing out where a lot of these assets stand relative to their record lows if you take any sort of zoomed-out view. Second, how weird is it that it's acceptable to go after some aspect of the market but not another? Meltem-Demir's rights, it normal for an elected official to make investment recommendations? Seems very specific to focus on a global $1 trillion market and just gloss over the stock market, a $50 trillion market in the U.S.

Starting point is 00:02:47 alone, which impacts more of her constituents and is just as volatile. And in case it isn't clear why this is so galling, Bitcoin right now is about 56% off its all-time highs from last November. In that same period, tech stocks like Netflix are down 71%. Pellatin is down 88% in that same period, and that wasn't even, it's all-time high. The point, of course, is there is a double standard and a hypocrisy of judging here. That makes it very hard to take seriously these investor protection type of mindsets. Unless, I guess, you assume that they also think that people shouldn't be allowed to invest in the stock market because it's risky, but then the question really becomes what can people make judgments for themselves,

Starting point is 00:03:29 versus the state telling them what they can and can't do. Alas, that is not the only thing happening in New York at the moment. The second is the mining moratorium. So this is a story we've looked at for a while. There have been various versions of a proof-of-work mining moratorium in the works over the last couple years. The reason that some New York politicians are nervous is that they're seeing a growth in this industry in their state, and they've heard all about how proof-of-work mining is bad and they want to take time to study it. And to some extent, that's healthy.

Starting point is 00:04:00 politicians taking time to study things that are impacting their constituents is something I support. Doing so while prohibiting the activity in question, I have a lot less support for, as you might imagine. So a proof of work-up mining bill was passed in the lower house of the New York Assembly earlier this year, but for a while it didn't look like it would make it in the Senate. That, it turns out, was wrong. Very late Thursday night, very early Friday morning, which you might note is already weird, the New York Senate passed the Bitcoin mining moratorium bill. The bill imposes a two-year moratorium on new proof-of-work mining projects that are powered by

Starting point is 00:04:37 carbon-based fuel. During this time, the state will be performing a study of the environmental impact of proof-of-work mining, and the bill's sponsors say that it was primarily designed to address Bitcoin mining operations that would look to reopen decommissioned carbon-based power plants. The bill's sponsor, Democratic Senator Kevin Parker, said that the impact would be limited. He says only one current operation of this type exists which would not be impacted by the bill, and there is one pending application which would be put on hold. From here, the bill needs to be signed by the New York governor before it is enacted,

Starting point is 00:05:07 which is where the community has turned its attention now. So let's actually talk about the scope of this bill. There is a lot of chatter on Twitter because God bless it, of course there is, about this being a proof of work ban, and that's just not true. Troy Cross tweets, This bill, if I'm reading it correctly, is being widely misreported. No existing fossil fuel-powered mining in New York State will be impacted. The bill prevents one new generation and two increases in mining at existing facilities. Troy is exactly right. Existing firms and ones that are currently

Starting point is 00:05:40 undergoing the permit renewal process will be allowed to continue operations. They simply can't expand. New operations that would use carbon-based power will not be approved. So this really is a moratorium on new projects and expansions of existing products. As Troy sums up, it is not a two-year moratorium on proof-of-work mining. It's a two-year moratorium on increases in proof-of-work mining that is behind the metered powered by fossil fuel generation. It's a dumb bill, but let's be accurate. Then again, Troy also gets the politics of where we are as a culture. Best chance of killing the bill, he writes, is to represent it as an attack on all mining, or all fossil fuel-powered mining and generate outrage. Best chance of passing the bill is same misrepresentation to fire up support.

Starting point is 00:06:24 Everyone's happy and this is our world now. Now, for what it's worth, the crypto industry is happy to play by that playbook if that's all we've got. Julia Stitzel from DCG writes, New York was a leader in crypto hires last year. This morning they passed a bill banning proof of work operations, aligning themselves with China and sending a negative signal to companies, not just crypto, who are hiring and growing in this emerging industry. Not a good, Look. So although the bill is less bad than it is being represented, it is still frustrating, especially coming from New York where it's part of a pattern. And indeed, this is why the bill had lots of opponents, including Democrats. Nexo lets you easily buy crypto with your bank card

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Starting point is 00:08:26 FDXUS is also the only leading exchange that supports both Ethereum and Solana NFTs. When you trade NFTs on FTCS, you pay no gas fees. Download the FTCS app today and use referral code Breakdown to support the show. Todd Kaminsky is the chair of the Senate Environmental Conservation Committee and a fierce environmentalist. He authored New York's Climate Leadership and Community Protection Act, which was a landmark 2019 law that mandates that the state gets to 100% zero-mission electricity by 2040. He has been a vocal opponent of this bill. Earlier this year, he said to Coindesk, I really believe in a new green economy in fighting climate change. The question we have to ask is,

Starting point is 00:09:10 how much will this law go towards helping us reach our climate goals versus harming a nascent industry that I feel is going to be increasingly critical to our state's economy. I'd like to do everything we can to make crypto mining more eco-friendly, and there's great innovators doing that now. But I think this will be seen as extremely hostile. I think it's going to lead to really deleterious economic consequences for New York, if people perceive it as being hostile to crypto. It wasn't just Kaminsky against this bill, its unions like the International Brotherhood of Electric Workers, and representatives from places like Rochester, which is one of the poorest cities in the country, and which had seen jobs come in around Bitcoin mining.

Starting point is 00:09:46 Given that Kaminsky was the chair of the Environmental Committee, it didn't look for a while like it was going to come out of committee. But then, according to Coin desk last night, quote, an 11th hour referral of the bill from the Environmental Conservation Committee to the Senate Energy and Telecommunications Committee, where Parker, aka the bill's sponsor, is the chairman, on Thursday evening, meant that the bill was able to reach the full Senate floor for a vote, mere hours before the close of the legislative session at midnight. The blockchain associations Jake Chavinsky writes, you would,

Starting point is 00:10:14 wouldn't believe the tricks. The New York Senate had to pull to pass the Bitcoin mining ban in the dark of the night, e.g. they had to reassign the bill to get around the Environmental Conservation Committee, which was against it. But it's not over yet. Governor Hocchel can still veto. The Bitcoin mining conversation, as it relates to policy, has to be one of the most frustrating areas for people who are invested in this space and who believe in climate change. One of the most positive parts about this whole saga had been the fact that proud, democratic environmentalists had not been in support of this bill, despite their interest in seeing Bitcoin mining continue to progress towards a more, as Kaminsky put it, eco-friendly state. That is the sort of

Starting point is 00:10:58 open space and nuance that could be incredibly productive for this discussion. But yet, it was denied that opportunity because of political gamesmanship. So pretty rough week, I mean, we've had an insider trading case against the former OpenC employee, which I think says a lot about the state of the industry in terms of at least our interpretation of it. We had that unbelievably mind-numbing, concerned tech letter. And more frustratingly, all the mainstream media headlines around it about how the technology sector is coming out against crypto, which is so farcical. Then from a macro perspective, hasn't been great either.

Starting point is 00:11:35 Quantitative tightening has officially begun. This month, the Fed will begin to allow bonds to run off its balance sheet without being renewed. This will shrink the size of the balance sheet and will also take away liquidity from the market, something that we haven't had for quite some time. How that will impact stocks to say nothing of crypto is anyone's guess right now. Over in Europe, they've ratcheted up the energy crisis with a ban on a huge portion of the oil that comes from Russia, which even if in the moral and political right is still going to have massive economic consequences, and so on and so forth, which brings me back to my Tuesday show where I suggested that for the

Starting point is 00:12:11 next couple months, the right idea might be to just go touch grass. But since this is technically the weekly recap and because we don't want to leave it totally bleak, we should ask, is there any bright news? Despite all of this, there does seem to continue to be some amount of mainstreaming. Beloved burrito shop Chipotle has announced that they will now accept cryptocurrency for payment in U.S. stores. The payment will be processed by Flexa, which is the third-party service, and supports a bunch of different cryptos, including Bitcoin and ETH. The option will be available in pretty much all of their almost 3,000 stores nationwide. Now, of course, this is one of those options that allows the store to accept crypto but get paid in dollars, and that's sort of just the way

Starting point is 00:12:51 of it right now. I think the more relevant point comes from DC investor who says, I love Chipotle, but I'm never going to spend my crypto to buy a burrito. Kanye West's Yeezus brand has filed 17 NFT-related trademarks, which suggest to people that it may be moving into the NFT space. The applications are for terms like blockchain-based non-fundable collectibles, assets, currencies, and tokens. Online retail store services featuring downloadable movies, videos, television, music, entertainment, and digital art. Now, if you're a little confused, you might be remembering that Kanye had previously posted an anti-NFT message on Instagram back in January. The post, which he later deleted, had a handwritten. written note that said, my focus is on building real products in the real world, real food,

Starting point is 00:13:34 real clothes, real shelter. Do not ask me to do a fucking NFT. Ask me later. The post caption added, stop asking me to do NFTs. I'm not fin a cosign. For now, I'm not on that wave. I make music and products in the real world. Now, of course, you may notice the ask me later and the for now, and maybe now is the later that he was discussing. Either way, these applications are the type that are about future potential use, not things that are actually going on, so it could come to nothing. Lastly, Prada became the latest luxury brand alongside Lancom, Valenciaga, Gucci, and others, to launch NFTs. Their first product was a T-shirt designed by Cassius Hirst, the son of artist Damien Hurst, that came with a corresponding NFT, so basically a real-world item that comes with a digital

Starting point is 00:14:17 asset as well. They'll have a Discord and additional perks, experiences, etc., and I think you can expect a lot of this type of experimentation, even as we go into a deep bear. So there you have it. In a world full of regulatory intrigue, enforcement actions, political gamesmanship, at least we've got luxury NFTs, avant-garde shoes, and burritos. For now, I want to say thanks again to my sponsors, nexo.com. Neer NFTX. And thanks to you guys for listening. Until tomorrow, be safe and take care of each other. Peace. Hey, Breakdown listeners, come join CoinDesk's Consensus 2020, the festival for the decentralized world this June 9th through the 12th in Austin, Texas. This is the only festival showcasing and celebrating all sides of blockchain, crypto ecosystems, Web3, and the Metaverse, and is designed for crypto newbies, investors, entrepreneurs, developers, and creators.

Starting point is 00:15:17 Use code Breakdown to get 15% off your pass at CoinDest.com slash Consensus 2020. 22.

The Breakdown - New York's Latest Anti-Crypto Action

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