The Celestial team has returned from an incredibly exciting and historic Bitcoin 2024 Conference in Nashville, Tennessee. Today, as the US federal debt surpasses $35 Trillion, I will try to relay to you the most important takeaways from this event.
As you may have heard from the media in attendance or read on the front page of the Wall Street Journal, the former President and currently leading presidential candidate, Donald Trump, less than two weeks after surviving an attempt on his life and a week after accepting his party’s nomination, addressed the Bitcoin 2024 conference on Saturday in the final keynote slot. Even if no major policies were announced, his presence would have been noteworthy. However, major announcements were anticipated and delivered.
Most newsworthy was his declaration of intent to establish a U.S. Strategic Bitcoin Reserve. Trump was not alone in making this proposal. A similar policy with more detail, including aggressive and specific targets, was also announced by the third major candidate in the 2024 race, Robert F. Kennedy, Jr., who addressed the same conference on Friday, the day before President Trump. The other major candidate, Vice President Kamala Harris, was invited to address Bitcoin 2024 but declined. Immediately following President Trump’s remarks, Senator Cynthia Lummis of Wyoming held up a bill to enact such a policy.
For those of us who have been in Bitcoin for a decade or more, it felt oddly flattering and a bit disconcerting to be so clearly courted, and to have the to the attention of so many national politicians. Former presidential candidate and Trump ally in attendance, Vivek Ramaswammy, estimated the political value of the Bitcoin constituency as “probably about 1% in swing States.”
Contrasting the two candidates in attendance is easy. Both see Bitcoin as a significant pool of potentially undecided votes up for grabs in this election as well as a technological innovation that could help shore up or cement American leadership in the 21st century. Trump is clearly newer to Bitcoin with less of a grasp of the finer points. Kennedy stated he already held the majority of his personal wealth in Bitcoin — a clear indication that he had done his homework. Trump offered a key observation based on his conversation with industry leaders about how the industry is very collaborative relative others that are more cutthroat in their competitive nature. He emphasized Bitcoin mining’s relationship to energy dominance and abundance — a key part of his policy agenda. Kennedy also emphasized energy but with more of a focus on how Bitcoin mining supports green and renewable energy development. Both spoke about the evils of inflation (a “country buster” and “a tax” in Trump’s framing) and how bitcoin offers people greater freedom and independence from government.
For single-issue Bitcoin voters, Kennedy offered what appears to be a more clear policy and a superior understanding of Bitcoin and he seems to be the preferred candidate of those not already in the Trump camp.
Clearly significant elements of the U.S. political leadership perceive the precarious fiscal and monetary situation and have sought some type of solution other than the politically unpopular Central Bank Digital Currency or CDBC. They seem to have discovered how Bitcoin and related technology such as stablecoins that track the dollar, providing a private alternative to the CDBC proposals, can play a role in supporting the market for Treasuries and thus extend the life of the present dollar system. Details have yet to be worked out or released.
Notably the morning keynote on Saturday was given by Cantor Fitzgerald chairman, Howard Lutnick, who spoke extensively on his company’s support for the industry, including the bitcoin mining sector, and how his firm holds in custody all the Treasury bills backing the Tether stablecoin. Tether is possibly the most important part of the Bitcoin ecosystem outside of bitcoin itself. There are currently $114 Billion in Tether in circulation globally. As Tether has grown and shifted its assets into Treasury bills, it has become an important customer for the issuer of these bills, the U.S. Treasury. This has occurred against a purported backdrop of waning interest on the part of the BRICS nations and others.
While bitcoin trades on regulated exchanges in the U.S. where accounts are largely funded with bank deposits, the bulk of the dollar liquidity for bitcoin outside the United States comes from Tether. Tether is also a preferred medium of exchange and store of value in developing countries with currencies that inflate at much higher rates than the dollar itself. It provides a lifeline of short term savings and transactional capability for unbanked people around the world. Tether and Bitcoin grow together.
What does this all mean for Bitcoin Mining and for us at Celestial? Bitcoin will have a cycle from 2024-2028 regardless of who is in office but it does now seem that just what kind of cycle we have depends on who takes office and what policies they adopt.
I had not seriously considered that the United States federal government might begin to acquire bitcoin in any serious way before 2030. It is not factored into our price models even in the most bullish case I have presented. If enacted, a policy of aggressive bitcoin accumulation on the part of the federal government would hasten bitcoin’s overtaking of Gold in terms of market cap. This translates to a $500k-$1m bitcoin price in short order. Could it happen this cycle? Sure it could with these policies. Continued steady acquisition would form a floor of support under bitcoin. Globally this policy would present a challenge to other nations. Some will follow in some way lest they be left behind. Others will choose a different route.
Centuries ago the Chinese chose silver for their currency when Europeans settled on Gold. What followed for the Chinese was a century of humiliation. This is not a coincidence. There is a direct correlation between the soundness of a country’s currency and its place in the global pecking order relative to those similarly endowed with population and resources. Likewise, and this analogy came up at the conference, the Chinese invented gunpowder but used it primarily for medicine. Others saw its explosive power projection capability. When your neighbor adopts gunpowder, you eventually adopt gunpowder too. Likewise with steel, oil, etc. This is the game theory of Bitcoin. President Trump is said to have privately called Bitcoin, “the new oil.”
The details of any program to acquire bitcoin on behalf of the federal government matter quite a lot and at this point details are lacking. There is a naive way to do this which would lead to rapid devaluation of the dollar relative to bitcoin and other assets—something which may be in the cards anyway. I assume the thinkers behind this have something else in mind. Perhaps they wish shore up the dollar with bitcoin reserves by improving the federal balance sheet first, then somehow tying bonds to bitcoin in a way that makes them more attractive, eventually maybe opening the door to some kind of convertibility down the road after the required fiscal reform is complete. (see Milei’s program in Argentina) This would be akin to returning to a “gold standard” with bitcoin in place of gold. Eventually they will learn that bitcoin is the thing and either the dollar merges with bitcoin or it fades away.
It’s also the case that none of this may be enacted this cycle. We might not get Trump, though he is currently favored. Kennedy is in third place. His role is apparently to serve as spoiler, sapping support for Harris from the left. Trump could face heavy resistance to these proposals in congress and from other power centers. A progressive case for Bitcoin exists and people are lobbying Kamala Harris to contrast herself from Joe Biden by charting a pro-Bitcoin course. However, many of the thinkers and strategists on the left maintain hostile views toward the asset. The prospect of a Harris administration still weighs on bitcoin and markets more broadly. Let us see what the Democrat Party convention brings in terms of any policy shift.
A Harris administration might not be all bad for bitcoin even if it doesn’t take a supportive stance. Erosion of the fiscal situation, inflation and geopolitical instability could boost bitcoin’s value in the eyes of many. The primary downside would come from regulatory challenges and hostile taxation proposals.
At Celestial Mining Management, we continue to hedge risk by seeking low cost power in pro-energy, pro-bitcoin jurisdictions but the urgency to deploy mining for maximum returns ahead of what promises to be a rewarding bitcoin cycle is clear. We have over 6 Megawatts deployed as well over 20 Megawatts of low-cost energy capacity in our pipeline. Opportunity abounds. We will update our bitcoin price models with new outlooks stemming from these conference announcements and the ensuing policy analysis. It is a tremendously exciting time to be involved in bitcoin and bitcoin mining. It was always going to happen like this but few expected it so soon.
