The Bitcoin 2023 conference was not as interesting as in previous years. Ethereum’s re-staking feature worries Vitalik Buterin. Ledger’s new feature created a storm on social media. Is there potential for Bitcoin mining in Finland? Tether announced its investment in Bitcoin.
The Bitcoin 2023 conference was uninspiring
The biggest names in the Bitcoin community gathered in Miami last week for the Bitcoin 2023 conference. Miami has been the scene of the biggest Bitcoin carnival in 2021 and 2022 as well. This year, the event was clearly quieter than in previous years.
The bear market that started at the end of 2021 is undoubtedly the major reason. Although the year 2023 has been positive in terms of price action, the activity below the surface is at a very low level. This was clearly visible in the number of participants, which fell by about 60 percent compared to last year.
The conference was organized in the middle of a bear market in 2022, but at that time the downhill had only lasted six months. The collapses of Terra, Celsius, and FTX had not been seen, and most of all, the attitude of the United States towards the crypto sector was completely different.
This year, the business and sponsor department was really quiet. Cryptocurrencies are a politically sensitive topic in the USA, and even exchanges do not want to take any risks. It seems that even Miami, which hosted the conference, wants to get rid of the “crypto bros”. Bitcoin 2024 will be held in Nashville.
There was little talk about Bitcoin 2023 also on Twitter. The only topic that caused a bit of a stir was the discussion regarding the Ordinals protocol, where the well-known Bitcoin trolls Eric Wall & Udi Wertheimer were on stage. The “Taproot Wizards” community also organized their own parties in Miami.
Had such a great time yesterday when all of the @TaprootWizards rushed the front of the crowd after Udi & Eric dominated the debate. It was pure magic. #MiamiQuest pic.twitter.com/RaVOmDW4jF
— TheHawk (@PackBagPoints) May 20, 2023
The event conveyed a slightly tired feeling to the outsider. It seems like the Bitcoin community needs some new blood and new topics to talk about. There were smart people talking smart things on the stage, but you hear the same stories pretty much every week in numerous Bitcoin-related podcasts.
Bitcoin 2023 didn’t offer any major news and neither did the 2022 event. Jack Mallers’ news bomb of El Salvador remains the biggest event of this decade, and it’s already two years old. Many well-known influencers also didn’t bother to attend, and the conference wasn’t even reported on social media like in recent years.
If the attitude of the United States towards cryptocurrencies does not change, this event should be moved to either Europe or Singapore. Hopefully, we’ll see a more upbeat carnival in Nashville a year from now!
Vitalik Buterin warns about Ethereum’s re-staking feature
Vitalik Buterin, the founder of Ethereum, has opened his verbal chest on an important topic. Buterin has published an article titled Don’t Overload Ethereum’s Consensus. The article takes a stand on the so-called re-staking feature, which has become a popular topic of debate.
Normally, the validators of the Ethereum network have a clear task: to follow the rules of the Ethereum protocol and to validate the transactions sent to the network. You can become a validator by staking at least 32 ETH. The validation work is rewarded with a little more than five percent annual interest on staked Ether.
Re-staking means that the Ethereum validator could be given extra tasks. A good example could be acting as an oracle, i.e. as a replacement for Chainlink. The Eigen Layer project is building technology where staked ETH can be put to work to also secure other blockchains built on top of Ethereum.
The Twitter account of the Bankless channel posted a good thread on the subject:
🥩 RE-STAKING RISKS 🥩
Here's how @VitalikButerin categorizes re-staking applications and their risks to Ethereum in his latest blog post
A Thread 🧵
— Bankless (@BanklessHQ) May 22, 2023
The proposal may suddenly sound like a good idea, but in practice, it can lead to catastrophic outcomes and even to a fork in the blockchain. This is exactly what Ethereum founder Vitalik Buter warns in his blog post. Those interested in the topic should read the article linked above.
In the article, Buterin also warns against talk that any major bugs of Layer 2s can be fixed with a rollback of Layer 1, i.e. the Ethereum blockchain. What if one of Ethereum’s big Layer 2s grows so-called into the “too big to fail” size category and get hacked? Should the Ethereum blockchain roll back to the time before the hack to restore funds?
We are talking about the term social consensus here. It is quite a “blast from the past” because Ethereum was born as a result of just such a rollback after The Dao hack in 2016.
So Vitalik Buterin’s message is clear. Ethereum validators should only focus on validating the Ethereum protocol and not get involved in the consensus of other protocols through re-staking. However, the problem is the open-source nature of the protocol – just like what happened with Bitcoin’s Ordinals uproar.
Buterin (or anyone else) cannot control what kind of clients or re-staking options are created for validators. Just like the Bitcoin fundamentalists can’t control it if some users want to deposit JPG images on the blockchain. Time will tell if this creates problems for Ethereum or not.
Ledger was in the middle of a social media scandal
Ledger is the world’s most famous manufacturer of cold wallets. Its best-known products are Nano S and Nano X, which are used by more than four million crypto investors globally. Last week, Ledger found itself in the middle of a major social media scandal.
The reason for the uproar was a new feature called Ledger Recover. It allows Ledger users to store their recovery keys with third parties. If you’d ever lose the recovery keys, you could restore them using the Recover feature.
There was a huge uproar on social media for two reasons. First of all, Ledger users have until now believed that recovery keys cannot be sent out of the device under any circumstances. Another reason for the uproar was Ledger’s really poor communication at a critical moment, which only made the situation worse.
Will Ledger’s products continue to be safe? Ledger Recover is an extra service that isn’t even free. It cannot be turned on by accident. If you don’t use the Ledger Recover service, the device will work as before.
Part of the social media community is of the opinion that Ledger can no longer be trusted. Of course, everyone has the right to use whatever devices they want. There are currently other manufacturers of cold wallets on the market, which will surely get additional sales for a while as a result of the hype.
However, it is good to remember one thing. No matter what wallet or service you use, you always have to trust that service and the company behind it. Although the idea of blockchain technology is to remove the need to trust other parties, this problem does not disappear when using products and services. Each wallet is programmed and assembled by someone.
On a general level, it can be stated that there is no single correct solution for storing cryptocurrencies. It depends on the investor which storage method is the best. You can read more about the topic in our cryptocurrency wallet article.
Is there potential for Bitcoin mining in Finland?
Finland has been one of the world’s leading countries in utilizing the internet and mobile technology. Unfortunately, the same cannot be said about cryptocurrencies. Finland is not among the world’s most innovative countries in this sector.
Bitcoin mining is also an area where Finland is badly behind its neighboring countries. Norway, Sweden, and Iceland have been attracting Bitcoin mining to their soil for years. Russia is a significant player in Bitcoin mining even on a global level.
However, there is hope for something better! This is what Jaran Mellerud of the Hashrateindex site writes, who sees a huge potential for Bitcoin mining in Finland. Check out the Twitter thread below, which also has a link to the actual article at the end.
Finland is Europe's unexplored #bitcoin mining frontier🇫🇮
Learn about this Nordic country's massive bitcoin mining potential in this thread🧵 pic.twitter.com/kAXt0dDs2D
— Jaran Mellerud (@JMellerud) May 22, 2023
What makes Finland a good soil for Bitcoin mining? One big reason is the recently completed Olkiluoto 3 nuclear power plant, which greatly increases Finland’s energy production capacity. In addition to this, the production of wind and solar power will be increased significantly during this decade.
There will be more and more ESG-friendly energy in Finland in the future. The cold climate is also suitable for mining, and waste heat can be reused efficiently. Finland is also a politically stable country with sensible regulation.
The price of electricity is higher in Finland than in comparison countries, but the new production capacity can help in this matter in the coming years.
“I see Finland as the last Bitcoin Mining frontier of Europe and believe the industry will grow to several hundred megawatts in the next couple of years,” Mellerud writes.
So far, Finland has been a statistician in the cryptocurrency revolution. The mining business is one area where Finland could become a significantly bigger player in the industry. The first goal would be to at least get to the same ballpark as the neighboring countries. Bitcoin mining would also help stabilize the power grid.
Tether Announced Huge Profits and Investment in Bitcoin
Tether is the world’s largest stablecoin provider. Tether’s number one position has been further strengthened in 2023, as its competitor USD Coin has suffered from the hostile attitude of the United States. The offshore stablecoin Tether seems like a safer option to many.
Tether’s situation is better than ever right now. Its market cap has already exceeded 80 billion dollars, and the company announced a massive result for the first quarter of 2023: $1.48 billion net profit. Tether now has more than $2.4 billion in excess reserves.
Another interesting news is related to Bitcoin. In the future, Tether plans to invest 15 percent of its net profits in Bitcoin.
Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin. These Bitcoin shall be considered on top of the minimum reserves assets that 100% back tether tokens.
More 👉 https://t.co/7zC2swgwWH pic.twitter.com/BOcSDjjmDf
— Tether (@Tether_to) May 17, 2023
Tether also commented that it already has $1.5 billion worth of bitcoins on its balance sheet. This is no small number. If you look at publicly traded companies, the largest holdings are in the $250-350 million range, Microstrategy excluded.
Interest rate hikes by the US central bank have been poison for many. Tether is one of the big beneficiaries, along with Circle, the company behind the USD Coin. Reserves are mostly held in US government bonds, which now pay better interest than they have in decades. Stablecoin companies make billions of dollars practically risk-free just by holding reserves.
There was also an interesting announcement yesterday. The Strike app announced that it had integrated Tether. Strike is founded by the famous Bitcoin enthusiast Jack Mallers and it leverages Bitcoin’s lightning network for payments.
BREAKING: Bitcoin payments app Strike integrates Tether's USDT stablecoin https://t.co/rFwRoXQ9lB
— The Block (@TheBlock__) May 22, 2023
What is interesting in the news is the reason why the American company Strike integrated Tether and not USD Coin, which is regulated in the United States. Jack Mallers said in a Fortune magazine interview that the reason is that people outside the United States do not trust the USDC stablecoin!
Just a year ago, USDC was seen as a safe, reliable, and regulated alternative in the market. USDC rapidly lost its status in 2023 due to the US administration’s attack on the industry.
Read more about stablecoins from our comprehensive stablecoin guide.