Last week’s most memorable moments

Greetings, Bitcoin History subscriber!

If you didn’t catch our last email, you’re probably wondering what Supply Shock is.

Well, it’s the brand new Bitcoin podcast from Pete Rizzo, the Bitcoin Historian, produced by Blockworks. Supply Shock officially launched at the end of February.

Twice a week, join Rizzo as he unpacks everything happening in Bitcoin today in context of its tumultuous timeline. Read more about the Supply Shock vision.

Recent episodes have featured guests including cypherpunk Jameson Lopp, advocate Dennis Porter and writer/researcher Nolan Bauerle. Check out episodes on YouTube, Spotify and Apple.

Not much will change with this newsletter for now. You’ll still receive a Monday roundup and Friday long-read every week in your inbox — but soon it will arrive five days a week. Same content, more context and even deeper cuts.

Now, onto the roundup:

Uncle Diamond Hands

It’s happening: The US government officially holds bitcoin as a reserve asset.

Could last Thursday’s executive order have been more bullish? Maybe. The Strategic Bitcoin Reserve will, in the beginning, only hold bitcoin seized in criminal and civil cases — a list that presumably includes Silk Road, which Arkham puts at 198,109 BTC ($16.64 billion) in total, though it’s likely much less.

That’s more than 40 times larger than the separate Digital Asset Stockpile to be composed of seized coins other than BTC, which today amount to about $419 million.

Still, the order authorized the Secretary and Commerce Secretaries to develop “budget-neutral strategies” to actively buy bitcoin in the future, as long as taxpayers don’t foot the bill. Key officials have already said they are actively exploring the idea through at least two government agencies. 

The same can’t be said for other cryptocurrencies — with the executive order stating the government will not acquire more assets for the Digital Asset Stockpile outside of forfeiture proceedings. 

No. Second. Best.

$4.1 billion mistake

If only the US had a Strategic Bitcoin Reserve in 2015.

This week marked the 10th anniversary of the US Marshalls auction of 50,000 BTC seized in connection with Silk Road — the third such auction in eight months.

The auction sold off the coins in 10 blocks each of 2,000 BTC and 3,000 BTC, raising $13.5 million from three anonymous bidders. Ross Ulbricht had only been convicted for his role in Silk Road two weeks earlier and was awaiting sentencing at the time. 

President Trump pardoned Ulbricht on the second day of his second term earlier this year but has now effectively directed the US to keep the rest of Ulbricht’s coins.

If held until today, the bitcoin sold in March 2015 would’ve been worth $4.12 billion and made the Strategic Bitcoin Reserve larger by 25%.

All told, the US government has missed out on $15.7 billion (current prices) by offloading seized bitcoin too soon. At least that number won’t get any higher.

11th hour in Utah

The Utah Senate passed the Bitcoin-focused bill known as HB230 by a 19-7-3 vote on Friday — which should’ve allowed the state to create its own strategic bitcoin reserve.

Lawmakers pulled the key provision effectively at the last minute. Had they not, Utah might’ve become the first US state to actively buy bitcoin.

Initially, the bill had made room for the state treasury to invest up to 5% of certain funds into digital assets, including accounts related to state disaster recovery and income tax fund budgets, among others.

The catch: the treasury could’ve only bought coins with a market cap above $500 billion, averaged over the last year. Bitcoin is the only cryptocurrency that fits that definition right now, so the bill was largely considered a move towards a de facto strategic bitcoin reserve.

There’s good news. The bill enshrined certain rights for Bitcoiners into law, including the right to mine, self-custody and run nodes. Other provisions allow for staking, including for coins other than bitcoin, while devs will be able build software on blockchain rails without shirking money transmitter laws.

All well and good. But at least the state bitcoin reserve dream is still alive in more than a dozen states including Arizona, Texas, New Hampshire, Oklahoma, Florida and Georgia. 

Five states have so far rejected related bills.

All gas, no brakes

Tales of the demise of El Salvador’s bitcoin dream have been greatly exaggerated.

Salt flowed in late February when the IMF shared details of a $1.4 billion loan agreement with El Salvador. The deal demands El Salvador stop taking bitcoin as payment for taxes, and that accepting BTC be made voluntary for the private sector moving forward.

But El Salvador also pledged to not buy anymore bitcoin “at the level of the overall public sector.” Many had interpreted the clause as the end of the country’s dollar-cost averaging plan, which sees it buy 1 BTC every day. 

Turns out, not so, as Bukele took to Twitter to set the record straight by announcing further bitcoin purchases. 

Reuters then reported that the IMF had been assured the recent buys were in line with the loan agreement.

El Salvador currently holds 6,111 BTC ($502.9 million) and is ahead by around 77% on its purchases to date, according to NayibTracker.

Hydro-powered by Bitcoin

The Kingdom of Bhutan is a Buddhist Bitcoin whale that’s been mining since as early as February 2021.

Last week, we were blessed with the first known interview with Prime Minister Tshering Tobgay about the kingdom’s mining operations, which aim to offset declining tourism revenue. “There are hundreds of people who have made billions of dollars on the back of Bitcoin. Why aren’t governments doing more?” Tobgay told Al Jazeera. 

“We have used bitcoin for health — to provide free healthcare, for [the] environment. But these are minor. The main use of Bitcoin has been to finance the salaries of public servants.”

A Blockworks analysis last September found Bhutan was raking in up to $4.9 million BTC per day and in total had generated 27,727 BTC up until that point, valued at nearly $2.3 billion at current prices. At the time, the government may have netted around $578.5 million from selling its mined coins over time. Its wallets currently contain 10,635 BTC ($876 million), per Arkham.

And when asked whether the Bhutanese will one day make bitcoin offerings to Buddha, the outlet said that Tobgay thinks the world is “heading inevitably towards using and exchanging bitcoin just like any other currency.”

I couldn't have said it better myself.

— David Canellis