Swan Signal Monthly: March 2021 Newsletter

Welcome to the 10th edition of the Swan Signal monthly newsletter.

Bitcoin hit a new all-time high of $62,000 this past month, pulled back to $48,000, and is now back up to $59,000. Histor­i­cally, in bull markets, this means Bitcoin is about ready to start another leg up.

In the meantime, we hope you find our monthly Bitcoin newsletter valuable! 

In this month’s letter:

1. Liftoff: a short essay on an impor­tant topic

2. A curated list of recent Bitcoin content from Swan and around the web

3. Behind-the-scenes updates from the Swan team 

You’ve probably seen headlines such as “Bitcoin boils the oceans” or compar­isons like “Bitcoin uses as much energy as Greece.” 

Time to explore the top 5 miscon­cep­tions about Bitcoin’s energy use…

Claim One: Bitcoin doesn’t do anything useful; therefore its energy use is not worth it.

 Most people critiquing Bitcoin for energy consump­tion assume Bitcoin doesn’t provide any value. 

For example, clothes dryers consume way more energy than Bitcoin, but no one complains because we agree they add value. 

There is a reason a decen­tral­ized protocol with no marketing budget went from zero to a $1T market cap in 12 years. The roughly 100M Bitcoin users value it.

Now the critics might say, “Well, the only use case for Bitcoin is specu­la­tion, which is bad.”

In a recent Video, Alex Gladstein explains how Bitcoin is protecting human rights, and Yan Pritzker lists a wide range of “non-specu­la­tive uses for Bitcoin.” 

Claim Two: Each Bitcoin transaction is responsible for [insert large number] CO2 emissions

This argument simply divides the total energy consump­tion of Bitcoin by the 300,000 trans­ac­tions per day settled by the network. This approach results in a very high “energy cost per trans­ac­tion.” 

Let’s break this down…

Bitcoin has a high fixed energy cost to maintain security, each marginal trans­ac­tion is very efficient. This is similar to building software which requires large upfront capital invest­ment (high fixed cost). However, once the software is finished, you can push it out to nearly infinite users at a low cost. 

The economic density per trans­ac­tion is increasing. Said another way, a Bitcoin “trans­ac­tion” is not the same as one “payment.” For example, a single Bitcoin trans­ac­tion could support one million end-user payments over layer 2 networks like Lightning.

Both Nic Carter and Lyn Alden explain this in detail.

Claim Three: Bitcoin’s Proof of Work is “inefficient” 

Bitcoin’s Proof of Work function appears ineffi­cient at first glance. 

However, there are no alter­na­tives if we want a secure, decen­tral­ized, sound monetary system. 

Critics will also attack Bitcoin’s energy consump­tion without comparing the relative energy costs of other known finan­cial systems such as our current fiat monetary system, the petrodollar. 

The short answer is a monetary system built on Bitcoin consumes orders of magni­tude fewer resources than our existing finan­cial system. Dan Held explores this in “PoW is Efficient.”

Claim Four: Bitcoin hogs local power resources, driving prices up.

This is simply not true. Bitcoin miners are only profitable when they find the lowest-cost energy on the planet. The cheapest energy is “nonrival energy, ” meaning it doesn’t compete with consumers. 

Instead, most Bitcoin miners consumed stranded, curtailed, or other­wise wasted energy. For example, China overbuilt hydro­elec­tric power sources. During the rainy season, they produce way more energy than can be consumed, so instead of wasting it, they happily sell it to Bitcoin miners. 

Inter­est­ingly, Bitcoin can run exclu­sively on “nonrival energy” since Bitcoin consumes less energy than the total nonrival energy produced today. 

Claim Five: Bitcoin consumes dirty energy.

Critics who make this claim fail to examine the energy mix that Bitcoin consumes. Let’s look at the data. 

According to the Inter­na­tional Energy Agency (IEW), nearly 28% of global energy produc­tion came from renewals in 2020. 

On the other hand, Coinshares estimates that 73% of Bitcoin’s energy consump­tion comes from renew­able sources. By compar­ison, Bitcoin is leading the charge in renew­ables. In summary, Bitcoin is not boiling the oceans; it’s very good for the world. 

We’ve pulled together some great Bitcoin content for you…

Archi­tecting the internet with Bitcoin’s Sphinx Chat on Tales From the Crypt Podcast 

Walk away with an under­standing of the big vision for Bitcoin’s Light­ning Network. In short, the future is already here. Content moneti­za­tion without ads, encrypted chat over Light­ning, Banking the unbanked, and much more. 

Aker Share­holder Letter announcing new Bitcoin venture (Seetee) 

The second richest man in Norway launched a new Bitcoin subsidiary. Notably, they praise Bitcoin mining as an impor­tant industry that’s net positive for the world. 

Bitcoin’s Layer 2 Solutions with Ryan Gentry on The Investors Podcast 

Learn how Bitcoin is extending its capabil­i­ties with layer 2 solutions such as Light­ning Network. This one might blow your mind. The future is already here; it’s just not evenly distributed. 

Bitcoin Tidbit: What is a hashrate?

“Hashrate” refers to the total combined compu­ta­tional power that is being used to mine and process trans­ac­tions on the Bitcoin network.

The more ‘hashrate’ a miner has the higher the chance they will “mine a block” which rewards them with freshly minted BTC. Currently the “block subsidy” is 6.25 BTC per block.” 

Swan is dedicated to producing great content to educate and raise aware­ness about Bitcoin. Our blog, Swan Signal, features thoughts and opinions on Bitcoin from the Swan team and industry experts. 

Our weekly live broad­cast, Swan Signal Live, pairs notable guests for compelling discus­sions about Bitcoin and economics. The live broad­cast is then published as audio on the Swan Signal Podcast feed. Subscribe to receive new episodes. 

Bitcoin: Fee-Based Security Modeling by Lyn Alden 

Lyn explores Bitcoin’s security model and how it will evolve as we transi­tion from a “subsidy-based security model” to a “fee-based security model.”

Swan Signal Live 53: Gigi and John Vallis 

Philo­soph­ical discus­sion of Bitcoin’s relation­ship with time, the bridge between the physical and the digital, and orange pilling the smartest people on the planet.

Swan Signal Live 54: Vijay Boyapati and Lyn Alden  

Bitcoin market cycles, macroeconomic outlook, NFTs, and game theory. The first time this incred­ible duo has recorded a conver­sa­tion together.

• Swan just celebrated its first birthday! We’ve grown to tens of thousands of members, thousands of bitcoins trans­ferred to long-term hodlers, and we are eternally grateful to Bitcoin and all our members.

• We are accepting inter­na­tional clients at swanbitcoin.com/international for instant buys with wire transfers. 

• Swan Private: Our concierge service that guides corpo­ra­tions and high net worth individ­uals toward building gener­a­tional wealth with Bitcoin is live. Our clients are onboarded in days instead of weeks/months, which is common at Coinbase/Gemini. 

• Swan in the media: Brady was inter­viewed on Keiser Report, Gigi was inter­viewed on What Bitcoin Did

• Clubhouse: The Swan team has been hosting Bitcoin rooms on Clubhouse; join our club Café Bitcoin to be notified of future events. 

• Facebook: we run a Facebook group called Café Bitcoin to help educate people about Bitcoin. Join the group and invite your friends!

• Swan Force has grown to over 5,000 members! Join Swan Force to get paid to recruit Bitcoiners. When you recruit someone to Swan, you’ll earn 25% of all Swan fees for 3 years. 

While central banks worldwide are forced to debase their curren­cies, people realize that they need a new strategy to protect their wealth. 

The smartest people on the planet are flocking to Bitcoin. And it’s not just individ­uals. We’re seeing insti­tu­tional investors like Paul Tudor Jones, PayPal enabling people to spend Bitcoin at their 29m merchants, Fidelity applying for a Bitcoin ETF, and corpo­ra­tions like Tesla buying $1.5B Bitcoin and accepting Bitcoin as payment. 

Bitcoin is up 800% in the last year alone, with no signs of stopping. Of course, there will be more volatility ahead, but the long-term trend is clear. Bitcoin is here to stay. 

As always, Swan is here to ensure investing in Bitcoin is easy, fast, and safe. Click here to get started today.

Thanks,

The Swan Team

P.S. As part of our commit­ment to educa­tion, we’re offering you and your friends a free copy of Inventing Bitcoin by Yan Pritzker. Share this link around!