One month after the bankruptcy of Lehman Brothers in 2008, Warren Buffett wrote an Op-Ed saying that he was buying stocks. Yet during the Coronavirus crisis, he is sitting firmly on the sidelines.
On Saturday night, the “Oracle of Omaha” spoke for 4.5 hours in the first ever virtual version of the Berkshire Hathaway annual shareholders meeting - an event which some have called the “Woodstock of Capitalism.”
On this episode, NLW examines some of the key topics of the presentation, including:
Why Berkshire sold their entire $6.5B stake in the airline industry
Why they were sitting on $137B in cash
Why they haven’t made any investments
How the Fed gave companies better terms than they were willing to
It was hard not to watch the presentation and conclude that Buffett feels that there are simply too many unknowns in the world going forward to feel comfortable doing much in the market right now.
F2Pool is the largest bitcoin mining pool in the world controlling 20 percent of the collective computational energy, also called hashrate, on the bitcoin network. On the fifth and final episode of Bitcoin Halving 2020: Miner Perspectives, Heller discussed the economic incentives driving cryptocurrency mining and mining pool operations.
Though miner revenue has decreased sharply over the last two years from around $0.60 per terahash to $0.10, Heller explained bitcoin mining continues to be profitable due to the release of more efficient hardware and the discovery of cheaper sources of electricity. Positive movements in bitcoin price is also a major factor, albeit a frustratingly unpredictable one.
Heller, who operates a slew of his own mining machines, said that without “significant price action” over the next two weeks leading up to bitcoin’s reward reduction, also called the halving, both he and other miners would have no choice but to turn off “older machines.”
For more information about the halving event, download the free CoinDesk Research explainer report which features over 30 different charts and additional commentary from bitcoin mining industry experts.
Two of CoinDesk’s most popular series, NLW’s The Breakdown podcast and the Money Reimagined newsletter by chief content officer Michael Casey, come together for a special podcast microseries in the run up to Consensus: Distributed, our first virtual big-tent event May 11-15. The Breakdown: Money Reimagined builds on themes Casey explores in his newsletter to tell the story of key arenas in the battle for the future of money -- from the incumbent dollar to the aspirational DCEP to the insurgent bitcoin -- in the context of a post-COVID19 world. The four-part podcast features over a dozen voices including Consensus: Distributed speakers Caitlin Long, Matthew Graham and more. New episodes air Fridays starting May 1 on the CoinDesk Podcast Network. Subscribe here.
Even before COVID-19, 2020 was poised to be a big year in the battle for the future of money. 2019 had seen: Fed intervention in overnight lending markets; the launch of Facebook’s Libra; an acceleration of China’s central bank digital currency; growing acceptance of bitcoin as digital gold and more.
When Coronavirus hit, however, it fundamentally altered the context in which this battle for the future of money would take place.
In late January, China issued a lockdown for the city of Wuhan in Hubei Province. Over the next few weeks, that lockdown as extended to more than 200 million people. China-based blockchain investor Matthew Graham called living through it “the craziest thing I’d ever seen.”
Yet despite such a chaotic blow to the economy of the supply chain capital of the world, US stock markets continued to mint new highs, with the Dow Jones Industrial Average reaching an all time high on February 12th and the S&P500 following suit exactly one week later.
On Monday, February 24th the damn started to break. Caitlin Long, founder of the crypto bank Avanti and 22 year Wall Street veteran said that COVID-19 was “starting to overwhelm the ability of central banks to solve this…You can’t solve a pandemic with liquidity. It’s just not going to work.”
That week would get messier still. By the end of the week, which completed a 10% drop from just 10 days earlier, crypto trader Scott Melker said “This is a historic drop. This is something we haven’t seen since World War II.”
By the first week in March, the Fed sprang into action, calling an emergency weekend meeting to announce a 50 bps rate cut. Unfortunately, the market did the opposite of what the Fed might have hoped. Delphi Digital macro analyst Kevin Kelly put it this way: “What last week’s rate cut did was confirm to equity investors what they didn’t want to admit to themselves: that this was a real risk and something the Federal Reserve was watching as a real threat to economic activity.”
As true fear crept in to markets, stage was now set for a torrent of action and intervention.
In this first episode of Money Reimagined, we look at:
Why US markets took so long to react
How the stock market became a political utility
Why, even before the crisis, “increasingly exotic forms of quantitative easing” were inevitable
Why the bailouts have some investors accusing our entire market of being cronyism rather than capitalism
What unlimited money printing means for the US dollar.
The key question explored in this episode is what happens to the US dollar next? On the one hand, monetary stimulus like the world has never seen suggests that at some point, we should anticipate an inflationary environment. On the other, the dollar has done nothing but grow stronger compared to other currencies. How can both of these things be true simultaneously.
For that, we turn to insights from Matthew Graham, Caitlin Long, Scott Melker, Kevin Kelly, Ben Hunt, Luke Gromen, Travis Kling, Mark Yusko, Anthony Pompliano, Jared Dillian, Dave Portnoy, Michael Casey, Preston Pysh, Peter Zeihan
Danielle DiMartino Booth is the CEO and Chief Strategist of Quill Intelligence. Before that, however, after correctly predicting the mortgage meltdown, she was called upon to serve and spent 9 years as an advisor to the President of the Federal Reserve Bank of Dallas. That experience led her to write “Fed Up: An Insider's Take on Why the Federal Reserve is Bad for America.”
In this episode, Danielle and NLW discuss:
How the Fed went from simply corrupt to corrupt and broken
Why we’ve been living through the largest experiment in monetary policy history
Why interest rates are the lowest they’ve been in 5000 years
Why COVID-19 was the pin, not the balloon
Why current Fed action compromises the Fed’s independence
Why the market structure incentivizes consumption and risk investment over savings
Why risk investments have ceased to be risky because of Fed backstopping
Why a key concern going forward is a second wave of COVID-19 layoffs in industries beyond the obviously impacted
The Lebanese pound has lost at least 50% of its value against the dollar since last year. 220,000 people have lost their jobs. Food prices are up 58%. An estimated 75% of the population needs assistance of some kind. And over the last two nights, at least a dozen banks have been torched by protesters.
The catalyst? Not coronavirus, but a massive dollar shortage that is destroying an economy that relies on inflows of US dollars to function.
In this episode, NLW breaks down how Lebanon models what it looks like for a currency to fail, and why this likely isn’t the last emerging market currency to experience a similar crisis in the months to come.
As the COVID-19 crisis rages, it takes on new economic and political dimensions. The frames for many of the most important questions for the next decade are being set now, in this moment.
On this episode of The Breakdown, NLW is joined by Maya Zehavi, a long-time blockchain consultant known for her insightful domain-spanning takes.
They discuss:
How the COVID-19 health crisis overlapped with a political crisis in Zehavi’s home country of Israel
Why governments use times of crisis to take extraordinary powers
How contact tracing apps have become a battleground for mass surveillance
Why the shift to localism from globalism creates new challenges
How the problems distributing stimulus are shaping the conversation around central bank digital currencies
The bitcoin halving is just two weeks away. While the COVID-19 crisis pushed attention off the momentous event for a while, the discussion is coming back fast and strong. Google searches for the bitcoin halving already exceeding the 2016 peak, despite almost no mainstream media coverage.
In this episode, NLW breaks down 4 archetypes of people within the larger debates around the bitcoin halving:
Speculators - those who flock to Twitter to engage in endless rounds of debate around the efficient market hypothesis and whether the halving is priced in or not
Fundamentals - those who believe that what matters about the halving isn’t the short-term price movement but the fundamental decrease in supply
Miners - those who have to actually figure out how to make their business model work in the context of reduced issuance
Symbologists - those who are focusing on the significance of bitcoin’s issuance reduction coinciding with QE infinity
On today's show we've got a pair of interviews for you. First we speak with John Cantrell, the author of Juggernaut, a new messaging layer 3 application being built on top of layer 2 lightning network, which is itself built on top of layer one bitcoin. It's a lot of layers, but as a technological concept currently in beta it's a fascinating project, and we talk about it. (Juggernaut on Github)
After the break we're joined again by Alex Gladstein of HRF.org for a discussion on political expediency in the age of pandemic and what crisis has revealed about various governments, and different types of governments around the world. Alex is one of my favorite returning guests, with his global human rights focused work taking him to some of the most interesting and most oppressed places around the world
"What's interesting is that citizen journalists I know in Taiwan have pressed the government on this and they've gone to parliament and it's all on record, and they've said 'Have these (...) digital contact tracing or cell phone surveillance things been useful?' And the governments said "Only in one case.... Only in one case was this sort of mass surveillance approach been useful', so they've actually been honest with the people... But at the end of the day it does teach us that even the most progressive governments are going to be lured by the sirens call of using surveillance to tackle problems." - Alex Gladstein, Chief Strategy Officer HRF.org
This episode of Let's Talk Bitcoin is sponsored by eToro.com and features content from John Cantrell, Alex Gladstein and Adam B. Levine. Todays show features music by Jared Rubens and Gurty Beats with editing by Jonas. Album Art original photo by Goh Rhy Yan on Unsplash
In this episode of the Bitcoin Halving 2020: Miner Perspective podcast series, we take a trip down memory lane back to the early days of bitcoin when miners first began competing for network rewards.
“I think the introduction of [Application Specific Integrated Circuits] was a watershed moment in terms of changing the way bitcoin was mined and secured,” said Galen Moore, senior research analyst for CoinDesk. “If you know that a more powerful machine will get you more reward, make your business more profitable, you’ll be looking for the next more powerful machine all the time knowing that your competitors are doing the same.”
Dave Carlson who participated as a bitcoin miner in the arms race for more advanced cryptocurrency mining machinery back in 2012 and 2013 admitted that at the time “the Chinese engineering firms and Chinese producers of this technology far surpassed our ability and speed to get something to market.”
However, there was a turning point in 2015 and 2016 when mining operations in China started to subside and coalesce in other regions parts of the world such as North America. More efficient power production, Carlson said, was the primary motivation for this shift.
In lead-up to the next bitcoin halving event in May, some bitcoin miners are looking at leveraging what Moore and Carlson describe as “surplus energy” to make operations even more cost-effective. Surplus energy is the run-off or waste fuel released by natural gas and hydro power plants that can be repurposed to mine bitcoin for zero cost. This could be a major technological breakthrough for mining if proven to work at a large scale, Carlson said.
For more information about the bitcoin halving, download the free CoinDesk Research explainer report which features over 30 different charts and additional commentary from mining industry experts.
Yan Pritzker is the CTO and cofounder of Swan Bitcoin, an automated bitcoin only investing app aiming to be the best onramp to bitcoin. He is also the author of Inventing Bitcoin.
On this episode, he and NLW discuss:
How immigrating from the Soviet Union taught Yan about capital controls
Buying bitcoin at $30 in 2011
Why the type of capital available shapes what type of startups entrepreneurs found
Why venture capitals focused investments away from bitcoin
The emergence of a bitcoin only startup scene
Starting a startup during the COVID-19 crisis
Why bitcoin’s scarcity is its most important property
