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Creating a strategic Bitcoin reserve could bring stability to Mining activity in the US.
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Mining all remaining BTC in the US would benefit the country, but would have centralization risks.
Donald Trump has made several promises related to bitcoin during his campaign.
Among them, he has promised to release Ross Ulbrich, the creator of Silk Road, an online black market that operated from the Tor network and where payment was made with bitcoin.
But some of the promises made by Trump have more to do with bitcoin mining under his future administration. For example, removing Securities and Exchange Commission (SEC) Chairman Gary Gensler.
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Dismissal of Gary Gensler
Without a doubt, the dismissal of Genslerwhich has historically been quite resistant to bitcoin and cryptocurrencies, could shift toward more favorable regulation of the industry. This would facilitate the economic growth of the country and the operation of bitcoin mining companies in the United States.
Now, the removal of a high-ranking public official like Gensler could require a formal process, and could face resistance in Congress and among financial regulators, even if the majority of legislators are “pro-Cryptocurrency”.
End of the “anti-cryptocurrency crusade” of the current administration
Trump has pledged to end the current administration’s “anti-cryptocurrency crusade.” If this ends current restrictive policies, the United States could create a friendlier environment for bitcoin mining.
Stopping the “crusade” does not sound very difficult in theory, taking into account that the Trump administration will have the most “pro-cryptocurrency” congress of American history.
Among possible consequences, the above would attract both the expansion of current mining operations and new farms and operators in the country. For example, Hive Digital Technologies, a mining and AI company based in Canada, Sweden and Iceland, could consider opening a data center in the United States, considering that it already has one in the vicinity of that country, in Lachute, Quebec , near the US border.
Creation of a strategic reserve in bitcoin
The creation of a strategic reserve in bitcoin and Trump’s promise that he will never sell bitcoin from this fund, could also affect mining. Assuming that this reserve grows over time, a strategic reserve could increase demand for bitcoinespecially in the market over-the-counter (OTC)which could incentivize mining to meet local demand and exchanges.
However, implementing this reserve would not be an easy task: it would require the approval of Congress and the acceptance of other economic regulatory bodies, such as the central bank. A reserve of this kind could be controversial for many due to the volatility of bitcoin.
On the other hand, the promise not to sell bitcoin from the reserve fund could serve as an incentive to stabilize the bitcoin market in the United States, providing a more predictable and secure environment for miners. This promise seems difficult to keep, especially in times of economic crisis or fiscal need. The Trump administration could face criticism for tying up financial resources.
Mining will be the last line of defense against “CBDCs”
He has also stated that the bitcoin mining will be the last line of defense against central bank digital currencies (CBDC) and that all remaining bitcoin to be issued will be mined in the United States. That is, Trump promotes the programmed and fixed shortage of bitcoin thanks to its mining against the uncontrolled issuance of centralized digital fiat money. Trump has claimed that bitcoin will help his country dominate the energy sector, generating so much electricity that people will call for production to stop.
Bitcoin mining as a defense against “CBDCs” may be one of Trump’s most radical proposals, and also one of the furthest from his agenda. By positioning bitcoin mining as a strategic defense, there could be an increase in government support and resources directed towards mining and, more generally, towards cryptocurrencies.
Favoring bitcoin and cryptocurrencies would be a declaration of intent: it would promote the usability of coins created with cryptography by the community and by individuals like Satoshi, or Vitalik Buterin, instead of CBDCs created by central banks, which they could no longer replace those. An action like this would consolidate cryptocurrencies as the currencies of the internet, instead of the digital yuan, digital dollar, etc.
All bitcoin will be mined in the United States
One of Trump’s most popular promises was to mine all the bitcoin in the United States. This policy could lead to a clear expansion of mining infrastructure in the country, creating jobs and stimulating local economies. Of course, centralizing all mining in the United States would be a process of years, perhaps longer than Trump’s term in office.
This milestone could be logistically complex and expensive, and Bitcoin does not seem to be one of the immediate topics of the president’s agenda. Although such an event would cause the hashrate produced in the United States to explode, this mining centralization in the US it would be negative for the peer-to-peer or P2P system, Bitcoin technology itself.
Bitcoin will help US become energy dominant
Likewise, Donald Trump believes that Bitcoin can help the US become dominant in the energy sector. If bitcoin mining becomes a central part of the energy strategy, there could be massive investments in energy infrastructure, benefiting miners with access to abundant and potentially cheaper electricity.
This would help “fulfill” the promise of producing all the bitcoin hashrate in the country. In addition, it would cause an improvement in energy efficiency throughout the territory, since it has been proven that bitcoin mining is useful for take advantage of surplus energy that would otherwise be lost.
On the other hand, increasing energy production and consumption in the US could be problematic, and difficult to achieve. According to Sigma Earth, a sustainability platform, energy consumption will reach unprecedented levels in 2024-2025 in the country, which implies the need to use more and more forms of energy with less environmental impact. This transition may take time, as may the improvement and development of the United States in this regard.
Generate abundance of electricity
Donald Trump said, within the framework of Bitcoin Conference 2024, in Nashville, Tennessee, the following: “We are going to generate so much electricity that you will say: ‘Please, please, Mr. President, we don’t want more electricity. We can’t stand it!’”
Fulfilling Donald Trump’s promise to produce this excess electricity could reduce operating costs for the bitcoin miners in the United Statesmaking them more profitable. Again, this would make the United States an attractive area to undertake and mine the currency with lower electrical costs due to excess supply.
Of course, generating a massive amount of electricity, more than the United States already produces, could require enormous investments in infrastructure, and could face known regulatory and environmental challenges: environmental impact should less “green” forms of energy be used ; political complaints from environmentalist sectors, among others.
Lower interest rates
Finally, the promise of lowering interest rates could also help make the United States a “paradise” for mining. Lower interest rates could facilitate access to financing for bitcoin mining projects, boosting growth in the sector.
This would imply that companies would have more liquidity to buy equipment, massify their operations, expand and even experiment with new ASICs and forms of energy.
That said, the reduction in interest rates is subject to the monetary policy of the Federal Reserve. The Federal Reserve, which guides the country’s monetary policy, sets the reference rate and, by design, operates independently of the White House. Therefore, Trump could not just cut interest rates without further ado.
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