Primetime for Gemini

Good morning. Today we've got our sixth edition of Altcoin Friday, an update on the Bitcoin mining debate, a big move for Gemini into prime brokerage, and more! Happy Friday!

Bonus Content Coming: I'm targeting early next week the end of the month to have my notes out from Messari's Crypto Theses for 2022. I'll include a link to my notes in this newsletter, however, the full report is definitely worth a read. The report is now in podcast form and can be found here.

Market Update (as of 7:56am ET):

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Top 5:

1. Bitcoin Mining 'Is a Perfect Battery': Why Foundry Insists Green Activists Are Wrong
On Thursday US lawmakers gathered to debate crypto's environmental impact with a specific focus on Bitcoin mining. The hearing follows a recent wave of concerns and criticism around Bitcoin energy consumption and the proof-of-work validation model. Over the past several months laws have been proposed in New York, Sweden, and the broader European Union to ban Bitcoin mining. Critics point to the fact that the network uses "more energy than Argentina" and question the utility provided by the energy intensive mining process. On the other side of the debate are Bitcoin proponents and miners themselves. This group argues that Bitcoin actually supports the expansion of green-energy by:

- "Load-balancing" energy grids, which basically means buying energy when demand is low and therefore serving as a profitable offramp for excess energy production
- Committing to buy from renewable energy plants up front, which can influence utility companies that are deciding whether or not to build renewable energy plants

The debate on energy consumption will continue as the Bitcoin network expands, but ultimately I think the key point to consider is the trade-off between network security (established by the proof-of-work mining model) and the energy usage required to support that level of security.

SSS (sat-sized summary): At a hearing on Thursday US lawmakers heard arguments on the energy consumption of Bitcoin mining. The critics say the value derived from the network is outweighed by the amount of energy required to support it, while the proponents point to the benefits Bitcoin can provide to renewable energy producers and energy grids. In my view, the arguments boil down to the tradeoff between network security and energy consumption.

2. Gemini Acquires Trading Technology Platform Omniex, Launches Gemini Prime
Gemini is going hard after institutional traders. On Thursday, the crypto-exchange owned by the Winklevoss twins announced the acquisition of Omniex, "a trading technology platform that provides order, execution, and portfolio management system solutions for institutional crypto trading." The acquisition enables Gemini to publicly launch a crypto prime brokerage business to serve institutional clients. According to the post announcing the acquisition, the new business, Gemini Prime, will offer:

- A single point of access to multiple exchanges and OTC liquidity sources
- Sophisticated tools and algorithms to ensure best execution and trade transparency
- An institutional-grade trading experience with full API connectivity

While these services won't impact or even be available to typical retail investors, it's basically a giant sign that says "THE INSTITUTIONS ARE HERE AND MORE ARE COMING."

SSS: Gemini announced the acquisition of Omniex, a trading technology platform, that will help them publicly launch their prime brokerage offering. Prime brokerage services are tailored to institutional investors and the fact that Gemini is investing heavily in this space indicates they are seeing demand from institutional players.

3. Altcoin Friday #6 - IOTA ($MIOTA)

Overview:
- Current price (as of this writing) of $.9611
- Market capitalization of $2.67 billion (48th overall)
- IOTA is a permissionless distributed ledger focused on the Internet of Things and aims to grow the machine economy by "enabling fee-less machine-to-machine payments" and providing improved scalability over blockchain networks
- IOTA is built on The Tangle, which is a Directed Acyclic Graph and not a blockchain

What is the Tangle?
The Tangle is still a distributed ledger, but unlike a blockchain that has only a single point at which new transactions can be added to the existing chain, the Tangle allows multiple points to attach new transactions or messages. The image below helps to visualize how this works in practice.

Sending messages in IOTA requires no fees as there are no miners or stakers which allows for very high transaction throughput.

IOTA Use Cases:
- Mobility and Automotive - enables communication and payments between vehicles and their immediate connected environments
- Global Trade & Supply Chains - allows supply chain participants to share trusted data and control access privileges for users on an end-to-end basis
- Industrial Internet of Things - empowers devices to communicate securely, exchange data, make payments, and creates an immutable audit trail of transactions

Note: Additional research from Binance can be found here, while the IOTA docs can be found here

4. Facebook and Instagram are reportedly exploring plans to make, showcase, and sell NFTs
It was really only a matter of time until Meta moved into the NFT space with Facebook and Instagram. Meta has been "actively exploring" NFTs for some time, but it looks like they are getting close to rolling out NFT capabilities on their platforms. According to a report from the Financial Times, the company is "readying" a feature to allow users to display NFTs as their profile pictures, working on a project that would let users to mint their own NFTs, and discussing launching their own NFT marketplace. No timeline for these rollouts is available, but I for one, cannot wait for my mom to mint the picture of our family vacation to New York that has been her profile picture for the last 8 years.

SSS: Meta is planning to roll out NFT features on Facebook and Instagram and also discussing the launch of their own NFT marketplace. It's big news a company of Meta's size is taking NFTs seriously, but I question how the decentralized ethos of crypto and web3 will mesh with a highly centralized company like Meta.

5. @punk6529 closing out the week
Have a good weekend!

Top Sharers of the Crypto Top 5:
1. Donna Y. - Nashville, TN
2. Jake Y. - Greenville, SC
3. Forrest H. - Evansville, IN

Weekend Reading:

Miners are the Optimal Buyers: The Data Behind Bitcoin-led Decarbonization in Texas - a longer piece on Bitcoin energy consumption from Nic Carter and Shaun Connell that uses Bitcoin miners in Texas to investigate demand response economics and the effect on the renewable grids

External Resources:
1. Cryptopedia from Gemini - if you see a word, acronym, or phrase in this newsletter that you don't understand, there's a good chance you can find an explanation here
2. Crypto Explainer+ - intro level courses on Bitcoin, Ethereum, decentralized finance, NFTs, and more

Disclaimer: The information contained in this newsletter shall not be understood or construed as financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information provided is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.