A few widow-makers hanging over Bitcoin this week, and the post-halving miner capitulation has begun. What we're starting to see, and why, when we look back, this will be remembered as a wild week.
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LINKS:
- Travis Kling on X: "All at the same time
- Hashrate continues to fall.
- When Bitcoin drops to $62K it means miners enter limbo and the first circle of Dante’s Hell.
- The miner capitulation is over—bitcoin’s next bull run begins. - YouTube
- Bitcoin (BTC) Miner CleanSpark (CLSK) to Buy Peer Griid (GRDI) for $155M Enterprise Value
- First-quarter GDP grew a soft 1.4%, but the U.S. economy might have more ‘spring’ in its step - MarketWatch
- Fed Rate Cuts Latest: Favorite Underlying Inflation Gauge Is Seen Cooling - Bloomberg
- Dashboard | Truflation
- California Reveals All Job Gains In 2023 Were Fake
- Yahoo News clip
- Carl Louis on X FDIC Thread
- Muntiny Wallet: Updates after DNS issues
- Strike launches in the UK following European rollout
- Jack Dorsey & Lyn Alden | The Power of Open Source - YouTube
- BBC coverage of Bitcoin since 2013
- Find my Nostr Public Key at ChrisLAS.com
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Unknown:
Welcome in to This Week in Bitcoin, episode 16. My name is Chris. If you're listening to this episode around release time, I think we're watching in real time Bitcoin price in a bunch of historical stuff that we're about to talk about. And if you're listening to this on a more long-term horizon, a year from now or more, I think you might look back at this as a mile marker week for 2004. I did that last week, too. It's going to fundamentally change things on the ground for Bitcoin. Also, we got some data this week that shows that maybe those ETF purchasers don't have such paper hands after all.
They've seen some of the first major price shakeouts since ETFs launched and on scale, they're holding. So welcome to the class of 2024. It has been a wild weekend change. All at the same time, the U.S. government is selling seized Bitcoin from multiple different legal cases, one of them being Silk Road. So is the German government. Tons of Bitcoin from one of their movie 2K cases. And Mt. Gox announced it's distributing its Bitcoin after a decade. Now, the governments are going right to spot market. Mt. Gox ought to be returning the funds to users. We'll be talking about that in a little bit. But that's just the small stuff. The bigger thing happening that's finally really taking place is the post-halving minor capitulation.
It's happening later than expected. Typically, if you look at past cycles, it happens roughly 30 days after the halving. But this cycle, we're just about 70 days post halving, and it does seem to be happening now. And I'll give you some of the data we have around that. But I wanted to back up a second, not get into this too fast, and maybe explain what this miner capitulation event is about. And Joe Burnett from Unchained Capital and on YouTube has a pretty solid explanation. What does this mean? Well, weak miners have mostly finished shutting off the energy-hungry machines used to mine Bitcoin.
In my view, once these miner capitulations occur and then end, they are incredibly bullish for bitcoin. The only natural seller of real spot bitcoin is miners. They are the only entities naturally selling billions of dollars worth of bitcoin every year to pay for their electricity expenses. The end of a miner capitulation has historically marked bottoms in the price of bitcoin. Bitcoin. Why? Miner capitulations are intense and real. This means Bitcoin ASICs plugged into hundreds of megawatts worth of power are actively being turned off.
Just so you know, only 100 megawatts worth of power is roughly equal to 100,000 homes no longer paying their power bill. And these miners that are actively turning off are the least efficient miners on the network. They're using the oldest Bitcoin ASICs and they have the most expensive electricity rates. These miners are effectively going out of business, defaulting on energy contracts, breaking land leases, and selling any spare Bitcoin they might have just to attempt to stay in business. At the end of these miner capitulations, only the strongest miners remain. main. And these are the miners that have less Bitcoin to sell on a daily or monthly basis because their expenses are less than the inefficient miners.
As Joe puts it, I'll link to his video. It's a brutal event. I mean, it is sometimes the death of a business or sometimes the sale of a business. CleanSpark announced that they're buying Grid. So if you're familiar with, I think it's Harry Strutt or something, if you've seen him on some of the other podcasts out there, his company, Grid Infrastructure, is going to be owned now by CleanSpark. And at $155 million purchase of all stock. So you have these kind of actual business changing things happening. But why did it take this long? Why did it take 70 days? Why did it take almost more than double the time that it typically does?
Well, I've got a hypothesis. And it goes something like this. And I'd like to know what you think of this. The ETF funds, of course, let's start there. They're buying Bitcoin OTC over the counter like crazy from the miners. They've built out relationships with the miners. And the miners are happy to sell around 70,000. right? They're making a nice, tidy profit. So that's obviously one of them. But I think the other thing that hasn't gotten as much attention but was different this having was ordinals. Ordinals gave miners a nice injection of fee profits. So it gave them more runway. I think that made a difference too, for better or for worse.
It's really hard to measure this kind of stuff while you're inside the storm. But as the storm begins to clear, you start to get a better picture than once the storm's passed. You know, you can survey the damage, and I think that's kind of where we're at. The storm's clearing. We're not through it yet, I suspect. Bob Burnett, he's the founder and CEO at Barefoot Mining. This is what he said this week. When Bitcoin drops to $62,000, it means miners enter limbo and the first circle of Dante's hell. At $61,000, they descend another level into hell. The heat turns up, and the profuse sweating commences.
At 60,000, they descend to a level three, and the mashing of teeth occurs. At 59,000, you'll hear them whimper and cry for mommy. At 58,000, they reach level five, and the stench you smell is their hair on fire. At 57, they reach level six, and their flesh begins to bubble. At 56,000, they plead for mercy, mercy killing, he says. And at 55, their flesh is turned black, and eerie silence ensues. At $54,000, they reach the full depths of hell and turn to ashes. So that's what he's trying to get to is even these, you know, couple thousand dollar price movements right now are just life and death for these miners.
And Matt Kimmel from CoinShares, he kind of thinks we're probably in a standard cycle. He has this theory, kind of like I do, that we go through this every time. And he's talked about this before. And so miners are the laborers that are sort of adding transactions to the Bitcoin blockchain. And we're in the middle of a minor capitulation stage. And once we reach full capitulation amongst Bitcoin miners, the sort of excess supply that they have currently been releasing and selling into the Bitcoin market could soon dry up. And that means they could again begin sort of accumulating Bitcoin as they have done historically.
Maybe it's a million dollar Bitcoin, but there might be a price point where you're actually willing to sell and take a little profit. But these government agencies or like the Mt. Gox stuff, that's not their angle at all with their stash. They're just going through a process, a legal process. And when they reach the end of that process, they're going to put them on the spot market. So you can kind of think of these Satoshis that these institutions own as kind of hanging over the market. Kind of like widow makers in the forest that could fall down and knock out a great bull run at any moment.
So in a way, it's like Bitcoin's healing at the perfect time. The minor capitulation's happening. These government coins are getting dumped on the market. It's all kind of lining up really well and kind of tidy. You know, these Mt. Gox coins have been in bankruptcy process for 10 years. I would have been, I just didn't want to go through it. I estimate I lost somewhere between 15 and 30 Bitcoin, at least on Mt. Gox. It might have been more than that. But I just couldn't bring myself to go through the process. But beginning in July, they're going to start redistributing those coins back, Bitcoin and Bitcoin Cash, back to the original owners that participated in this process.
And when they do that, those owners will then have the choice to sell or not. We just don't really know. And it's going to kind of go between July and October. Some of them may choose to sell. Some of them may choose not to. I kind of suspect a lot of them are just going to keep hodling. Why not? So I don't think we're quite out of all of it yet, but things do seem to be moving right along and we do kind of seem to be on our way, at least. Music. Thanks for watching. Of course, that could always be taken out at its knees if the U.S. economy were to crash. And I want to make it clear, I think this really matters for Bitcoin.
U.S. liquidity is driving the Bitcoin price performance and also driving the adoption of traditional finance. All of this is kind of like the next stage of Bitcoin scale and user adoption. And I think a good portion of it, from where I'm sitting, seems to be dramatically impacted by what happens in the U.S. right now. And so if the U.S. economy were to dramatically crash or slow, it's likely Bitcoin would dramatically crash or slow in terms of adoption, deployment, in both the sense of ownership and in the sense of like platforms. And we got some data today as I record. The first quarter GDP grew softer than expected at 1.4%. And if you dig into that 1.4% growth, you're likely going to find it's mostly military contractors and anybody related to the war in Ukraine.
Thing is, when you look at the numbers for people, it's not so good. So consumer spending, which is the main driver of the economy, rose at the slowest rate in a year and a half. It's a big markdown. First numbers came out, looked okay. But then the second set of numbers that were revised came out and we saw a big markdown. Now, I want to put all this in perspective. We're not talking about anything that's just like next week, right? This is stuff that is slow moving. It takes a while for it to hit. It's stuff that is headwinds that are way out there right now, at least seemingly.
But I watched this interview with this big money manager gal. She works for like private billionaires and she manages their wealth for them. And she does seem to know her stuff. I've seen her interviewed several times. And she thinks it's a lock that there's no crash at all this year, that we're probably going to have the Treasury step in. We're going to have the Fed step in. We're probably set to go for the rest of 2024. Well, we're not concerned about the market. Right. And Carl, we've talked about this every time I'm on. It's an election year. The Fed is pumping so much money into the system, far outweighing any impacts of tightening.
And that's going to continue. You know, Yellen is an appointed position. The president has a lot of tools at his disposal to support the market and the economy so that a negative market or economy is not going to be something that's going to influence the reelection campaign. In a presidential year, right? Yeah, and a presidential year, which this is a double presidential re-election year. She just openly says the quiet part out loud, and that is that Jerome Powell and Janet Yellen are political players that respond to political pressure. And she's so confident she's going to bet her clients money on that.
And then on top of that, she's going to go on CNBC television and state her reputation, which matters in this industry, on this. She's convinced they're political actors. And I think she's right. In part you could just see their internal logic. Well, they don't want to disrupt anything during the election, right? The best way to maintain the election is to just keep everything smooth in the economy. When in reality, what they're kind of implicitly not saying is things would be falling apart if we didn't step in, and that would be bad for the candidate, right? So that's what they're implicitly not saying.
But you could see how they self-internalize it as well in order to keep things smooth, keep things humming along so people can focus on the election. And so the election can go fairly and smoothly, we're going to step in and make sure the economy doesn't have any bumps. So that a negative market or economy is not going to be something that's going to influence the re-election campaign. In a presidential year, right? Yeah, in a presidential year, which this is a double presidential re-election year. So we just think that this market is supported for the year. It doesn't mean we don't have concerns next year after the election.
And it doesn't mean that we don't have concerns globally. globally and, you know, what does that mean for other asset classes. But we are confident that in the U.S. large cap space that the market will continue its run through the year. As the Fed is tightening in higher for longer rates, you're also focused on consumer spending and the changing patterns therein, looking at, you know, the increasingly prevalent pattern of the needs outcrowding the wants in terms of how consumers are thinking about what they're buying right now. Now, does that suggest to you that there are cracks forming in the economy that may not be as indicated by some of the data that we're conventionally watching?
There are definitely cracks in the system, and I think those will come to play probably next year. But we're seeing a big dispersion between high-income households and low-income households. You notice she said this twice now, next year. Next year. Like, she's not quite saying what she expects, but she expects something bad to happen next year. We'll come back to that. She's about to talk about the dispersion between high income households and low income households and how high income households are hardly even feeling it. Low income households are really feeling the pinch.
That's no doubt true. But I don't think it's as black and white as that, right? I think it's, there's also people that are kind of caught in the middle that maybe you're going on one less trip that year. You know, maybe you're not buying the good stuff at the grocery store anymore, but you're still doing grocery store trips. You know, you're cutting back in areas, but you're still buying in other areas. And I think that is probably happening across the board, even for the wealthy. You know, I have a conversation with a family member who's well off and they clearly are trying to make cuts as well.
You know, they don't get rich by spending a bunch of money. So I don't necessarily agree with her next take completely. But if you were just going by the data, it does seem to indicate this is true. But we're seeing a big dispersion between high income households and low income households. We're seeing credit card debt tick up. We're seeing credit card delinquencies. And that's all in the lower income earners. You know, high income, they're continuing to spend on food and travel and experiences. And so there is this dispersion that we're seeing and that's going to have to come to play. I think once the government stops spending or stop spending as much, the tightening will take hold and that will play through the system.
It's certainly going to be more of a delayed effect than we've seen thus far. This is why the people need Bitcoin. When I met my wife, the average house price in the United States was going for about 400 Bitcoin. Now, the price of houses has skyrocketed since then, because this was well before the pandemic and all of that. Now, depending on where you're shopping, it's four or five Bitcoin, sometimes seven Bitcoin, you know, here in the Pacific Northwest. But we go from hundreds of Bitcoin to just a couple of Bitcoin in a few years. While that very thing, that commodity or that whatever you want to call the house, is exploding in price.
And people's credit card debt is exploding. The only thing that saves us from this is Bitcoin. People need Bitcoin. They're going to need to be able to take loans on their Bitcoin. They're going to need to spend their Bitcoin. They're going to need to be able to pay their taxes in Bitcoin because some of us sometimes just get our faces kicked in by the IRS. People need the solution. And if we zoom into the state level, the story gets even worse. California this week, for example, and I suspect this is true probably for some other states out there as well, has revised their job numbers.
Now, we're looking at 2023 right now, but their gains in 2023 were initially reported as very substantial. But a recent report from the California Legislative Analyst Office, the LAO, reveals that all of the gains were illusionary. In fact, there was no net job growth for the whole year. California actually lost 32,000 jobs from September to December of 2023. For the entire year of 2023, California essentially saw no net job growth. Only 9,000 jobs added after all the revisions total for the whole state. Huge state. Huge state. Now, we don't have this number for 2024 yet, obviously, but what it shows us is there's two different systems at work here.
There's the real-time employment counting system that we kind of go on month to month that has been completely broken at the state level and at the federal level. The federal numbers get revised every month as well, downward. There's a massive discrepancy between the early and the revised data every single time. It's a trend. And I think this situation in California probably reflects a broader issue in the U.S. labor market reporting system, suggesting we probably have inflated job growth figures nationwide. And we may discover around this time or maybe a little earlier in 2025 that the very same was true for 2024.
In fact, would you be surprised at all if there was maybe a little more pressure during election year to have the numbers be juiced even more to make it just look a little better. And then you have the accounting office come back, oh, wait a minute, you triple counted here. So employment numbers matter because they've played a major role in the Fed's rate decisions since they started cutting. So they've been a huge factor, as well as the CPI and the core PCE numbers. And now we have ample evidence that shows us that all of these numbers are cooked. Cooked potentially the employment numbers we know they've been at least inaccurate consistently but they may be completely cooked if california is correct the cpi and.
Core pce numbers are ridiculous i could do a whole episode on how ridiculous and completely unworthy they are of being cited by anyone let alone the federal reserve so we're working off all of this fake data it seems entirely possible to me that in 2025 the bottom could fall out of this thing so boost in and tell Tell me what you think. Do you think we could see the bottom drop out after the election or maybe they time the rates just right? They could paper over these issues for a little bit. What do you think? Does the Fed juice it just right?
Hit the hit the veins of the market with them sweet rates and walk it down and the money starts flowing in and just papers over all this? Or does the bottom drop out after the election? Where does this go? Or, you know, the only thing that has been on my mind, and I'd love to know your insights on this as well, listener. Doesn't it feel like since COVID, every month we've been talking about a recession and it just doesn't arrive? It just doesn't show up. So maybe my take is wrong, but I look at this and I see we have all these fake numbers and now we have these employment revisions.
We have this $35 trillion debt. It just doesn't seem sustainable. But the one thing they've been able to prove my whole life is they can kick that can much longer than I ever thought possible. So boost in, tell Tell me what you think. Music. All right, coming up next, my take on why we are in some of this mess to begin with, some important project updates big time, and your boosts. But first, I want to thank Podhome.fm. Go use my promo code TWIB and get three months free at Podhome.fm. The premier podcasting 2.0 hosting platform, my hosting platform of choice with unlimited shows and episodes powered by unlimited Podhome AI.
Yeah, its tools will balance your audio and transcribe your podcast. It'll automatically create chapters and even suggest episode and title suggestions and all that. But you can go in and then curate it as well. The UI makes it really easy to do that. And Podhome has brilliant live streaming. If you'd like to do that, it supports value for value. If you want to take boosts and do value for value music. And it's fast. Podhome focuses on solving problems of come around publishing to just make it a pain after years. Podhome comes in and smooth Moves that stuff out. It's like you got a team in your back pocket.
It's my hosting platform of choice. Go check it out. Unlimited shows, unlimited episodes with unlimited Podhome AI. Use the promo code TWIB and get three months for free. And go treat yourself right. Get yourself some features that make you stand out. That's the thing. The podcasting 2.0 stuff makes you stand out. And if you want to spend some sass on the Lightning Network and you use the Bitcoin company, You can use my promo code Jupiter to take a little bit off and it sends some sats towards the show. The Bitcoin Company on the app or on the web and use the promo code Jupiter and send some sats towards the show when you spend sats over the Lightning Network.
It's pretty slick. It's one of my favorite ways to grab stuff, you know, if I was going to spend some sats. That's how I do it. The Bitcoin Company dot com and Pothome dot FM. Lazy Locks comes in with 10,000 sats. You're not going to believe this. I hate to say it, but you are our baller. That's the reality. You are our baller this week, so thank you, Lazy Locks. Oh, what? What, you want your clip? Fine. Here. You got your lobster. I kid. I really appreciate it, Lazy Locks. He says, time for another boost. You know what? You nailed that timing, didn't you? I think that might be the cheapest baller boost in the history of the show so far.
Oppie 1984 comes in with 4,000 sats. Make it so. Symbol X is cool, though I have yet to get anyone to actually use it in my orbit, but I still love the idea. Another thing that you should look into is Meshtastic. It uses LoRa, or L-O-R-A standard, to create a local mesh network for basic text messaging. The boards are cheap and easy to set up, and if you want to expand your coverage, you can just connect to a node. You connect a node to MQTT, get it on the internet. It might not be the most practical thing for day-to-day messaging, but fun, low-cost, no-license radio hobby. like GRMS and amateur radio.
Okay, so Appi, I've heard a couple of people mention Meshtastic to me. And so my question is, what's the range like? Could I be like 40 miles away and message the kids? Because there's kind of like this stretch on the I-5 corridor where the family's kind of spread out. And we're very prone to earthquakes and heck, even volcanoes. So I thought if there's ever a disaster, I'd really like something outside the cellular network, outside the data networks to get a hold of them. Maybe Meshtastic would be right for that. I honestly don't know. So if you have an opinion, please let me know.
Jordan Bravo comes in with 5,555 sats. Maybe mining should be called unlocking Bitcoin because arguably all 21 million Bitcoin already exist. It's just that they haven't all been unlocked yet. Here's another idea. My wife suggested mining should be called something that relates to its function, such as verifying transactions. Those are all really good. Time releasing Bitcoin could be another one. One, verifying transactions I think I like the best, you know, because you could argue the Visa network and the MasterCard network and the banks take tons and tons of electricity that they're not public about, like Bitcoin is, to verify transactions.
And so we already pay an enormous electrical cost for that. And it seems like everybody's OK with that. It's a good one. Jordan Bravo, you got a keeper there. Thank you for the boost. The golden dragon comes in with a classic row of ducks. Number go up. It seems to me that the number does go up when they're having in general market pressures. But for a hardware wallet, if you can get a Pi Zero, SeedSigner is amazing. You know, I really like the idea of SeedSigner. I have heard a couple of people articulate arguments against SeedSigner. So I have been particularly hoping somebody would boost in with an opinion on SeedSigner.
And I think this is the second SeedSigner mention we've gotten. I'm still looking to collect information because I've heard that they're not maybe as secure as some of the other device options. But that could be fun and it's nice to be able to build your own and you know you could use something that doesn't look like a bitcoin wallet you know it just looks like a stupid raspberry pi or something I got plenty of those, just pull it out of the drawer look this guy's got a raspberry pi no big deal you know but you pull out something like a cold card or a trezor you know immediately oh this is a crypto wallet, So that's something to think about. Thank you.
Appreciate it, Dragon. The tone record comes in with 3,333 cents. The traders love the vol. Great episode again, he says. Concerning the term mining as a point of confusion with the production activity, I found the following helpful. All 21 million Bitcoin already exist, but they are inaccessible and locked or frozen in time until future blocks are found and they're made available or unlocked from the block they reside within. in. So another pitch for unlocking Bitcoin. Yeah, I don't mind it. I think the only problem besides, so verifying transactions, you know, kind of makes sense. People get that.
It's not as accurate. I think unlocking Bitcoin is probably more accurate. I do have an episode that gets into the Bitcoin time chain. If you're wondering what the heck we're talking about, go look at the back catalog. We dig into that. It's kind of a mind blower, but I think it's a great way to think about the blockchain. VCP comes in with 3,000 sats. That's not possible. Nothing can do that. It's obviously possible. He says your breakdown of the NVIDIA price pump and the Texas energy grid were so good. I'm going back to listen to the whole episode again. All signal, no noise.
Thanks, VCP. I appreciate the return of value. It keeps this little thing going. Thank you very much. Gene Bean comes in with 2,048 sats. Hell no. No one other than my family is adjusting my thermostat. That's one reason I have I have a Z-Wave thermostat now. Yeah. Although you still haven't told me which Z-Wave thermostat, Gene Bean, because I really am looking. My Wi-Fi thermostat, which is some weird brand that you'll never find, just completely factory reset itself. And now it's no longer on the Wi-Fi. And I can't be bothered. Z-Wave would be preferable. But I'd asked you guys last week if you'd be down for the energy grid coming in and turning your AC essentially from, like, say, 72 degrees to 84 degrees.
Gene Bean's the only one that took me up on the question, though. I guess the rest of you are all okay with it. That's the conclusion, obviously. Shout out to Gene Bean. Appreciate the thoughts. All right. Next boost comes from BHH32. I wonder if that stands. BHH32. I feel like I almost know what that stands for. With 5,000 sats. Oh, okay. He also has a thermostat response. I would never allow someone to install a thermostat or device in my home that can reach and dictate what goes on. This is beyond invasion of privacy and getting into the realm of dictatorship. My military service was for the land of the free.
Free as in freedom. Not free as in beer. BHH, thank you. I appreciate you also jumping in on that. I was curious. You know, you never know, man. I live in Seattle. You never believe what people would be down with. Ace Ackerman comes in with, look, a double production. Look at that. And he says, value for value, episode 14. Thank you, Ace. Always good to hear from you. Appreciate it very much. DPG comes in with 3,333 sats. A pro tip for Americans looking to turn cash into Bitcoin. You can deposit up to $1,000 into the Cash app at many retailers like Kroger and Walgreens for a flat fee of $1. From there, you can swap to Bitcoin and even Lightning in-app.
This is very KYC granted, but it sure beats those outrageous Bitcoin ATMs. I had no idea you could deposit into the Cash App at retailers like Kroger and Walgreens. I had no idea. That's really cool. I know Swan right now has like no fees on your first 10,000 Bitcoin. I don't know what, I guess 10,000 in USD. I'm not quite sure. So that's something to keep in mind too. I still think River is probably the way to go because it has lightning. Cash App has lightning too though. So the nice thing about Lightning is you can at least then peg into liquid, peg out really easily and cheap, and you can break some of that on-chain analysis.
You won't break the fact that you KYC'd. They'll still have a record. So you're not getting away with anything other than people being able to track what you spend your money on. And the Lightning network lets you move it around real cheap. So if you do stack with a KYC app, just my advice is try to have the requirement that you have yourself Lightning at least. And then I think you'll be all right. Thank you, everybody, who did boost in. That's kind of it. We had 15 boosters, not a bad amount, but we only stacked 42,434 sats. It's kind of getting rough, and I think maybe people are just getting a little exhausted out there, and I understand.
You know, it's a tricky thing, and to kind of make value for value sustainable, there's kind of a reciprocation on both ends, right? My proof of work here is the show, and then I hope that you validate that proof of work by boosting in and keeping things going. And I understand, you know, week after week, it does get tricky. But it is essential to the ongoing production. And if you'd like to boost in, just get a new podcast app. If you haven't tried out Fountain yet, it's one of the good ones at Podverse. It's open source and it's cross-platform.
You can also boost from the Fountain FM website. You can just search for This Week in Bitcoin over there and then send it in right through the web. Even if you don't have the Fountain app, you actually don't have to switch, but you might want to. All right. So why are we in this mess we are in today? And so few people seem to have any kind of financial literacy. I mean, I've been trying to understand this as I talk about Bitcoin to other audiences that just seem to really struggle to understand. I think it really comes down to people don't really understand how broken the fiat system is until they start to look at something like Bitcoin that's done right.
And so many people now have grown up within the system, trying to measure the system from within the system, and it's all they've ever known. And even our supposed experts are idiots. This is Yahoo Finance. And Yahoo Finance is one of the more respected online financial analyst firms. And their Yahoo Finance website is very popular and their lead anchor, who runs much of their most primetime television, seems to not understand the very basics of finance. You know, if you look at a world of full unpredictability, just once we have an unpredictability increasing, Bitcoin, I think it's a beacon of predictability in a world where you can predict anything pretty much.
This is her guest from Swan, and she's about to jump in now. I don't think if you look at a price chart of Bitcoin, you would say it's a beacon of predictability. And 2% inflation means growth. Let's stop there before we get to the... If you look at the price chart of Bitcoin, I don't think it means a beacon of predictability. I don't think if you look at a price chart of Bitcoin, you would say it's a beacon of predictability. The first failure of somebody who's supposed to be a financial expert would be to look at the hourly price chart. You got to be an idiot. Maybe you look at the 200 moving average. Maybe you zoom out and look how it's performed over the last decade.
You know, then you start to better understand the kind of returns you see from this asset. But more of a sin, a fundamental understanding is missing here. How does price go up without volatility? Somebody tell me that. And I'd like her to answer that. Number only go up if number also go down. That's how you shake things out. That's how you establish prices. This is the nature of any volatile asset in its infancy. Always has been, always will be if it's a fair market. The only time it doesn't work like this is when it's a manipulated market. And perhaps we're just so used to that that these supposed experts don't actually know what a free open market actually looks like for price discovery.
Build, you know, in a world where you can predict anything pretty much. I don't think if you look at a price chart of Bitcoin, you would say it's a beacon of predictability. And 2% inflation means growth. So with growth comes inflation. Usually that's the way economics works. Although, yes, we've had very low inflation before this current regime, but I don't even know where to start here. The breath is literally taken away from me when I hear this. Usually we need 2% inflation for growth. The beacon of predictability. And 2% inflation means growth. So with growth comes inflation.
Usually that's the way economics works. Although, yes, we've had very low inflation before this current regime. I'd invite you to go tell me anywhere where it's cited where that 2% inflation target comes from. It's just something that the banks have agreed on because it lets them quietly steal from you. A healthy market doesn't need inflation. This is Stockholm syndrome. And she's considered an expert. And she cuts the swan guy off. He never gets a chance to correct her. But this is Yahoo Finance. And they're considered one of the respectable ones. It's embarrassing. Their understanding is like inverse.
They think volatility is bad for price discovery. And they think inflation is good. It's fiat education. And it's not just the news actors. it goes all the way to the people inside the Treasury and the FDIC and the Federal Reserve. They are all low quality thinkers. I'm going to go a little bit back in time here. So get in the Wayback Machine with me. We're going to 2009, my friends, just after the big 2008 collapse, the finance market was just wrecked. But more importantly, I think in the context of this clip, The housing market was also wrecked. And the FDIC chair at the time, and she's well-respected, you could kind of see the way she thinks.
And the way they think is this sort of set-in-stone thing. Never going to change, the U.S. government will always be the reserve currency of the world kind of mindset. And so then they can act and plan based on that. And it's just without question. And this clip kind of demonstrates the way they think, which I think is low quality. FDIC Chairman Sheila Baer is a former treasury official and professor of finance who's written children's books on the wisdom of saving. Maybe some of the CEOs on Wall Street should Should have read the children's books. Maybe so. Maybe so. I already don't like her.
I mean, it's so smug to assume that this bureaucrat is smarter than the CEOs on Wall Street. So much smarter that they should have read her children's book. That's how smart she is. Some of the CEOs on Wall Street should have read the children's books. Maybe so. Maybe so. Bear warned two years ago that bad mortgages threatened the financial system. Now she's managing the biggest bank failures in years, including the collapse of Washington Mutual and last summer's sudden failure of IndyMac in California. I like that these dramatic failures that are equivalent to like an absolute collapse are talked about like, well, she's on top of it. She's managing it.
This destruction that's happening to middle class wealth and to jobs and entire companies and this inability to get your money. It's all being managed by this woman. She's on top of it. Don't worry about it. We were told we would get in. Stay open an extra hour. When IndyMac failed, you were watching these scenes on television of people lining up outside the bank like it was 1932. Yes, it was. It was amazing. What did you think of that? I think people just forgot that banks do fail and how the FDIC works. Their money was safe. It was probably the safest place in the world to have your money because we were an operating institution at that point.
What sort of hit was that on your balance sheet? I think we ended up to, it was over $9 billion for a $33 billion, yes, it was very stiff. The question becomes. How many times can the FDIC do that? At what point is the FDIC broke? The FDIC is backed by the full faith and credit of the United States government. So if we need to, we try not to and don't want to, but if we need to, we can borrow from Treasury to make up for any shortfall. So the FDIC never goes broke? We don't go broke. No, we are the government. We're backed by the full faith and credit of the United States government.
Oh, I'm sorry to say, unfortunately, the FDIC seems to be broke. Now, fast forward back to current time, and Carl Lewis has a fantastic thread that I'll link you to in the show notes, and he writes, although the designated reserves managed by the FDIC were intended to be at least 2% of actual, or I'm sorry, although were intended to be at least 2%, actual was closer to 1%, he writes. In other words, the FDIC only has 1.15% of its total insured deposits in reserves. So since I botched that a little bit, I'll just make it clear. Right now, at the end of June in 2024, the FDIC only has 1.15% of total insured deposits in its reserves.
If other banks, he goes on to write, have similar FDIC insured ratios as the top 30 banks, then there are at least up to $16 trillion of deposits not insured or having any reserves. It's like the money doesn't exist and isn't backed by anything. Quote, what is the money would be the greatest question of the century if we were to have a major banking crisis. The thread has charts and data. I mean, it's great. That's just one of the many things it touches on. So in 2009, she said it three times, the FDIC could never go broke. In 2004, well, the full faith and credit of the U.S. government is $35 trillion in debt.
And the FDIC has 1.15% of total insured deposits and reserves. Doesn't seem like that's a great position to be in. Again, again, I don't really necessarily even say this with any delight, but Bitcoin does fix this. Some important project updates I'd like you to know about. I love the Mutiny wallet, and it was a little unfortunate to see that they had to put out a PSA about some of the functionality of Fedements being degraded due to DNS issues. And they've been providing updates really reliable. I do think some people have been having trouble getting their funds. You know, the Fedements system is still kind of new. It's rough.
It's one of the reasons why I haven't really talked about it much on the show. So I am very hopeful and I remain just a pretty happy liquid user for this type of task, but I would love to replace liquid one day with a Fetament and something I could trust. It just seems like some of the stuff needs to be worked out. So if you've used this functionality of Mutiny Wallet, I'd love to hear from you. Really encourage you to check the links in the show notes because there are some steps you might be able to follow to get funds out. It does seem like maybe some folks lost some money. I'm not sure.
Not a great situation, but it is early days there. The Mutiny Wallet remains really great, and the team was really on top of this, disabling functionality that would get people in trouble and kind of cleaning things up as fast as they could. So that was really good to see. And then there's a really good bit of news for the UK this week. Strike has launched in the UK following their European rollout. Strike's a really solid Bitcoin-only app, and it's a good tight team that's working on making the experience the best possible. Strike also integrates with Fountain to make boosts really easy.
And Strike's on the Lightning Network with, I think, free withdrawals too, on-chain or Lightning, which is a great deal, especially during high transaction fees. So Strikes really focused, they're really honed in on Bitcoin and Lightning and trying to give you a good wallet and something you can purchase your sats with and then send it around wherever you want. And it's so fantastic to see it come to the UK. I think this is one of those apps that's a little misunderstood in our community. And I think people should give it a second look because it's pretty good. All right. Are we ready for our final clip of the week?
Bitcoiners should always be thinking with a long time, time preference, right? Right. Thinking for the like 30 years out, you want your health to be good. Right. You want your family to be good. You want to be planning to be able to get access to your generational wealth. And you need to take care and note of your information diet, which I think is a critical aspect to your mental health. But really how you think about the world and how you make decisions, how this stuff lands in your brain and it kind of soaks in and you kind of make your world decisions and views based off that information you take in.
Something I think a lot about with this show. Try to make it high signal. And it's something Jack Dorsey and Lynn Alden were discussing recently at the also Freedom Forum. And Lynn asked Jack on his thoughts on open source algorithms and how these closed black box algorithms could be impacting society. You'll recall Jack Dorsey, of course, former CEO of Twitter, probably has a little bit of insight here. This is going to sound a little bit crazy, but I think the free speech debate is a complete distraction right now. I think the real debate should be about free will.
And we feel it right now, because we are being programmed. We're being programmed based on what we say we're interested in, and we are told through these discovery mechanisms what is interesting, and as we engage and interact with this content, the algorithm continues to build more and more of this bias. But the algorithm, even if it's open source, is effectively a black box. You cannot predict 100% of the time how it's going to work, what it's going to show you. And it can be moved and changed at any time. And because people become so dependent upon it, it's actually changing and impacting the agency we have, the free agency we have.
And I think the only answer to this is not to work harder at open source in algorithms or making them more explainable about what they're doing and why they're doing it, but to give people choice. Give people choice of what algorithm they want to use from a party that they trust. Give people choice to build their own algorithm that they can plug in on top of these networks. And that's really the biggest problem and why these corporations became so large and so valuable is because they solved the discovery problem on the internet. We talk a lot about the public square.
But the public square cannot be owned by one company. The public square, by default, is the internet. But the problem with the public square is it's very hard to discover and to be matched with the things that you're truly interested in. And that's where the value of a Google came in. It helps you discover. That's where the value of a Facebook, it helps you discover your friends. The value of a Twitter helps you discover news and interesting content of the day. But if we can solve the discovery problem in an open source way, in a free agency way, that you get to choose, how you see the world and what algorithms you're using and you know more or less how they're how they're working and that you can turn them off and see everything otherwise it really is attacking, free will it's it's programming how we think and we can resist it all we want but it knows us better than we know us because we tell it our preferences implicitly and explicitly all the time and it just It just feels super dangerous to continue to rely upon that without choice.
That was actually a really great talk. It was The Power of Open Source, and I think it's under 30 minutes. So I'll link to the whole thing in the show notes if you'd like to watch it. I recommend it. I think he's absolutely right, and that's why I've gotten more and more serious about Noster. If you'd like to find my public key, it's chrislass.com. I have it over there. But the reason why I think about this is you can see it even with legacy media. You know, if you think about what the legacy media chooses to show you, it's kind of like they're running their own algorithm, if you will.
And if you look up stats of Bitcoin acceptance and adoption, you'll notice it's really bad in the UK. Very unfavorable poll results, whereas, you know, 30, 40 percent favorable here in the States. And it's generally considered much less well-received when you do polling around Bitcoin and cryptocurrency in the UK. I've always wondered why that is, because they need Bitcoin just as badly, if not worse, than we do here in the States. And their inflation has been horrendous. And even years of horrendous inflation didn't shake them out of their opinion.
Now, again, you'll have to go look these up online. But there's been surveys. And just recently, on June 19th, there was surveys conducted of the BBC's coverage of Bitcoin since 2013. And when you go back through it, what you realize is that with three or four exceptions, all of the BBC's coverage since 2020-2013 has been negative or neutral. Only like four stories or so have been positive since 2013. And you might be wondering, well, how many times did they cover it? A lot. This chart, I'll put a link in the show notes, it shows you. A lot. Starting on April 12th, 2013, their first story, which was neutral.
But by 2014, 2015, they were getting pretty negative. And if you look at the last few years, really since May of 2020, all negative. But there's a lot of negative in between too. But it's just been consistently negative. And that's programming the population. And they're getting all warmed up over there with their CBDC too. They're going to be one of the first to get one. So they're all going to end up being crypto users. That's the irony of it. They're all going to end up being crypto users, even though when they're surveyed, they hate it. I just think that's so funny. And they're going to have the worst shit coin of them all, a CBDC, right?
So, you know, I mean, there's an irony in that. I laugh at it, I guess. But I'll put a link to that in the show notes because I think that data is just absolutely fascinating when you analyze the coverage of the BBC. Like I mentioned, chrislast.com for that Noster public key. Links to what I talked about today are thisweekinbitcoin.show. This is episode 16, so you can find episode 16 over there. Get the transcript, get the chapters, get the links to what we talked about today. Day i sure would appreciate a boost or if you shared this show with somebody who might be a little bitcoin curious and if you have a podcasting 2.0 show that you love send it in i'm trying to build out the community i really i really want this to be like the bitcoin news podcast for podcasting 2.0 so i'm trying to do reaching out to like different podcasters and just saying hello, so if you've got a favorite show out there boost in the name of it or send it through my contact page so i can reach out and say hello to them and we're gonna we're gonna wrap it up with a value for Value song like I love to do.
There's so many great ones these days. Music.
Welcome in to This Week in Bitcoin, episode 16. My name is Chris. If you're listening to this episode around release time, I think we're watching in real time Bitcoin price in a bunch of historical stuff that we're about to talk about. And if you're listening to this on a more long-term horizon, a year from now or more, I think you might look back at this as a mile marker week for 2004. I did that last week, too. It's going to fundamentally change things on the ground for Bitcoin. Also, we got some data this week that shows that maybe those ETF purchasers don't have such paper hands after all.
They've seen some of the first major price shakeouts since ETFs launched and on scale, they're holding. So welcome to the class of 2024. It has been a wild weekend change. All at the same time, the U.S. government is selling seized Bitcoin from multiple different legal cases, one of them being Silk Road. So is the German government. Tons of Bitcoin from one of their movie 2K cases. And Mt. Gox announced it's distributing its Bitcoin after a decade. Now, the governments are going right to spot market. Mt. Gox ought to be returning the funds to users. We'll be talking about that in a little bit. But that's just the small stuff. The bigger thing happening that's finally really taking place is the post-halving minor capitulation.
It's happening later than expected. Typically, if you look at past cycles, it happens roughly 30 days after the halving. But this cycle, we're just about 70 days post halving, and it does seem to be happening now. And I'll give you some of the data we have around that. But I wanted to back up a second, not get into this too fast, and maybe explain what this miner capitulation event is about. And Joe Burnett from Unchained Capital and on YouTube has a pretty solid explanation. What does this mean? Well, weak miners have mostly finished shutting off the energy-hungry machines used to mine Bitcoin.
In my view, once these miner capitulations occur and then end, they are incredibly bullish for bitcoin. The only natural seller of real spot bitcoin is miners. They are the only entities naturally selling billions of dollars worth of bitcoin every year to pay for their electricity expenses. The end of a miner capitulation has historically marked bottoms in the price of bitcoin. Bitcoin. Why? Miner capitulations are intense and real. This means Bitcoin ASICs plugged into hundreds of megawatts worth of power are actively being turned off.
Just so you know, only 100 megawatts worth of power is roughly equal to 100,000 homes no longer paying their power bill. And these miners that are actively turning off are the least efficient miners on the network. They're using the oldest Bitcoin ASICs and they have the most expensive electricity rates. These miners are effectively going out of business, defaulting on energy contracts, breaking land leases, and selling any spare Bitcoin they might have just to attempt to stay in business. At the end of these miner capitulations, only the strongest miners remain. main. And these are the miners that have less Bitcoin to sell on a daily or monthly basis because their expenses are less than the inefficient miners.
As Joe puts it, I'll link to his video. It's a brutal event. I mean, it is sometimes the death of a business or sometimes the sale of a business. CleanSpark announced that they're buying Grid. So if you're familiar with, I think it's Harry Strutt or something, if you've seen him on some of the other podcasts out there, his company, Grid Infrastructure, is going to be owned now by CleanSpark. And at $155 million purchase of all stock. So you have these kind of actual business changing things happening. But why did it take this long? Why did it take 70 days? Why did it take almost more than double the time that it typically does?
Well, I've got a hypothesis. And it goes something like this. And I'd like to know what you think of this. The ETF funds, of course, let's start there. They're buying Bitcoin OTC over the counter like crazy from the miners. They've built out relationships with the miners. And the miners are happy to sell around 70,000. right? They're making a nice, tidy profit. So that's obviously one of them. But I think the other thing that hasn't gotten as much attention but was different this having was ordinals. Ordinals gave miners a nice injection of fee profits. So it gave them more runway. I think that made a difference too, for better or for worse.
It's really hard to measure this kind of stuff while you're inside the storm. But as the storm begins to clear, you start to get a better picture than once the storm's passed. You know, you can survey the damage, and I think that's kind of where we're at. The storm's clearing. We're not through it yet, I suspect. Bob Burnett, he's the founder and CEO at Barefoot Mining. This is what he said this week. When Bitcoin drops to $62,000, it means miners enter limbo and the first circle of Dante's hell. At $61,000, they descend another level into hell. The heat turns up, and the profuse sweating commences.
At 60,000, they descend to a level three, and the mashing of teeth occurs. At 59,000, you'll hear them whimper and cry for mommy. At 58,000, they reach level five, and the stench you smell is their hair on fire. At 57, they reach level six, and their flesh begins to bubble. At 56,000, they plead for mercy, mercy killing, he says. And at 55, their flesh is turned black, and eerie silence ensues. At $54,000, they reach the full depths of hell and turn to ashes. So that's what he's trying to get to is even these, you know, couple thousand dollar price movements right now are just life and death for these miners.
And Matt Kimmel from CoinShares, he kind of thinks we're probably in a standard cycle. He has this theory, kind of like I do, that we go through this every time. And he's talked about this before. And so miners are the laborers that are sort of adding transactions to the Bitcoin blockchain. And we're in the middle of a minor capitulation stage. And once we reach full capitulation amongst Bitcoin miners, the sort of excess supply that they have currently been releasing and selling into the Bitcoin market could soon dry up. And that means they could again begin sort of accumulating Bitcoin as they have done historically.
Maybe it's a million dollar Bitcoin, but there might be a price point where you're actually willing to sell and take a little profit. But these government agencies or like the Mt. Gox stuff, that's not their angle at all with their stash. They're just going through a process, a legal process. And when they reach the end of that process, they're going to put them on the spot market. So you can kind of think of these Satoshis that these institutions own as kind of hanging over the market. Kind of like widow makers in the forest that could fall down and knock out a great bull run at any moment.
So in a way, it's like Bitcoin's healing at the perfect time. The minor capitulation's happening. These government coins are getting dumped on the market. It's all kind of lining up really well and kind of tidy. You know, these Mt. Gox coins have been in bankruptcy process for 10 years. I would have been, I just didn't want to go through it. I estimate I lost somewhere between 15 and 30 Bitcoin, at least on Mt. Gox. It might have been more than that. But I just couldn't bring myself to go through the process. But beginning in July, they're going to start redistributing those coins back, Bitcoin and Bitcoin Cash, back to the original owners that participated in this process.
And when they do that, those owners will then have the choice to sell or not. We just don't really know. And it's going to kind of go between July and October. Some of them may choose to sell. Some of them may choose not to. I kind of suspect a lot of them are just going to keep hodling. Why not? So I don't think we're quite out of all of it yet, but things do seem to be moving right along and we do kind of seem to be on our way, at least. Music. Thanks for watching. Of course, that could always be taken out at its knees if the U.S. economy were to crash. And I want to make it clear, I think this really matters for Bitcoin.
U.S. liquidity is driving the Bitcoin price performance and also driving the adoption of traditional finance. All of this is kind of like the next stage of Bitcoin scale and user adoption. And I think a good portion of it, from where I'm sitting, seems to be dramatically impacted by what happens in the U.S. right now. And so if the U.S. economy were to dramatically crash or slow, it's likely Bitcoin would dramatically crash or slow in terms of adoption, deployment, in both the sense of ownership and in the sense of like platforms. And we got some data today as I record. The first quarter GDP grew softer than expected at 1.4%. And if you dig into that 1.4% growth, you're likely going to find it's mostly military contractors and anybody related to the war in Ukraine.
Thing is, when you look at the numbers for people, it's not so good. So consumer spending, which is the main driver of the economy, rose at the slowest rate in a year and a half. It's a big markdown. First numbers came out, looked okay. But then the second set of numbers that were revised came out and we saw a big markdown. Now, I want to put all this in perspective. We're not talking about anything that's just like next week, right? This is stuff that is slow moving. It takes a while for it to hit. It's stuff that is headwinds that are way out there right now, at least seemingly.
But I watched this interview with this big money manager gal. She works for like private billionaires and she manages their wealth for them. And she does seem to know her stuff. I've seen her interviewed several times. And she thinks it's a lock that there's no crash at all this year, that we're probably going to have the Treasury step in. We're going to have the Fed step in. We're probably set to go for the rest of 2024. Well, we're not concerned about the market. Right. And Carl, we've talked about this every time I'm on. It's an election year. The Fed is pumping so much money into the system, far outweighing any impacts of tightening.
And that's going to continue. You know, Yellen is an appointed position. The president has a lot of tools at his disposal to support the market and the economy so that a negative market or economy is not going to be something that's going to influence the reelection campaign. In a presidential year, right? Yeah, and a presidential year, which this is a double presidential re-election year. She just openly says the quiet part out loud, and that is that Jerome Powell and Janet Yellen are political players that respond to political pressure. And she's so confident she's going to bet her clients money on that.
And then on top of that, she's going to go on CNBC television and state her reputation, which matters in this industry, on this. She's convinced they're political actors. And I think she's right. In part you could just see their internal logic. Well, they don't want to disrupt anything during the election, right? The best way to maintain the election is to just keep everything smooth in the economy. When in reality, what they're kind of implicitly not saying is things would be falling apart if we didn't step in, and that would be bad for the candidate, right? So that's what they're implicitly not saying.
But you could see how they self-internalize it as well in order to keep things smooth, keep things humming along so people can focus on the election. And so the election can go fairly and smoothly, we're going to step in and make sure the economy doesn't have any bumps. So that a negative market or economy is not going to be something that's going to influence the re-election campaign. In a presidential year, right? Yeah, in a presidential year, which this is a double presidential re-election year. So we just think that this market is supported for the year. It doesn't mean we don't have concerns next year after the election.
And it doesn't mean that we don't have concerns globally. globally and, you know, what does that mean for other asset classes. But we are confident that in the U.S. large cap space that the market will continue its run through the year. As the Fed is tightening in higher for longer rates, you're also focused on consumer spending and the changing patterns therein, looking at, you know, the increasingly prevalent pattern of the needs outcrowding the wants in terms of how consumers are thinking about what they're buying right now. Now, does that suggest to you that there are cracks forming in the economy that may not be as indicated by some of the data that we're conventionally watching?
There are definitely cracks in the system, and I think those will come to play probably next year. But we're seeing a big dispersion between high-income households and low-income households. You notice she said this twice now, next year. Next year. Like, she's not quite saying what she expects, but she expects something bad to happen next year. We'll come back to that. She's about to talk about the dispersion between high income households and low income households and how high income households are hardly even feeling it. Low income households are really feeling the pinch.
That's no doubt true. But I don't think it's as black and white as that, right? I think it's, there's also people that are kind of caught in the middle that maybe you're going on one less trip that year. You know, maybe you're not buying the good stuff at the grocery store anymore, but you're still doing grocery store trips. You know, you're cutting back in areas, but you're still buying in other areas. And I think that is probably happening across the board, even for the wealthy. You know, I have a conversation with a family member who's well off and they clearly are trying to make cuts as well.
You know, they don't get rich by spending a bunch of money. So I don't necessarily agree with her next take completely. But if you were just going by the data, it does seem to indicate this is true. But we're seeing a big dispersion between high income households and low income households. We're seeing credit card debt tick up. We're seeing credit card delinquencies. And that's all in the lower income earners. You know, high income, they're continuing to spend on food and travel and experiences. And so there is this dispersion that we're seeing and that's going to have to come to play. I think once the government stops spending or stop spending as much, the tightening will take hold and that will play through the system.
It's certainly going to be more of a delayed effect than we've seen thus far. This is why the people need Bitcoin. When I met my wife, the average house price in the United States was going for about 400 Bitcoin. Now, the price of houses has skyrocketed since then, because this was well before the pandemic and all of that. Now, depending on where you're shopping, it's four or five Bitcoin, sometimes seven Bitcoin, you know, here in the Pacific Northwest. But we go from hundreds of Bitcoin to just a couple of Bitcoin in a few years. While that very thing, that commodity or that whatever you want to call the house, is exploding in price.
And people's credit card debt is exploding. The only thing that saves us from this is Bitcoin. People need Bitcoin. They're going to need to be able to take loans on their Bitcoin. They're going to need to spend their Bitcoin. They're going to need to be able to pay their taxes in Bitcoin because some of us sometimes just get our faces kicked in by the IRS. People need the solution. And if we zoom into the state level, the story gets even worse. California this week, for example, and I suspect this is true probably for some other states out there as well, has revised their job numbers.
Now, we're looking at 2023 right now, but their gains in 2023 were initially reported as very substantial. But a recent report from the California Legislative Analyst Office, the LAO, reveals that all of the gains were illusionary. In fact, there was no net job growth for the whole year. California actually lost 32,000 jobs from September to December of 2023. For the entire year of 2023, California essentially saw no net job growth. Only 9,000 jobs added after all the revisions total for the whole state. Huge state. Huge state. Now, we don't have this number for 2024 yet, obviously, but what it shows us is there's two different systems at work here.
There's the real-time employment counting system that we kind of go on month to month that has been completely broken at the state level and at the federal level. The federal numbers get revised every month as well, downward. There's a massive discrepancy between the early and the revised data every single time. It's a trend. And I think this situation in California probably reflects a broader issue in the U.S. labor market reporting system, suggesting we probably have inflated job growth figures nationwide. And we may discover around this time or maybe a little earlier in 2025 that the very same was true for 2024.
In fact, would you be surprised at all if there was maybe a little more pressure during election year to have the numbers be juiced even more to make it just look a little better. And then you have the accounting office come back, oh, wait a minute, you triple counted here. So employment numbers matter because they've played a major role in the Fed's rate decisions since they started cutting. So they've been a huge factor, as well as the CPI and the core PCE numbers. And now we have ample evidence that shows us that all of these numbers are cooked. Cooked potentially the employment numbers we know they've been at least inaccurate consistently but they may be completely cooked if california is correct the cpi and.
Core pce numbers are ridiculous i could do a whole episode on how ridiculous and completely unworthy they are of being cited by anyone let alone the federal reserve so we're working off all of this fake data it seems entirely possible to me that in 2025 the bottom could fall out of this thing so boost in and tell Tell me what you think. Do you think we could see the bottom drop out after the election or maybe they time the rates just right? They could paper over these issues for a little bit. What do you think? Does the Fed juice it just right?
Hit the hit the veins of the market with them sweet rates and walk it down and the money starts flowing in and just papers over all this? Or does the bottom drop out after the election? Where does this go? Or, you know, the only thing that has been on my mind, and I'd love to know your insights on this as well, listener. Doesn't it feel like since COVID, every month we've been talking about a recession and it just doesn't arrive? It just doesn't show up. So maybe my take is wrong, but I look at this and I see we have all these fake numbers and now we have these employment revisions.
We have this $35 trillion debt. It just doesn't seem sustainable. But the one thing they've been able to prove my whole life is they can kick that can much longer than I ever thought possible. So boost in, tell Tell me what you think. Music. All right, coming up next, my take on why we are in some of this mess to begin with, some important project updates big time, and your boosts. But first, I want to thank Podhome.fm. Go use my promo code TWIB and get three months free at Podhome.fm. The premier podcasting 2.0 hosting platform, my hosting platform of choice with unlimited shows and episodes powered by unlimited Podhome AI.
Yeah, its tools will balance your audio and transcribe your podcast. It'll automatically create chapters and even suggest episode and title suggestions and all that. But you can go in and then curate it as well. The UI makes it really easy to do that. And Podhome has brilliant live streaming. If you'd like to do that, it supports value for value. If you want to take boosts and do value for value music. And it's fast. Podhome focuses on solving problems of come around publishing to just make it a pain after years. Podhome comes in and smooth Moves that stuff out. It's like you got a team in your back pocket.
It's my hosting platform of choice. Go check it out. Unlimited shows, unlimited episodes with unlimited Podhome AI. Use the promo code TWIB and get three months for free. And go treat yourself right. Get yourself some features that make you stand out. That's the thing. The podcasting 2.0 stuff makes you stand out. And if you want to spend some sass on the Lightning Network and you use the Bitcoin company, You can use my promo code Jupiter to take a little bit off and it sends some sats towards the show. The Bitcoin Company on the app or on the web and use the promo code Jupiter and send some sats towards the show when you spend sats over the Lightning Network.
It's pretty slick. It's one of my favorite ways to grab stuff, you know, if I was going to spend some sats. That's how I do it. The Bitcoin Company dot com and Pothome dot FM. Lazy Locks comes in with 10,000 sats. You're not going to believe this. I hate to say it, but you are our baller. That's the reality. You are our baller this week, so thank you, Lazy Locks. Oh, what? What, you want your clip? Fine. Here. You got your lobster. I kid. I really appreciate it, Lazy Locks. He says, time for another boost. You know what? You nailed that timing, didn't you? I think that might be the cheapest baller boost in the history of the show so far.
Oppie 1984 comes in with 4,000 sats. Make it so. Symbol X is cool, though I have yet to get anyone to actually use it in my orbit, but I still love the idea. Another thing that you should look into is Meshtastic. It uses LoRa, or L-O-R-A standard, to create a local mesh network for basic text messaging. The boards are cheap and easy to set up, and if you want to expand your coverage, you can just connect to a node. You connect a node to MQTT, get it on the internet. It might not be the most practical thing for day-to-day messaging, but fun, low-cost, no-license radio hobby. like GRMS and amateur radio.
Okay, so Appi, I've heard a couple of people mention Meshtastic to me. And so my question is, what's the range like? Could I be like 40 miles away and message the kids? Because there's kind of like this stretch on the I-5 corridor where the family's kind of spread out. And we're very prone to earthquakes and heck, even volcanoes. So I thought if there's ever a disaster, I'd really like something outside the cellular network, outside the data networks to get a hold of them. Maybe Meshtastic would be right for that. I honestly don't know. So if you have an opinion, please let me know.
Jordan Bravo comes in with 5,555 sats. Maybe mining should be called unlocking Bitcoin because arguably all 21 million Bitcoin already exist. It's just that they haven't all been unlocked yet. Here's another idea. My wife suggested mining should be called something that relates to its function, such as verifying transactions. Those are all really good. Time releasing Bitcoin could be another one. One, verifying transactions I think I like the best, you know, because you could argue the Visa network and the MasterCard network and the banks take tons and tons of electricity that they're not public about, like Bitcoin is, to verify transactions.
And so we already pay an enormous electrical cost for that. And it seems like everybody's OK with that. It's a good one. Jordan Bravo, you got a keeper there. Thank you for the boost. The golden dragon comes in with a classic row of ducks. Number go up. It seems to me that the number does go up when they're having in general market pressures. But for a hardware wallet, if you can get a Pi Zero, SeedSigner is amazing. You know, I really like the idea of SeedSigner. I have heard a couple of people articulate arguments against SeedSigner. So I have been particularly hoping somebody would boost in with an opinion on SeedSigner.
And I think this is the second SeedSigner mention we've gotten. I'm still looking to collect information because I've heard that they're not maybe as secure as some of the other device options. But that could be fun and it's nice to be able to build your own and you know you could use something that doesn't look like a bitcoin wallet you know it just looks like a stupid raspberry pi or something I got plenty of those, just pull it out of the drawer look this guy's got a raspberry pi no big deal you know but you pull out something like a cold card or a trezor you know immediately oh this is a crypto wallet, So that's something to think about. Thank you.
Appreciate it, Dragon. The tone record comes in with 3,333 cents. The traders love the vol. Great episode again, he says. Concerning the term mining as a point of confusion with the production activity, I found the following helpful. All 21 million Bitcoin already exist, but they are inaccessible and locked or frozen in time until future blocks are found and they're made available or unlocked from the block they reside within. in. So another pitch for unlocking Bitcoin. Yeah, I don't mind it. I think the only problem besides, so verifying transactions, you know, kind of makes sense. People get that.
It's not as accurate. I think unlocking Bitcoin is probably more accurate. I do have an episode that gets into the Bitcoin time chain. If you're wondering what the heck we're talking about, go look at the back catalog. We dig into that. It's kind of a mind blower, but I think it's a great way to think about the blockchain. VCP comes in with 3,000 sats. That's not possible. Nothing can do that. It's obviously possible. He says your breakdown of the NVIDIA price pump and the Texas energy grid were so good. I'm going back to listen to the whole episode again. All signal, no noise.
Thanks, VCP. I appreciate the return of value. It keeps this little thing going. Thank you very much. Gene Bean comes in with 2,048 sats. Hell no. No one other than my family is adjusting my thermostat. That's one reason I have I have a Z-Wave thermostat now. Yeah. Although you still haven't told me which Z-Wave thermostat, Gene Bean, because I really am looking. My Wi-Fi thermostat, which is some weird brand that you'll never find, just completely factory reset itself. And now it's no longer on the Wi-Fi. And I can't be bothered. Z-Wave would be preferable. But I'd asked you guys last week if you'd be down for the energy grid coming in and turning your AC essentially from, like, say, 72 degrees to 84 degrees.
Gene Bean's the only one that took me up on the question, though. I guess the rest of you are all okay with it. That's the conclusion, obviously. Shout out to Gene Bean. Appreciate the thoughts. All right. Next boost comes from BHH32. I wonder if that stands. BHH32. I feel like I almost know what that stands for. With 5,000 sats. Oh, okay. He also has a thermostat response. I would never allow someone to install a thermostat or device in my home that can reach and dictate what goes on. This is beyond invasion of privacy and getting into the realm of dictatorship. My military service was for the land of the free.
Free as in freedom. Not free as in beer. BHH, thank you. I appreciate you also jumping in on that. I was curious. You know, you never know, man. I live in Seattle. You never believe what people would be down with. Ace Ackerman comes in with, look, a double production. Look at that. And he says, value for value, episode 14. Thank you, Ace. Always good to hear from you. Appreciate it very much. DPG comes in with 3,333 sats. A pro tip for Americans looking to turn cash into Bitcoin. You can deposit up to $1,000 into the Cash app at many retailers like Kroger and Walgreens for a flat fee of $1. From there, you can swap to Bitcoin and even Lightning in-app.
This is very KYC granted, but it sure beats those outrageous Bitcoin ATMs. I had no idea you could deposit into the Cash App at retailers like Kroger and Walgreens. I had no idea. That's really cool. I know Swan right now has like no fees on your first 10,000 Bitcoin. I don't know what, I guess 10,000 in USD. I'm not quite sure. So that's something to keep in mind too. I still think River is probably the way to go because it has lightning. Cash App has lightning too though. So the nice thing about Lightning is you can at least then peg into liquid, peg out really easily and cheap, and you can break some of that on-chain analysis.
You won't break the fact that you KYC'd. They'll still have a record. So you're not getting away with anything other than people being able to track what you spend your money on. And the Lightning network lets you move it around real cheap. So if you do stack with a KYC app, just my advice is try to have the requirement that you have yourself Lightning at least. And then I think you'll be all right. Thank you, everybody, who did boost in. That's kind of it. We had 15 boosters, not a bad amount, but we only stacked 42,434 sats. It's kind of getting rough, and I think maybe people are just getting a little exhausted out there, and I understand.
You know, it's a tricky thing, and to kind of make value for value sustainable, there's kind of a reciprocation on both ends, right? My proof of work here is the show, and then I hope that you validate that proof of work by boosting in and keeping things going. And I understand, you know, week after week, it does get tricky. But it is essential to the ongoing production. And if you'd like to boost in, just get a new podcast app. If you haven't tried out Fountain yet, it's one of the good ones at Podverse. It's open source and it's cross-platform.
You can also boost from the Fountain FM website. You can just search for This Week in Bitcoin over there and then send it in right through the web. Even if you don't have the Fountain app, you actually don't have to switch, but you might want to. All right. So why are we in this mess we are in today? And so few people seem to have any kind of financial literacy. I mean, I've been trying to understand this as I talk about Bitcoin to other audiences that just seem to really struggle to understand. I think it really comes down to people don't really understand how broken the fiat system is until they start to look at something like Bitcoin that's done right.
And so many people now have grown up within the system, trying to measure the system from within the system, and it's all they've ever known. And even our supposed experts are idiots. This is Yahoo Finance. And Yahoo Finance is one of the more respected online financial analyst firms. And their Yahoo Finance website is very popular and their lead anchor, who runs much of their most primetime television, seems to not understand the very basics of finance. You know, if you look at a world of full unpredictability, just once we have an unpredictability increasing, Bitcoin, I think it's a beacon of predictability in a world where you can predict anything pretty much.
This is her guest from Swan, and she's about to jump in now. I don't think if you look at a price chart of Bitcoin, you would say it's a beacon of predictability. And 2% inflation means growth. Let's stop there before we get to the... If you look at the price chart of Bitcoin, I don't think it means a beacon of predictability. I don't think if you look at a price chart of Bitcoin, you would say it's a beacon of predictability. The first failure of somebody who's supposed to be a financial expert would be to look at the hourly price chart. You got to be an idiot. Maybe you look at the 200 moving average. Maybe you zoom out and look how it's performed over the last decade.
You know, then you start to better understand the kind of returns you see from this asset. But more of a sin, a fundamental understanding is missing here. How does price go up without volatility? Somebody tell me that. And I'd like her to answer that. Number only go up if number also go down. That's how you shake things out. That's how you establish prices. This is the nature of any volatile asset in its infancy. Always has been, always will be if it's a fair market. The only time it doesn't work like this is when it's a manipulated market. And perhaps we're just so used to that that these supposed experts don't actually know what a free open market actually looks like for price discovery.
Build, you know, in a world where you can predict anything pretty much. I don't think if you look at a price chart of Bitcoin, you would say it's a beacon of predictability. And 2% inflation means growth. So with growth comes inflation. Usually that's the way economics works. Although, yes, we've had very low inflation before this current regime, but I don't even know where to start here. The breath is literally taken away from me when I hear this. Usually we need 2% inflation for growth. The beacon of predictability. And 2% inflation means growth. So with growth comes inflation.
Usually that's the way economics works. Although, yes, we've had very low inflation before this current regime. I'd invite you to go tell me anywhere where it's cited where that 2% inflation target comes from. It's just something that the banks have agreed on because it lets them quietly steal from you. A healthy market doesn't need inflation. This is Stockholm syndrome. And she's considered an expert. And she cuts the swan guy off. He never gets a chance to correct her. But this is Yahoo Finance. And they're considered one of the respectable ones. It's embarrassing. Their understanding is like inverse.
They think volatility is bad for price discovery. And they think inflation is good. It's fiat education. And it's not just the news actors. it goes all the way to the people inside the Treasury and the FDIC and the Federal Reserve. They are all low quality thinkers. I'm going to go a little bit back in time here. So get in the Wayback Machine with me. We're going to 2009, my friends, just after the big 2008 collapse, the finance market was just wrecked. But more importantly, I think in the context of this clip, The housing market was also wrecked. And the FDIC chair at the time, and she's well-respected, you could kind of see the way she thinks.
And the way they think is this sort of set-in-stone thing. Never going to change, the U.S. government will always be the reserve currency of the world kind of mindset. And so then they can act and plan based on that. And it's just without question. And this clip kind of demonstrates the way they think, which I think is low quality. FDIC Chairman Sheila Baer is a former treasury official and professor of finance who's written children's books on the wisdom of saving. Maybe some of the CEOs on Wall Street should Should have read the children's books. Maybe so. Maybe so. I already don't like her.
I mean, it's so smug to assume that this bureaucrat is smarter than the CEOs on Wall Street. So much smarter that they should have read her children's book. That's how smart she is. Some of the CEOs on Wall Street should have read the children's books. Maybe so. Maybe so. Bear warned two years ago that bad mortgages threatened the financial system. Now she's managing the biggest bank failures in years, including the collapse of Washington Mutual and last summer's sudden failure of IndyMac in California. I like that these dramatic failures that are equivalent to like an absolute collapse are talked about like, well, she's on top of it. She's managing it.
This destruction that's happening to middle class wealth and to jobs and entire companies and this inability to get your money. It's all being managed by this woman. She's on top of it. Don't worry about it. We were told we would get in. Stay open an extra hour. When IndyMac failed, you were watching these scenes on television of people lining up outside the bank like it was 1932. Yes, it was. It was amazing. What did you think of that? I think people just forgot that banks do fail and how the FDIC works. Their money was safe. It was probably the safest place in the world to have your money because we were an operating institution at that point.
What sort of hit was that on your balance sheet? I think we ended up to, it was over $9 billion for a $33 billion, yes, it was very stiff. The question becomes. How many times can the FDIC do that? At what point is the FDIC broke? The FDIC is backed by the full faith and credit of the United States government. So if we need to, we try not to and don't want to, but if we need to, we can borrow from Treasury to make up for any shortfall. So the FDIC never goes broke? We don't go broke. No, we are the government. We're backed by the full faith and credit of the United States government.
Oh, I'm sorry to say, unfortunately, the FDIC seems to be broke. Now, fast forward back to current time, and Carl Lewis has a fantastic thread that I'll link you to in the show notes, and he writes, although the designated reserves managed by the FDIC were intended to be at least 2% of actual, or I'm sorry, although were intended to be at least 2%, actual was closer to 1%, he writes. In other words, the FDIC only has 1.15% of its total insured deposits in reserves. So since I botched that a little bit, I'll just make it clear. Right now, at the end of June in 2024, the FDIC only has 1.15% of total insured deposits in its reserves.
If other banks, he goes on to write, have similar FDIC insured ratios as the top 30 banks, then there are at least up to $16 trillion of deposits not insured or having any reserves. It's like the money doesn't exist and isn't backed by anything. Quote, what is the money would be the greatest question of the century if we were to have a major banking crisis. The thread has charts and data. I mean, it's great. That's just one of the many things it touches on. So in 2009, she said it three times, the FDIC could never go broke. In 2004, well, the full faith and credit of the U.S. government is $35 trillion in debt.
And the FDIC has 1.15% of total insured deposits and reserves. Doesn't seem like that's a great position to be in. Again, again, I don't really necessarily even say this with any delight, but Bitcoin does fix this. Some important project updates I'd like you to know about. I love the Mutiny wallet, and it was a little unfortunate to see that they had to put out a PSA about some of the functionality of Fedements being degraded due to DNS issues. And they've been providing updates really reliable. I do think some people have been having trouble getting their funds. You know, the Fedements system is still kind of new. It's rough.
It's one of the reasons why I haven't really talked about it much on the show. So I am very hopeful and I remain just a pretty happy liquid user for this type of task, but I would love to replace liquid one day with a Fetament and something I could trust. It just seems like some of the stuff needs to be worked out. So if you've used this functionality of Mutiny Wallet, I'd love to hear from you. Really encourage you to check the links in the show notes because there are some steps you might be able to follow to get funds out. It does seem like maybe some folks lost some money. I'm not sure.
Not a great situation, but it is early days there. The Mutiny Wallet remains really great, and the team was really on top of this, disabling functionality that would get people in trouble and kind of cleaning things up as fast as they could. So that was really good to see. And then there's a really good bit of news for the UK this week. Strike has launched in the UK following their European rollout. Strike's a really solid Bitcoin-only app, and it's a good tight team that's working on making the experience the best possible. Strike also integrates with Fountain to make boosts really easy.
And Strike's on the Lightning Network with, I think, free withdrawals too, on-chain or Lightning, which is a great deal, especially during high transaction fees. So Strikes really focused, they're really honed in on Bitcoin and Lightning and trying to give you a good wallet and something you can purchase your sats with and then send it around wherever you want. And it's so fantastic to see it come to the UK. I think this is one of those apps that's a little misunderstood in our community. And I think people should give it a second look because it's pretty good. All right. Are we ready for our final clip of the week?
Bitcoiners should always be thinking with a long time, time preference, right? Right. Thinking for the like 30 years out, you want your health to be good. Right. You want your family to be good. You want to be planning to be able to get access to your generational wealth. And you need to take care and note of your information diet, which I think is a critical aspect to your mental health. But really how you think about the world and how you make decisions, how this stuff lands in your brain and it kind of soaks in and you kind of make your world decisions and views based off that information you take in.
Something I think a lot about with this show. Try to make it high signal. And it's something Jack Dorsey and Lynn Alden were discussing recently at the also Freedom Forum. And Lynn asked Jack on his thoughts on open source algorithms and how these closed black box algorithms could be impacting society. You'll recall Jack Dorsey, of course, former CEO of Twitter, probably has a little bit of insight here. This is going to sound a little bit crazy, but I think the free speech debate is a complete distraction right now. I think the real debate should be about free will.
And we feel it right now, because we are being programmed. We're being programmed based on what we say we're interested in, and we are told through these discovery mechanisms what is interesting, and as we engage and interact with this content, the algorithm continues to build more and more of this bias. But the algorithm, even if it's open source, is effectively a black box. You cannot predict 100% of the time how it's going to work, what it's going to show you. And it can be moved and changed at any time. And because people become so dependent upon it, it's actually changing and impacting the agency we have, the free agency we have.
And I think the only answer to this is not to work harder at open source in algorithms or making them more explainable about what they're doing and why they're doing it, but to give people choice. Give people choice of what algorithm they want to use from a party that they trust. Give people choice to build their own algorithm that they can plug in on top of these networks. And that's really the biggest problem and why these corporations became so large and so valuable is because they solved the discovery problem on the internet. We talk a lot about the public square.
But the public square cannot be owned by one company. The public square, by default, is the internet. But the problem with the public square is it's very hard to discover and to be matched with the things that you're truly interested in. And that's where the value of a Google came in. It helps you discover. That's where the value of a Facebook, it helps you discover your friends. The value of a Twitter helps you discover news and interesting content of the day. But if we can solve the discovery problem in an open source way, in a free agency way, that you get to choose, how you see the world and what algorithms you're using and you know more or less how they're how they're working and that you can turn them off and see everything otherwise it really is attacking, free will it's it's programming how we think and we can resist it all we want but it knows us better than we know us because we tell it our preferences implicitly and explicitly all the time and it just It just feels super dangerous to continue to rely upon that without choice.
That was actually a really great talk. It was The Power of Open Source, and I think it's under 30 minutes. So I'll link to the whole thing in the show notes if you'd like to watch it. I recommend it. I think he's absolutely right, and that's why I've gotten more and more serious about Noster. If you'd like to find my public key, it's chrislass.com. I have it over there. But the reason why I think about this is you can see it even with legacy media. You know, if you think about what the legacy media chooses to show you, it's kind of like they're running their own algorithm, if you will.
And if you look up stats of Bitcoin acceptance and adoption, you'll notice it's really bad in the UK. Very unfavorable poll results, whereas, you know, 30, 40 percent favorable here in the States. And it's generally considered much less well-received when you do polling around Bitcoin and cryptocurrency in the UK. I've always wondered why that is, because they need Bitcoin just as badly, if not worse, than we do here in the States. And their inflation has been horrendous. And even years of horrendous inflation didn't shake them out of their opinion.
Now, again, you'll have to go look these up online. But there's been surveys. And just recently, on June 19th, there was surveys conducted of the BBC's coverage of Bitcoin since 2013. And when you go back through it, what you realize is that with three or four exceptions, all of the BBC's coverage since 2020-2013 has been negative or neutral. Only like four stories or so have been positive since 2013. And you might be wondering, well, how many times did they cover it? A lot. This chart, I'll put a link in the show notes, it shows you. A lot. Starting on April 12th, 2013, their first story, which was neutral.
But by 2014, 2015, they were getting pretty negative. And if you look at the last few years, really since May of 2020, all negative. But there's a lot of negative in between too. But it's just been consistently negative. And that's programming the population. And they're getting all warmed up over there with their CBDC too. They're going to be one of the first to get one. So they're all going to end up being crypto users. That's the irony of it. They're all going to end up being crypto users, even though when they're surveyed, they hate it. I just think that's so funny. And they're going to have the worst shit coin of them all, a CBDC, right?
So, you know, I mean, there's an irony in that. I laugh at it, I guess. But I'll put a link to that in the show notes because I think that data is just absolutely fascinating when you analyze the coverage of the BBC. Like I mentioned, chrislast.com for that Noster public key. Links to what I talked about today are thisweekinbitcoin.show. This is episode 16, so you can find episode 16 over there. Get the transcript, get the chapters, get the links to what we talked about today. Day i sure would appreciate a boost or if you shared this show with somebody who might be a little bitcoin curious and if you have a podcasting 2.0 show that you love send it in i'm trying to build out the community i really i really want this to be like the bitcoin news podcast for podcasting 2.0 so i'm trying to do reaching out to like different podcasters and just saying hello, so if you've got a favorite show out there boost in the name of it or send it through my contact page so i can reach out and say hello to them and we're gonna we're gonna wrap it up with a value for Value song like I love to do.
There's so many great ones these days. Music.
Welcome and Week in a Snapshot
The Post-Halving Miner Capitulation
Reasons for Delay in Miner Capitulation
Government Agencies and Mt. Gox Impact
U.S. Economy's Influence on Bitcoin
Market Confidence and Election Year
Concerns for the U.S. Economy in 2025
Impact of Fake Data
Podcast Updates and Project Insights
Listener Boosts and Appreciation
Mental Health and Information Diet
Impact of Algorithms on Free Will
Wrapping Up and Call to Action
