A rocket year ahead!
- Mayors and Professional Athletes Requesting to be Paid in Bitcoin
There has been a recent trend gaining momentum among Mayors (and other politicians of various positions) requesting their salaries be paid in Bitcoin. Recently elected New York City mayor Eric Adams has stated on Twitter that “I’m going to take my first THREE paychecks in Bitcoin when I become mayor.” This statement was made in direct response to mayor Francis Suarez’s (Miami, FL) tweet about also accepting Bitcoin as payment. Mayor Jane Castor (Tampa, FL) will be accepting her paycheck as well in bitcoin while mayor Scott Conger (Jackson, TN) will be converting his paycheck directly into Bitcoin.
This trend has also been gaining steam among professional athletes after Russel Okung famously tweeted “Pay me in Bitcoin” back in 2019. We have now seen athletes like Aaron Rodgers, Trevor Lawrence, Saquon Barkley, Sean Culkin, Cade Cunningham, and most recently Odell Becham Jr. announce that their salaries will now be paid in bitcoin.
As we see more famous and well-connected individuals publicly state their support for Bitcoin adoption, a good number of their peers and followers will eventually do the same.
2. Lightning Adoption in Developing Countries
The world is witnessing the game theory play out with developing countries as well. With apps like Strike becoming more available across the globe, countries like El Salvador have taken advantage of the Lightning Network to provide cheaper remittance for their citizens. With most transactions costing users less than a cent to participate in commerce and trade with one another, there is no more wealth to be saved for each citizen. Many critics have called President Nayib Bukele’s Bitcoin adoption strategy reckless and detrimental to the people of El Salvador. Whether or not one agrees with using bitcoin, allowing citizens the option to use bitcoin and fiat is a step in the right direction towards innovation and wealth creation.
El Salvador is laying the groundwork for other countries that are interested (and hesitant) in utilizing bitcoin. As time goes on, these countries will witness the benefits and possible challenges for El Salvador.
3. Less Liquidity on Exchanges
As more people around the globe adopt bitcoin, bitcoin exchanges run into the issue of providing enough liquidity for their users. This is one of the important metrics for understanding bitcoin adoption. As likely (or unlikely) as it may be for higher prices to occur in bitcoin, the chart below should not be the only indicator used when deciding whether or not to buy bitcoin.
Less bitcoin in the hands of exchanges will very likely mean that more bitcoin is being held in cold storage or lost for the open market to buy. Basic economics tells us that if the demand for a good stays consistent or grows while the supply is reduced for newcomers and current users, the direction of price for that good is very likely to go up in the future.
4. Oil and Gas Companies Adopting Bitcoin Mining
There will only ever be 21 million bitcoin ever in existence but a good number of bitcoins are lost or considered lost because they have not moved for years. It is estimated that about 2-4 million may be lost but there are still about 2.1 million bitcoin left to be mined over the next 119 years until 2140 (the last projected year to mine bitcoin). This equates to about 90% of the supply already mined.
As the Bitcoin network becomes more secure, so does the amount of energy and machines required. Oil and gas companies would see an enormous benefit from using their stranded energy to mine bitcoin. This process is done by burning methane that cannot be harnessed or repurposed. Oil and gas companies have a huge incentive to not waste that energy and convert it into bitcoin that can subsidize costs for operations. Companies like Crusoe Energy are a great example of what can be done to help secure the bitcoin networks while saving oil and gas companies from losing money.
5. Subsidizing Small Farm Costs with Bitcoin Mining
Small farms also have the ability to benefit from Bitcoin mining because it generally takes a lot of time and money to run a farm. Their margins are fairly thin and are prone to choosing profits over providing the most nutritious methods for livestock and produce. Big farming corporations are incentivized to produce meat, vegetables, and fruits as quickly and for as little money as possible while a smaller farm may only aim to provide for the family and neighbors running the operation. If a small family farm has access to space and cheap electricity, mining bitcoin may allow them to increase their profit margins. In fact, many local farms have access to government grants and lower energy rates so mining bitcoin can be an additional source of revenue.
As adoption continues among those with connections and influence, so do the incentives for those who wish to subsidize their own businesses with Bitcoin mining. The beauty of Bitcoin is that anyone can adopt Bitcoin without connections, influence, or a business to do so. As game theory plays out within Bitcoin, more participants will continue to join the network and the incentives for doing so will continue to increase.