Companies are betting on bitcoin

Who will imitate the MicroStrategy playbook next?

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BITCOIN BOX SCORE

Exchange Rate: $67,820
Market Capitalization: $1.34T
Hash Rate (90 days): 605.1 EH/s
Transactions (30 days): 16,651,
Network Fees (day): 10 sat/vB
Bitcoin Dominance: 54.04%

Corporations are turning to bitcoin to protect against structural risk in the traditional system. As a liquid asset with fixed issuance, bitcoin allows companies to continue operations and meet short-term obligations during banking disruptions.

The Financial Accounting Standards Board (FASB) rule change in September 2023 made it more practical for public companies to own bitcoin, allowing them to report market value accurately and capture unrealized gains and losses quarterly.

In addition to the FASB rule change, two recent events have boosted corporate confidence – the SEC's approval of spot Bitcoin ETFs and MicroStrategy CEO Michael Saylor's successful implementation of the "MicroStrategy playbook," acquiring massive amounts of bitcoin as a primary reserve asset.

Two firms (Semler Scientific, Inc and Metaplanet) have copied MicroStrategy, leading to significant stock price increases.

Corporate adoption of bitcoin is set to rise as institutions seek to minimize counterparty risk and recognize bitcoin's value potential. Which corporation will follow MicroStrategy's lead next?

NEWS

🔋 Marathon Digital invests in renewable energy, striking deal with the Kenyan government

Kenya partnered with Marathon Digital Holdings to monetize its underutilized geothermal energy for bitcoin mining. This collaboration aims to harness Kenya's surplus energy, generate additional revenue, and develop the country's infrastructure.

Remember the climate attacks on bitcoin?

There aren't happening anymore. Now, bitcoin's enemies have moved on to a new angle: the supposed threat of money laundering and apparent national security risks associated with the existence of neutral money.

📖 Semler Scientific implements the MicroStrategy playbook

Semler Scientific, Inc. has adopted bitcoin as its primary treasury reserve asset, purchasing 581 bitcoins for $40 million. The company remains focused on its core mission of healthcare innovation while utilizing bitcoin as a store of value.

The playbook is working.

As Dylan LeClair, who is implementing the bitcoin strategy for another firm, notes:

👨‍⚖️Federal government appeals Corporate Transparency Act reversal

The Corporate Transparency Act (CTA), passed in 2021, was ruled unconstitutional. The act required most entities incorporated under state law to report information about their "beneficial owners" to a database managed by the US Treasury's Financial Crimes Enforcement Network (FinCEN). It significantly expanded government surveillance and allows FinCEN to share this sensitive data with law enforcement and intelligence agencies.

A small win, for now.

Critics argue that the CTA undermines anonymity, infringing on civil liberties and protecting politically unpopular enterprises. In 2022, the National Small Business Association and others sued the Treasury Department, claiming the CTA violated constitutional provisions. In March 2024, a federal court ruled the CTA exceeded Congress's authority and violated the Fifth Amendment. This decision led to a permanent injunction against the CTA's enforcement, which the government is appealing.

🇦🇷 Argentina seeks bitcoin partnership with El Salvador

Argentina's National Securities Commission (CNV) is exploring cooperation with El Salvador on bitcoin adoption following a meeting between Argentinian and Salvadoran regulators. High-ranking CNV officials praised El Salvador's progress and discussed ways to collaborate.

El Salvador's strides are not going unnoticed.

If it happens, a formal collaboration between El Salvador and Argentina would add momentum to global bitcoin adoption. Even today, this development demonstrates El Salvador's leadership and the growing recognition bestowed upon it by other nations.

In an odd turn, even President Biden announced that a presidential delegation would attend Salvadorean President Nayib Bukele's inauguration this June. 🤔

BITCOIN ADOPTION CONTINUES

Foundation announced the release of Passport Firmware v2.3.1, integrating Theya, Zeus, and Coinbits.

The NYSE will launch bitcoin financial products with CoinDesk Indices to offer new risk management options amid rising interest in bitcoin among investors.

OCEAN, the bitcoin mining pool backed by Jack Dorsey and led by Luke Dashjr has established OCEAN MINING S.A. de C.V in El Salvador as its international business development hub.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week:

Bitcoin solves the Byzantine Generals Problem

The Byzantine Generals Problem is the name given to the problem of multiple self-interested parties reaching consensus without a central authority. Its name stems from an example of a group of generals attacking Byzantium. Each general is in charge of part of the army. If they all attack, they’ll win the battle. But if fewer than all of them attack, the attackers will be wiped out. They can communicate by sending each other messages, but those messages could be intercepted and corrupted. How can the generals successfully agree about what to do? In other words, how can they, a geographically decentralized team, achieve consensus?

People who study bitcoin will know that one of the key breakthroughs described in the bitconi whitepaper was a solution to this problem. However, the problem applies beyond bitcoin – it comes up in the context of other decentralized systems, such as data storage. (This is what led to the belief that “blockchain technology” has applications beyond bitcoin.)

Bitcoin solves the Byzantine Generals Problem with a novel data structure called a “blockchain” or “time chain,” and a Proof-of-Work (PoW) consensus algorithm that builds the chain. The time chain is a decentralized history of changes to a universal ledger. Every node in the network maintains a copy of this ledger, ensuring participants have access to the same information. This arrangement eliminates the need for a central authority, as each node can independently verify the validity of transactions.

Proof of Work (PoW) is what allows changes to the ledger to be made while maintaining consensus about the correct state of the ledger. To append data to the time chain, miners must expend electricity to generate numbers that perfectly fit with the previous block like a puzzle piece. Since everyone on the network can see whether the puzzle piece fits or not, consensus in maintained even when the ledger changes.

Bitcoin's design incentivizes honest behavior and penalizes dishonesty, as the network would quickly detect and reject any attempt to manipulate the time chain. Each node verifies transactions independently, which means trust is not necessary for the system to work. By combining a time chain with Proof of Work, the bitcoin whitepaper solved a problem in computer science that had beguiled researchers for decades.

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COIN CHECK

Which corporation owns the most bitcoins?

  1. Galaxy Digital

  2. Tesla

  3. Riot

  4. MicroStrategy

Check your answer at the end of the page.

FROM THE MEME POOL

ANSWER

  1. MicroStrategy is in the lead. The company owns a whopping 214,400 bitcoins as of May 1, 2024.

That’s all for this week, folks! When you signed up for this newsletter, we promised to act as your personal guide and help you understand what’s happening in the world of bitcoin. What did you think of today’s newsletter? Reply to this email and let us know what you’d like to see more of.

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