updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131hustle domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131wpforms-lite domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131BitMEX co-founder Arthur Hayes examines de-dollarization and its fiscal and political implications in an article titled ‘Exit Liquidity.’
Former BitMEX CEO Arthur Hayes recently aired his views on exit liquidity vis-à-vis the US dollar’s reserve currency status. In a Medium blog post, the American entrepreneur wrote exhaustively on whether the US dollar can be replaced as the global reserve currency. Additionally, Hayes debated whether China or any other powerful nation would be willing to and capable of replacing the US as the global reserve currency issuer.
In his ‘Exit Liquidity’ writeup, Arthur Hayes explored suggested signs that certain “corridors of trade are de-dollarizing” and what it portends for America.
According to Hayes, reserve currency status poses certain benefits but also burdens the host nation with cost implications. The BitMEX co-founder identified the main benefit as “printing currency at will to pay for real goods.” However, he maintained that such primary benefit does not see equal distribution among the host nation’s citizenry.
Hayes stressed that despite America’s vaunted wealth levels, the political and military superpower’s inequality problems rank among the worst in the developed world. Furthermore, he added that this situation is worsening even though most of America’s populace, who own little financial assets, feel the brunt of the reserve currency status. According to Hayes, global de-dollarization threatens the position of American elites who have largely benefitted from global reserve currency status. However, he also fears that the majority of Americans could become ‘exit liquidity’ to their more privileged compatriots regarding capital expropriation. In Hayes’ opinion, the American financial elite would do anything to remain influential amid de-dollarization. Therefore, such drastic measures to protect their wealth could entail transmuting potential global fiscal repercussions to less illustrious citizens.
Hayes’ writeup showed a series of detailed charts that support his inequality argument. For instance, one visual representation showed the US as number 1 in the latest gross income inequality Gini coefficient among G7 nations. America outranked the UK, Germany, and Canada with a much higher figure of 0.434.
Hayes suggested that many believe China can replace the US as a reserve currency issuer. However, the ex-BitMEX CEO stressed that cynics remain unconvinced due to the unappealing nature of the yuan. In a world where trades are increasingly priced in dollars, Hayes opined critics might wonder what the yuan can buy. According to him, another knock on the yuan is that China’s capital account remains closed.
In Hayes’ opinion, these constraints pose the question of whether China actually yearns to be the new global reserve currency issuer. Furthermore, he questioned to what extent the so-called de-dollarization can induce the desire for a new global reserve currency. Lastly, former crypto business executive Hayes wrote that crypto could be critical in shaping new international financial policies. The ex-BitMEX co-founder suggested that it remains unknown how the global reserve currency saga will play out eventually. However, he is reasonably certain that in the coming years, the world will trade in several currencies instead. Additionally, Hayes also predicted that savings would be in gold and digital assets such as Bitcoin (BTC).
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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A Financial Times (FT) article on Tether CEO Jean-Louis (JL) van der Velde has become the center of controversy. Tether, the biggest stablecoin issuer is not new to media glare owing to its run-ins with the law and continuous speculations about its reserve. The stablecoin issuer has taken a strong objection to FT’s article on Velde titled “Tether’s CEO: from IT sales to calling the shots in crypto land.”
Tether took a dig at the FT article for showing the CEO in the bad light and called it a “tabloid piece,” rather than real journalism. The controversial article begins with JL’s early life in China where his company faced several lawsuits and tax fines. The article read,
“The chief executive of Tether ran a company that faced a string of lawsuits in China over unpaid bills and fines for late tax payments before he helped launch the contentious stablecoin now at the heart of the crypto industry.”
The article then goes on to talk about his early life as an electronic salesperson to his troubles with creditors and law. Tether took special exception to FT’s digging of the past and highlighting early failures. In an official press release, the firm said,
“The recent Financial Times story highlights the challenges of doing business in China, and despite this, JL was able to build positive relationships with his business constituents. This only further demonstrates the character and dedication of our company’s executives to problem-solving and their ability to navigate through complex situations and environments.”
Tether went on to accuse the author of the article of following “tabloid journalism” and said,
“It saddens them to see this genre of journalism taking over at the Financial Times. Rather than taking the effort to truly learn and understand the significance of blockchain technology and the Web3 revolution, reporters such as the ones who penned this article for the Financial Times have chosen to go down the road of tabloid journalism to sustain readership for the once well-respected publication house.”
The FT article also talked about Tether’s controversial stablecoin management and reserve controversy. The leading stablecoin issuer has maintained that their USDT reserves are fully backed, however instead of all reserves being backed by cash or cash equivalents, a portion of its is backed by commercial papers and some other securities that aren’t considered stable.
Tether along with Bitfinex crypto exchange was fined by CFTC in October for misleading financial information about its reserves. The stablecoin issuer came out with a statement in the wake of a $43 million fine, claiming they have resolved the issue.
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Did China make the mistake of a lifetime by banning Bitcoin mining or do they have a secret plan? That’s the question the whole Bitcoin ecosystem is struggling to answer. And today, we got another piece of the puzzle. In the article titled “It’s Over, It’s All Over” – The Death Of China’s Bitcoin Mining Industry,” a pseudonymous manager by the name of Ye Lang tells his story. And in his tale, a bigger story is reflected.
Related Reading | Bitcoin Hash Rate Goes On Death Spiral Post China’s Crackdown On Miners
On May 21st, in a “meeting of the State Council’s Financial Stability and Development Committee, a top-level economic and financial policymaking body chaired by Vice Premier Liu He,” China decided to ban Bitcoin mining. Less than a month later, on June 19th, the Sichuan government ordered “the closure of Ye’s facility, along with 25 other cryptocurrency mining projects in the province.”
That story started like this:
Ye decided to jump on the Bitcoin mining bandwagon in 2018 when he closed down the majority of his internet café business, mortgaged his apartment in Anqing, Anhui province, borrowed money from relatives and left his wife and daughters to move to Sichuan
What can we learn from Ye’s first-hand experience?
At the peak of the facility’s Bitcoin mining operations, Ye was in charge of 80 employees and a total of 80,000 mining machines, with the entire project estimated to be earning more than 90 million yuan ($14 million) during the peak six months when Sichuan’s rivers are glutted and electricity is especially cheap
The numbers are staggering. Evidently, supersizing mining operations offers a huge advantage. Especially in regions with cheap electricity.
The fact that the electricity for crypto mining in Sichuan came from clean hydropower meant that many thought the province would be a safe haven for Bitcoin miners. As pressure on local governments to cut carbon emissions mounts, projects were successfully shuttered in some other provincial-level regions — such as Xinjiang and Inner Mongolia — where the mining was chiefly fueled by coal.
The only thing we can know for sure about the Chinese government’s plan is this: the environment is not on their radar. They’re closing these mining operations for other reasons altogether.
The fact that the Sichuan crackdown was about to hit, confirms what everyone has known: the “justification” for cracking down bitcoin miners, the cold shoulder on bitcoin by social luminaries (such as Elon Musk) and the use of the ESG bullshit excuse that crypto is “dirty” have always been merely a socially-acceptable smoke screen for a regulatory crackdown on cryptos when they become too big.
Enough said. ZeroHedge nailed it on the head.
It’s also worth noting that Nic Carter also nailed it on the head regarding China’s energy mix when it came to Bitcoin mining.
Despite the government’s hardline approach, Ye is determined to carry on: “This industry is extremely volatile. High emotions and stress are involved, but that’s also its appeal. Companies are banned from mining Bitcoin, but individuals aren’t,” Ye said, adding that he plans to turn around his operation by purchasing old equipment and downsizing.
The Chinese government was only worried about industrial-sized private mining operations. The question is why. What are they planning? Nobody seems to have figured that out.
Another character enters the scene, the owner of the mine. We’ll call him Liu Weimin, also a pseudonym.
Liu owned more than 10 Bitcoin mining farms, which industry insiders estimated accounted for one-eighth of the total electricity consumed by all Bitcoin mines in the province.
During peak seasons, Liu said his farms could mine 70 to 80 Bitcoins every day. About 900 Bitcoins are issued each day globally, according to an industry information platform.
Almost 10% of the total daily issuance seems like too much for a single individual. The Bitcoin world scored a huge win with the Chinese ban on Bitcoin mining.
BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
“Mining farms are somewhat like conventional crop farms. No matter how the Bitcoin market changes, the mining process remains. Opening such facilities is a relatively stable investment, and I can generally break even in a year,” Liu told Caixin.
There are few businesses in the world that can give you that ROI. At least among the legal ones. Food for thought for the young entrepreneurs out there.
Related Reading | How China Bitcoin FUD Is Lowering The Cost To Produce BTC
Thanks to the Sichuan government’s mining-friendly policies back then, Liu’s business continued to flourish for the past three years. He quickly made a name for himself, and was a frequent guest at government events and meetings, where he was recognized as one of many model energy consumers who had helped lift locals out of poverty.
From a respected businessman to a social pariah. It would be easy to feel sorry for Liu if he wasn’t on his way to restore his business.
Following the government’s May 21 crackdown announcement, he arranged teams of employees to scout for new venues in North America and Kazakhstan. In mid-June, his company bought an oilfield in Canada that could potentially provide fuel for his Bitcoin mining business.
So, why did China banned Bitcoin mining? We have no idea. We know, however, that their hold over the industry was already waning and that entrepreneurs are selling small hydropower stations. And we have both Ye and Liu’s stories. Is the picture clearer? Are we closer to the real deal?
Featured Image by Лечение Наркомании from Pixabay - Charts by TradingView
According to Tether, it is currently running its usual business activities and focuses on its customers.
Yesterday, Bloomberg published a report stating that Tether (USDT) executives have been allegedly involved in conducting bank fraud. As Coinspeaker revealed yesterday, the Department of Justice has recently uncovered a bank fraud conducted by the executives at Tether many years ago. Now, Tether is under formal investigation.
Several hours after the Bloomberg report, Tether published a statement as a response. According to Tether, Bloomberg’s article is based on unnamed sources and years-old allegations, and is “patently designed to generate clicks”. Further, Tether stated that it follows a model of “repackaging stale” that seems to be news and gains attraction.
Further, Tether stated:
“Tether routinely has open dialogue with law enforcement agencies, including the US Department of Justice, as part of our commitment to cooperation, transparency, and accountability. We are proud of our role as industry leaders in promoting cooperation between industry and government authorities in the US and around the world. We remain committed to our customers and the industry-leading technology and transparency that has led to our growth.”
Currently, Tether is running its usual business activities and focuses on its customers.
Notably, it is not the first time Tether has got into hot water. Federal prosecutors have been keeping an eye on Tether since at least 2018. For example, two years ago, Tether was allegedly involved in crypto market manipulation. In particular, Tether was allegedly sourcing USDT tokens to its crypto affiliate Bitfinex without actually backing them physical USD.
Earlier, in 2018, NYAG accused Bitfinex of misappropriating $850 million worth of funds and later covering up by issuing Tether’s USDT stablecoins. This case came to an end only at the beginning of 2021, when Tether agreed to pay $18.5 million in a penalty to NYAG.
Following Bloomberg’s report about Tether conducting fraud activity, the market evaluation of BTC has noticed a sudden fluctuation drop. As the news went viral on leading media outlets, Bitcoin has registered a fall of $1000 adversely affecting the investors all around. Within 24 hours, Bitcoin dropped by 3.42%. At the moment of writing, it is trading at $37,065.96. Its market cap is $695.6 billion.
Other coins dropped in price as well. For example, Ethereum (ETH) dropped by 2.78% to $2,190.08 in the last 24 hours, its market cap declined by 6.54%.
XRP declined as well. Its price dropped by 5.93% to $0.6256.
Tether (USDT) itself has lost 0.02% in price. As of the press moment, it is trading at $1.00. As for its market cap, it totals $61.79 billion.
Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.
