APRIL 24, 2022 | Issue 12
WILL ENERGY MARKET PRICING GO FROM USD TO BTC?
Several weeks ago, I wrote about energy companies that have bitcoin mining operations at their shale oil fields.
Shale oil produces excess natural gas, mostly methane, that is released into the atmosphere. Methane is right behind carbon dioxide as the second worst culprit in causing global warming.
Bitcoin miners capture the methane and use it to power their computers. The output is bitcoin.
Are bitcoin miners paying their landlords, e.g. Exxon, in BTC or USD? If some of the payment is in BTC, we may be seeing the beginning of a closed-loop bitcoin-energy economy.
One of my favorite authors who writes about crypto and monetary policy, Nik Bhatia, speculated, "At the beginning, we might see electricity prices for miners priced in bitcoin, but eventually nations that amass bitcoin reserves or oil conglomerates that have mined bitcoin will tap markets where the buyers only use bitcoin. This will force the first crude oil bitcoin-denominated contract."
This is another interesting path for crypto adoption that's worth watching.
On the crypto real estate front, I'm encouraged that many of you are reaching out to me to discuss how crypto might fit into your seller's marketing plan.
I'm here for you!
I hope you had a wonderful weekend. Have a great week and stay crypto curious!
Rich Hopen
richard.hopen@compass.com
908.917.7926
PS. You can find all CNR newsletters here.
CRYPTO & REAL ESTATE
Inman, a real estate news publisher, held their conference – Inman Connect New York.
Lane Hornung, CEO of zavvie, talked about the promise of blockchain to drive efficiencies in title process. He said there are 10,000 county clerks that would have to switch their current system onto the blockchain. "I'm not holding my breath for that."
Hornung is encouraging others to pay attention to virtual real estate, but he is most bullish on lending platforms that use crypto as collateral.
CRYPTO NEWS ▸ Moonbirds NFT Launch Sold Over $200 Million This week's profiled influencer is Kevin Rose. Rose is co-creator of PROOF Collective which sold the NFTs. PROOF Collective is a private NFT community that entitles its members access to a Discord channel, in-person events, and opportunities to invest in upcoming projects including virtual real estate.
PROOF launched the Moonbirds NFT. The NFT comprises 10,000 computer-generated pixel owls with an opening price or $7,700. Currently, the lowest price on the secondary market is $144,600 for a Moonbird. So far, the highest payment for a Moonbird has been $612,600. The market cap is $1.4 billion. It's currently the top selling NFT according to coinmarketcap.
▸ Crypto & NFT Markets Have Cooled, But VC Funds Keep Flowing
Crypto currencies and NFTs (other than Moonbirds) have been languishing, yet $5 billion has been invested in crypto/blockchain in the first quarter.
Bloomberg cited data from Pitchbook and said investment has doubled over 2021 first quarter. However, 9 out of the top 10 investors are focused exclusively on crypto.
▸ US Treasury Sanctions Russian Crypto Miner
The Treasury's Office of Foreign Assets Control added Russia-based crypto miner BitRiver to its sanction list.
Treasury's release said, "By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources."
▸ New York State Considers Banning Some Crypto Mining
Crypto mining servers use up to 44 megawatts for their mining operations. A bill is before the New York state legislature that would enact a two-year moratorium on reactivating fossil-fuel power plants.
Some miners pay less for electricity by locating their operations at closed power plants.
The crypto industry is lobbying against the New York ban because it could become a model for other states seeking to do the same thing. The National Conference of State Legislatures said more than 160 crypto-related bills are being considered in 37 states.
▸ Hacker Steals $182M From Stablecoin Project
This week's hack of stablecoin project, Beanstalk, netted the criminals $76 million.
Beanstalk used a DAO, or decentralized autonomous organization, whereby users could dedicate funds to the project and vote in governance and protocol changes.
The hacker borrowed close to $1 billion worth of stablecoins and added it to Beanstalk's funds. That massive infusion of funds gave the hacker a large portion of voting power. The hacker proposed donating funds to Ukraine and when voting occurred, the vote included code that sent all Beanstalk's funds to the hacker's wallet. Once the funds were stolen, the loan was repaid and the hacker kept the difference. According to Beanstalk's website, the hacker profited $76 million.
CRYPTO CLASS – NFTs
Surprisingly, I haven't written a crypto class on Non-fungible tokens (NFTs). I've covered NFTs in the context of NFTs and real estate, but I haven't explained how they are evolving.
Essentially, NFTs are a crypto assets that prove ownership of real or digital items.
Investors who purchase a plot of virtual land in Decentraland, for example, will acquire an NFT. It's a virtual deed.
Purchasers of digital art obtain an NFT documenting that they own the art.
Anything digital is fair game to become an NFT. It could be a jpg, GIF, or an audio clip.
While we normally don't think of a digital file as being unique, when it is "minted" (created) as an NFT, it has metadata that identifies each file. It's like an artist who makes 1,000 prints and each one is numbered.
Many NFT creators change backgrounds of images to delineate a rare group of an NFT series.
The authenticity of an NFT is verifiable since it is recorded on the blockchain from its creation to each time it is bought and sold.
Unlike cryptocurrencies which are bought and sold on exchanges like Coinbase and Gemini, NFTs are listed and traded on NFT marketplaces such as OpenSea, Rarible, and Nifty Gateway
Bloomberg reported that the NFT market grew to $41 billion in 2021. The conventional art market was $50 billion in 2022. Investment bank Jeffries projects the NFT market-cap will exceed $80 billion in 2025.
INFLUENCERS - People to follow
Kevin Rose – @kevinrose and kevinrose.com
Kevin Rose, 45, is a successful entrepreneur and investor. He was on the cover of Business Week in 2006 with the headline, "How This Kid Made $60 Million In 18 Months – Digg.com's Kevin Rose leads a new brat pack of Silicon Valley Entrepreneurs."
Rose was a general partner at Google Ventures. He was an early investor in Twitter, Facebook, Square, Medium, and Nextdoor. Currently, he's a partner at venture capital firm True Ventures that focuses on NFTs, crypto, and DeFi.
RESOURCES – Books, websites, podcasts, articles
I began my crypto education by watching a full semester course taught by Prof. Gary Gensler in 2018. There are 24 classes and I was riveted by most. If you're as crypto curious as me, watch either the first class or the last one to get a taste of his teaching style. Gensler is the current Chair of the Securities & Exchange Commission.
CRYPTO WORDS – HASH RATE
Hashrate is the combined computational power that is used to mine and process transactions on a Proof-of-Work blockchain. It is important because the more machines dedicated to discovering the next block, the higher the hashrate. And the higher the rate, the more secure the network.
OH, ONE MORE THING – Exciting News! Crypto News for Realtors is having a CONTEST!!! Be the first CNR subscriber to tell me who this guy is, why he's famous in the crypto world, and the date he is honored. (The prize will be obvious to the winner.)
Send your submission to richard.hopen@compass.com. Deadline is April 28, 2022.
Thanks for reading! See you next week.
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