Bitcoin and Bitcoin Mining | Winning the Economic Debate and Gaining Political Favor

At Redsand Ventures, our deep involvement in the data infrastructure and Bitcoin mining industry over the past four years has provided us with a front-row seat to the transformative power of Bitcoin.

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The landscape of global finance is shifting dramatically, and 2024 marks a pivotal year for Bitcoin and the mining industry. The convergence of macroeconomic factors and geopolitical trends is propelling this digital asset to the forefront of economic debates, while its mining industry is garnering unprecedented political support.

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Institutional interest and the rise of Bitcoin ETFs

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The growing recognition of Bitcoin in global economics is largely driven by the increasing institutional interest and the expansion of Bitcoin exchange-traded funds (ETFs). These financial instruments are revolutionizing the way investors access and engage with Bitcoin. The introduction of Bitcoin ETFs is akin to the launch of gold ETFs two decades ago, which democratized access to gold investments and fuelled a significant market expansion. Similarly, Bitcoin ETFs are expected to broaden participation in the cryptocurrency market, particularly among institutional investors who were previously hesitant due to the complexities of direct Bitcoin ownership.

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Major financial firms like BlackRock, Fidelity, and Invesco have already applied for Bitcoin ETF approvals, signalling a shift towards wider adoption. These ETFs provide a regulated and familiar investment vehicle, making it easier for institutions to include Bitcoin in their portfolios. This shift not only enhances market liquidity but also bolsters confidence in Bitcoin as a legitimate asset class. The global expansion of Bitcoin ETFs, particularly in regions like Canada, Brazil, and Europe, underscores Bitcoin's emerging role in the global economy. These developments are driving significant changes in the financial landscape, contributing to the maturation of the cryptocurrency market and potentially leading to a more stable and integrated role for Bitcoin in global economics.

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Bitcoin's growing role in national economies

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Beyond institutional adoption, several countries are integrating Bitcoin into their economic policies, further solidifying its role on the global stage. El Salvador made history in 2021 by becoming the first country to adopt Bitcoin as legal tender, setting a precedent that has been closely watched by other nations. The Central African Republic followed suit in 2022, adopting Bitcoin alongside the CFA franc to bolster its financial system and increase access to global markets. While not adopting Bitcoin as legal tender, Brazil has recognized cryptocurrencies as a legal form of payment, signalling a strong move towards crypto integration. Panama and Hong Kong have also introduced legislation and policies that support the development and adoption of cryptocurrencies, highlighting a broader trend of Bitcoin integration into national economies.

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Political support in the United States

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The political landscape in the United States is also shifting in favor of Bitcoin. At the Bitcoin 2024 conference in Nashville, former President Donald Trump outlined his vision for integrating Bitcoin into US economic policy. Trump pledged to establish a strategic Bitcoin reserve for the United States if re-elected, emphasizing the importance of retaining government-held Bitcoins as a step towards securing America's financial future and maintaining global economic dominance, particularly in competition with China. Trump's proposals include regulatory changes aimed at creating a more favourable environment for Bitcoin and cryptocurrency investments, as well as policies to boost domestic Bitcoin mining by leveraging the country's energy resources.

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Similarly, Robert Kennedy Jr., a U.S. presidential candidate, proposed designating Bitcoin as a strategic reserve asset. Kennedy's plan involves accumulating up to 4 million Bitcoins as part of the U.S. Treasury's reserves, positioning Bitcoin as a hedge against inflation and a crucial asset in the context of global economic competition. Both politicians highlight the strategic importance of Bitcoin mining, suggesting that the U.S. should lead in Bitcoin adoption to stay ahead of global competitors like China. This stance could result in increased government incentives for mining companies and investments in energy-efficient mining technologies.

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The BRICS factor and global competition

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Recent developments from the BRICS nations (Brazil, Russia, India, China, and South Africa) also have significant implications for Bitcoin. The BRICS bloc is making substantial progress on creating a blockchain-based digital payment platform aimed at reducing reliance on the U.S. dollar and circumventing systems like SWIFT. This platform would facilitate trade in local currencies among BRICS nations, promoting financial independence from Western-dominated financial systems. While Bitcoin's volatility currently limits its use as a stable medium of exchange, the push towards decentralized financial systems could eventually create a more favourable environment for Bitcoin adoption within the BRICS framework.

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Moreover, the BRICS discussions include the possibility of creating a shared cryptocurrency for cross-border settlements, which could pave the way for more structured and widespread use of digital assets, including Bitcoin. While the direct adoption of Bitcoin by BRICS nations remains uncertain, the bloc's initiatives to develop independent financial systems and reduce reliance on the dollar could create an environment where Bitcoin and other cryptocurrencies gain more traction over time.

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A bright future for Bitcoin and Bitcoin Mining

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The convergence of institutional interest, national adoption, political support, and geopolitical trends is creating a perfect storm for Bitcoin and the Bitcoin mining industry. The strategic importance of Bitcoin is becoming increasingly clear, with policymakers and industry leaders recognizing its potential to reshape the global financial system. As we look to the future, Bitcoin and its mining industry are not only winning the economic debate but also gaining political favour, positioning themselves as central players in the new global economy.

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At Redsand Ventures, we remain steadfast in our support for decentralized economies, infrastructure, and finance, confident that Bitcoin's best days are still ahead.

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Author:

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Nicole Anderson, Managing Partner Redsand Ventures

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