To catch the weekly synopsis, consider subscribing to The Bitcoin Minimalist!

News

Silicon Valley Bank Collapse

Silicon Valley Bank (SVB) collapsed late last week, dropping 60%, then another 60% the next day before trading was halted. Before the collapse, the bank met consultants and Peter Theil warned people to leave the bank the same day the price plunged.

SVB was founded in 1983, storing money for venture capital funds and startups across the US. As SVG was collapsing, many were worried that this would decimate the startup and small businesses banked by SVB.

By Monday, there was news that FDIC would cover those affected up to $250,000.

USDC Depegged

At the time of of the SVB collapse, USDC had started to de-peg. Each USDC is usually valued at $1 USD.

News broke out that USDC’s parent company, Circle, banked with SVB, and people started fleeing the stablecoin. Many large crypto exchanges use USDC, including Coinbase.

The USDC and USD peg broke below 88 cents, eventually recovering. The current price is $0.9999 USD per USDC, according to Coin Market Cap.

Contagion to Other Banks

On Monday, the contagion had spread to many other banks, halting trading.

Signature Bank, a large crypto bank, was also frozen. Some asked why, concerned this shut down might be an attack on Bitcoin.

FED Bails out SVB

On Monday, the FED announced it would guarantee all Silicon Valley Bank customer balances, even those not FDIC-insured.

In 2008, 3 banks failed, causing a cascade of bank failures 6-8 months later with many smaller banks. The large banks were left unscathed, consolidating and acquiring the smaller ones.

Anti-Bitcoin, Pro-CBDC

Earlier that week, HB 1193 was voted on having some anti-bitcoin language, changing the definition of money, and possibly looking to sneak in some CBDC language.

Washington has been talking about CBDCs as of late, and with the recent bank failures, this could spell trouble for US citizens and their freedoms if CBDCs were implemented.

Price

While all other banks and stocks crashed over the weekend and into Monday, the Bitcoin price skyrocketed, up over 15% to $26,000 on Tuesday.

Year-to-date figures are a +50% increase in price compared to the SPY, which is below 10% on the year.

Bitcoin’s positive performance directly contrasts the market, highlighting that Bitcoin’s narrative is ever-changing and not held to traditional market volatility.

According to Daniel Batten, the percentage of bitcoin mining that is “sustainable” is over 50%. Because miners are searching for the lowest cost of energy, it is often found that they move towards wind and solar.

Wind and solar are less reliable energy sources, changing supply and production through the day based on weather, so they sometimes drop to negative rates, for example, in West Texas. This might be why mining is seeing a large increase in wind and solar energy consumption.

Tweets

Bitcoin Experiences First Bank Bailout

PoW is Electric

Bitcoin is the Stablecoin

BTC > SVB

The Banking System Explained

Jobs

We have recently launched Bitcoinjobs.com! Looking for a job in the Bitcoin space? Visit Bitcoinjobs.com for more job openings.

What to read

March 2023 Newsletter: A Look at Bank Solvency - Lyn Alden

Thanks for reading The Bitcoin Minimalist! Subscribe for free to receive new posts and support my work.