28th January 2023 > > Arizona.

tl;dr

Arizona forges ahead with its crypto supportive stance.

Market Snap

Market Wrap

Two days ago, Bitcoin’s hash rate – a measure of the processing power dedicated to the mining of BTC – reached an all-time high.

BTC miners’ cash flow difficulties and debt problems resulting from 2022’s brutal price action are well-known so one might be surprised that this investment in mining rigs continues apace. Such a situation is likely to result in record levels of network difficulty. I would interpret both metrics as positive, but, even more pleasingly, miners’ reserves of BTC are at their lowest for over two years. The threat of ongoing miner supply greater than mining rewards is fast receding, and one should expect an accumulation phase to begin soon.

Curious Cryptos’ Commentary — Arizona

Wendy Rogers, state Senator, has sponsored some crypto related legislation that are of interest to us.

I should point out upfront that some, if not most, of the CCC readership might find her politics and beliefs to be distasteful, as well as her sometimes injudicious turn of phrase. However, the CCC remains fiercely apolitical, with a strong editorial policy that cancel culture does not fit with a decentralised ethos. In that context the commentary below is not an endorsement in any shape or form of anything other than the pursuit of freedom and happiness enabled by the crypto revolution.

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First up we have a bill (https://www.azleg.gov/legtext/56leg/1R/bills/SB1235P.pdf) that aims to make BTC legal tender in Arizona.

Yep, you heard that right.

“A. LEGAL TENDER IN THIS STATE CONSISTS OF ALL OF THE FOLLOWING:

1. ANY MEDIUM OF EXCHANGE THAT IS AUTHORIZED BY THE UNITED STATES CONSTITUTION OR CONGRESS FOR THE PAYMENT OF DEBTS, PUBLIC CHARGES, TAXES AND DUES …

4. BITCOIN.”

This isn’t the first time an attempt to put BTC on a par with USD has been tried in Arizona, but crypto maximalists are salivating at the prospect of this bill becoming law. The motivation for doing so has been expressed on Twitter thus:

“Centralized digital money controlled by the central bankers is slavery. Decentralized #Bitcoin is freedom.”

This is an unacceptable comparison for any reasonable person to make, but equally the underlying sentiment has some validity.

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The State of Arizona has an aversion to taxes:

“Under Arizona’s constitution, all federal, state, county and municipal property are tax exempt, as are public debts, many household goods, and certain stocks of raw or finished materials, unassembled parts, works in process or finished products.”

A second piece of legislation (https://www.azleg.gov/legtext/56leg/1R/bills/SCR1007P.pdf) amends the definition of property that is exempt from taxation to include:

“5. VIRTUAL CURRENCY. FOR THE PURPOSES OF THIS PARAGRAPH, "VIRTUAL CURRENCY" MEANS A DIGITAL REPRESENTATION OF VALUE THAT FUNCTIONS AS A MEDIUM OF EXCHANGE, A UNIT OF ACCOUNT AND A STORE OF VALUE OTHER THAN A REPRESENTATION OF THE UNITED STATES DOLLAR OR A FOREIGN CURRENCY.“

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It is all too easy to fall into the trap that attitudes towards cryptos are solely divided along party political lines, though there are indeed many examples of that divide in play.

Happily, I can report that Arizona, a state that is undoubtedly crypto supportive, has a Democratic governor.