Presumptive 2024 Republican nominee Donald Trump, in a surprising move, announced on Wednesday his vision for all remaining Bitcoin to be mined within the United States. This strategic positioning of cryptocurrency as a new battleground against President Joe Biden marks a significant shift for Trump, who was previously sceptical of the digital sector. This shift could potentially bring about a new era of cryptocurrency in the U.S., fostering innovation and economic growth.
Key Facts
In a late-night post on his social media platform Truth Social, Trump declared, “We want all the remaining Bitcoin to be MADE IN THE USA.” He warned that Bitcoin, a cryptocurrency mined through a computational process, “may be our last line of defence against” a Central Bank Digital Currency (CBDC), a digital form of a country’s fiat currency that is regulated by the central bank.
Trump has consistently opposed the idea of a “digital dollar” issued by the Federal Reserve, calling it a “dangerous threat to freedom” and promising to block its creation if re-elected. It’s worth noting that a digital dollar could potentially streamline financial transactions, enhance financial inclusion, and reduce the risk of counterfeiting. However, it could also raise concerns about privacy, security, and the potential for government surveillance.
Trump claimed that mining Bitcoin in the U.S. would also make the country “energy dominant.” However, this needs to be clarified, given the high energy consumption associated with Bitcoin mining. Additionally, it’s important to note that the U.S. becoming a major player in Bitcoin mining could have significant economic and national security implications, as it would reduce the country’s reliance on foreign sources of cryptocurrency.
He criticised Biden, stating that the current administration’s “hatred of Bitcoin” benefits U.S. adversaries like China and Russia, as well as the “Radical Communist Left.”
Uncertainties and Controversies
While Trump’s vision for Bitcoin mining in the U.S. is ambitious, the rationale behind several of his claims remains to be determined. It’s debatable how Bitcoin would defend against a central digital currency or help the U.S. become ‘energy dominant.’ Bitcoin mining is energy-intensive, accounting for up to 2.3% of national electricity consumption in 2023. Biden’s proposed 2025 budget includes measures to mitigate this environmental impact, such as a 30% tax on miners’ total energy costs. These uncertainties and controversies highlight the need for careful consideration and planning in the implementation of such a strategy.
Given Bitcoin’s potential use in illicit activities, Trump’s national security argument is also challenging to interpret. He might highlight privacy concerns over a central bank-issued digital currency, a sector that emphasises anonymity.
Recent Developments
Trump reportedly met with Bitcoin miners at Mar-a-Lago on Tuesday, including leaders from CleanSpark Inc. and Riot Platforms. According to CleanSpark chair Matthew Schultz, Trump expressed his support for cryptocurrencies and promised to advocate for Bitcoin miners if re-elected. He suggested that miners could help stabilise the grid’s energy supply, a key concern in the context of Bitcoin mining’s high energy consumption.
Background
Trump has historically been critical of cryptocurrencies. In 2019, he stated that he was “not a fan” of Bitcoin and other digital assets, citing their volatility and potential for unlawful use. However, he has since shifted his stance, revealing significant investments in digital assets, accepting campaign donations in cryptocurrencies, and promoting his “digital trading cards.”
Tangent
Bitcoin’s supply is capped at 21 million, with around 90% already mined. The energy required to mine Bitcoin increases as we approach this limit, and the mining rewards halve approximately every four years. Despite these challenges, the U.S. currently leads global Bitcoin mining, accounting for 35-40% of production. Other leading mining countries include China, Kazakhstan, Russia, Canada, and Germany. However, pinpointing exact locations is difficult due to the computational nature of mining.
Conclusion
Trump’s unexpected embrace of Bitcoin and his push for U.S.-based mining represent a significant shift in his approach to the digital sector. As the 2024 election approaches, cryptocurrency may become a vital issue dividing Trump and Biden, with Trump positioning himself as a proponent of Bitcoin against a backdrop of regulatory scepticism from the current administration. This issue could potentially shape the future of the U.S. economy and national security, making it a crucial consideration for voters in the upcoming election.
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