Howdy, crypto partners!

Welcome to another edition of Crypto Roundup. Whether you’re a top hand in digital assets or just a greenhorn, you’re welcome in this bunkhouse. Our aim is to cover the important news in the crypto world and leave you feeling smarter each week.

This week saw some potentially seismic shifts that could reshape the future of digital finance. From Visa’s groundbreaking partnership to Texas’ energy conundrum with Bitcoin miners and a potential accounting game-changer, we’ve got all the juicy details.

Let’s saddle up and ride!

 

☀️ SOL Invictus: Visa Announces New Partnership For Payments 💳

A few weeks ago, we talked about Visa (NYSE: V) testing a new system to simplify “gas fees” (think transaction fees) on the Ethereum network.

Well, the payments behemoth is at it again, announcing this week its intentions to ramp up its use of Circle’s USDC stablecoin on its network. For those not in the loop, USDC is a stablecoin, meaning its value is pegged to a stable asset, in this case, the U.S. dollar. It’s the second-largest stablecoin by market cap, trailing only tether.

As part of those efforts, it also announced the integration of the Solana on its network. Solana is a high-performance blockchain known for its efficiency in decentralized applications and smart contracts. Visa plans to kick off by sending USDC to select merchants via the Solana blockchain in a fresh pilot program.

Remember, I’ve said previously that it would be a mistake to assume the credit card giants were anti-crypto. As this article in Forbes mentions, Visa’s head of crypto, Cuy Sheffield, wrote in a blog post that Visa sees “significant potential for blockchain networks.” He also said, “Blockchains today share some parallels with the early internet—particularly more than their fair share of skeptics, hecklers, and critics.” Interesting.

The Big Picture

We’re witnessing the early stages of some truly disruptive stuff in this arena.

This move by Visa follows PayPal’s (Nasdaq: PYPL) introduction of its Ethereum-based stablecoin, which we covered here. And then, there’s Shopify’s (Nasdaq: SHOP) wholesale integration of Solana Pay, allowing merchants to accept payment with crypto on its platform.

Moreover, the stablecoin market is projected to balloon to a whopping $2.8 trillion in the next half-decade as more platforms leverage public blockchains for value exchange.

Visa’s growing relationship with the blockchain is a testament to the growing integration of traditional finance and the crypto world. As these worlds continue to converge, the landscape of payments, commerce, and financial applications is set for a transformative shift.

Lone Star Power Play: Bitcoin Miner Gets Paid to Hit the Brakes ⚡

They say everything’s bigger in Texas (I can attest to that). And that includes the energy demands. As you can imagine, this summer has not been kind to the power grid. The state’s grid operator, ERCOT, made its usual moves to conserve power, but it also had one trick up its sleeve that caught some people off guard.

It paid Riot Blockchain (Nasdaq: RIOT), a major Bitcoin miner, a whopping $31.7 million to not mine Bitcoin in August.

Why? Well, Bitcoin mining is an energy-intensive process. Miners use powerful computers to solve complex mathematical problems, and in return, they’re rewarded with Bitcoin. But this process consumes a metric crap-ton of electricity.

To put it more scientifically, this article in CBS News points out that Bitcoin consumes roughly 110 Terawatt Hours per year or 0.55% of global electricity production. That’s about what the nation of Sweden consumes, by the way.

Why This Matters

Now, this is where most media stories covering this will stop. They’ll only focus on the novelty of a bitcoin miner getting paid to not do what they’re ostensibly supposed to do — or talk about the larger effects of bitcoin mining on the environment.

But if you dig a little deeper, you’ll learn that this is kind of a feature (not a bug) of the system.

Like other large-scale Bitcoin miners, Riot operates in areas with access to cheap electricity. These miners often have relationships with grid operators, allowing them to act as “demand response” assets for the power grid.

This simply means in situations where there’s an abundance of energy production, miners can use that to mine Bitcoin. But ERCOT can go to Bitcoin miners like Riot when the grid is strained and offer energy credits to slow down (or halt) their usage.

While it might seem counterintuitive for a business to halt operations, the payout was more than the potential profit from mining anyway. Still, as crypto continues to evolve, this story highlights the continuing need for more innovation to address sustainability questions concerning Bitcoin mining.

📊 Could This Accounting Change Spur Corporate Investment? 🪙

I have to admit, I don’t regularly follow the developments of the Financial Accounting Standards Board (FASB). But if I did, I imagine I would die of boredom. But they are shaking things up in a way that could be a game-changer for corporate investment in digital assets.

Let me explain.

The FASB sets the standard for how companies report their financials. And as you may know, in recent years, companies like Tesla (Nasdaq: TSLA) and Microstrategy (Nasdaq: MSTR) have taken to holding crypto assets like bitcoin on their books.

Currently, under the “intangible assets” classification, companies have to report their crypto at the purchase price. This means even if Bitcoin’s price skyrockets, on the balance sheet, it remains at the original purchase value.

But number-crunchers at FASB are considering a proposed change. It would allow companies to “mark to market” their crypto holdings — that is, report them at fair market value, reflecting any ups or downs from the purchase price. This move would align crypto accounting more closely with how other investments, like stocks, are reported.

Why This Matters

As Coindesk reports, analysts at Stifel used MicroStrategy (Nasdaq: MSTR) as a valuable example. The company, run by notorious Bitcoin advocate Michael Saylor, owned roughly 152,300 Bitcoin at the end of the second quarter. They were on the company’s books at a value of $2.3 billion. But that was a 50% (or $2.3 billion) discount to their fair market value at the time.

Saylor himself argues that this change could be monumental. Allowing companies to report their crypto assets’ actual value could encourage more corporate entities to invest. In other words, investors would quickly know that their balance sheets reflect the asset’s worth more accurately.

I’m not totally sold on that at this point. But if folks like Saylor are right, and if the FASB adopts the proposal, it could signal a significant shift in corporate America’s approach to crypto investment. Stay tuned.

Closing Thoughts

As the lines between traditional finance and the crypto world continue to blur, one thing is clear: the future of money is digital.

We’re witnessing the early stages of a financial revolution. Major corporations and regulatory bodies are acknowledging and adapting to the crypto wave. Whether it’s reimagining payment systems, forcing hard questions about energy consumption, or redefining accounting standards, crypto is pushing boundaries and challenging the status quo.

The only question is… will you be there for the ride?

Stay tuned for next week as we continue to track these transformative shifts.

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