Bitcoin’s Future Looks Uncertain as Bearishness Spreads

On July 3, Bitcoin’s price fell briefly below the crucial $60,000 psychological mark on fears that Mt. Gox is about to release $9 billion worth of BTC.

U.S. Sport Bitcoin ETFs ended a five-day inflow streak with $13 million in net outflows on Tuesday. The sell-off to $59,000 seems to be a mix of concerns about the Mt. Gox distribution, ongoing inflation in the U.S., and growing bearish sentiment.

Bitcoin’s price dropped 18% during the second quarter of 2024. Investors had been anticipating a breakout above $70,000 to new all-time highs, but instead now face the prospect of an extended price correction.

The first evidence that Mt. Gox has started to repay its holders came from Charles Edwards, the founder of digital asset hedge fund Capriole Investments. Edwards wrote in a July 2 X post: “The entire history of the Bitcoin Spent Volume chart has disappeared because an enormous sum of Bitcoin moved on-chain, 10X more than the previous highs. $9B. But by who? Mt. Gox. It looks like those distributions really are coming.”

Source: X

More than $9.4 billion worth of Bitcoin is owed to approximately 127,000 Mt. Gox creditors who have been waiting for over ten years to recover their funds. The question is how many investors will cash out after waiting a decade, and how many will be content to continue hodling their coins? The $9 billion from Mt. Gox is significant, but could be eventually absorbed by institutional inflows to spot Bitcoin ETFs. The ETFs have amassed over $52.5 billion worth of BTC since their launch in January.

On Wednesday, Jerome Powell, chair of the U.S. The Federal Reserve, spoke about the economy and monetary policy at an event in Portugal, emphasizing the need for more evidence before considering interest rate reductions. Following his remarks, market anticipation for a rate cut at the upcoming September Federal Open Market Committee (FOMC) meeting diminished slightly, though the probability remained about 65% according to the CME Group’s FedWatch Tool.

Marathon Hodls

Marathon Digital Holdings, the world’s largest Bitcoin mining firm, has not sold any of its coins over the past month. Despite Bitcoin being in a downtrend for over a month, Marathon Digital chose to hold. As of June, the company held a total of 18,536 BTC worth over $1.1 billion, according to a report published on July 3. The company said it intends to continue strengthening its Bitcoin holdings through open market BTC purchases and investing in “other opportunities to increase its Bitcoin yield.” However, it also noted that it might sell some of its BTC in the future, “MARA opted not to sell any Bitcoin in June. The Company still intends to sell a portion of its Bitcoin holdings in future periods to support monthly operations, manage its treasury, and for general corporate purposes.”

Marathon, valued at over $6.25 billion, has doubled its operational hashrate year-over-year to 26.3 exahashes (EH/s) in June. This increase is primarily due to operational improvements at the Ellendale facility, which is now fully operational according to Fred Thiel, CEO and chairman of Marathon Digital. Thiel stated: “Our proprietary mining pool outperformed, capturing 158 blocks during the month, a 10% increase over last year. Domestically, our team continues to optimize our recently acquired sites with immersion cooling technology and the latest generation hardware. With these advancements and the expansion of our fleet, we remain on track to reach our target of 50 EH/s by the end of this year.”

Big Tech’s Carbon Footprint Overshadows Bitcoin Mining Emissions

The carbon footprint of Big Tech companies continues to grow rapidly due to the rise of generative artificial intelligence products and services. Amazon alone produces more carbon dioxide emissions annually than all the Bitcoin mining operations worldwide. Since 2019, when major U.S. tech firms began disclosing their emissions, Big Tech has released more carbon dioxide into the atmosphere than Bitcoin has since its inception in 2014. Amazon reported generating 71.54 million metric tons of CO2 in 2021, surpassing Bitcoin’s estimated annual emissions of 65.4 million metric tons. When combining Amazon’s emissions with those of Google (14.3 million tons in 2023) and Microsoft (15.3 million tons in 2023), the total exceeds 100 million tons per year, even before accounting for Amazon’s growth or Apple’s emissions (15.6 million tons).

Bitcoin’s Carbon Footprint

Calculating the exact carbon footprint of Bitcoin is challenging due to the lack of comprehensive power grid usage data from all countries involved in mining. However, estimates based on mining activity and electricity consumption provide a feasible approximation. A United Nations University study found that the global Bitcoin mining network consumed 173.42 terawatt-hours of electricity between 2020 and 2021. If Bitcoin were a country, its energy use would exceed that of Pakistan, which has a population of 220 million. Another study estimated Bitcoin mining’s annual CO2 emissions at 65.4 megatonnes, comparable to Greece’s total emissions.

Critics argue that Bitcoin’s value does not justify its environmental impact. However, when comparing Bitcoin’s emissions to those of large tech companies, it becomes evident that Big Tech is a more significant contributor to carbon emissions. Assuming similar power demands and carbon outputs for data centers involved in AI, Bitcoin, and cloud computing, data indicates that U.S. Big Tech companies have emitted more carbon since 2019 than all global Bitcoin mining operations have throughout the cryptocurrency’s existence.

Polymarket Beats on Biden’s Wobbles

A New York Times report that President Joe Biden is weighing his future in the 2024 race prompted traders on Polymarket to increase the odds the Democrat will drop out to almost 80% on Wednesday, a massive jump from 55%. If Trump does win, Bitcoiners will hope that a pro crypto Whitehouse will bring some relief to the market.

Source: Polymarket

Bullish or Bearish?

Despite the bearish sentiment, some analysts remain long-term bullish, Tom Lee, head of research at Fundstrat Global Advisors, told CNBC that he expects a rally of up to $150,000 after the Mt. Gox distribution is completed. “One of the biggest overhangs is going to disappear in July, I think it’s a reason to expect a sharp rebound in the second half,” he said.

Meanwhile, billionaire Libertarian and early Bitcoiner, Peter Thiel has expressed skepticism about Bitcoin’s potential for further dramatic price increases in the near future. Speaking at the Aspen Ideas Festival on June 27, Thiel said that he continues to hold some Bitcoin but doubts that its price will rise significantly from current levels. He suggested that the best time to invest in Bitcoin was last year, and now its growth from here will be curtailed.