Senator Cynthia Lummis has officially introduced the Bitcoin Strategic Reserve bill that plans to establish a national Bitcoin reserve fund. The bill has already received support from politicians like RFK Jr. and Donald Trump. Meanwhile, the crypto community is waiting to see what the effect of the accelerated repayments to Mt. Gox creditors and the near all-time high mining hashrate will be on BTC’s price. Concurrently, Bitcoin miner Riot Platforms reported a Q2 net loss because of increased costs, although its mining revenue increased driven by Bitcoin's price climb.
Wyoming Senator Pushes for National Bitcoin Reserve
Senator Cynthia Lummis has officially introduced the Bitcoin Strategic Reserve bill that aims to direct the United States government to establish a reserve fund for Bitcoin. The bill proposes creating a decentralized network of secure Bitcoin vaults under the control of the US Treasury, with strict cybersecurity and physical security measures to protect the funds.
The goal is to accumulate 1 million BTC, or approximately 5% of the total supply, by using existing Treasury funds to buy BTC in amounts reflecting the Treasury's gold allocation. Lummis believes it is time for the US to take bold steps to address inflation and national debt, and stated that the reserve would create a brighter future for generations.
The bill also reaffirms the right to self-custody Bitcoin in the United States, a right that has been challenged by some lawmakers. So far, this ambitious plan has been supported by politicians like RFK Jr. and the Republican Party's 2024 presidential candidate Donald Trump.
However, after Trump promised not to sell any of the US's Bitcoin holdings, the government transferred 29,800 Bitcoin, valued at close to $2 billion, to an unmarked wallet. This move raised quite a few eyebrows, and Galaxy Digital CEO Mike Novogratz called it "tone deaf."
Some believe the US's current inflation and national debt issues will strengthen the case for hard assets like Bitcoin. Matt Bell, the CEO of Turbofish, argued that the sustainability of fiat currencies is increasingly concerning the global population, which could lead to a growing interest in assets like Bitcoin as a hedge against inflation and economic instability.
Mt. Gox Repayments Accelerate
Whether the US government decides to buy or sell its BTC, it will likely have an effect on the crypto king’s price. This is what many think the case will be with the Mt. Gox repayments as well, but some experts disagree.
According to Lookonchain data, Mt. Gox recently moved $3.13 billion worth of Bitcoin to various wallets. These repayments, which started in late May, accelerated in July. However, the market may have overestimated the selling pressure from Mt. Gox as many Bitcoin holders have transferred their coins to cold storage instead of selling.
Bitcoin is trading hands at $63,887,73 at press time, after its price dropped by over 2% throughout the past day. So far, more than 40% of the coins have already been distributed to Mt. Gox creditors.
SkyBridge Capital founder Anthony Scaramucci downplayed the impact of Mt. Gox repayments on the market, and pointed out that there are still strong inflows into BlackRock’s IBIT ETF.
Mt. Gox was once the leading crypto exchange, but collapsed in 2014 after a major hack. The exchange accounted for over 70% of global trading volume at its peak. In May, Mt. Gox transferred 140,000 coins to an unknown address to prepare for repayments.
According to Crypto research firm Glassnode, the completion of these repayments will remove a major bearish factor from the market. Blockstream CEO Adam Back has also dismissed the repayments as insignificant, and predicted that Bitcoin could reach a new all-time high soon.
Mining Hashrate Surge Could Stabilize BTC’s Price
In related news, the Bitcoin mining hashrate is nearing all-time highs, and CryptoQuant analysts believe this could help stabilize BTC's price. The hashrate has been recovering since July 9, which coincided with Bitcoin's price rebound to over $69,000 before a correction to around $63,000.
Currently, the hashrate is only 2% below its peak, compared to an 8% drawdown earlier in July. This recovery is typically associated with a sustained rally in Bitcoin prices. According to CryptoQuant's market report, miners have increased hashrate as they are now being fairly compensated after the recent price rally. This contrasts with earlier in the year when miners were underpaid.
Bitcoin Network Hashrate (Source: CryptoQuant)
Data shows that the mining hashrate reached an all-time high of 667 EH/s on Monday when Bitcoin's price surged above $69,000, though it has since slightly dipped to 636 EH/s. Bitcoin outflows from miner wallets have also cooled, and large miners are actively accumulating Bitcoin. Daily outflows now stand at between 5,000 and 10,000 BTC, down from higher levels earlier in the year. Large miners now also hold 65,000 BTC, up from 61,000 at the start of 2024, while smaller miners have reduced their holdings from 59,000 BTC to 51,000 BTC.
Miner revenues have increased a lot as well, with total daily revenues rising by almost 50% to $32 million, supporting the hashrate comeback. However, the report did reveal that miner profitability is heavily dependent on Bitcoin's price due to low transaction fees, which have dropped from 150 BTC before the halving to 8 BTC.
Riot Platforms’ Revenue Falls
Bitcoin miner Riot Platforms reported a Q2 net loss of $84.4 million, or $0.32 per share, which is double the $0.16 per share loss forecasted by Zacks. This is the first quarterly loss for Riot since Q4 of 2022, largely due to an increase in selling, general, and administrative expenses totaling $61.2 million.
Riot's revenue fell 8.75% year-on-year to $70 million, slightly missing Zacks' estimates. The decline in revenue was attributed to a drop in engineering revenues, partially offset by increased Bitcoin mining revenue.
Riot's Bitcoin mining production also decreased by 52% to 844 BTC in Q2, which the company attributed to April's halving event. The cost to mine a Bitcoin rose 340% from $5,734 to $25,327 due to the halving and a 68% rise in the Bitcoin network hash rate.
Despite this, Riot's Bitcoin mining revenue increased by 12%, which was driven by a near-100% rise in Bitcoin's price between June 30 of 2023, and June 30 of 2024. Riot also almost doubled its installed hash rate to 22 exahashes per second during Q2 and expects to reach 36 EH/s by the end of 2024.
Riot intensified its acquisition strategy against rival Bitfarms as well by buying roughly 10 million additional shares, according to a July 31 filing. Although Riot attempted a $950 million buyout of Bitfarms in mid-June, the company later admitted defeat because of the impossibility of engaging with Bitfarms' board.
Riot pLatforms Inc share price (Source: Google Finance)
Riot's share price fell 1.74% in after-hours trading after the Q2 report, according to Google Finance data, and is down close to 33.8% in 2024.
