Block Chain Gang LLC, Crypto Cowboy, Something Something Blockchain LLC: Based on the names of dozens of new companies registering to set up shop in Wyoming, the state's effort to lure the latest tech craze appears to be paying off.
In this March 8, 2018 photo Wyoming state Rep. Tyler Lindholm poses next to computer servers in a Cheyenne office building. (AP Photo/Mead Gruver)
Proponents say blockchain — the ledger where transactions of digital currencies, like bitcoin, are recorded — could be the kick in the pants Wyoming needs to attract tech businesses and diversify its economy beyond fossil fuels.
As for how many of these new businesses will get off the ground in Wyoming or anywhere else, time will tell. So far, only a small fraction of them exist as more than electronic paperwork.
Wyoming is willing to find out. In March, Gov. Matt Mead signed four blockchain-friendly bills that arguably make the least-populated state friendlier to the technology than any other.
One new law exempts certain types of blockchain tokens, or cryptocurrencies issued to people who invest in tech startups, from state securities laws.
Another allows businesses incorporated in Wyoming to use blockchain for record-keeping, promising easier and more accurate files on transactions and shareholders. The other two facilitate cryptocurrency trading and exempt cryptocurrency from property tax — a measure more symbolic than anything because Wyoming doesn't have property taxes.
"If you can grab that tiger by the tail, your advantage over other states is tremendous," said state Rep. Tyler Lindholm, a Republican rancher and electrician who sponsored the bills.
The stakes are high as Wyoming struggles with low prices for oil and natural gas and weak demand for coal. The fossil fuels account for 20 percent of Wyoming's economy, more than any other state, and the industry's recent weakness has saddled the state with a $500 million deficit.
Other states hoping to lure tech companies with blockchain-friendly laws include Arizona and Tennessee, which also will now let businesses use blockchain for record-keeping.
One potential problem in Wyoming: Under the U.S. Constitution's supremacy clause, blockchain tokens sooner or later are likely to be regulated by federal law and the U.S. Securities and Exchange Commission, which take precedence over state securities laws and regulations.
"It's taking a sort of pro-business stance, which is great in some respects," Clyde Tinnen, a blockchain attorney with the Withers Bergman law firm in New York, said of the state incentives. "The tricky part is that as a result of the supremacy clause, it may not be as beneficial as they hope."
In February, SEC Chairman Jay Clayton told a U.S. Senate committee that in his opinion, blockchain tokens issued to launch a company during what's called an initial coin offering in most cases appear to qualify as securities.
Initial coin offerings raised more than $4 billion worldwide in 2017, up 18-fold from 2016, according to financial sector research provider Autonomous Research.
Meanwhile, the number of businesses registered in Wyoming with "blockchain" or "crypto" in their names has surged from 17 to over 145 since late last year, when advocates began pushing for the state to pass blockchain-friendly legislation.
One new Wyoming business, Wyoming Blockchain Technologies LLC, registered March 5, seeks to help cities and towns use blockchain for records and collecting sales taxes, said company founder Joseph Coyne.
"It will primarily be an educational effort initially. It will shift into improving cybersecurity, and then we'll start exploring actual use cases," Coyne said. "Ultimately we think the real value will be in the collection and distribution of municipal revenues."
Coyne works from home on the Wyoming plains near the Nebraska and Colorado lines. He's no fan of "some of the craziness we see in the cryptocurrency world right now," including the hype and speculation surrounding Bitcoin.
Neither is the founder of Something Something Blockchain, registered March 20, which despite its name has nothing to do with blockchain. Seattle-based tech consultant Evan Zlotnick said he set up the corporation to bill clients.
"I picked the name as a joke as I am pretty negative on blockchain and cryptocurrency. It seems like nothing but hype," Zlotnick wrote via LinkedIn messaging.
In Cheyenne, cheap electricity and cool weather would seem ideal for bitcoin mining, the complex computations on warehouses of servers that make the cryptocurrency work in exchange for a share of its value. The city is home to a small tech business park with a Microsoft data center and supercomputer dedicated to earth sciences.
But so far at least, bitcoin miners are setting up in Montana, not Wyoming. And Cheyenne has a long way to go to catch up to the Rocky Mountain region's undisputed tech capital, Denver, where the economy is booming and construction cranes bristle the skyline.
A few bitcoin miners have asked about Wyoming's new blockchain laws, but nothing major has come of the legislation just yet, said Ron Gullberg, business development director for the Wyoming Business Council, the state's economic development agency.
"There could be opportunities for developers to come to Wyoming. So we're doing a lot of research and a lot networking and studying up on it," Gullberg said.
Still, optimism about blockchain abounds.
"The thing that I'm excited about is that Wyoming is willing to jump in and experiment, knowing full well we have a great deal of additional work to do," said Coyne. "That includes appropriate regulation."
NEW YORK (AP) — Sometime in the next few days or even hours, the “miners” who chisel bitcoins out of complex mathematics are going to take a 50% pay cut — effectively slicing new production of the world’s largest cryptocurrency in half.
That could have a lot of implications, from the price of the asset to the bitcoin miners themselves. And, as with everything in the volatile cryptoverse, the future is hard to predict.
Here’s what you need to know.
Bitcoin “halving,” a preprogrammed event that occurs roughly every four years, impacts the production of bitcoin. Miners use farms of noisy, specialized computers to solve convoluted math puzzles; and when they complete one, they get a fixed number of bitcoins as a reward.
Halving does exactly what it sounds like — it cuts that fixed income in half. And when the mining reward falls, so does the number of new bitcoins entering the market. That means the supply of coins available to satisfy demand grows more slowly.
Limited supply is one of bitcoin’s key features. Only 21 million bitcoins will ever exist, and more than 19.5 million of them have already been mined, leaving fewer than 1.5 million left to pull from.
So long as demand remains the same or climbs faster than supply, bitcoin prices should rise as halving limits output. Because of this, some argue that bitcoin can counteract inflation — still, experts stress that future gains are never guaranteed.
Per bitcoin’s code, halving occurs after the creation of every 210,000 “blocks” — where transactions are recorded — during the mining process.
No calendar dates are set in stone, but that divvies out to roughly once every four years. The latest estimates expect the next halving to occur sometime late Friday or early Saturday.
Only time will tell. Following each of the three previous halvings, the price of bitcoin was mixed in the first few months and wound up significantly higher one year later. But as investors well know, past performance is not an indicator of future results.
“I don’t know how significant we can say halving is just yet,” said Adam Morgan McCarthy, a research analyst at Kaiko. “The sample size of three (previous halvings) isn’t big enough to say ‘It’s going to go up 500% again,’ or something.”
At the time of the last halving in May 2020, for example, bitcoin’s price stood at around $8,602, according to CoinMarketCap — and climbed almost seven-fold to nearly $56,705 by May 2021. Bitcoin prices nearly quadrupled a year after July 2016’s halving and shot up by almost 80 times one year out from bitcoin’s first halving in November 2012. Experts like McCarthy stress that other bullish market conditions contributed to those returns.
This next halving also arrives after a year of steep increases for bitcoin. As of Thursday afternoon, bitcoin stood at just over $63,500 per CoinMarketCap. That's down from the all-time-high of about $73,750 hit last month, but still double the asset's price from a year ago.
Much of the credit for bitcoin's recent rally is given to the early success of a new way to invest in the asset — spot bitcoin ETFs, which were only approved by U.S. regulators in January. A research report from crypto fund manager Bitwise found that these spot ETFs, short for exchange-traded funds, saw $12.1 billion in inflows during the first quarter.
Bitwise senior crypto research analyst Ryan Rasmussen said persistent or growing ETF demand, when paired with the “supply shock” resulting from the coming halving, could help propel bitcoin’s price further.
“We would expect the price of Bitcoin to have a strong performance over the next 12 months,” he said. Rasmussen notes that he’s seen some predict gains reaching as high as $400,000, but the more “consensus estimate” is closer to the $100,000-$175,000 range.
Other experts stress caution, pointing to the possibility the gains have already been realized.
In a Wednesday research note, JPMorgan analysts maintained that they don’t expect to see post-halving price increases because the event “has already been already priced in” — noting that the market is still in overbought conditions per their analysis of bitcoin futures.
Miners, meanwhile, will be challenged with compensating for the reduction in rewards while also keeping operating costs down.
“Even if there’s a slight increase in bitcoin price, (halving) can really impact a miner’s ability to pay bills,” Andrew W. Balthazor, a Miami-based attorney who specializes in digital assets at Holland & Knight, said. “You can’t assume that bitcoin is just going to go to the moon. As your business model, you have to plan for extreme volatility.”
Better-prepared miners have likely laid the groundwork ahead of time, perhaps by increasing energy efficiency or raising new capital. But cracks may arise for less-efficient, struggling firms.
One likely outcome: Consolidation. That’s become increasingly common in the bitcoin mining industry, particularly following a major crypto crash in 2022.
In its recent research report, Bitwise found that total miner revenue slumped one month after each of the three previous halvings. But those figures had rebounded significantly after a full year — thanks to spikes in the price of bitcoin as well as larger miners expanding their operations.
Time will tell how mining companies fare following this next looming halving. But Rasmussen is betting that big players will continue to expand and utilize the industry's technology advances to make operations more efficient.
Pinpointing definitive data on the environmental impacts directly tied to bitcoin halving is still a bit of a question mark. But it's no secret that crypto mining consumes a lot of energy — and operations relying on pollutive sources have drawn particular concern over the years.
Recent research published by the United Nations University and Earth’s Future journal found that the carbon footprint of 2020-2021 bitcoin mining across 76 nations was equivalent to emissions of burning 84 billion pounds of coal or running 190 natural gas-fired power plants. Coal satisfied the bulk of bitcoin's electricity demands (45%), followed by natural gas (21%) and hydropower (16%).
Environmental impacts of bitcoin mining boil largely down to the energy source used. Industry analysts have maintained that pushes towards the use of more clean energy have increased in recent years, coinciding with rising calls for climate protections from regulators around the world.
Still, production pressures could result in miners turning to cheaper, less climate-friendly energy sources. And when looking towards the looming halving, JPMorgan cautioned that some bitcoin mining firms may also “look to diversify into low energy cost regions" to deploy inefficient mining rigs.
FILE - An advertisement for the cryptocurrency Bitcoin displayed on a tram, May 12, 2021, in Hong Kong. Sometime in the next few days or even hours, the “miners” who chisel bitcoins out of complex mathematics are going to take a 50% pay cut — effectively slicing new emissions of the world’s largest cryptocurrency in an event called bitcoin halving. (AP Photo/Kin Cheung, File)
