Bitcoin Is An Ecological And Monetary Disaster And It Happens To Be Worth Zero.

In December of 2018, I was invited to dinner with some of the world’s largest Bitcoin holders at the Guggenheim museum in New York. The ‘whales’, as they are known, competed with each other in predicting the ways in which Bitcoin would destroy or reform every known industry. The main target was banking – which the largest whale claimed would be wiped out imminently because Bitcoin could be lent from one user to another without a middleman. I proceeded to remark that banks are not just middlemen – they propagate money by lending out multiples more than they take in through deposits. The whale had not thought of that caveat and could not think of a mechanism whereby Bitcoin could replicate the leverage provided by banks. Their other prognostications were just as ill thought out.

Today, Bitcoin’s most ardent proponent is Michael Saylor, the founder of Micro Strategies. Mr. Saylor is not new to financial fame or hyperbole - in the late 90’s, he was charged by the SEC with accounting fraud, having been found to have ‘materially overstat[ed] … revenues and earnings’ and incurred the largest penalty until then outside of insider trading.1 Mr. Saylor has remarkably managed to remain the CEO of Micro Strategies, a software company that has seen its revenues decline by 10% since 2015, and operating profits by 75%. Yet over that same timeline shares in Micro Strategies (MSTR) have nearly quadrupled as the company has taken on leverage to buy Bitcoin. Mr. Saylor claims that Bitcoin will become a widely adopted currency going forward. The problem is that currencies need to be stable to be usable – and Bitcoin is over 10,000 times more volatile than any western currency. When presented with this fact in a recent interview, Mr. Saylor retorted that ‘volatility is vitality’

2 - which may be the most absurd claim in the history of finance. You might as well say death is breath…