By Pam Martens and Russ Martens: December 5, 2024 ~

Two years ago, more than 1,600 computer scientists, software engineers and technologists from around the world sent a letter to U.S. Senate and House Committee Chairs, Ranking Members, and Congressional leaders.

There were 45 signatories that were employed at Google at the time; 19 who worked at Microsoft; 11 employed at Apple. There were signatories that are Ph.Ds from the most prestigious universities in the world, including the University of Oxford and MIT. And all 1,600 signed a letter that says this about crypto and blockchain:

“We strongly disagree with the narrative—peddled by those with a financial stake in the crypto-asset industry—that these technologies represent a positive financial innovation and are in any way suited to solving the financial problems facing ordinary Americans…

“As software engineers and technologists with deep expertise in our fields, we dispute the claims made in recent years about the novelty and potential of blockchain technology. Blockchain technology cannot, and will not, have transaction reversal or data privacy mechanisms because they are antithetical to its base design. Financial technologies that serve the public must always have mechanisms for fraud mitigation and allow a human-in-the-loop to reverse transactions; blockchain permits neither.”

The letter links to an article from Bruce Schneier, a Security Technologist who teaches at the Harvard Kennedy School. The article appeared at Wired on February 6, 2019 under the headline: “There’s No Good Reason to Trust Blockchain Technology.” The article makes the following salient points:

“What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure.

“When that trust turns out to be misplaced, there is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there’s a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people. Would you rather trust a human legal system or the details of some computer code you don’t have the expertise to audit?”

In 2019, Trump Tweeted that “Bitcoin and other Cryptocurrencies” are “based on thin air” and “can facilitate unlawful behavior, including drug trade….” In 2021, Trump was on Fox Business calling crypto a scam. But all that was before crypto billionaires began plowing big money into his latest campaign for President and he and his family created their own crypto firm, World Liberty Financial. Now Trump is all in on crypto and pledging to make the U.S. the crypto capital of the world.

This past July, Trump delivered a speech at the 2024 Bitcoin Conference in Nashville, Tennessee. At 46 minutes and 10 seconds (46:10) on this CSPAN video of the Trump speech, you can hear Trump say this to the audience:

“America will become the world’s undisputed bitcoin mining powerhouse. You’ll be a bitcoin mining powerhouse. You will not have to move your family to China. We will not be moving to China. As we implement these reforms, Bitcoin and crypto will grow our economy, cement American financial dominance and strengthen our entire country, long into the future….”

Yesterday, consistent with what Trump is doing with other federal agencies, Trump nominated a crypto cheerleader, Paul Atkins, to become Chair of the Securities and Exchange Commission. And, unlike some of Trump’s other jaw-dropping picks, Atkins has actual prior experience at the SEC, so he will more than likely pass Senate confirmation.

That could make Atkins an extremely dangerous man to U.S. national security interests because crypto mining is adding to the heating of the planet and life-threatening climate change.

In January 2022, Senator Elizabeth Warren and other Democrats in Congress investigated the inherent dangers between crypto, energy usage and the heating of the planet. A press statement summarized their concerns as follows:

“Bitcoin is the largest cryptocurrency by market cap, and the United States’ share of Bitcoin mining increased from 4% in August 2019 to 35% in July 2021. This share of mining is growing even more rapidly after China’s crackdown on crypto-mining, which left 500,000 mining operations looking for new locations. This could push North America to represent over 40% of the total global computing power dedicated to mining Bitcoin. As more cryptomining operations proliferate in the United States, the extraordinary energy use raises alarms about massive carbon emissions and the impacts of this energy consumption on consumer energy prices. A recent study estimated that cryptomining in upstate New York raised annual electric bills by about $165 million for small businesses and $79 million for consumers.”

According to a report published by the United Nations University and Earth’s Future journal, “during the 2020–2021 period, the global Bitcoin mining network consumed 173.42 Terawatt hours of electricity. This means that if Bitcoin were a country, its energy consumption would have ranked 27th in the world, ahead of a country like Pakistan, with a population of over 230 million people. The resulting carbon footprint was equivalent to that of burning 84 billion pounds of coal or operating 190 natural gas-fired power plants. To offset this footprint, 3.9 billion trees should be planted, covering an area almost equal to the area of the Netherlands, Switzerland, or Denmark or 7% of the Amazon rainforest.”

The report also found this:

“The UN scientists report that Bitcoin mining heavily relies on fossil energy sources, with coal accounting for 45% of Bitcoin’s energy supply mix, followed by natural gas (21%). Hydropower, a renewable energy source with significant water and environmental impacts, is the most important renewable source of energy of the Bitcoin mining network, satisfying 16% of its electricity demand. Nuclear energy has a considerable share of 9% in Bitcoin’s energy supply mix, whereas renewables such as solar and wind only provide 2% and 5% of the total electricity used by Bitcoin.”

Bitcoin mining involves massive banks of computers being deployed to solve complex math problems which have no practical use to society. The incentive to build these crypto “mines” and solve the math problems is simply to get rewarded with the payment of Bitcoins. A rational person would have to seriously question if the fossil fuel industry has been the invisible hand in creating this preposterous business model to prop up energy demand and prices.

Indicating just how pleased crypto interests were with the nomination of Atkins to head the SEC, Bitcoin spiked above $100,000 yesterday for the first time, following the announcement.

Atkins worked for two SEC Chairmen in the 90s, serving as Chief of Staff to Richard Breeden and Counsellor to Arthur Levitt. He returned to the SEC as a Commissioner from 2002 to 2008. Atkins received his J.D. from Vanderbilt University School of Law.

Following his stint as an SEC Commissioner, Atkins founded Patomak Global Partners in 2009. He remains there today as its CEO. Patomak is a firm that helps crypto firms, Wall Street trading houses and megabanks push for less regulation and get out of trouble with their regulators. It is the quintessential revolving door company with its lawyers having previously worked at Big Law firms providing outside counsel to Wall Street and/or at federal regulators like the SEC and Office of the Comptroller of the Currency (OCC). For an understanding of just how that revolving door spins, the orbit of Keith Noreika who now serves as Executive Vice President and Chairman of the Banking Supervision and Regulation Group at Patomak Global Partners is an eye opener.

Patomak’s website shares the following about its “Litigation Support” and “Crisis Management and Investigation Issues” for its clients:

“Our team assists counsel in legal, regulatory, and transactional issues involving major financial firms and collaborates with counsel to develop litigation strategies. The team then assists counsel with preparing for depositions and enforcement interviews. Patomak’s experience and vision help clients develop effective litigation strategies in preparation for depositions and enforcement interviews.”

And this:

“We work with law firms to support financial institutions during high-profile regulatory investigations. In doing so, we provide expert-level insights to aid preparation for interactions with regulators and Congress on sensitive issues.”