The Environmental Impact of Bitcoin, Blankos, and Beyond Good & Evil

Bits of Signum 06.12.2021

Well-known Plastic Toy Designer Candie Bolton Sells Out First Digital Toys in Mythical’s Upcoming Game Blankos in 112 Seconds

After an incredible trip last week to Bitcoin Miami 2021, we have been reflecting on what we learned from so many smart people in the space. It was a reunion of discussion, debate, and just generally challenging ourselves to think differently about the future of money, self-sovereign wealth creation, and a world with more open financial access. These are all core tenets of Signum Growth Capital.

When Elizabeth Warren (D-MA) came out this week with “you bet” referring to the need for Bitcoin regulation and the obvious damage Bitcoin does to the environment, we couldn’t help but to resurface the great work done by ARK Invest and to provide a couple of points of rebuttal below.

The environment continues as a hot topic in crypto, and it even surfaced this week in video games, when Ubisoft (the publisher of Beyond Good & Evil if you were wondering why I mentioned it in the title) reported that Ubisoft’s execs’ bonus will depend on how successful they are at carbon reduction. This change in focus is an important one because it demonstrates that the company believes that gamers care a lot about ESG, which could encourage other gaming companies to follow suit.

Separately, the Series B for Mythical Games has wrapped and the drumbeat of Sold Out Blankos NFTs continues. Well-known plastic toy artist Candie Bolton’s drop sold out in 112 seconds, which is a good sign given the Blankos game hasn’t launched yet. On the topic of the environment, I’m sure she can say, hand-on-heart, that Blankos toys are an improvement over the plastic toys that made her famous.

I spent some time in Miami with Quincy Jones’ music team, OneOf, and wow, the vision of the creative team and the OneOf platform, led by CEO Lin Dai, is mind blowing. Stay tuned for a bigger report on MUSIC. As we have previously discussed in our Primer on the Polkadot Network, the crypto world outside of Bitcoin is moving to “Proof of Stake” networks. OneOf is built on Tezos, and like all Proof of Stake networks, Tezos is a environmentally friendly option with almost no impact on the environment.

We generally find it interesting that as the pricing hype dies down for NFTs, the fundamentals are getting stronger. I was happy to see my friend Al Tylis jump in to create the first NFT for his traditional soccer team in Mexico — he will sell a 1% stake in Club Necaxa (Liga MX) in an NFT auction with a starting bid of $1.3m.

Finally, E3 is kicking off today and we cant wait to hear was CEO John Linden has to say-> Mythical E3 Keynote on Monday, June 14 at 11:10am PT. Also stay tuned as Mythical will release a first NFT Twitch Drop! Speaking of the most anticipated game conference, Kevin Lee from IGN published this helpful EG schedule (so far) and here is a link to register — it is all virtual and free.

Thanks and happy summer weekend!

Angie

The US Senate Banking Committee held a CBDC hearing and put Bitcoin in the hot seat. While the meeting was aimed at a Central Banking Digital Currency, Senator Elizabeth Warren (D-MA) expressed deep concerns about Bitcoin and other cryptocurrencies’ lack of security, high volatility, and not surprisingly, she didn’t miss a chance to jump on the environmental costs.

We continue to be concerned that the U.S. will miss out as people and resources flow to friendlier jurisdictions. Following the news that El Salvador will be the first country to adopt Bitcoin as a legally recognized currency, the Reserve Bank of India directed commercial banks and other entities to stop avoiding transactions involving cryptocurrency. Could India actually be warming up to Bitcoin? Could this cause many other countries to warm up to Bitcoin? We are wondering if we might start to see countries adopt Bitcoin as a way to attract innovation and boost their economies at the expense of the United States.

• On Security: Elizabeth Warren believes that Bitcoin is not secure as a currency. Meanwhile, bitcoin’s use of blockchain makes it arguably the most secure currency platform available for use. Addresses and transactions can be traced and measured by anyone. In fact, just this week, the government has used its ability to track down ransomware that a major U.S. pipeline operator paid to a Russian hacking collective last month. It also has been able to freeze wallets belonging to terrorist groups which would not be possible with fiat currency.
• On the Environment: The entire environmental narrative has shifted more favorably toward Bitcoin in our view. China mining operations have been coming off line all year. On the margin, the less mining in China and the more mining elsewhere implies more clean mining. The drumbeat continued this week when China’s Qinghai crypto miner shut down, again in response to concerns that miners are using mainly coal based energy and government’s desire to decrease its carbon footprint.
• Then ARK Invest’s report really accelerated the shift, pointing out — “a world with bitcoin is a world that, at equilibrium, generates more electricity from renewable carbon-free sources.” The ARK model demonstrates how the aforementioned statement holds true using real-world data to forecast how bitcoin mining could encourage investments in solar energy and help renewables generate a higher percentage of grid power, with no change in cost of electricity!
• In addition to demonstrating more reliable provision of power at equal profitability, the model can also be used to understand the way in which power systems might be underwritten given the availability of bitcoin mining as a tool for power developers. Read the full ARK report by Brett Winton (@wintonARK), Yassine Elmandjra (@yassineARK) & Sam Korus (@skorusARK) here.

In the news on NFTs/Digital Assets/Crypto/esports/Video Games -

• Liga MX & NFTs: For $1.3 Million, an NFT and stake in a Mexican Soccer Team Club Necaxa plans to sell a 1% stake in Club Necaxa in an NFT auction with a starting bid of $1.3 Million. Necaxa is using the NFT to generate more interest in the soccer club as well as reach a new audience. The adoption of NFTs by a well-known soccer team is important because in the past, monetizing professional sports rights has been challenging in a token model.
• Quincy Jones’ OneOf Music NFT Platform: has announced that he is backing a new NFT marketplace for music fans called OneOf. Several big-name artists including Whitney Houston, Doja Cat, John Legend, Charlie Puth, and others have already prepared collections of NFTs which are to be released on the platform. The company has raised $63 million from seed funding and has been in the works for two years now. This will be a big development in the NFT sector as it will open the market to a much larger audience.
• China’s Qinghai Crypto Miner Shut Down: via a government document. This order is in response to concerns that miners are using mainly coal based energy and the local government has been trying to decrease its carbon footprint. Additionally, the State Council is making an effort to maintain financial stability by cracking down on crypto mining and trading. While bitcoin is making major strides in countries like El Salvador, there is still major push back in others because of the environmental and volatility risks that bitcoin carries.
• Amazon and Blockchain: The company is looking to hire blockchain staffers with experience in decentralized finance. There has been speculation for some time that Amazon has been looking for staff to build a digital payment token which seems to be part of an “emerging payments initiative”. Amazon is one of the largest sellers of goods in the world and if they build a team for their own NFT or mainstream the use of crypto, this would really help from a legitimacy perspective.
• Red Bull Racing Partnership with Tezos: as the Team’s Official Blockchain Partner. Tezos is an energy efficient blockchain which will be used to create the first ever “NFT fan experience” for Red Bull. Tezos was chosen by Red Bull because of the more energy efficient means of securing their network by using a, Proof of Stake, method. Many sports teams have recognized the value of NFTs and digital assets to maximize and create a unique engagement with their audience like the NBA and the NFL; now Racing is the most recent sport in which NFTs are being embraced.
• 0x and Ethereum Invest in Polygon: The teams behind the platform Polygon announced they will be spending $10.5 million to increase the number of users on the network. The investment will be used to make the network easier to use and to develop DeFi infrastructure. Given Ethereum’s hurdles of speed and gas fees, we have been hearing from issuers that Polygon is a solution that works well among side chain players. We still believe that interoperability and security will be top priorities in the future and that Polkadot solves these, as a Layer 0 protocol which operates one layer below and allows all blockchains to communicate with each other.
• JBS USA Holdings Pays Ransom: the FBI believes to be, REvil. The group was able to gain control of the company’s computers and data, while demanding $11 million in bitcoin. While JBS was able to regain control of their computers and data, there was no guarantee they wouldn’t be attacked again, so they paid the ransomware group what they asked. As a result, The U.S. Dept. of Justice has elevated ransomware hacking to a similar level as terrorism. This attack, as well as the Colonial Pipeline attack, have shed some light on the concerns that people have about the risks of ransomware.

Esports

• Fighting Game Annual Tournament: CEO(Community Effort Orlando), has received two thousand first day registrations and multiple games have already reached their participant cap. While most people think of esports as games which are open map, complicated, and multiplayer, fighting game esports tournaments have been selling out around the country . There has been a noticeable rise in demand for these types of games which could signal the possibility for fighting or other categories of video games to enter the esports domain.
• BYD Auto signs sponsorship deal: one of the biggest automotive companies in China, said that they have signed a sponsorship deal with the Chinese League of Legends Pro League Team, Victory Five. This is another example of a large, non-endemic company getting involved in professional esports.
• Baltimore Ravens and Esports: The NFL team announced that they will be launching a new league called, the Ravens Gaming League. To support this launch, the Baltimore Ravens have partnered with Esports Entertainment Group to serve as official esports tournament providers and will run tournaments using their platform. While professional sports team’s involvement in esports is certainly not new, it has waned given the challenging business model and difficulty in securing big sponsorships that many teams face.
• Claro Moving into Brazilian Esports: The Brazilian based company will be launching an esports circuit for amateurs called Arena Gaming. Claro has been a part of many large esports events and moving their focus to Brazil says a lot about the bigger picture of where there is growth for esports. This is just following a big announcement from Dell who said they would be sponsoring a tournament in Brazil. We are certainly following the growth in South American esports!
• Immortals Gaming Club to Include Wild Riftin its Latin American gaming platform service, Gamers Club, and is launching a tournament called “Conquest” in Brazil. Additionally, the large consumer electronics company, Razor, has signed on a sponsor for the tournament.
• FaZe Clan Cover of Sports Illustrated: The feature has become the first esports organization to be on the cover of Sports Illustrated. Lebron James’ son and football player Kyler Murray are also featured with the organization, bridging the gap between physical and esports.
• Crypto Sponsor for CS:GO Circuit: The Brazilian Counter-Strike Circuit has announced that the crypto exchange Mercado Bitcoin will be the newest sponsor for the competition. The plan is to develop digital assets such as utility tokens, FanTokens, and NFTs. Now that a crypto organization has stepped foot into the country, it almost brings the attraction to a level that is similar in other countries who have had similar partnerships but perhaps more popularity.

Video Games

• Mythic Launches M1076 Analog Matrix Processor: to provide a low-power AI processing unit to gamers. The device they created can operate with 10 times less power than a normal system. This is a significant development in the processing world, as many have been focused on this challenge for close to a decade. This could lead to a jumpstart in the sector as it may show other companies that they need to step up their game to continue to compete in the industry.
• IDC Expects Jump in Play-Time to Persist on Mobile: A market intelligence firm reported an expectation that the 75% consumer playtime increase on mobile games during covid to continue post pandemic. If true, this will have a significant impact on models and expectations across the mobile gaming companies. While covid certainly did increase the time spent playing (in place of commuting and all of the other slack time due to a lack of movement), it may have also introduced new players who will end up being regular users.
• Ubisoft’s Executives’ Bonus will Depend on Carbon Reduction: This change in focus is an important one to recognize because it demonstrates that the company believes gamers care about ESG, which could encourage other gaming companies to follow suit.

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