Thursday, July 18, 2024

For the first time in history, Bitcoin and the cryptocurrency community at large could play a pivotal role in a U.S. presidential election. Although November 2024 is over a year away, campaigns are already in full swing and, like it or not, Bitcoin is on the ballot. The fact that many candidates feel compelled to take a stance on “crypto” is a testament to the uniqueness of the moment.

On the Republican side, several major candidates – Governor Ron DeSantis, Mayor Francis Suarez, and Vivek Ramaswamy –  are proponents of Bitcoin, celebrating the technology’s tenets of freedom, privacy, and decentralization. DeSantis has also come out against a U.S. central bank digital currency (or “digital dollar”), signaling his commitment to decentralization and data privacy.

This story is part of CoinDesk’s 2023 Mining Week, sponsored by Foundry. Kyle Schneps is the director of public policy at Foundry.

For the Democrats, Robert F. Kennedy Jr. pledged to support the rights of all Americans to use, custody, and mine Bitcoin without undue prejudicial government scrutiny. And, while Elizabeth Warren has vowed to build an “anti-crypto army,” she at least knows that crypto is a topic to be reckoned with, albeit in a negative sense.

Even former President Donald J. Trump – the Republican frontrunner and longtime Bitcoin skeptic – remains uncharacteristically silent on the issue. Clearly, a political shift is underway, begging the question: if Bitcoin was a non-factor in previous general elections, why is this time different?

Indeed, the growth of the crypto industry and the sheer number of investors in the United States is reaching levels hard to ignore. The U.S. Federal Reserve estimates that 8%-11% of Americans – certainly enough to sway an election – own cryptocurrencies depending on the relative timing of the bull/bear market cycle. This number will likely increase dramatically given the recent pivot by BlackRock, Vanguard, and other major financial institutions to invest in Bitcoin (BlackRock recently applied to the SEC to form a Bitcoin ETF, long seen as a key vehicle for more mainstream acceptance).

Read more: Anthony Power – How Miners Are Preparing for the Next Bitcoin Halving

Moreover, according to a Plaid survey, 46% of Black Americans and 44% of Hispanic Americans view cryptocurrencies as more accessible than the traditional financial sector. Comparative data from the Fed and Pew Research Center confirm that crypto investment is the only asset class where Black and Hispanic voters outpace White Americans per capita. These are key electoral demographics for a presidential election, especially when we consider that a candidate’s stance on crypto policy could directly impact voters’ investment portfolios.

Bitcoin and other cryptocurrencies receive a significant amount of attention from the press compared to other industries, and press is vital for the success of any political candidate. As a result, many politicians are taking strong stances on crypto policy, one way or the other, because it can boost their public profile. Senator JD Vance (R-Ohio), for example, won his first term in 2022, in part, by positioning himself as a pro-Bitcoin candidate. Moreover, in the 2022 New York Governor’s race (the closest one in decades), both Kathy Hochul and Lee Zeldin were asked during their first public debate to share their views on Bitcoin and Bitcoin data centers –  a topic never raised in previous election years. It’s clear that, whatever the political viewpoint, Bitcoin is becoming an increasingly important election issue.

The Biden administration has maintained a tough-on-crypto policy posture since taking office in January 2021. Both the White House Office of Science and Technology Policy (OSTP) and the Council of Economic Advisers delivered unfavorable reports on Bitcoin.

The OSTP report, for example, railed against the environmental impact of Bitcoin data centers without making apples-to-apples comparisons to other major industries or analyzing the data center market in its entirety. The OSTP report also devoted nearly 20% of its citations – more than any other source by far – to Digiconomist, a highly controversial researcher whose methodology has been largely debunked by various technical analysts. In addition, the President’s budget proposed a specific 30% Digital Asset Mining Energy (DAME) tax on Bitcoin data centers without applying the same standard to any other types of data centers.

Read more: George Kaloudis – Through It All, the Bitcoin Mining Industry Looks Set for Growth

Promoting specific policies that are anti-Bitcoin mining could also negatively affect candidates in the 2024 election. Many Bitcoin data centers are developing businesses in rust belt counties, like those in Pennsylvania and Ohio, which represent key swing votes for a federal election. Bitcoin mining companies are employing thousands of voters, increasing local tax revenue, and revitalizing areas that have been overlooked and underserved for generations.

A Bitcoin mining tax, like the DAME excise tax, would threaten jobs and revitalization in these important electoral communities, and therefore could be met with opposition in key electoral zones. It remains to be seen whether the 2024 Biden campaign will soften its approach toward the industry as it pivots into campaign mode in these areas.

Perhaps the most important political game-changer for the 2024 election may lie within the Bitcoin and cryptocurrency community itself. Bitcoin and crypto enthusiasts can be known for their internal fractiousness. Divisions within divisions among various impassioned ideologies have at times become an almost revolving cycle of mitosis. Yet the political and regulatory crackdown on the industry may serve as a galvanizing force.

Where once protocol wars, Twitter battles, or coin cultures may have trumped all other concerns, there is now a growing unification among many supporters who realize that political cohesion might be necessary for survival in the United States. In a series of investigative pieces in early 2023, investor and analyst Nic Carter laid out in stark detail how the banking sector was potentially being used to extra-judiciously hamstring Bitcoin and crypto businesses. While there were many negative ramifications to such policies for American companies, perhaps the silver lining for the industry is that it served as a wake-up call, demonstrating that internal divisions amount to little when compared with indiscriminate external attack.

In a sense, the anti-Bitcoin and anti-crypto rhetoric espoused by some in Washington DC has unwittingly created an ardent and oppositional voting bloc where one had not previously existed. Like any industry or community, Bitcoin and crypto supporters are diverse and varied in personal experience and political outlook. But anti-innovation policies continue to be viewed with mistrust by a growing pro-crypto cohort of Democrats, independents and Republicans who are willing to be single-issue voters if they feel that their livelihoods, investments, and ideological beliefs are in jeopardy.

This cohort also believes that anti-innovation policies risk irreparable damage to U.S. competitiveness on the global stage. While there are very few, if any, U.S. voters who would support a candidate simply because they are anti-Bitcoin (it doesn’t move the needle for most people one way or the other), there is a large contingent of U.S. citizens who will vote for a candidate simply because they are pro-Bitcoin. These single-issue voters are the reason why many presidential candidates proudly articulate their pro-innovation, pro-Bitcoin, and pro-crypto positions on the campaign trail – realizing that being “anti-Bitcoin” will alienate a rapidly growing cohort of young, diverse, and politically-engaged American voters.

Politicians competing in the coming campaign cycle should take note.

Edited by Ben Schiller.

#Bitcoin #Ballot

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