The White House says in the Wild Economic Report that “Bitcoin has not announced any plans to introduce proof-of-stake.”

The Biden administration just released a new economic report that covers bitcoin and crypto extensively, mentioning the two terms a whopping 305 times in total.

The document is making waves by stating that “crypto assets to date do not appear to offer investments of fundamental value” – but that is just a glimpse of the report.

Here are some of the highlights.

1. The report tracks Ethereum’s move to a proof-of-stake consensus mechanism, but appears to lack a basic understanding of how Bitcoin’s consensus is established and refers to the decentralized network as if it were a company with the ability to make official statements.

“Despite Ethereum’s move to proof-of-stake, Bitcoin hasn’t announced any plans for a similar change.”

2. The report criticizes Bitcoin’s energy consumption, but does not compare Bitcoin’s energy consumption to the banking sector that BTC should replace.

It also fails to mention that miners are incentivized to use renewable energy to save costs, or that already 59.5% of BTC mining is reported to rely on renewable sources.

“Globally, bitcoin accounts for 0.42% of all electricity consumption.

This effectively means that Bitcoin consumes the same amount of electricity as a medium-sized advanced economy.”

3. The report cites Bitcoin’s price volatility at an awkward time amid a government-created banking crisis that has forced many Americans to realize that banks are not storing their cash and deposits over $250,000 are not insured by the FDIC.

“The value of a bitcoin (relative to the US dollar) increased by over 1,000% from March 2019 to March 2021 and then fell by over 70% from November 2021 to October 2022.

This volatility means anyone using Bitcoin to store their savings is at high risk of volatility in their purchasing power.”

4. The report also cites BTC’s “run risk” amid the collapse of several US banks and ironically warns that crypto assets could trigger a “Minsky moment” that marks the end of a long period of economic prosperity.

But despite the criticism, the report also says the crypto industry is likely to stay here.

“The risks of crypto assets come from excessive speculation, high leverage, running risks, environmental damage from crypto asset mining, and fraudulent activities that harm retail investors and businesses.

As cryptoassets appear to be here to stay, policymakers should consider these risks to avoid a cryptoasset-induced ‘Minsky moment’.”

5. The report cites Bitcoin’s scarcity and its maximum supply of 21 million coins, but states that paper money is superior due to the existence of central banks printing cash with impunity.

“Cryptocurrencies are not only generally speculative assets, but they are not currently effective alternatives to sovereign money like the US dollar. As mentioned above, most cryptocurrencies have no fundamental value, but that is not a requirement for them to function as money. Indeed sovereign money has no fundamental or intrinsic value. Nevertheless, sovereign money can easily cover the need for money …

The main reason for this is that the value of sovereign money is guaranteed by a trusted institution – the central bank.

You can view the full report here.

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