BTC Miners Capitulate as Token's Fiat Price Crashes, Mt. Gox Liquidators Distribute Tokens

The BTC token's fiat price crash is wreaking havoc on miners whose entire business model was already suffering from the recent 'halving' reduction in block rewards.

The BTC token’s fiat price crash is wreaking havoc on miners whose entire business model was already suffering from the recent ‘halving’ reduction in block rewards.

The BTC token suffered another serious dip in fiat value last week, spurred by significant selling pressure from Germany’s government, the Mt. Gox liquidators wrapping up their decade-long recovery process, and news that the U.S. government was sending some of its significant BTC holdings to the Coinbase (NASDAQ: COIN) exchange for conversion to dollars.

Last week, Germany began moving around $300 million worth of the roughly $2.5 billion in BTC it seized from criminals (including the 50,000 tokens recovered in January from operators of a digital piracy portal). The German government sent the BTC in small batches to various exchanges, including Coinbase, Kraken, and Bitstamp. It moved another $900 million worth of the tokens on Monday, signaling that the sales won’t stop anytime soon.

Over the weekend, social media posts claimed that Germany’s government was also ‘buying the dip’ as BTC’s fiat value continued to fall. This post was based on blockchain data showing roughly $111 million in BTC flowing back from exchanges to government-controlled wallets.

However, this transfer actually represented tokens that the exchanges weren’t able to sell due to (a) the failure of the markets to meet the country’s reserve price, and (b) the apparent lack of fiat dollar liquidity on the exchanges (Germany isn’t interested in selling for dodgy stablecoins with unconfirmed fiat reserves). The same exchanges sent another $163 million back to Germany on Monday.

On July 4, German MP Joana Cotar made public a letter she sent to Chancellor Olaf Scholz and other leading pols pleading to halt these “not only not sensible, but counterproductive” sales. Cotar claimed that Germany should follow the (alleged) lead of the U.S. in holding BTC “as a strategic reserve currency.” (In reality, despite hopeful op-eds by ‘crypto bros,’ no one in the U.S. government is actually considering this.)

Cotar, a known BTC fan, proceeded to undermine her case by inviting Scholz and the others to a lecture by Samson Mow, former Blockstream executive and enthusiastic supporter of Tether, the Bitfinex exchange, and other dodgy endeavors. Sadly, other blockchain notables—like Sam Bankman-Fried and Changpeng ‘CZ’ Zhao—were, er, unavailable to offer their thoughts on why Germany would want to chain these fiscal anvils to its ankles.

In an effort to stop the BTC bleeding, Tron founder Justin Sun issued a tweet proclaiming his willingness “to negotiate with the German government to purchase all BTC off-market to minimize the impact on the market.” Skeptics were quick to point out that the self-aggrandizing Sun has made countless performative offers of this type before, including his alleged willingness to buy the Credit Suisse bank.

Sun’s interest in stopping BTC’s downward fiat spiral reminded some observers of Alameda Research CEO Caroline Ellison’s public offer to buy all of Binance’s FTT tokens (the in-house token of the FTX exchange). Ellison’s desperate offer followed the exposure of the fraud behind the FTX/Alameda empire and didn’t stop either entity from going belly-up within a week. Careful what you wish for, Justin.

All the cool governments are doing it

Germany isn’t alone in having a stash of BTC that may be dumped on the market in short order. The U.S. government has around 214,000 BTC in its possession, much of it also seized from ‘crypto’ crooks. But Uncle Sam’s ‘hodling’ days appear over, as it recently moved nearly 4,000 of these tokens—acquired from a former ‘vendor’ of the Silk Road darknet marketplace—to Coinbase.

Coinbase attempted to paint this as a deal to “provide custody and advanced trading services” to the Department of Justice’s Marshals Service. But it seems to be nothing more than Washington’s desire to ‘sell these pieces of crap before they fall any further.’ The tender for this ‘deal’ makes it plain that the Marshals Service “has a requirement for managing and disposing of large quantities of popular cryptocurrency assets.” (Emphasis added.)

The U.K. is sitting on $3.3 billion of its own BTC, again, much of which was seized from crypto criminals who imagined themselves impervious to such setbacks. While HM Revenue and Customs has conducted the odd auction of tokens in its possession, its long-term plans remain unknown.

All told, Arkham Intelligence estimates there is nearly $18 billion worth of BTC in government hands around the world. With many governments running significant deficits, the urge to sell now before BTC’s value tanks further may prove irresistible.

The government sales occurred just as Mt G

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