Feb. 27, 2022
Dear SEC,
I’m writing to support the conversion of Grayscale Bitcoin Trust (Symbol: GBTC), currently the world’s largest Bitcoin fund, to the first Spot Bitcoin ETF in the United States.
This is an essential step for US energy dependence. Production from shale oil and gas after the 2008 financial crisis changed the geopolitical landscape as we became less dependent on energy imports from Opec and Russia. However, this rapid production increase has major challenges in sustaining growth. Rapid depletion of as much as 60% in the first year means that constant new drilling is required to keep production flat. Mark Papa, shale pioneer at EOG warned that tier 1 acreage was running low as the best and cheapest areas of the Permian were drilled first. Now, the Permian is the sole basin for growth. Other problems include: interference from drilling wells too close together, rising costs for sand and steel, rising labor costs, environmentally damaging release of methane, toxic waste water, rising gas:oil ratio, etc. Also, shale was built on a constant flow of cheap money that is now coming to an end with rising inflation. Several years ago, Mr. Powell has cited that shale production could be a shock absorber in the event of a rapid oil price rise. However, that shock absorber is broken as evidenced by the slow increase of new rigs and the running down of DUCS. How does Bitcoin help?
Instead of burning off shale gas that cannot be economically hooked up to pipelines, BTC miners use the gas to mine. This is already being done by Equinor. The earnings from mining could sustain production of oil and gas production even in a rising interest rate environment. KSA and Russia have the advantage of low cost conventional production but we can take that away with steady flow of funds from BTC mining.
To succeed, regulation must protect against BTC manipulation. Fortunately, Chairman Gensler, who has in depth knowledge of Bitcoin and cryptocurrencies gained from his time at MIT, has taken major steps to regulate BTC futures and options trading which will protect against foreign manipulation. Mr Gensler is also a champion for equity and inclusion. Why not stake BTC from mining and distribute to citizens who most need help? Stacks is already moving forward in Miami and NYC with promising projects.
Unfortunately, the current political environment will not allow for passage of a US digital dollar. All the more reason to innovate through the positive disruption of BTC and crypto. China needs coal to mine BTC which is perhaps why they banned the practice.
My father fought in World War II and saw the devastation of war first hand. Those memories haunted him for the rest of life. He would be the last person to understand BTC but he put his life on the line of liberty and freedom and always consider himself lucky because many of his comrades did not make it back.
I believe Mr. Gensler is a freedom fighter who understands the vital role BTC can play for our country during this challenging time. Instead of moving from Goldman Sachs to his own hedge fund, he immersed himself in learning about crypto. As a marathoner, he is playing a disciplined long game that will result in a regulated and fair market for BTC and Crypto in the USA. American ingenuity, nurtured in a free and open democracy, is what has always separated the US from the rest of the world. A new and more inclusive future awaits as US adoption and support of BTC accelerates. What a legacy to leave!
Sincerely,
Denny Wright