"When residents of an affluent estate community in Alberta started hearing noise from a nearby power plant, they didn't expect their complaints of sleepless nights would lead to a months-long investigation that would find a bitcoin mining operation had set up shop without approval," reports the CBC: Now, Link Global, the company behind the site, is being ordered by the province's utility commission to shut down two plants until it can prove it's allowed to operate — a move the company says will cost jobs and cause the oil and gas infrastructure in which it operates to sit dormant....

Vancouver-based Link Global had set up four 1.25 MW gas generators at the site, pulling power from a dormant natural gas well owned by Calgary-based company MAGA Energy. The natural gas powers thousands of computer servers that run programs to "mine" digital currency... Work on the plant began in August 2020, and by fall — when neighbours started to get annoyed — it was operating at full capacity. There was just one problem: The company hadn't notified neighbours of its plans. Or the county. Or the provincial utilities commission — which allows power plants to be set up without approval if they meet several conditions, including only generating power for the company's own use and proving the plant has no adverse effects on people or the environment...

Alberta is littered with nearly 200,000 dormant or abandoned oil and gas wells, often because they're no longer economically viable. It has raised the spectre that landowners and taxpayers could be on the hook for the cleanup costs, which the province estimates could be up to $30 billion, as well as prompted a push to find other uses for the facilities, such as powering cryptocurrency operations. Stephen Jenkins, Link Global's CEO, said some of that abandoned energy infrastructure, is at risk of leaking methane — a greenhouse gas more potent than carbon dioxide. "We look at, OK, what can we do to use this in a beneficial way ... I don't want to say we're in the business of methane destruction, but we're in the business of beneficial use of that potential methane-generating source. You combust it properly. You don't flare it, and you control those emissions," Jenkins said...

And though the facility employs only four people, Jenkins said it's important to him to employ locally and give former oil and gas workers a path into other careers. The Sturgeon County plant's supervisor is a former pipefitter; he's now a bitcoin pro and an expert at keeping the plant online, Jenkins said. "It's a perfect use of people's skills," he said.

Of course, it's not all altruism. The company has said for every 10 MW of power, it can generate about 1.2 bitcoins per day.
Last Friday the Alberta Utilities Commission (AUC) ruled that the plant had indeed been violating their regulatory requirements, and would now also have to suffer a financial penalty which the CBC reported as "a $50,000 to $75,000 fine, reduced by up to 50% because Link Global admitted to breaking the rules..."

"More penalties could be on the way. The AUC will now review whether specific sanctions should be imposed against Link Global for operating without approval — a decision on that is expected this fall."

The CBC adds that another Link Global plant was also found to be "set up without the AUC's prior approval."

An anonymous reader quotes a report from ZDNet, written by Charlie Osborne: The parents of two teenagers allegedly responsible for stealing $1 million in Bitcoin are being sued. According to court documents obtained by Brian Krebs, Andrew Schober lost 16.4552 in Bitcoin (BTC) in 2018 after his computer was infected with malware, allegedly the creation of two teenagers in the United Kingdom. The complaint (.PDF), filed in Colorado, accuses Benedict Thompson and Oliver Read, who were minors at the time, of creating clipboard malware. The malicious software, designed to monitor cryptocurrency wallet addresses, was downloaded and unwittingly executed by Schober after he clicked on a link, posted to Reddit, to install the Electrum Atom cryptocurrency application.

During a transfer of Bitcoin from one account to another, the malware triggered a Man-in-The-Middle (MiTM) attack, apparently replacing the address with one controlled by the teenagers and thereby diverting the coins into their wallets. According to court documents, this amount represented 95% of the victim's net wealth at the time of the theft. At today's price, the stolen Bitcoin is worth approximately $777,000. "Mr. Schober was planning to use the proceeds from his eventual sale of the cryptocurrency to help finance a home and support his family," the complaint reads. The pair, tracked down during an investigation paid for by Schober, are now adults and are studying computer science at UK universities. The mothers and fathers of Thompson and Read are named in the complaint. Emails were sent to the parents prior to the complaint requesting that the teenagers return the stolen cryptocurrency to prevent legal action from being taken. However, the requests, sent in 2018 and 2019, were met with silence.

Schober's complaint claims that the parents "knew or reasonably should have known" what their children were up to, and that they also failed to take "reasonable steps" in preventing further harm. In response (.PDF), the defendants do not argue the charge, but rather have requested a motion to dismiss based on two- and three-year statutes of limitation. "Despite his knowledge of his injury and the general cause thereof, Plaintiff waited to file his lawsuit beyond the two and three years required of him by the applicable statutes of limitations," court documents say. "For this reason, Plaintiff's claims against Defendants should be dismissed." However, Schober's legal team has argued (.PDF) that the teenagers were not immediately traced, and roughly a year passed between separately identifying Read and Thompson. Schober's lawyers have requested that the motion to dismiss is denied.

Digital currency company Circle says it's changing the makeup of its dollar-pegged stablecoin's reserves to just cash and U.S. Treasury bonds. CNBC reports: Digital currency company Circle had claimed its stablecoin, USD Coin, was backed 1:1 by actual dollars in a bank account. In July, it was revealed this was no longer the case, with Circle disclosing in an "attestation" from auditors Grant Thornton that cash made up just over 60% of USD Coin's reserves. The other 40% was backed by various forms of debt securities and bonds. Now, Circle says it's changing the makeup of USD Coin's reserves once again, with just cash and U.S. Treasury bonds underpinning the stablecoin.

Centre, a consortium founded by Circle and crypto exchange Coinbase which developed the stablecoin, unveiled the change on Sunday. "Mindful of community sentiment, our commitment to trust and transparency, and an evolving regulatory landscape, Circle, with the support of Centre and Coinbase, has announced that it will now hold the USDC reserve entirely in cash and short duration US Treasuries," Centre said in a blog post. "These changes are being implemented expeditiously and will be reflected in future attestations by Grant Thornton."

Payments technology company Visa announced Monday that it has bought a CryptoPunk as it enters into the world of non-fungible token (NFT) commerce. The Block reports: Visa bought CryptoPunk 7610, one of 3,840 female punks, for around $150,000 last week. CryptoPunks are considered the original NFTs, launched in 2017 by Larva Labs. These are a collection of 10,000 pixel art images of misfits and eccentrics. Each CryptoPunk has its own personality and unique combination of features. "We felt that CryptoPunks would be a great addition to our collection of artifacts that can chart and celebrate the past, present, and future of commerce," Visa's head of crypto, Cuy Sheffield, told The Block in an interview.

When asked why Visa added a CryptoPunk to the collection, Sheffield said CryptoPunks "pioneered the NFT technology and wave of NFT commerce," so Visa wanted to own a punk. He said the decision was less about the individual punk but more about CryptoPunks in general, given that it is a historical NFT project. Visa worked with Anchorage Digital to buy the CryptoPunk, meaning Anchorage facilitated the transaction and is custodying the NFT for Visa, said Sheffield. "We purchased it from Anchorage using fiat," he said. Visa first partnered with Anchorage earlier this year to settle payments in the USDC stablecoin on Ethereum.

Visa believes NFTs will play an important role in the future of commerce. NFTs can help individual content creators and small and medium-sized businesses in new ways, said Sheffield. "NFTs are an intersection of culture and commerce," he added. Sheffield compared NFTs with the early days of e-commerce, saying that e-commerce made it possible for a small business to sell online and reach customers worldwide. But they still have to produce and ship physical goods, which can have high upfront costs. So NFTs allow a small business to harness a public blockchain to create digital goods, which can be delivered instantly to a crypto wallet anywhere in the world, said Sheffield. "We can envision a future where a crypto address becomes as important as your mailing address," he said.

PayPal is launching its cryptocurrency service in the U.K. From a report: The U.S. online payments giant said Monday it would let British customers buy, hold and sell digital currencies, starting this week. It marks the the first international expansion of PayPal's crypto product, which first launched in the U.S. in October last year. "It has been doing really well in the U.S.," Jose Fernandez da Ponte, PayPal's general manager for blockchain, crypto and digital currencies, told CNBC. "We expect it's going to do well in the U.K." PayPal's crypto feature lets customers buy or sell bitcoin, bitcoin cash, ethereum or litecoin with as little as 1 pound. Users can also track crypto prices in real-time, and find educational content on the market. Like the U.S. version of the product, PayPal is relying on Paxos, a New York-regulated digital currency company, to enable crypto buying and selling in the U.K. PayPal said it has engaged with relevant U.K. regulators to launch the service.

"Hackers have drained Japanese cryptocurrency exchange Liquid of $97 million worth of Ethereum and other digital coins," reports Forbes: The company, in a tweet posted late Thursday, announced the compromise and said it is moving assets that were not affected into more secure "cold wallet" storage. The company has also suspended deposits and withdrawals... Liquid did not put a dollar figure on the amount, but blockchain analytics company Elliptic said its analysis estimates the losses at about $97 million...

Of that, $45 million were in Ethereum tokens, which are being converted into Ether, preventing the hacker from having those assets frozen. Other cryptos taken in the heist include Bitcoin, XRP, and stablecoins.

According to a tweet from Coinbase CEO Brian Armstrong, the brokerage firm is planning to purchase more than $500 million worth of cryptocurrency on its balance sheet. It's also going to be investing 10% of all future profits in crypto. The Block reports: "I expect this percentage to keep growing over time as this crypto economy matures," Armstrong said. A blog penned by Coinbase's chief financial officer Alesia Haas indicated that the purchase would include Ethereum as well as other assets tied to the decentralized financial world.

"We have committed to invest $500M of our cash and cash equivalents," Haas wrote. "We will become the first publicly traded company to hold Ethereum, Proof of Stake assets, DeFi tokens, and many other crypto assets supported for trading on our platform, in addition to Bitcoin, on our balance sheet," she added.

EtherRock, an early NFT project consisting of 100 discrete images of the same cartoon rock, each tinted a slightly different color, is seeing the price of its NFTs soar after crypto-savvy media personality Gary Vaynerchuk tweeted about them a couple of weeks ago. According to Motherboard, "the lowest listed price for a single EtherRock is now 95.2 ETH, or about $300,000. And of the 761 total EtherRock transactions, 581 have happened within the last two weeks. The current highest price paid for an EtherRock is 96 ETH." From the report: The anonymous developer behind EtherRock is still actively maintaining the project. "I was a complete amateur when I built it," they said in an interview with Motherboard. "It was originally intended as a) a joke and b) an exercise for me to learn [the Ethereum coding language] Solidity." They said they would've "spent a lot more effort" on the NFTs had they known they were going to get this expensive.

You could be forgiven for thinking it's "stupid" to spend hundreds of thousands of dollars on tokens tied to royalty-free clip art, but EtherRock owners figure they'll get the last laugh. Prominent token-holders include Bitcoin advocate Meltem Demirors and former BitMEX executive Arthur Hayes (the latter of whom is still facing federal prosecution for allegedly violating the Bank Secrecy Act). "Rocks are about flexing," she said. "There are only 100 rocks, and people who try to pretend they own one get called out quickly. Because the data is all public domain, you can see when a rock is moved to a new wallet address."

On August 15, 1971, Richard Nixon announced that the U.S. would no longer exchange dollars held by foreign governments for gold. "Shock waves from Washington's decision to break the link with gold have rippled down the decades," reports The Guardian. "The creation of the euro, the hollowing out of US manufacturing, the arrival of cryptocurrencies and the ability of central banks to print seemingly unlimited quantities of money can all be traced back to August 1971." From the report: In 2019, when he was the governor of the Bank of England, Mark Carney floated the idea of a global digital currency -- backed by a number of central banks -- as a replacement for the dollar. Carney said his plan would help stabilize financial markets unsettled by trade and currency disputes. Were Carney's plan ever to come to fruition it would mark the final stage in the shift from a system where currencies were backed by something tangible -- gold -- to one where they are virtual. It is not hard to see why there are those who feel uneasy about this.

Why? Well, for a start, events of half a century ago led to a rapid increase in currency trading. Foreign exchange markets can be wild and unpredictable places. Governments, as Carney pointed out, try to secure competitive advantage by manipulating their currencies and by protectionist trade policies. One way of doing this is through quantitative easing, the process by which central banks create money though the purchase of bonds. Trillions of dollars, euros, pounds and yen pumped into the global economy over the past decade.

Classical economic theory would suggest that an increase in the money supply of this magnitude should lead to a sharp rise in inflation but that has not happened. At least not yet. Before they became the ultimate speculative play for financial investors, the rationale for cryptocurrencies such as bitcoin was that they represented a hedge against the profligacy of central banks. Tricky Dicky didn't know it in 1971 but 50 years on his decision has led to a world of volatile financial markets, geopolitical tension, inflated asset prices underwritten by low interest rates and QE, and where trust in central banks is starting to wear a bit thin. In the circumstances, it is perhaps easy to understand why governments have decided to hold on to their remaining gold stocks.

Walmart is looking to hire a cryptocurrency expert to develop a blockchain strategy, joining a growing number of major corporations exploring the viability of digital currencies such as Bitcoin. From a report: The position will be responsible for "developing the digital currency strategy and product roadmap" and identifying "crypto-related investment and partnerships," according to a job posting Sunday on the retail giant's website. The senior director will be based in Walmart's corporate offices in Bentonville, Arkansas.

While Walmart's specific intentions weren't immediately clear, the job description refers to the "broad set of payment options for its customers" in stores and online. The company didn't immediately respond to a request for additional information. The recruitment effort by Walmart comes several weeks after a similar job posting by rival Amazon.com, indicating that the biggest retailers in the U.S. may soon let customers use cryptocurrencies to pay for their purchases. PayPal Holdings began letting select customers of its Venmo app buy, sell and hold digital currencies earlier this year and expanded the effort last week.

TorrentFreak reports: A new paper published by Microsoft's research department proposes to tackle piracy with a blockchain-based bounty system titled "Argus." The system allows volunteers to report piracy in exchange for a reward. It uses the Ethereum blockchain and is transparent, practical, and secure, while limiting abusive reports and errors...

Pirated content is traced back to the source through a unique watermark that corresponds with a secret code. When a pirated copy is reported, the status of the source (licensee) is changed to "accused." The system provides an appeal option, but if that fails, the accused status changes to "guilty...." Whether Microsoft has any plans to test the system in the wild is unknown. It theoretically works with various media types including images, audio and software...

This idea isn't completely new, however, as the South African company Custos came up with a similar idea years ago. Microsoft's research notes that Argus is superior to Custos' solution as it can assess the severity of piracy and the strength of accusations.
TorrentFreak points out that the paper also received input from researchers at Alibaba and Carnegie Mellon University.

I like how the paper referenced the appropriately-named functions for parts of the process, including Report(), Appeal(), and SetGuilty().

"Ethereum is making big changes," writes Bloomberg. "Perhaps the most important is the jettisoning of the 'miners' who track and validate transactions on the the world's most-used blockchain network. Miners are the heart of a system known as proof of work. It was pioneered by Bitcoin and adopted by Ethereum, and has come under increasing criticism for its environmental impact: Bitcoin miners now use as much electricity as some small nations. Along with being greener and faster, proponents say the switch, now planned to be phased in by early 2022, will illustrate another difference between Ethereum and Bitcoin: A willingness to change, and to see the network as a product of community as much as code...

The idea behind proof of stake is that the blockchain can be secured more simply if you give a group of people carrot-and-stick incentives to collaborate in checking and crosschecking transactions... It's thought that switching to proof of stake would cuts Ethereum's energy use, estimated at 45,000 gigawatt hours by 99.9%. Like any other venture depending on cloud computing, its carbon footprint would then be only be that of its servers. It also is expected to increase the network speed. That's important for Ethereum, which has ambitions of becoming a platform for a vast range of financial and commercial transactions. Currently, Ethereum handles about 30 transactions per second. With sharding, Vitalik Buterin, the inventor of Ethereum, thinks that could go to 100,000 per second.

In a proof of stake system, it would be harder than in a proof of work system for a group to gain control of the process, but it would still be possible: The more Ether a person or group stakes, the better the chance of being chosen as a validator or attestor. Economic disincentives have been put in place to dissuade behavior that is bad for the network.
The article also argues that Bitcoin's "growing dominance by huge, centralized mining farms" is "antithetical to a system that was designed to be decentralized."

Ezra Klein, writing at The New York Times: Think about it this way: The internet we have allows for the easy transfer of information. We costlessly swap copies of news articles, music files, video games, pornography, GIFs, tweets and much more. The internet is, famously, good at making information nearly free. But for precisely that reason, it is terrible at making information expensive, which it sometimes needs to be. What the internet is missing, in particular, are ways to verify identity, ownership and authenticity -- the exact things that make it possible for creators to get paid for their work (for more on this, I highly recommend Steven Johnson's article "Beyond the Bitcoin Bubble").

That's one reason the riches of the web haven't been more widely shared: You get rich selling access to the internet or by building companies that add convenience and features to the internet. So Facebook got rich by building a proprietary infrastructure for identity, and Spotify created a service in which artists could eke out payment from works that were otherwise just being pirated. The actual creators who make the internet worth visiting are forced to accept the exploitative, ever-changing terms of digital middlemen.

This is the problem that the technology behind crypto solves, at least in theory: If the original internet let you easily copy information, the next internet will let you easily trade ownership of digital goods. Crypto lets you make digital goods scarce, which increases their value; it lets you prove ownership, which allows you to buy and sell them; and it makes digital identities verifiable, as that's merely information you own. Together, they unlock the potential for a true economy for digital goods, where creators actually get rewarded for what they make. I will admit to some skepticism that this is how it'll play out, because many of the financiers funding crypto also founded and sit on the boards of the companies that set the terms of today's internet, but we'll see.

Cross-chain decentralized finance (DeFi) platform Poly Network was attacked on Tuesday, with the alleged hacker draining roughly $600 million in crypto. From a report: Poly Network, a protocol launched by the founder of Chinese blockchain project Neo, operates on the Binance Smart Chain, Ethereum and Polygon blockchains. Tuesday's attack struck each chain consecutively, with the Poly team identifying three addresses where stolen assets were transferred. At the time that Poly tweeted news of the attack, the three addresses collectively held more than $600 million in different cryptocurrencies, including USDC, wrapped bitcoin (WBTC), wrapped ether (WETH) and shiba inu (SHIB), blockchain scanning platforms show.

"We call on miners of affected blockchain and crypto exchanges to blacklist tokens coming from the above addresses," the Poly team tweeted. The $600 million figure would place the Poly Network hack among the largest in crypto history. Tether froze approximately $33 million in relation to the hack, Tether CTO Paul Adroino tweeted. About one hour after Poly announced the hack on Twitter, the hacker tried to move assets including USDT through the Ethereum address into liquidity pool Curve.fi, records show. The transaction was rejected.

AMC Entertainment said Monday it will start accepting bitcoin as payment for movie tickets and concessions if purchased online at all of its U.S. theaters. From a report: CEO Adam Aron said during an earnings call Monday that the movie theater chain will have the IT systems in place to take the cryptocurrency as payment by the end of 2021. The move marks a marriage of two highly speculative assets -- bitcoin, known for its wild volatility, and AMC, which became a meme stock star favored by retail traders on Reddit's infamous WallStreetBets forum.

The price of bitcoin swung drastically in recent weeks, last trading around $46,000 after falling below $30,000 last month. The recent rebound came amid optimism that a cryptocurrency compromise will be included as part of the bipartisan infrastructure package. The Senate ultimately failed to advance the deal.

While some bitcoin mining operations are now looking to nuclear power, the Associated Press reports, Bill Spence (and his company Stronghold Digital Mining) is creating crypto-mining hubs out of waste coal power plants. (Text-only version here): The plant he had bought was in trouble. It was competing with cheap natural gas on the power grid and losing — endangering the 35 jobs at Scrubgrass Generating Station along with the effort to clean up millions of tons of leaching coal waste left behind by mining companies over the course of decades. The plant couldn't just rely on the grid for revenue anymore, because the grid simply didn't need its power all that often. Mr. Spence started to look for other customers...

Already, some power generators — finding they can make more money supplying electricity to Bitcoin-mining operations than selling it to the grid — are shifting focus. Energy Harbor, which owns the Beaver Valley Nuclear Plant in Beaver County, announced earlier this month that it will supply nuclear power to a Bitcoin-mining data center in Ohio. Talen Energy, owner of the Susquehanna Steam Electric Station in Luzerne County, is doing the same. The company said last month that it will develop a data center to mine digital currency that could use up to 300 megawatts, or 12% of the nuclear plant's capacity. Bitcoin miners, in turn, are hyper cognizant of power prices and availability. Some are taking mobile units into the oil fields, hooking up their machines to run on natural gas, a byproduct of oil product that would otherwise be flared...

Today, Scrubgrass, an 85-megawatt blue box with a black smokestack in the hills of Scrubgrass Township, looks much like it did when it first opened in 1993 — except for the trailers filled with Bitcoin miners in the back... [T]here are about 3,000 cryptocurrency miners packed into retrofitted shipping containers behind the power plant, most of them owned by Stronghold and some that belong to other mining companies that buy power from the plant. Another 5,000 machines are scheduled to arrive next month. According to documents filed with the SEC, Stronghold is planning to operate 57,000 miners by the end of next year. In 2020, when the power plant seldom ran, Stronghold made more money from its Bitcoin operations than by selling Scrubgrass's energy to the grid. During the first three months of this year, the trend reversed. It received almost $2 million from power sales and more than $1 million from its crypto datacenter...

Stronghold is buying another waste coal plant, Panther Creek Energy Facility in Carbon County, with plans to replicate its cryptomining data center there, and is eyeing a third.
The Associated Press notes that the waste-coal plants are powered by those thousands of acres of abandoned (and pollutant-emitting) coal piles left behind by earlier coal-powered plants, finally remediating them into reclaimable land. But with waste coal plants, there's always a trade-off.

"In 2019, the last year with available federal data, Scrubgrass emitted the equivalent of 371,000 tons of CO2 — the greenhouse gas footprint of 80,000 cars driving for a year."

Two competing amendments to the Senate's infrastructure bill may shape the future of cryptocurrency in the United States as senators fight over who must be subject to new tax reporting requirements. Motherboard reports: One proposal wants to exempt miners, hardware manufacturers, and developers, putting the focus on centralized cryptocurrency exchanges and trading apps. But the Biden administration has thrown its weight behind another amendment that would grant exemption only to those behind so-called proof-of-work cryptocurrencies such as Bitcoin, but not other networks said to be more environmentally friendly because they don't consume as much electricity to validate transactions.

The infrastructure bill, which promises public spending on major projects like new roads and bridge repairs, wouldn't appear to have anything to do with cryptocurrency. But the Congress figured that "crypto brokers" could be squeezed for $28 billion in taxes over a decade to foot part of the bill. The proposal immediately caused a furor, with crypto influencers prompting their followers to call their senators and industry stakeholders applying pressure. The definition of brokers in the original bill -- any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person -- was so broad that it meant pretty much anyone that makes a cryptocurrency tick -- node operators, miners, validators, or services that stake digital assets -- would have to report to the I.R.S. the information on their "customers." Cryptocurrencies such as Bitcoin are designed to be non-custodial and pseudonymous, so that requirement would be nearly impossible to satisfy for much of the industry, Olya Veramchuk, director of tax solutions at blockchain firm Lukka, told Motherboard.

On Wednesday, three senators -- Ron Wyden (D., Ore.), Pat Toomey (R., Pa.), and Cynthia Lummis (R., Wyo.) -- put forward an amendment to narrow the definition of a crypto broker down to those who are custodial and actually hold information on their customers, such as cryptocurrency exchanges like Coinbase or trading apps like Robinhood, granting exemption to everyone else. But an amendment proposed by Senators Rob Portman (R. Oh) and Mark Warner (D., Va) on Thursday, favored by the Biden administration, grants an exemption from the tax reporting obligation to only a segment of the crypto industry, resting on a major technical difference in blockchain design between proof-of-network and proof-of-stake. [...] The vote on rival amendments is expected to take place on Saturday. A proof-of-work model is when a network, such as Bitcoin and Dogecoin, requires miners to take care of the task of validating transactions using huge amounts of electricity for a reward in the form of newly-minted coins. "Others, like Polkadot and Cardano, require 'staking' (hence, proof-of-stake) -- which is a process of pledging funds to the network and getting semi-randomly called to validate transactions," notes Motherboard. "Validators are rewarded with newly-minted coins."

The U.S. government regularly holds auctions for its stockpile of bitcoin, ethereum, litecoin and other cryptocurrencies it seizes and then holds in crypto wallets. "In fiscal year 2019, we had about $700,000 worth of crypto seizures. In 2020, it was up to $137 million. And so far in 2021, we're at $1.2 billion," said Jarod Koopman, director of the IRS' cybercrime unit. CNBC reports: As cybercrime picks up -- and the haul of digital tokens along with it -- government crypto coffers are expected to swell even further. Interviews with current and former federal agents and prosecutors suggest the U.S. has no plans to step back from its side hustle as a crypto broker. The crypto seizure and sale operation is growing so fast that the government just enlisted the help of the private sector to manage the storage and sales of its hoard of crypto tokens.
[...]
Once a case is closed and the crypto has been exchanged for fiat currency, the feds then divvy the spoils. The proceeds of the sale are typically deposited into one of two funds: The Treasury Forfeiture Fund or the Department of Justice Assets Forfeiture Fund. "The underlying investigative agency determines which fund the money goes to," said [Sharon Cohen Levin, who worked on the first Silk Road prosecution and spent 20 years as chief of the money laundering and asset forfeiture unit in the U.S. Attorney's Office for the Southern District of New York]. Koopman said the crypto traced and seized by his team accounts for roughly 60% to 70% of the Treasury Forfeiture Fund, making it the largest individual contributor.

Once placed into one of these two funds, the liquidated crypto can then be put toward a variety of line items. Congress, for example, can rescind the money and put that cash toward funding projects. "Agencies can put in requests to gain access to some of that money for funding of operations," said Koopman. "We're able to put in a request and say, "We're looking for additional licenses or additional gear,' and then that's reviewed by the Executive Office of Treasury." Some years, Koopman's team receives varying amounts based on the initiatives proposed. Other years, they get nothing because Congress will choose to rescind all the money out of the account.

An anonymous reader quotes a report from Motherboard: [Miami has] launched its own cryptocurrency, MiamiCoin, which claims to allow city citizens to earn Bitcoin "in their sleep." On Tuesday, Okcoin was the first crypto exchange to list MiamiCoin. The idea is to fill the city's coffers via speculation. People can mine the coin (which is less difficult and thus less energy intensive than mining Bitcoin or Ethereum), and revenue from the coin will be diverted to the city's treasury. As investors buy the coin, its value will ideally continue to go up, and that cash will be used to fund infrastructure projects or events in the city.

MiamiCoin, which is listed as $MIA on exchanges, is the product of CityCoins, a project that "gives communities the power to improve their cities, while providing crypto rewards to individual contributors and city governments alike." MiamiCoin is the first CityCoin to be released, though a cryptocurrency for San Francisco is on the way, too, according to the website. The project works hand-in-hand with the Miami government.

Bitcoin comes into all of this because the blockchain MiamiCoin runs on, Stacks, is built on top of the Bitcoin blockchain. So, MiamiCoin miners are rewarded with small amounts of Bitcoin by inadvertently contributing to the Bitcoin blockchain. Mayor Francis Suarez, who previously invited persecuted Chinese Bitcoin miners to Miami after the country cracked down on the industry, said that the coin could earn the city "millions of dollars" in an interview last week. Suarez told Fox Business that the funds could be used to help "eliminate homelessness completely" and "increasing our police force." Despite emphatically not being Bitcoin and having complex layers of mechanics, Suarez said that MiamiCoin was "like a Bitcoin." Not all Bitcoiners agree with that sentiment. "Miami would be better off converting long term treasury holdings to Bitcoin. While MiamiCoin's novelty will likely generate some traction after its launch, I think it will fade away. All the while Bitcoin will continue to grow faster than the internet itself," said Brady Swenson, Head of Education at Swan Bitcoin, an app that automates Bitcoin purchases, and the host of podcasts Swan Signal Live and Citizen Bitcoin. "MiamiCoin will not benefit from Bitcoin's global network effect, nor accrue the corresponding exponential gains in purchasing power."

Ethereum, the second-largest blockchain network, is about to undergo a technical adjustment that will significantly alter the way transactions are processed, as well as reduce the supply of the ether token and sharply boost its price. The scheduled coding revamp will go live on Aug. 4. From a report: The upgrade known as Ethereum Improvement Proposal (EIP) 1559 is similar, analysts said, to a bitcoin "halving" event in which periodic adjustments reduced the supply of bitcoin. Each halving helped propel bitcoin's price to higher records. While bitcoin is the preferred store of value in the digital ecosystem, Ethereum has emerged as the leading financial infrastructure, settling over $12 billion of daily transactions, according to a Grayscale report released in February this year.

Andrew Keys, managing partner at DARMA Capital, said ether's current price has yet to factor in the looming software upgrade. He estimates that the expected software adjustment next week, coupled with another upgrade in the first quarter of 2022, should "easily quintuple the price of ether" by next year. On Thursday, ether was up 0.6% at $2,312. EIP-1559 is a software upgrade that fundamentally changes the way transactions are processed on Ethereum by providing clear pricing on transaction fees in ether paid to miners to validate transactions and "burning" a small amount of those tokens. The burned tokens will be permanently taken out of circulation. In token burning, miners would typically send the tokens to specialized addresses that have unobtainable private keys. Without access to a private key, no one can use the tokens, putting them outside the circulating supply. By reducing the number of tokens, the currencies that remain in circulation become rarer and more valuable.