It was a week dominated by elderly gentlemen: the god of investing Warren Buffett (92) and his apostle Charlie Munger (99), President Joe Biden (80) and the youngster Geoffrey Hinton (75, now ex-Google). They were all relevant, for better or worse, in areas I look at with interest: AI, crypto and ESG targets. And reader Maurits Stuyver was at the Web Summit in Rio de Janeiro, with a very different audience.
Bitcoin tax is nonsensical
This week President Biden announced that his administration is considering imposing a tax on Bitcoin miners in the amount of 30% of their energy costs. I personally do not own Bitcoin due to energy use, but this is an example of the kind of ill-conceived legislation that makes climate legislation measures generate unnecessary resistance. There needs to be a general overhaul of the tax system so that businesses and citizens pay taxes not only based on sales, profits, wealth and income, but also on pollution and resource consumption.
My former shareholder and mentor Eckart Wintzen advocated a tax on "extracted value from the planet" back in the 1990s. That would make much more sense than just a tax on Bitcoin mining, diesel cars or nitrogen emissions. The thinking is too small and isolated, but I hardly read that anywhere in the responses to this populist proposal by Biden.
When I wanted to start writing about technology and innovation again last March, as I did on my weblog 20 years ago, I ran into the problem, reason why even traditional media rarely report meaningfully on crypto, that there is not enough independent journalism on crypto worldwide. So unless you dive deep into something yourself and research sources, you can cite virtually no other media.
One popular crypto news site is Cointelegraph, which sold a Middle East license to PR firm Luna, which has mostly crypto projects as clients. The best source in crypto is Coindesk, but with FTX trying to recover nearly $4 billion from now-bankrupt Genesis Global, it is embarrassing that Coindesk has to continually emphasize that it is a sister company of Genesis. Imagine if the NRC were to report on the bankruptcy of Imtech and in an interjection reported, "NRC is a sister company of Imtech, both companies are owned by ZBM, Soulless Belgian Media Company.
Even Coinmarketcap, the most widely used source of cryptocurrencies, is owned by crypto exchange Binance, although it would take eight paragraphs to explain that Coinmarketcap operates independently. The list of such strange relationships is endless in crypto.
I come to this because I still want to provide an analysis on the new European crypto legislation and the upcoming crypto regulations in the US. And how lacking then is serious, professional analysis that tests the intended legislation against reality.
Crypto law can be simple
Actually, it's simple: if a party manages money from customers, crypto or not, it has to meet the same strict requirements as regular banks. So a site where you can buy crypto and then hold those tokens for you, whether it's Bitcoin or a stable token, must ensure that your funds are not being tampered with. The custodian function must be sacrosanct. The same goes for security tokens, tokens that are actually a crypto version of a type of asset (e.g. stocks, real estate, bonds etc) and should be treated like other investment products.
But all other types of tokens, from utility tokens (tokens that allow you to buy one type of service or product, similar to a digital book token) to payment tokens (such as Ripple), constitute a whole new class and cannot be lumped together with other tokens just because they are all crypto tokens. Developers of DeFi platforms, where users themselves provide the market in a pool via a smart contract protocol and buy and sell independently in it, can never keep track of who is buying and selling what; because they are merely the authors of a smart contract that enables trading, nothing more.
At the core, I fear lawmakers are making the mistake of looking at appearance and then treating all crypto equally. That would be as silly as legally treating a love letter and a fake bomb threat equally if they are both sent by e-mail.
Web Summit in Rio big success, for Warren Buffett it's wait and see
Reader of this newsletter Maurits Stuyver was one of the few Dutchmen among the fifteen thousand participants at the first Web Summit in Rio de Janeiro last week. Stuyver, who does serious business development for interesting companies, wrote a readable account of his findings in this market, which is often overlooked in Europe. One striking conclusion I found was the new resort to crypto that Stuyver deduced, fueled by the new banking crisis in America that I wrote about last month. It was also news to me that Brazil has a big focus on fintech companies.
An estimated thirty thousand visitors descended on the antithesis of Rio de Janeiro this weekend as Warren Buffett held his Berkshire Hathaway's annual shareholder meeting again in Omaha, Nebraska. Free after Susan Sarandon in Thelma & Louise: "it may not be the middle of nowhere, but you can see it from here.
Usually shareholders are as critical of Buffett as the crowd at the Arena is of the Toppers, but this time something is brewing. Big shareholders like Blackrock want Berkshire Hathaway to start contributing more to meeting ESG goals. I doubt Buffett and his associate Charlie Munger (99) care. Together they are 193 years old, it seems to me that makes you happy to still hear the alarm clock go off in the morning. In the wings, squeaky-clean Greg Abel (60) is ready to take over from the seniors.
Nice quote from Warren Buffett yesterday about Apple, of which Berkshire Hathaway owns 6%:
"Apple has a position with consumers where they're paying 1,500 bucks or whatever it may be for a phone. And the same people pay $35,000 for having a second car, and [if] they had to give up a second car or give up their iPhone, they give up their second car. I mean, it's an extraordinary product. We don't have anything like that that we owned 100% of, but we're very, very happy to have 5.6 or whatever-it-may-be percent, and we're delighted every 10th of a percent that goes up."
Warren Buffet on May 6, 2023, at the annual meeting of Berkshire Hathaway shareholders in Omaha, Nebraska
Not the week of AI
It was not to be missed: 'the Godfather of AI,' Geoffrey Hinton, left Google because he is concerned about the dangers AI has for the world. Or as CNN cosily summed it up, "AI may figure out how to kill people. And they then pulled out 4 minutes and 11 seconds for that at the 24-hour news channel. PBS did better with this report. The annoying thing about the doomsday scenario Hinton outlines is that if it ever turns out that he is right, it will be too late for humanity to do anything about it. Who wasn't thinking about Skynet and The Terminator this week?
The US Federal Trade Commission (FTC) issued a warning this week that AI can manipulate people to the point of making bad decisions. The Republican Party did not let that be said twice and produced this anti-Biden commercial, created entirely with AI.
Notable links:
- Nearly half of YouTube viewing time in America takes place on TV. Where YouTube once began with muddled amateur videos in a resolution of 3 by 4 pixels, audiences are now watching on 4K televisions. The advertising world is following the viewers, affecting the traditional TV world. Still, YouTube's revenue fell again. Good for advertisers, bad for media operators.
- Globally, investment in startups is falling dramatically. What unexpectedly turns out to be the most popular sector to invest in? It's not AI or crypto, but good old health care.
- An interesting trend in venture capital is investment funds run by active CEOs and entrepreneurs. So not by former entrepreneurs, but CEOs who apparently have time to do a lucrative side job on the side. Of course, Americans have coined another wonderful term for this: dual threat CEOs.
- One of those CEOs with an investment fund is Auren Hoffman of Safegraph, herself the author of an excellent monthly newsletter and one of the few tech CEOs who is openly Republican.
Spotlight 9: crypto rises sharply, Apple follows
Apple released its quarterly earnings this week and almost casually announced that revenue will decline this year. Consequence: the stock skyrocketed. A closer look at the stock price shows that Apple shares are already up 39% this year. Granted, it's not yet up to the level Bitcoin (+77%) or Ethereum (+61%) is at this year, but for the investor with a less strong stomach, Apple remains attractive. For those who hear people jubilating about crypto again at birthdays should be aware that compared to a year ago, Bitcoin is up -19% and Ethereum as much as -28%. And Apple? Ten percent in the plus.
Apple has actually gone up $400 billion in value since my comparison with Philips two weeks ago, almost the gross national product of a country like Austria, to once again compare apples to potatoes. Analysts had expected worse numbers and the iPhone is selling better, especially in India.
It remains difficult for Apple to balance on the tenuous tightrope between multiple worlds and especially multiple continents. For example, the Financial Times published this piece arguing that Apple is now a Chinese company. Nonsense of course, easy shouting from the sidelines. Apple is the corporate version of a global citizen trying to develop himself within the norms and values of the countries where he lives and works.