A new think tank is Coinbase’s latest attempt to shape the debate around crypto policy.
As the crypto industry faces growing scrutiny from politicians and the media, Coinbase is trying a new tactic to shape the debate: a “global crypto-native think tank.”
The Coinbase Institute, which was announced on Tuesday, will “cut across many disciplines and provide expert analysis and insights about what’s happening in the global crypto economy.”
In an interview with Decrypt, Director Hermine Wong—a former SEC and State Department staffer—said a key priority for the institute will be the dissemination of empirical and peer-reviewed research. This will include an academic partnership with the University of Michigan to measure household adoption and attitudes toward cryptocurrency.
Meanwhile, the Coinbase Institute has already issued its first report, titled “Crypto and the Climate,” which makes the case that the industry’s high energy use is often justified, and claims that it contributes to new forms of energy efficiency and longterm sustainability.
According to Wong, the institute is not modeled on nonprofit think tanks like the Brookings Institute or the The Atlantic Council, but instead on the research arms of companies like Microsoft and JPMorgan Chase. She declined to disclose the budget of the institute, which is entirely virtual.
Coinbase’s launch of a “think tank” is consistent with the mentality of CEO Brian Armstrong, who has often expressed frustration with media accounts of the crypto industry he views as wrong or uninformed.
One year ago, Armstrong announced the launch of a service called Coinbase Fact Check, which he said would see the company publish “the truth” in response to malicious or inaccurate media reports—an initiative that won plaudits from some in the industry, but led skeptics to question how it was any different from other companies’ in-house media arms.
Meanwhile, Coinbase also broke off from the crypto industry’s main lobbying body, Blockchain Association, to back a new group called the Crypto Council for Innovation along with Block (formerly Square), Fidelity, and the venture fund Paradigm. Despite an ample budget, the new group has had little impact on policy debates, though executives there say its influence will ramp up in coming months.
According to Wong, Coinbase Institute will complement these other initiatives as the company seeks to promulgate a crypto-native view of the world.
The institute’s advisory board includes professors from prominent universities, including MIT, Harvard, Duke, and Johns Hopkins. Such an effort to create alliances with academics has proved fruitful for companies in the past, notably Google, which is known for leveraging them into political influence.
chinese bitcoin miners
Even after last year’s Bitcoin mining ban in China, the nation remains second only to the U.S. in terms of capacity.
China has reemerged as a major Bitcoin mining hub, with covert miners accounting for more than one-fifth of the network’s hash rate, according to data from the Cambridge Digital Assets Programme (CDAP).
The CDAP is a public-private research initiative being hosted by the Cambridge Centre for Alternative Finance (CCAF), known for its widely cited Bitcoin Mining Map.
The Chinese government issued a sweeping Bitcoin mining ban in June 2021. At the time, it was the latest attempt by authorities there to stamp out mining activity after having been at odds with the industry for years. In September 2020, Chinese-based Bitcoin miners accounted for 67% of all network activity.
Over several weeks last May and June, authorities started cracking down on Bitcoin miners and the network hashrate plummeted, at one point falling to 57 exahashes per second (EH/s). But as miners relocated, it recovered to pre-ban levels by December, and in February set an all-time high of 248.11 EH/s.
Hashrate is a measure of total computing power on a blockchain. Each hash represents a “guess” at a cryptographic string. The one who correctly guesses it wins the right to verify a block worth of transactions and add it to the blockchain. One exahash represents one quintillion such guesses.
The report suggests that a sizable portion of Chinese Bitcoin miners found ways to adapt to the ban, using foreign proxy services to hide mining activity, rather than leaving the country. New CCAF data shows that China, accounting for 21% of Bitcoin hashrate, has become second only to the U.S., which now accounts for 38%.
“As the ban has set in and time has passed, it appears that underground miners have grown more confident and seem content with the protection offered by local proxy services,” CDAP’s report says.
Even before China’s ban took effect last year, U.S.-based Bitcoin miners were outpacing overall network growth. The U.S. doubled its share of the Bitcoin network hashrate, from 11% to 22%, in the first half of 2021, according to CDAP.
Installed Bitcoin mining capacity in the U.S. reached 70.97 EH/s this January, a 66% increase from August. The uptick in the states has been so significant that CCAF has added a U.S. Bitcoin mining map to its index. It shows that Georgia (31%), Texas (11%), and Kentucky (11%) combine to account for more than half the country’s overall hashrate.
CDAP also reported that it’s beginning work on a model to estimate the Bitcoin network’s greenhouse gas emissions after finding that last year’s ban in China actually seems to have worsened mining’s environmental impact.