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In this episode of Hot Topics on the Edge of NFT, hosts Richard Carthon and January Jones discuss the latest in Web3 technology, blockchain, and digital assets. They are joined by Ben Schiller, Managing Editor for Features and Opinion at Coindesk. The topics include Tron’s T3 Financial Crime Unit and its impact on blockchain security, the rise and legal challenges of Bitcoin ATMs, and the declining profitability of Bitcoin mining. The discussion also touches upon the intersection of Bitcoin with theater, highlighting a new play, 'Happenstance,' inspired by the FTX scandal.
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Key Topics Covered:
- T3 Financial Crime Unit: A collaboration between Tether, Tron, and TRM Labs has launched the T3 Financial Crime Unit to combat illicit activities involving USDT on the Tron blockchain, aiming to enhance security and trust within the crypto ecosystem by leveraging their combined resources. Since its inception, the unit has already frozen over $12 million in USDT linked to scams.
- Bitcoin ATMs and Security Concerns: The rise of Bitcoin ATMs has sparked debates regarding their role in crypto adoption, with concerns about their security vulnerabilities and the lack of education for users on crypto risks. While these ATMs provide a familiar interface for transactions, experts warn that they may not effectively educate users about the complexities and security needed in the crypto space.
What was your favorite quote or lesson from this episode? Please let us know in the comments on YouTube. https://www.youtube.com/@edgeofnft/
Episode Highlights:
- "We want to hope that they can [police themselves], and we're getting to a place where eventually they should be able to do so. Uh, but at this point, uh, as it relates to Tron, uh, the short answer is no" - Richard Carthon (00:10:20).
- "I think it's a bit of a double-edged sword in terms of adoption... on the one hand, yeah, it's... people are learning about crypto... but maybe they get a slightly sort of unhelpful view of what crypto is to think that it's sort of contained in an ATM" - Ben Schiller (00:25:45).
For the full transcript, see further below.
People and Resources Mentioned:
- Ben Schiller Website
- Benjamin Schiller LinkedIn
- Coin DeskWebsite
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About Our Guest:
- Bio: Ben Schiller is a prominent figure in the cryptocurrency journalism space, currently serving as the Managing Editor for Features and Opinion at Coindesk, a leading news platform focused on blockchain and digital assets. With a background in financial journalism, Schiller brings a critical perspective to discussions surrounding cryptocurrencies, financial crime, and regulatory challenges. He has been actively involved in analyzing key developments in the crypto world, including the implications of Bitcoin ATMs and the evolving landscape of Bitcoin mining profitability.
- Website: Ben Schiller
- Twitter: @btschiller
- LinkedIn: Benjamin Schiller
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Full Episode Transcript:
Hot Topics Video with Ben Schiller
Richard Carthon: Welcome to Hot Topics on the Edge of NFT. I'm Richard Carthon, and I'm here with our new Edge of NFT collaborator, January Jones.
January Jones: Thanks, Richard. This is another production of Edge of Company, a rapidly growing media ecosystem, empowering the pioneers of Web3 tech and culture. Stay tuned as we give you a quick look at the latest developments in the world of Web3, blockchain, and digital assets with our guest today, Ben
January Jones: Schiller, Managing Editor for Features and Opinion at Coindesk.
January Jones: Welcome Ben.
Ben Schiller: How are you doing? Good to be here.
January Jones: Since Ben is with us this week, we'll look at some stories hitting over at Coindesk. We will talk about Tron taking on financial crime, Bitcoin ATMs, and the decline in Bitcoin mining probability. And hear about how Bitcoin is showing up in theaters.
Richard Carthon: Let's dive in.
January Jones: Tether, Tron and TRM Labs have launched the T3 Financial Crime Unit to combat illicit activities involving USDT on the Tron blockchain. This collaboration aims to enhance security and trust within the crypto ecosystem by leveraging TRM Labs anti financial crime expertise, Tron's technological capabilities, and Tether's investigative resources.
January Jones: Since its inception, the T3 FCU has already frozen over 12 million in USDT connected to scams, including blackmail and investment fraud. A 2023 report from TRM labs showed that the Tron blockchain was home to nearly 45 percent of all illicit crypto volume. Data from Tether shows that there are 60. 7 billion USDT issued on Tron.
January Jones: 53. 9 billion on the Ethereum blockchain and 712 million on Solana. So Ben, Richard, what do you think? Can these companies police themselves in this space?
Richard Carthon: Uh, we want to hope that they can, and we're getting to a place where eventually they should be able to do so. Uh, but at this point, uh, as it relates to Tron, Uh, the short answer is no, uh, but hopefully we can work to get there.
Richard Carthon: And I only say that because I mean, you just brought up a really interesting stat, like when there's 45 percent of all illicit crypto volume coming from one. Ecosystem that speaks volumes. I mean, not just that they got dropped from the circle back in February. Of this year, um, because they were concerned about being able to truly show their books and show like how much, uh, how much USDT they could, could actually prove that they, that they have.
Richard Carthon: So it's good that they're trying to put things in place to police themselves or to, to put on the, um, actions of showing that they're trying to do better. But history has shown that they have not been able to do that. Ben, what's your take on it?
Ben Schiller: Well, I think it's a really interesting development actually.
Ben Schiller: And I think there's a little bit of PR and sort of self policing going on here because, uh, you know, if you were to name two big projects in crypto, um, that are in the, uh, you know, the sites of regulators and people who worry about money laundering, they would definitely be Tron and tether. So it's interesting that they would come out with an initiative like this to say that we can police ourselves and, you know, they didn't just call it like a Compliance unit like any financial company would have they call it the t3 financial crime unit which has that sort of Sort of sense of a you know law enforcement division Um so that they're very much trying to speak a kind of game about like well We can handle this we know what's going on and we can stamp out this illegal Um, you know, we've got a lot of political activity ourselves and please don't investigate us.
Ben Schiller: Um, you know, from the government. Um, I mean, you know, Justin son, the founder of Tron. I mean, he's under investigation from the SEC. Um, some of these issues. So, uh, you know, I think he has an incentive to prove to people, um, empower and prove to the world that Trump can't be trusted with, uh, with, with, with money.
Ben Schiller: And, uh, I think this is an example of them trying to show that
January Jones: Is this an avoidance in light of what we've seen, um, with, um, the telegram arrest and trying to clamp down on these kinds of transactions, but having it come from a government authority.
Ben Schiller: Yeah, I mean, this is a continuing question in crypto, right?
Ben Schiller: Because, uh, you know, the original intent of crypto was to have a permissionless system where people could transact freely from Uh, you know intermediaries and these intermediaries in the form of, you know, government authorities are saying we don't like that We don't want that. There's too much illegal activity Um, and so I think um, you know, you saw that with the pavel durov case, uh, telegram case recently where he was arrested Is over a lot of legal activity on the Telegram network and the authorities there were saying you have to clamp down on this and Telegram has now gone away and introduced a new initiative to do that.
Ben Schiller: So I think this idea that, you know, blockchain founders can say, well, we're just the kind of, the network here, the platform, we don't quite know what's going on and it's not our responsibility. I think those days are really over. And, you know, these networks really have to conform to more sort of traditional standards of compliance and, um, you know, surveillance of these networks, which is sort of an antithesis to the kind of ethos of Cribs are originally.
Ben Schiller: But I think it's a modern reality for these companies.
Richard Carthon: Yeah, I think just to add a final thought there, uh, because I think bringing in the tide of what's happening over at Telegram to what's happening here at Tron, I think 2025 might be the year of great compliance of having to clean up a ton of acts because it's already being seen over and over again that, like you said, what was done previously can no longer be, um, especially as more institutional money is being flown in with Bitcoin ETFs, Ethereum ETFs, and the proposal of even Solana ETFs coming soon, uh, Bitcoin.
Richard Carthon: Things just have to get way, way more buttoned up
Ben Schiller: being encrypted for 10 years. And, uh, the kind of the end of the permissionless dream is a little hard to take. But on the other hand, uh, when we're talking about a series of serious volumes of money here and the potential for harm to be caused, then you have to really get in line and accept that, uh, you know, crypto is a source of money laundering.
Ben Schiller: It might not be as much as, uh, some of our detractors think and claim. But it is still a significant amount. And that's why we're seeing initiatives like this.
January Jones: It's in the billions. I mean, these transactions are in the billions and it's kind of hard to wrap your head around. Well, moving on, let's talk about Bitcoin ATMs.
January Jones: So CoinDesk reported on a UK case involving the first charges ever for a person running a network of crypto ATMs. The accused processed over 3. 4 million in crypto transactions through the ATMs. And crypto ATMs in the UK are currently illegal. Stateside, we've also seen them popping up all over the country, but there is not a law against them.
January Jones: The US Federal Trade Commission has reported a 1000 percent rise in scams related to these machines since 2020. Experts warn that their high value makes them appealing to hackers, leading to vulnerabilities such as malware attacks and network security issues. Many ATMs will require personal information for KYC compliance, which can be compromised.
January Jones: But the largest operator of Bitcoin ATMs, Bitcoin Depot, disputes claims that these machines are hacking targets. Now, I recently saw one of these in a laundromat of all places. And if we're thinking about the larger adoption of crypto for the general public, this seems like it is something that would erode trust and be a barrier to adoption.
January Jones: Richard, have you seen any of these Bitcoin ATMs?
Richard Carthon: I have, uh, and I personally am a fan of Bitcoin ETMs as an option for adoption for some people who are trying to get into the space and don't know the first steps. So the main reason when you look at adoption and especially over here in the States, uh, for, for boomers, for example, uh, Um, most people in the U.
Richard Carthon: S. Don't really carry cash like that. They have cards. They use other things. However, a lot of people are very familiar with what it means to go to an A. T. M. To take out cash. So if you have that same type of user experience to be able to, uh, take some of your money and then buy this thing called Bitcoin or Ethereum or whatever else you're buying at one of these crypto ATMs, uh, and, and go through the same process.
Richard Carthon: And now you have your first form. It is a first step into being able to have access to crypto. Like, is that the future? Well, will that be the way that people continue to do this? I don't think so. I don't know about ATMs. Really have a shelf life on them as well. As far as the future of how people transact, it's a first step.
Richard Carthon: And so I think there's a lot of, uh, good use cases for them. I've seen them all over the country here in the U S. Um, one of the first introductions, me, myself, and, uh, to crypto was like looking at a Bitcoin ATM at a cafe and a new Orleans back in 2017. So, um, I think they, uh, definitely have some pros to using them, but Ben, what's your, what's your type?
Ben Schiller: Yeah. I mean, I think I have a. Maybe a different take on this. I mean, uh, you know, I mean, an ATM, I can't remember when they were invented, but I think they were made sometime in the 1970s. So I mean, there is something a bit weird about talking about ATMs in the context of Bitcoin or crypto or digital cash or digital money, because, you know, obviously, that's all about getting rid of these kinds of clunky old machines.
Ben Schiller: So, uh, you know, I think it's a bit of a double edged sword in terms of adoption, right? Because on the one hand, Yeah, it's, uh, you know, people are learning about crypto or at least being made aware of crypto by seeing an ATM in a laundromat, but maybe they get a slightly sort of, uh, you know, unhelpful sort of view of what crypto is to think that it's sort of contained in a, in a, in an ATM.
Ben Schiller: So, uh, I don't know, it kind of reminds me in the same way that people represent Bitcoin with a physical coin. You see that a lot, you know, there, there is no real sort of, I mean, there are some physical. Bitcoins, but very few of them and it's not really a physical thing. So I don't know. I think I think the kind of the message here is a bit weird.
Ben Schiller: And, uh, if they if they are honey pots for hackers, um, that's problematic to my feeling really here is that I don't think as you say, Richard, that, you know, I don't think in 10 years time we're gonna be seeing a lot of Bitcoin ATMs around the place. I think we'll find other ways to onboard the next generation of crypto users.
Ben Schiller: So I kind of feel like this is a bit of a sort of, um, a story on its way out really, and then really the future as you say.
January Jones: Well, being on its way out, somebody did 3. 4 million in transactions in the UK, right? So I think that it is, you know, happening. And like Richard says, it's a familiar interface for people.
January Jones: Um, but my concern is people don't understand the security aspects needed for crypto and your wallet and all those things. Uh, your average person really isn't prepared to really understand the risks. So adopting through, you know, uh, an ATM doesn't give you that education, uh, that you need to know to protect yourself.
Ben Schiller: Yeah, I mean, this is kind of a long running debate in crypto, you know, uh, if we abstract away the complexity of doing a crypto transaction. Uh, that might be on board people, but if it's not a crypto transaction, uh, is it not really a crypto transaction with a bit of Bitcoin ETM? Really? Um, are we really educating people or are we giving them a false impression of what crypto really is?
Ben Schiller: I don't know. It's kind of a debate there about, um, industry. If you take away some of the complexity, are you sort of new to what it really is? So I don't know. It's kind of an interesting question.
Richard Carthon: I agree. Uh, crypto security is one of the biggest aspects of the challenges of being in space. And I, See Bitcoin ATMs as a way again, as a first introduction and not the main thing, right?
Richard Carthon: But I also think from the complexity around, like, how do you make sure things are safe and secure? Because it brings up the age old question, right? Like right now in 2024, even with your own liquid money, whether you have euros, USD, whatever, are you safe for carrying cash? Are you safe with it being in your bank?
Richard Carthon: And it then brings you to the idea of like, okay, well, uh, if you're using that same concept for, uh, cash that you're trying to turn into Bitcoin that you can then hold, is it better in your possession that you can now do things with and put it in your bank or safe or whatever it is. And so it gets the wheels turning.
Richard Carthon: It gets people thinking like, okay, what can I do next? And I think just getting people familiar and wanting to do those next steps, uh, in itself is a powerful tool. And again, I don't think this is here forever, but I think for now it is a path forward.
Ben Schiller: Yep, absolutely. I mean, the security issues are interesting and they do seem to be growing.
Ben Schiller: So I guess the question Might be that, uh, you know, hackers are obviously going to target what they think is the weakest link in the system. So maybe this is partly a response to security getting better in the more online crypto industry. Um, and therefore, you know, they're targeting what is perceived to be a more vulnerable system.
Ben Schiller: So this might be, uh, the impact of, you know, other forms of crypto becoming more secure. So that's something to think about perhaps.
January Jones: Well, next up, let's talk about Bitcoin mining profitability, Bitcoin mining profitability dec. Bitcoin mining profitability declined significantly in August compared to July.
January Jones: According to a research report by investment Bank Jefferies, the drop was attributed to a decrease in Bitcoin's average price and an increase in network hash rate. which represents the level of competition in the mining industry. Despite the economic challenges, miners experienced improved operational efficiency, partly due to days of extreme heat this summer, leading to better uptime.
January Jones: The report suggests that September may continue to be difficult for miners as Bitcoin prices remain below 60, 000 and network hash rate continues to climb. U. S. listed mining companies saw a decrease in their share of new Bitcoin mined Although they still represent a significant portion of the total network.
January Jones: So why mining economics for becoming less favorable operational efficiency seems to be improving. Why does this matter right now, Ben?
Ben Schiller: Yeah, I think the mining industry is really fascinating, actually, because there's so many kinds of complex dynamics at play here. So we had a halving, the bitcoin halving earlier this year, which halved the reward for mining bitcoin.
Ben Schiller: So that obviously hurts profitability. Let's see. You have a very competitive marketplace for miners, um, which makes the difficulty, you know, always increase there. And then you have the, you know, price of Bitcoin itself, uh, sort of plateauing over the summer and being in the kind of mid fifties now, where there might have been an expectation for the price to go up and therefore profitability to increase.
Ben Schiller: So, uh, and then you also have this kind of global industry, so you can mine Bitcoin anywhere. Yeah. Um, you know, anywhere where energy is cheap and easily available. So you have this kind of very interesting industry, which is, uh, you know, the creature of many different dynamics, both geopolitical, energy related, Bitcoin related.
Ben Schiller: So it's kind of a fascinating snapshot of, of, of an industry, um, you know, under pressure all the time. Um, and I think what's happening now is that, you know, we're seeing some consolidation in the industry as well, because some of the smaller players are not able to compete anymore. You know, you know, five years ago, you could stick to a minor in a country with cheap energy and then you could compete with a bigger company.
Ben Schiller: But I think that those days are really gone. And you're seeing big players like Marathon, for instance, really scoop up more and more market share because they're able to have that scale and that efficiency that the smaller players can't match. So, um, you know, it's becoming harder and harder to compete.
Ben Schiller: And, uh, the rewards at the moment. Are, uh, are not there that they might've expected a few months ago.
Richard Carthon: Yeah. Uh, I think people need to stay cognizant of the longterm game of what it means to be a Bitcoin miner. Like, like Ben was saying, the barrier to entry was very low or where you almost were immediately always going to operate at a profit.
Richard Carthon: Whereas now, uh, it's, it's a lot harder as energy is becoming, uh, more expensive and also the price of Bitcoin is going up. So right now for. A minor to be profitable. You basically need a price of Bitcoin around 80, 000. And clearly we're below that right now, but for context in 20, in 2000, uh, 2012, uh, the price, uh, on halving day was 12 and 35 cents.
Richard Carthon: In 2016, it was $650. That's a huge, huge, huge multiplier in a matter of four years. And then look at it again in 2020. It was $8,821, the price of Bitcoin on that halting day. And then fast forward to 40, uh, uh, the 2024, the price was 64, 000, huge multipliers every time, right? This takes time, but it doesn't mean that right now it's profitable.
Richard Carthon: So it's hard for companies to survive this moment while it's below the threshold to be profitable. And so what do you have to do? You either have to sell your company to like, uh, like Ben was saying, like marathons out here, scooping up all these players that can't survive in this moment, playing the long game, knowing that like, Hey, if history repeats.
Richard Carthon: We're going to be okay. We just got to survive long enough to get there. And then when they do, they crush. And so you're going to keep seeing this consolidation happened. And, uh, it's really tough for miners right now with the price of Bitcoin, where it is, but in the long term, just based on how history has been, They'll probably be okay if they can survive right now.
Ben Schiller: Yeah. So, I mean, a lot of miners are actually, uh, they're either consolidating or they're diversifying as well. So we've seen a lot of miners get into AI compute, which is obviously, uh, in huge demand at the moment. So they're basically getting out of Bitcoin and turning their machines over to, uh, you know, AI compute, uh, functions and also high speed, uh, You know, equity trading as well.
Ben Schiller: That's another activity of diversification for these companies. So, um, it's kind of interesting to see. Um, there's kind of a more fundamental question about the mining industry, because it's not only a kind of, you know, something you do to make money. Obviously, this is crucial for the you know, the long term viability of bitcoin itself.
Ben Schiller: We need these mining companies to be validating these transactions in a decentralized way in order for bitcoin to be bitcoin. So that there is this kind of long term debate within crypto, particularly in bitcoin circles to say, well, if the reward is going down and down and down and therefore there's less incentive for miners to be involved to validate transactions.
Ben Schiller: Will that at some point lead to some kind of security issue for, um, you know, for the integrity of Bitcoin transactions? And if that happened, then, uh, you know, Bitcoin might potentially, um, be not Bitcoin as it is now, which is a diversified decentralized network that we can really trust the veracity of.
Ben Schiller: So, um, that's something to think about long term.
January Jones: Well, we've been talking a lot about Bitcoin today and Ben, I saw on your ex account that you are putting on a play in New York about Bitcoin, love and freedom, so it says, and it's loosely based on the FTX scandal that coined us broke. Can you tell us a little bit about your jump into the theatrical world and bringing cryptocurrency with you?
Ben Schiller: Well, thanks for mentioning that. Yeah, we're producing a play in the East Village in New York City, uh, in October, October 23rd to 26th. Uh, it's called Happenstance, and it is a play about a Bitcoin coder who's going to prison and his struggles for freedom in different ways. Uh, and yes, it is based a little bit on FTX, which was the scandal that Coindesk, uh, broke.
Ben Schiller: And also some of the other, uh, scandals and sort of, um, dramas that we've seen over the years with, uh, People getting into trouble and how they, um, get out of that. So, um, please check it out. The website is called happenstance play. com and we're selling tickets now. So please, uh, come along. It's going to be at the Crane Theatre in the East Village and, um, you know, we're looking for support and, uh, hope people can make it.
Richard Carthon: Awesome. Well, we really appreciate that. Everyone listening, make sure you go get a listen, especially if you're in New York city, uh, go check that out. And also want to say, uh, you know, this has been a really fun show. Um, it's a wrap for today's hot topic. We've covered a ton of topics from Tron taking off financial crime to.
Richard Carthon: Bitcoin ATMs to the decline of Bitcoin mining profitability and how Bitcoin is making its way to theater with Ben putting on a play in New York about Bitcoin.
January Jones: Stay curious, stay secure and keep pushing Web3 boundaries. This is January and Richard is signing off from the edge of NFT. Catch you on the flip side of blockchain.
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