Is Bitcoin actually a negative yielding bond (with defined supply), just without a sovereign?

Another thread guaranteed to make me wildly popular on the interwebs.
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One of the curious things about the Bitcoin value prop is that it positions itself as an answer in a world where NIRP (Negative Interest Rate Policy) is becoming more popular.

NIRP is frequently cited by Bitcoinistas as a pro-bitcoin dynamic.
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But one of the curious things about Bitcoin is that, if we consider the ecosystem as a whole, it’s a negative carry instrument.

Most of the conversation focuses on its well defined rarity, and there is sparse if any discussion about the implied negative yield.
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What do we mean here by negative yield?

Well… people often think about Bitcoin network costs in terms of “mining cost” relative to the price of creating one coin because these discussions are typically focused on the unit economics of mining.
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But a miner-centric cost analysis fails to capture an important systems dynamic: why miners exist in the first place.

Miners exist because they’re running the network. Paying them in bitcoin is just a way to incentivize them to run the network at large.
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So if we consider the network as a whole - a transactional token network - that network must “tithe” a percentage of its value to the distributed custodians (miners) of the network who keep it running.

The network is negative carry.
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How do these negative carry dynamics play out?

Well, in order to fund ongoing operations miners must continually sell bitcoin (gotta pay the power/equipment bills), so the ecosystem as a whole *must have* a persistent seller.

A seller who runs the place.
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So while Bitcoin is excellent from the perspective of a ‘defined-supply asset’, this dynamic creates constant selling from a flows perspective.

Instead of a sovereign levying a tax in the form of negative-yield bonds, the miners levy a tax as the network absorbs their flows.
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This dynamic is structurally similar to a negative-yielding bond.

A persistent seller in the market acts as a structural headwind for bitcoin prices (which trade up and down), in much the same way a negative yield slowly erodes the base value of a bond (trading up and down)
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Critics will argue that the defined-supply nature of Bitcoin more than makes up for this and hey - perhaps they’re right.

But for an ecosystem that prides itself on being the ‘ultimate store of value’, there is precious little discussion about the implied negativ ecarry.
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This negative carry is not present in the case of an ‘inert’ hard asset like, say, gold. Gold has no carry whatsoever, positive or negative (unless you pay someone to store it or something).

If all the gold miners stop mining gold doesn’t cease to exist, it just sits there
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In contrast to gold - if all the Bitcoin miners stop mining, the whole system collapses. It is a structurally necessary negative carry.

Bitcoin is a structural hostage of ‘miners continuing to mine’ in the same way bonds are a structural hostage of their issuer’s solvency.
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Sovereigns price their carry costs in known ways (yields & currency value).

BTC carry costs, in contrast, are barely talked about and anyone bringing this stuff up is shouted down with “have fun staying poor” or “you don’t understand Bitcoin.” (note: I stand at the ready)
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I’d like to pause here, briefly, and thank the Bitcoin community for being so hostile to doubters. The persistent aggression has activated my Napoleon complex to such a degree that I’m now having fun digging into every little corner I can find.

Anyhow, back to business.
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It’s rather interesting that a community so hostile to NIRP would be comfortable with a systems dynamic that is tantamount to an ongoing tax in the form of a forced seller.

Perhaps the theory is that scarcity of supply will overcome this?

Quite possible, can totally see it
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ehStill: Bitcoin remains a negative carry asset. There's a required, persistent price headwind that cannot go away.

If you own Bitcoin, it’s worth having a very clear view on what specific countervailing forces you believe will offset that headwind, and to what degree.
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It's quite possible that the small market cap, reduced supply inflows, and increasing interest, etc. will overcome the persistent & structurally required selling flows from miners.

But we should probably at least talk about it.

I will now prepare myself for the troll brigade
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