Weekly Digest: What Jamie Dimon Doesn’t Get About Bitcoin

Plus, 24/7 Ports Won’t Save This Holiday Shopping Season

Welcome to your Sunday digest…my weekly breakdown of the things we’re thinking about and talking about in the Global Intelligence world. 

First up this week, we need to dole out a much-needed shellacking to Jamie Dimon. 

Dimon, the head honcho at JPMorgan, has frequently expressed his disdain for bitcoin. At various points in the past, he’s called it “fool’s gold” and a “fraud.” Then earlier this week, he returned to this theme, describing bitcoin as “worthless” at an international finance forum. 

There are a few important points to address about this story.  

First, while Dimon is out there bashing bitcoin, the bank he runs is diving headfirst into the crypto pool. Right now, JPMorgan offers crypto funds (including bitcoin) to its wealthy clients, has taken big steps to develop its crypto asset research capabilities, and has even launched its own cryptocurrency, called JPM coin. 

So, Dimon believes bitcoin is worthless, but he’s happy to sell it?  

That means Dimon is either a liar or a hypocrite. Moreover, it highlights just how bankers like Dimon view their clients…as little more than piggy banks to be emptied out.  

Second, Dimon’s reasons for bashing bitcoin are idiotic.  

One of the key facets of bitcoin is that it has a finite supply. This makes it rare, which makes it valuable. Ultimately, just 21 million bitcoins will ever exist, and already 18.7 million of those have been created. But over time, the mining process gets so increasingly difficult that the last bitcoin won’t be mined until sometime around the year 2140. 

While speaking at the forum, Dimon questioned this limit, saying “How do you know it ends at 21 million? You all read the algorithms? You guys all believe that? I don’t know, I’ve always been a skeptic of stuff like that…” 

Here’s what I think: Dimon sure hasn’t read the algorithms and if he did—and if he understood it—he would realize that, yes, the number of bitcoin is capped at 21 million. 

This is not a hard cap, to be sure. This number can be increased by the bitcoin community, but that would require a consensus among bitcoin owners…which means that they’d have to choose to devalue their own money.  

That ain’t happening…and assuming (in some drunken stupor) that the community does eventually decide to increase the number of bitcoin, this is not a problem we’re going to confront for a long, long, long! time. Remember…2140. 

All Dimon managed to accomplish with his inane comments was to display the ignorance and hypocrisy of the traditional banks.  

Crypto is the future—which, of course, scares the bejesus out of Dimon and his ilk.  

If the traditional banks aren’t willing to embrace this future, they’ll be left behind just like Blockbuster and Borders and Kodak and all the other companies who closed their eyes to the technological revolutions staring them in the face. 

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Next up…a little more about bitcoin. 

The U.S. has reportedly become the world leader in bitcoin mining. This comes after the Chinese government started cracking down on crypto mining…essentially eliminating the industry in China. 

According to the Cambridge Center for Alternative Finance, the U.S. now accounts for 35.4% of the global hashrate—the total amount of computing power used to mine bitcoin. That’s roughly doubled from just under 17% since April.  

No. 2 and No. 3 in bitcoin mining are Kazakhstan and Russia, with 18% and 11% of the hashrate, respectively. Meanwhile, China’s share of the hashrate is now basically zero.  

What these figures indicate is that many Chinese mining firms have managed to successfully relocate their operations overseas. 

Overall, this is a very positive development for crypto.  

At one point, China controlled as much as 75% of the global hashrate. This potentially gave the Chinese government far too much influence over bitcoin. 

Now, bitcoin mining is more evenly distributed around the globe.  

This decentralization is good for bitcoin and marks another small step on the road to higher and more stable bitcoin prices. 

*** 

Finally this week, ports move to 24/7 schedules to tackle chronic logjams. 

As I’ve been writing about for many months now, the global supply chain is a complete mess due to the pandemic, with long queues of container ships waiting to get into many major ports. 

Now, in an effort to ease blockages before the holiday shopping season, several key U.S. ports are operating 24/7, including the Port of Los Angeles and the Port of Long Beach.  

While I applaud the port workers who’ve agreed to these schedules, don’t expect these efforts to solve the problem.  

Cargo ship logjams may ease somewhat in California, but these ports are just one part of a much larger system that involves trucking companies, major retailers, port and factories in Asia, shipping firms, and much more. 

And having been a Long Beach resident, I can assure you that the logjam at the port there isn’t an issue that can be solved simply by working 24/7. It’s an issue of ingress and egress for freight trains and, particularly truck traffic. It’s a nightmare of congestion trying to navigate the 710 and the 110 Freeways, which are the only north-south corridors. 

Without wider systemic change at key U.S. ports and overseas, shortages will remain. This in turn means inflationary pressures will remain high. Which means prices will continue to increase. And shortages of many goods will persist. 

My advice: Do your holiday shopping early this year. Seriously. And you should probably do it online. 

That brings us to the end of this week’s digest. Many thanks for being a subscriber. And if you have any feedback or questions, please reach out through the contact form on the Global Intelligence website. I’d love to hear from you. 

Enjoy the rest of your Sunday.