Crypto Currency Experience

[Richard_Winblad]

I’ve heard so much about cryptocurrency that I decided to learn more. Apart from books and podcasts I decided to dive in with a small investment. Once I passed the “real person” verification I was able to invest a few hundred dollars on a platform that provides the “wallet” to buy, sell and trade cryptocurrencies.
The Key is to Not Lose the Key

Crypto is controlled by a wallet. . Each wallet comes with a private key. Crypto wallets may be in the form of software such as a computer to phone app. It may also be in the form of a device similar to a USB stick.

The wallet holds a public and private key. This is information that allows access to the currency. Think of the public key as an ATM card and the private key as the pin number. The private key is used to initiate transactions such as buying, selling or converting the currency. This also allow access to the balances held by the wallet. If you lose your key, you lose your crypto! There are stories of individuals who have lost fortunes because they misplaced their private key. Therefore it is important to store your key in a form that is accessible to yourself and those you designate in an estate plan.

I started with the BitCoin the first substantial currency. Naturally, I purchased on the eve of the Russian invasion of Ukraine. That was a wild ride seeing my value plummet 20% when the war started. A couple of days later I’m back to my original investment.

The platform provides the ability to trade a variety of currencies and tokens. Tokens are not technically currency, but are used to validate transactions or verify assets. Tokens have value, so for my purpose tokens are equivalent to cryptocurrency. (Not trying to geek out or create a debate here).

Crypto is not for the faint of heart. Although my investment was relatively small, watching the values respond to the news cycle was fascinating. Naturally I wish that I would have invested on morning of February 23rd. My portfolio is now spread across several currencies just as a learning curve.

“This post is not legal, investment or tax advice, it is for discussion purposes only. Reading or responding to this post does not create an attorney-client relationship.”

[PermianResearch]

What does this have to do with mineral rights?

[PeteR]

Cryptocurrency clauses could be a part of your next lease as partnerships between well operations and crypto generators seem to be on the increase. Nice to know something about it.

[M_Barnes]

There was a very interesting talk at the National Association of Royalty owners convention regarding the use of “stranded” gas for running generators for crypto currency mining. Lease language that allows free use of gas may allow operators to use the gas for crypto mining without paying the mineral owner, so something to be aware of. The speaker mentioned that the operators might be paid in the crypto currency, but the mineral owners would get no payments. Those folks who have not allowed that clause should stay on top of this issue and demand to be paid if their gas is being used in this way and not put in the pipeline.

[Richard_Winblad]

That is a valid question.

Cryptocurrency mining is a motivating factor to convert flared gas into electricity to power crypto mining rigs. Here is an article explain a setup. Article As Martha points out, this was a breakout session during the NARO convention last October.

As mineral owners we need to understand trends and economics that impact the value of our assets. Granted my post did little more than explain dabbling in the bitcoin market, however having a little state in the cryptocurrency, token and blockchain world is interesting.

One of the advantages of blockchain is the ability to immediately verify transactions and provide for instantaneous funding. In the book, “The Truth Machine” by Michael Casy and Paul Vigna, they describe how the technology can validate transactions similar to an escrow agreement even where the is mistrust between the parties.

Landman: Sign the lease Owner: Not until I get paid Landman: If I pay, how will I know that you will sign

For these reasons I believe it is worthy of discussion.

“This post is not legal, investment or tax advice, it is for discussion purposes only. Reading or responding to this post does not create an attorney-client relationship.”

[Dukesdottir5]

I greatly appreciate this thread. I’m showing my ignorance here but I’ll admit this is all new to me and I feel mostly lost. Is there a specific clause or language that those of us who are more uninformed could look for or add to leases? Thank you all so much for the help and education.

[M_Barnes]

The lease language would vary by state. Talk to your attorney. This is very new for them as well. I am listening to a webinar at lunch today on solar leasing language and protecting the surface and mineral owner. This one is by the Women in Oil and Gas in Austin. NARO has webinars, AAPL has webinars. Growing topic.

[r_w_kennedy]

I don’t consider Bitcoin to be an investment, I think of it as a trade. In an investment you always look at the fundamentals. The fundamentals of Bitcoin are that it sprang from nothing and when something kills it, there will be no residue left, no plant, no offices, no patents, literally nothing. Nothing to sell off to return even pennies on the dollar to investors.

A large part of what has been driving the vortex of hot air that drives Bitcoin up is that it has been beyond the reach of governments, the governments couldn’t shut it down at will but that is changing. China recently cracked down on Bitcoin. Joe Biden just announced that several government departments will be studying how to control crypto currencies and their assessments on how to effectively control them is due in 6 months.

I was shocked a couple months ago when I read the headline that the Federal Reserves top priority was to get their own digital currency going, the Central Bank Digital Currency, and not controlling inflation. Crypto has enjoyed the status of being different from US currency in the eyes of the government. Bitcoin isn’t a competitor to the paper dollar or even the digitized dollar, but will that remain the case with the new Central Bank Digital Currency? The governments want complete control of anything you might spend. That would include crypto and that will remove some of the shine from it. Why is that important? Because there is nothing solid holding most crypto up. That means when more people want to sell than buy, there is no moderating effect, no resistance point for most crypto to catch on. I said most crypto, there is some crypto out there that supposedly owns some mines, gold, silver, and various other minerals and it hasn’t been up and running long, it might be a ground floor opportinity. Disclaimer, I don’t own any crypto, I do own physical gold/ silver, oil producing land, 2 foreign currencies

I’m not saying you can’t make money in trading crypto, I’m saying it’s not an investment.

I am Specifically not saying the following is the reason why the OP posted, I think he is just an enthusiast. Now comes the but. People holding Bitcoin need ever more people to buy or want to buy Bitcoin because it’s held up with hot air and many of them go to venues and try and pump it because literally, when more people want to buy it goes up, when more people want to sell, it will be the end.

All above is just my personal analysis.