We hate fees.

Sneaky bank fees when you hit your transfer limit for the month.

When your airline insists your carry-on bag is not a carry-on, or your Airbnb charges a retroactive $120 cleaning fee — even though you did all of the host’s dishes, fed their dog, and even disinfected their lawn chairs — we feel your pain.

But what if — and hear us out — fees didn’t cost money?

What if they made you money?

Find out more in the deep dive.

Espresso Shots

☕️ $4 Billion Withdrawn From Coinbase and Binance, Binance.us 📤 🪙 

In the wake of the SEC cases against three exchanges last week, roughly $4 billion in customer funds have already been pulled out.

To break it down, that’s $3.1 billion in Ethereum and $864 million in Bitcoin.

Last Wednesday’s net outflow of 13,953 Bitcoin from the exchanges represents the largest crypto fund removal since the market was rocked by FTX contagion last December, according to a Coindesk report.

While this represents a staggering customer withdrawal, Binance.us urged customers to withdraw their fiat currency last Friday as the exchange becomes strictly crypto in response to “extremely aggressive and intimidating tactics,” from the SEC, said the report.

Still, this action represents one of the largest, most significant removals since Scoutmaster Dan tweezed a splinter from my thumb and I didn’t even cry. Not even a little.

☕️ DAOs are People? 🏢 👪

The Commodity Futures Trading Commission (CFTC) just settled an illegal trading case against Ooki DAO, wherein the DAO engaged in activities only registered futures commission merchants (FCM) may perform.

The Founders of Ooki DAO, Tom Bean and Kyle Kistner, created the organization to avoid culpability while still being able to offer illegal trading actions, like leveraged and margined retail commodities, in addition to failing to collect customer identification information.

Previously, Tom Bean and Kyle Kistner the bZeroX protocol, which they renamed Ooki DAO, and then, by “transferring control to a DAO, bZeroX’s founders touted to bZeroX community members the operations would be enforcement-proof — allowing the Ooki DAO to violate the CEA and CFTC regulation with impunity,” read a 2022 press release from the CFTC.

Despite their efforts to create a blameless entity, Tom Bean and Kyle Kistner were ultimately served with a $250,000 fine.

If every individual who votes in a DAO might be considered liable should the DAO face any future legal trouble, it sets a dangerous precedent for other concepts and ideas in the crypto space. The “spirit of rebellion” and “anarchy” better be on their best behavior.

☕️ Will Texas Be the Silicon Valley of Crypto? 🖥 📱

It’s more likely than ever, since Texas’ 88th legislative session just blocked a bill against crypto mining, and passed several motions that will make the Lone Star state even more attractive for crypto.

"The microchip was invented in 1958 but that technology was monetized in California,” wrote Lee Bratcher, President of the Texas Blockchain Council, in an email to Decrypt. “Texas is not going to let that happen again. Texas will be the Silicon Valley of the Digital Asset industry."

In total, three crypto-positive bills passed the Texas House and Senate, and are awaiting the governor’s signature. Those bills cover industry transparency, energy-usage-related incentives, and most importantly, that Texas-based exchanges maintain enough assets to satisfy obligations to their customers.

The situation looks more positive than ever for crypto in Texas and the state’s upcoming status as a crypto hub seems almost assured.

The only issue will be getting Silicon Valley-grade developers and programmers to move to Texas, where all their high-school bullies live.

Spilling the Beans

You Can Profit From Bitcoin Fees 🟠 💰

If you’re even moderately crypto-curious, you’ve probably wondered what it takes to mine bitcoin.

And no, obviously, you’re not going to need a pickaxe, drill, or a team of West Virginians with black lung.

Bitcoin mining is less like traditional mining, and more closely resembles that time that you tried to run World of Warcraft on your MacBook Air. We remember.

It’s a room full of computer processors whirring, whining, and heating up as the computers grapple with the insanely complicated math needed to validate Bitcoin transactions on the blockchain.

We can’t overemphasize it: you don’t even have to be good at math to become a Bitcoin miner. You just need one to four hundred computers. And a dream.

Now, let’s talk about Bitcoin mining fees. Again, we traditionally interpret fees as a negative thing. Just another small, unnecessary chunk that’s being taken out of our wallets.

But that’s not the case with Bitcoin mining fees.

Every time a bitcoin miner successfully mines a Bitcoin block, they’re rewarded with someone else’s transaction fee.

In crypto, fees are a crucial part of the digital ecosystem rather than just another bank or airline trying to bite an extra chunk out of your ass.

In fact, if you become a Bitcoin miner, higher transaction fees become part of your self-interest.

You could have a new, passive revenue stream and an exciting, techy side hustle. But even if you have zero aspirations of ever mining bitcoin, higher transaction fees are actually a good thing for all of us.

This past May, bitcoin mining underwent a flurry of activity.

Some of it was due to the debut of Ordinals, which lets you mint NFTs directly on the Bitcoin blockchain.

“Speculators have been keen to mint any project that arises on Bitcoin and often set high transaction fees to prioritize their place in the mint process,” said Spencer Hughes, a research analyst at Blockworks.“ As more centralized exchanges, such as Binance and OKX, add Ordinals support, it is possible that this trend is just warming up.”

In a recent press release for Marathon Digital Holdings’ May update, CEO Fred Thiel said:

• The emergence of Ordinals significantly increased transaction fees in May, which in some cases, were so high that they exceeded the 6.25 BTC block reward. With our scale and our improved uptime during the month, we were able to capitalize on this opportunity. While such abnormally high transaction fees are historically rare, we believe these events can serve as a positive sign for the future of mining economics.

So even if you’re not a bitcoin miner and directly benefiting from these fees, don’t think of those higher bitcoin transaction fees as an inconvenience. Rather, they’re an indicator of sunnier days to come.

Fees are like spiders, they’re ugly and you don’t want them crawling on you, but they play an important part in crypto’s financial ecosystem.

Also, we’re fairly certain bitcoin transaction fees eat mosquitos.

As you try to adjust to your new mindset, we find it helps to remember the words of President Franklin D. Roosevelt at times like these:

We have nothing to fee, but fee itself.

Meme of the Day

Hopefully working with Bitcoin will have a better life expectancy than coal mines.

Crypto 101

Bitcoin Ordinals: This is the protocol that allows extra data to be attached to Bitcoin’s blockchain.

This protocol functions even with the absolute smallest increment of Bitcoin, the Satoshi.

The extra data attached to the Bitcoin is often an NFT. In fact, Bitcoin Ordinals allow NFTs to be minted directly on the Bitcoin blockchain.

The Last Sip

The Last Sip: We spent today’s deep dive praising Bitcoin mining fees, but fees are still pretty annoying. To stay true to ourselves and prove our relatability, we compiled a list of the worst fees of all time.

3. Junk fees - These are bank fees like hitting your transfer limit, overdraft fees, and account maintenance fees. How is it that every bank commercial advertises “no hidden fees,” yet every bank has them?

2. Ticketmaster fees - Were you hit with a $48 service fee while nabbing tickets to that Sublime cover band? These fees are so heinous that even Joe Biden has vowed governmental action to reign these clowns in. Ticketmaster’s day in court? We’d buy front-row seats for that.

1. Nanny McPhee - What was the pitch for this movie? It’s exactly Mary Poppins but she’s hideously ugly and just turns into Emma Thompson as the children’s behavior improves? Julie Andrews must be rolling over in her — oh wait, nope, never mind.

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.