Volcanos, Bitcoin and remittances: A Tongan lord plans for financial security
A former lawmaker from the island nation wants to use Bitcoin to secure his country’s financial security.
A former member of the Tongan Parliament is behind a proposal to make Bitcoin (BTC) legal tender in the tiny Pacific nation…
A former lawmaker from the island nation wants to use Bitcoin to secure his country’s financial security.
A former member of the Tongan Parliament is behind a proposal to make Bitcoin (BTC) legal tender in the tiny Pacific nation of Tonga, following in the footsteps of El Salvador. It’s due for a vote in Parliament in May and the early signs are encouraging.
Mataʻiʻulua ʻi Fonuamotu, Lord Fusitu’a told Cointelegraph that plans are in motion to use state-run volcano mining facilities to create wealth in Tonga.
Tonga has 21 volcanoes. “That means one volcano for every 5,000 people.” He owns one volcano himself through his family’s hereditary land rights.
The proposed Bitcoin mining operations would use the geothermal energy of the volcanoes to generate power.
“It takes two megawatts of electricity to service 5,000 people. So 40,000 megawatts will service the entire national grid. Each volcano produces 95,000 megawatts at all times leaving much to spare,” says Lord Fusitu’a.
“We will give every family hash huts. But, this is only 20,000 units, as there are only 20,000 families.”
He suggests each volcano can generate $2,000 of Bitcoin each day, to be “gifted” to each family by the Tongan government.
For an Island of 120,000 people, economies of scale matter and the average person stands to benefit greatly.
Family Bitcoin hash huts:. Source: Lord Fusitu’a
Tonga needs $26 million for the cabling to build the operation, but the World Bank said Tonga didn’t have the collateral for that funding.
Nevertheless, Tonga managed to raise the money through a Least Developed Countries grant. Given Lord Fusitu’a's influence in local politics — and the fact he claims to own a volcano himself — he might just pull it off.
Lord Fusitu’a also claimed to have negotiated a gratis offer of the mining tech, but he has not revealed the terms of the deal. Chinese companies such as Bitmain have much market share in this space. It is also possible that refugee mining operations from China’s recent ban could be headed to Tonga. For now, that remains a mystery.
“For a nation-state, the math doesn’t change. The optimal state is for a state to have its own mining.”
Once a barrister before he was a politician, Lord Fusitu’a is a member of the Tongan nobility.
Tonga is the only country in the South Pacific with a remaining indigenous monarchy. While it is a member of the Commonwealth, this was done so by choice in 1970. Tonga has never been colonized, despite pressures from imperial nations throughout history.
Lord Fusitu’a decided to step down as MP in November 2021 after recovering from operations for serious medical conditions and living in New Zealand for three years, especially with Tonga closing its borders due to COVID-19. However, his cousin has taken his seat in the Tonga Parliament, so according to Lord Fusitu’a, his domestic legislative agenda remains intact.
Two clinical deaths due to injury have informed his ambitious agenda atthe Global Organization of Parliamentarians against Corruption, which includes anti-corruption legislation and gender empowerment and climate change policies.
When he spoke to Cointelegraph, and as is common since a series of surgeries, he is shirtless and covered in tattoos (a Tongan word corrupted by Captain Cook) that depict a millennium of his clan’s tattoo history.
Lord Fusitu’a has been a “Bitcoin only guy” since 2013, but “don't let the exterior fool you:” He began coding when he was eight years old.
It was his time stuck in hospital when he couldn’t speak or swallow and could only read when he reaffirmed his passions. Re-reading every printed word about Bitcoin.
Lord Fusitu’a is very visible in Bitcoin circles online where he waxes lyrical about why his country, which relies so heavily on remittance payments, should pursue Bitcoin adoption.
“It’s the soundest money ever devised. It’s the combination of digital scarcity and decentralized distributed ledger. The most democratic egalitarian money on the planet. It’s sound money, the most pristine asset ever devised. It has a 200% appreciation year-on-year. As a store of value, it’s the apex creditor asset.”
“But, if you’re a remittance-dependent country like El Salvador or Tonga, it’s life changing immediately. For hyperinflation ravaged countries like Nigeria or Venezuela, where you need a wheelbarrow of currency to buy a loaf of bread […] it could be a survival mechanism for four billion poor people,” he said.
The plan
Fusitu’a explained his four-part plan for changing the way Tonga operates its economy to Cointelegraph.
The plan consists of financial education for Tongans about Bitcoin remittance payments, making Bitcoin legal tender, setting up Bitcoin mining operations in Tonga and creating Tongan Bitcoin national treasuries.
A key part of the plan revolves around fiscal education for Tongans whose economy is most heavily dependent on remittances.
Lord Fusitu’a says heis tired of families in the developing world losing so much of the badly needed income from middlemen when sending remittances home.
About 40% of the Tongan national economy is built upon remittances sent back to the country from its diaspora of almost 300,000 overseas workers, according to Lord Fusitu’a. They send money back to the island population of about 120,000. As more than double the population lives in the Tongan diaspora, remittances are crucial to the national economy.
He claimed that Tonga’s “GDP in 2020 was $510 million, 40% of that is just over $200 million. So, 30% of that, or $60 million, is fees alone to Western Union.”
Lord Fusitu’a argues that feeless Bitcoin transactions would provide a 30% uptick for everyone on remittances, as the Western Union charges villagers 30% commissions, though a calculator on Western Union’s site suggests a fee of nearly three Australian dollars for transferring a 100 Australian dollar transaction.
However, Lord Fusitu’a says that this does not account for the fact that:
“The $2.90 on $100 shown on the website does not show that there’s a minimum fee of around 10–25% on ALL remittances, depending on where you’re sending from that’s not shown on the website. When your average remittance from El Salvador or Tonga is $50–$100, that’s a lot of your remittance. It also doesn’t show that you’ll be charged the forex slippage for the purchase of Australian dollars, its conversion into Tongan pa’anga and purchase of the TOP.”
Tonga has already begun the financial literacy and “how money works” education programs in 2021, and teams were sent out for community outreach. What does the “how money works” discussion look like? Simple:
“People understand the three hours of travel and the $20 return fare bus ticket. Waiting in line at a Western Union to pay the high remittance fees. The $70 dollars that is at the counter instead of the $100 they thought they would get. And then there’s the beggar’s tax, as beggars sit outside. Three hours each way back to the village, makes a nine-hour day, you come home tired, hungry and having lost remittance fees and bus fares just to get $40-50 of your original $100 wire transfer.”
Importantly, there’s a high rate of mobile-first internet adoption in Tonga.
“A cell phone with an internet connection can change lives immediately,” Lord Fusitu’a says. For the unbanked, “a cellphone and warm wallet is their first participation in any financial system ever.”
Non-Know Your Customer wallets like Moonwallet can help those that don't have IDs. “It’s not about Bitcoin Bros, this is a viable mechanism for the billions of unbanked poor people globally. $200 billion of $700 billion lost in fees in annual remittances globally hurts the average family.”
Also, in 2005, Tongan instituted a consumption tax (GST) of 15%, rather than an income tax, which further penalizes the poor. If Bitcoin is adopted then more money in the pockets of average Tongans — and less for Western Union — will also benefit government coffers through the consumption tax.
Lord Fusitu’a also provides Bitcoin fundamentals talks weekly in the Tongan language.
The legal tender bill
Lord Fusitu’a looked to El Salvador’s bill for Bitcoin as legal tender before its release and seeks to pass “pretty much a carbon copy.”
Tonga’s bill has been ready to go since July 2021 and would make Bitcoin legal tender alongside Tonga’s currency, the paʻanga.
Like article 7 of El Salvador’s controversial Bitcoin Law, the bill would make Bitcoin mandatory to accept if proffered.
The bill will be tabled at the next session of parliament in May 2022. To pass, it will require the approval of a parliamentary majority of at least 14 of the 26 members.
Nine members of parliament are hereditary lords who “vote in a block” and supposedly “always” follow Fusitu’a’s lead as the only lawyer and barrister in parliament. Three other elected members have exposure to Bitcoin. Needing only two more of fourteen votes would seem to make a successful majority vote plausible.
Lord Fusitu’a expects there to be a natural uptick in remittances from the Tongan diaspora when and if the bill is passed into law. Bitcoin remittances back to Tonga have already seen an increase in 2021, he mentions.
It is pegged to five currencies keeping it artificially low to protect its exports of mainly produce, but this makes imports expensive.
The final part of Lord Fusitu’a's four-point Bitcoin plan is building Bitcoin’s national treasuries as a hedge against inflation. The lord’s thoughts on Bitcoin’s utility have informed this decision that is controversial in traditional economic policy.
“Emerging markets traditionally hold theirs in ‘melting at 5% per annum’ USD, ‘devaluing at 2-6% per annum' gold and ’negative yielding since 2008’ U.S. bonds. We do this also. Had we moved our $700 million national treasuries into BTC in March 2020 they would have been worth $22.5 billion by February 2021.”
“With a 2020 GDP of $510 million, $22.5 billion is equivalent to 45 years of Tongan economic productivity earned in 11 months,” he says, adding, “When Nayib Bukele teases on Twitter that he’s ‘buying the dip,’ what he means is he’s moving his national treasuries from those three dead man’s assets into BTC with each purchase.”
Bukele has been criticized for his decisions, but part of this criticism stems from the nature of his governance. Lord Fusitu’a’s track record of participation in multinational groups suggests he is more amenable to working with international organizations to secure his country’s economic future.
What’s ahead?
But, if it’s so obvious, why don’t other countries follow his logic? “They see the logic but it takes the money from legacy finance,” Lord Fusitu’a says.
Another Pacific Island, Palau, is rolling out a stable coin on Ripple’s XRP. “Are they crazy? Their approach is more palatable because partnerships with XRP with Ripple include legacy finance rails.”
The international monetary policy risks are still there for Tonga. In October 2021, the Internal Monetary Fund released a report acknowledging that crypto ecosystems could replace official currencies in “unbanked” emerging economies unless regulators ensure financial stability. But, perhaps that showed that the IMF was paying attention to Tonga.
On both the legal tender and the Bitcoin mining plans, Lord Fusitu’a is optimistic. The “Bitcoin community likes seeing the underdog win.”
Like many in crypto land, Lord Fusitu’a is either a genius or a great showman. Or both.
It was Jan. 11, 2024 when software giant Microsoft (MSFT) briefly passed Apple (AAPL) as the most valuable company in the world.
Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion.
It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion.
"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.
The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.
Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue.
Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.
Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.
“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.
A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.
Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.
Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.
The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.
Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.
Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.
"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads.
"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.
Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify (SPOT) and other music streaming rivals via restrictions on the App Store.
The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.
Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com.
The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.
BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market.
Analyst says Apple selloff 'overdone'
Concurrently, prices for previous models are typically reduced by about $100 with each new release.
This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.
Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.
This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China.
BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.
The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.
On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”
The firm said that investors' growing preference for AI-focused stocks like Nvidia (NVDA) has led to a reallocation of funds away from Apple.
In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.
And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.
“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.
Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries
There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…
There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.
Credit: IVI
There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.
The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.
There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.
“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”
In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.
There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.
Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.
Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”
As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.
###
About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.
IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.
IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.
Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study
We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.
Maybe it will never matter. Maybe MMT is real. Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.
I have no idea. Only time will tell. But it’s going to be fascinating to watch it play out.
He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."
According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.
The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...
... and spending which is about 50% higher compared to where it was in 2020.
The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.
And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.
But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).
... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.
We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...
.. which lays out the proposed Biden budget as follows:
The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.
Without them the deficit will grow $19 trillion.
That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.
No family budget or business could exist with this kind of math.
Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.
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