 The Bitcoin 2021 conference in Miami wasn't just a celebration of the end of the pandemic and an opportunity to gather up close and maskless with more than 10,000 ideological fellow travelers. It was also a watershed moment for a technological and cultural movement whose goal is nothing short of the separation of money and state. Bitcoin emerged just a dozen years ago when a pseudonymous genius shared a nine-page paper on an obscure email list. And now it's the third largest currency on the planet. In another dozen years, we may look back on Bitcoin 2021 as the woodstock of the crypto generation. The headline acts included former Congressman Ron Paul. I admit there's a lot of things about, you know, bitcoins and other things that I don't fully understand, but I understand liberty. Twitter and Square CEO Jack Dorsey. We need to be able to transact with this every single day. And everyone around the world needs to transact with it every day. Howard legend Tony Hawk, boxer Floyd Mayweather, sex tape entrepreneur Paris Hilton, DJ and record producer Diplo and Ross Olbrecht, who beamed in from federal prison, where he is serving an effective life sentence for creating the pioneering dark website Silk Road, which helped bootstrap Bitcoin in its early years. The conference ended with an announcement that El Salvador will become the first country on earth to recognize Bitcoin as legal tender. I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. One of the breakout stars of the conference was Cynthia Lummis, a 66 year old freshman Republican senator from Wyoming. From the stage and in an interview with Reason, Lummis forcefully made the case that Bitcoin not only provides a fully legitimate alternative store of value and medium of exchange, but would act as a check on the devaluation of the US dollar and other currencies through the runaway creation of fiat money. She also believes that the growth of Bitcoin, a sale for its heavy use of electricity, is acting as a spur to create renewable energy in Wyoming and around the globe. And she extolled its privacy features in a world of increasing surveillance by governments and corporations alike. Senator thanks for talking to Reason. It's my pleasure Nick. What's your main interest in crypto? I mean you're in the Senate and in Congress more broadly you're like a leading light on this type of stuff. What do you see as the value of this new technology, especially as it intersects with a fiat currency system that has really gone off the rails? I had been my state's treasurer in Wyoming. I think that suffices. I understand why you're interested in crypto. Yeah I was always looking for a store of value and I see Bitcoin specifically as a great store of value. My 21 million will ever be developed and so we know that scarcity will protect its value going into the future unlike the US dollar that we're printing more of every single day. Oh yeah I mean by the end of this interview there will be millions more in circulation right? But I mean I would think you're in the US Senate is Bitcoin or is crypto more broadly is that a competitor to the US dollar? It's not a competitor but it is an alternative saving instrument for people like me who are concerned that the US dollar saved will be worth far less than when it's deposited in savings. So to me I see it as an opportunity to save for my future in something that will grow in value not fall in value. Do you own Bitcoin or other crypto? I do. Okay are you cashing out or are you long on Bitcoin? I'm what they call a hodler I'm long I'm in it for the distance. You are a hodler. What is you are working both to bring kind of an understanding and a legislative agenda around crypto you know into fruition. What's the regulatory framework that you want to see crypto you know being used that apart from currently it basically is treated as a private commodity. So it's subject to things like capital gains tax. Where do you see things going what's your dream vision? It is to create a regulatory and statutory framework a sandbox if you will that innovators know the parameters but the parameters don't constrain them in their innovation as they develop new uses, new tools, new opportunities. So the blockchain will provide for example the opportunity to put both contracts and the money or value associated with that contract on the blockchain so it cannot be adulterated or have there be miscommunication about what the contract entails. So it makes a secure framework and we want to make sure that legislation protects that and doesn't stifle innovation. So you want to have a kind of clear predictable stable set of rules in place and then that way people can kind of get on with the business of building a crypto world. That's correct Nick. What's the timeline for that and where are the main sticking points is it mostly that people have no idea what you're talking about or is it that they're like I kind of get this and I don't like this because it might have in my ability to keep printing money. Now the lack of understanding our knowledge about what the distributed ledger is, what Bitcoin is, what blockchain is, it's a total mystery to most members of Congress. So the first part's going to be to inform, educate, bring in experts who can help explain the importance of this. Some of the urgency is because China is making a digital yuan and intends to roll it out as we understand at the Winter Olympics in 2022. They want to compete against the U.S. status as having the dollar as the world reserve currency. So that's some of the urgency. Are you in favor of the U.S. creating digital dollars as well? I am. And you're not worried that to the extent that the U.S. gets into the digital space it's just going to pollute the pool? It's not. There are different reasons to have a digital dollar or a central bank digital currency than to have Bitcoin. As long as the dollar is in use it's important that we make faster transactions, that they clear faster, that people have more opportunity to use a digital format for the U.S. dollar. And to use Bitcoin it would be for perhaps a different purpose, at least initially. So that's where you're going to go to buy your soon to be legal drugs, right? You're going to go on the dark net web and use Bitcoin. Did you ever use Silk Road, Senator Maske? You know, I am aware that there are softwares that can detect fraud or illicit use. Of Bitcoin and the blockchain and it usually has to do with a pattern of use that would require the usual privacy associated with Bitcoin to be transgressed. But the software is working well that can ferret out illicit uses. So you're not worried about, I mean this is one of the growing case against Bitcoin and crypto in general, that as it gets more popular it's only being used by criminals or for bad actions. You don't really buy that. Not at all. In fact, it is used less for criminal activity than traditional fiat currency is. How do you feel about China is, you know, on the one hand a plurality of Bitcoin mining is being done in China, at least as best as we can tell. So people are like, oh well we have to attack Bitcoin because we have to attack China from a United States point of view. But the Chinese government is also cracking down on crypto. You know, what worries you the most about how the Chinese government is acting towards Bitcoin? They're cracking down on Bitcoin because they want to give rise to the digital yuan. The digital yuan will allow them to surveil its use. So they'll be able to track the way people are using digital yuan and they'll be able to punish people who are using it in ways that the Chinese Communist Party doesn't like. If they contribute to a religious organization they'll be able to crack down on them. Maybe a person contributes to a religious organization and then tries to rent a car to drive to another city in China, they're not going to be able to. These are the kind of manipulative tactics that will be used with the digital yuan. So having a digitized dollar that is much more private because of our own constitutional bill of rights, the Fourth Amendment, will provide a degree of privacy that the yuan is intended not to have. And then there's Bitcoin which is even more private, not anonymous as a lot of people say it's more pseudonymous, but it provides privacy. It seems like a lot of Republicans over the past 20 years or so have gotten away from that idea that things should be private because the government doesn't have any business knowing what you're up to and it doesn't mean like if you want privacy that you're a criminal. But it seems like in the Bitcoin argument a lot of people increasingly on the Republican side of the aisle are like if we can't find out, if the government can't find out what's going on we should regulate it tightly. You seem to be coming from a different tradition. Absolutely. Disabuse people of that and have them recognize that Bitcoin, because of its privacy, is very freedom loving and oriented. Take for example the fact that today people in Venezuela can privately convert their wealth to Bitcoin so they can avoid the hyperinflation and the repressive regime that didn't use to exist. It provides great freedom to people who are living in hyperinflation or repressive governments. So it works in the United States. Well, and as we see inflation growing it should I think alert the Fed that their proposed 2% inflation strategy is not working right now and that we need to address this. There's too much money floating around in the economy right now. You mentioned that you were interested in crypto because you had served as Wyoming's treasurer. What about intellectually? How did you get into the idea of competing private currencies? Did you read a lot of Milton Friedman or Friedrich Hayek or where did that come from? Actually my reading of Hayek came after my first investment in Bitcoin, which was in 2013 and once you invest in something you have a little skin in the game you start to learn more about it. So I invested as an experiment and that experiment has become not only an interest but now a fascination. One of the other arguments in the United States that's being advanced increasingly against Bitcoin is that it's an energy hog through a couple of poorly structured studies. The idea is that if Bitcoin actually becomes a global currency all the electricity on the planet maybe in the universe will be devoted to Bitcoin transactions. That's not true but you have talked about how Bitcoin is actually helping to either make use of stranded energy or curtailed energy in Wyoming or actually develop renewable supply. Can you talk about that? We know that even now Bitcoin mining is 40% sourced by renewables whereas globally the average use is 12%. So even now it is more intensively used using non-hydrocarbon sources of energy. But in Wyoming you'll see a trailer full of Bitcoin mining equipment pulled into an oil and gas drill site. They'll hook up to the natural gas that's being vented into the atmosphere because it's not yet hooked up to a pipeline and they'll use that as a source of energy. So it's actually taking an asset that's stranded and being wasted and using it to mine Bitcoin. Why isn't that more widely appreciated? I think that people like me need to use the opportunity that you've given me today, Nick, to explain that. Which party is better on Bitcoin and cryptocurrency in general, do you think? Crypto, Bitcoin blockchain, when you say these things some people like their eyes light up, many other people, they get dark scowls on their face. Is the Republican Party better on Bitcoin than the Democratic Party? Is it old people versus young people, coasts versus rural? What is it? That's what's so fun about it. It's all of those things and none of those things. We have a financial innovation caucus that I founded with Senator Kirsten Sinema of Arizona, a Democrat, and it is bipartisan. We have members of both parties and in the House there is interest in cryptocurrency and financial technology and Bitcoin from both parties and it's all age groups. Most of the people I'm meeting with here are younger, a lot younger than I am. They're my daughter's age and so they're informing me and educating me as I try to figure out how we can craft a regulatory framework that doesn't stifle what all these young innovators are trying to do. Takes me a while to grasp some of their thought processes because they're so far ahead of being in terms of understanding technology, but I'm catching up and I need to help my colleagues in Congress catch up. Some of the people we're talking to here are very worried that the government, the federal government is going to come after Bitcoin at some point and that they're going to either take it over or destroy it. What can you tell them about whether that's going to happen? The people that I talk to that are policymakers that are thinking the way I'm thinking want to make sure that doesn't happen. We want to make sure that Bitcoin, stablecoins, tokens can innovate and the US dollar can innovate as well and become a digital currency so there's going to be formats that people can use that are much more user friendly than are more old fashioned forms of currency. Young people are ready to embrace it. People my age are either nervous about it or perhaps they're in traditional banking and they think that this is going to pull the rug out from under their business. So we have to find ways to explain it so traditional bankers understand that yes it's going to change their business model, but it's not going to destroy their business model. And we need to inform policymakers of the benefits of having these various opportunities to store wealth and value can exist side by side. You mentioned your age. How old are you? I'm 66. So you're on the young side of the Senate. Right? This is true. I mean, this is true. Do you worry at all that America is becoming a gerontocracy? I'm close enough in age to you where I remember looking at Soviet leaders and being like, oh my God, they're ancient and you know, they're not. They were in their 50s when the Soviet Union collapsed. Do you worry that American leadership is getting old and that with that kind of old age comes fear and anxiety about the future? Some people are as worried as people my age that we're spending too much money, that the US dollar will lose value, that will have inflation, maybe hyperinflation. So they want to see an alternative like Bitcoin protected. We want to see tokens and stablecoins available. So there are places to go if the US dollar underperforms dramatically. That's true of people of both ages. I am finding, however, is that too many members of Congress continue to believe that we can spend more and more. We cannot do that and we're going to have to adjust. And among the ways we can adjust is to help provide opportunities for Bitcoin. Republicans tend to talk a really good game about cutting the size, scope and spending of government when they're not in power. After Donald Trump's spending went up when Republicans were in power, over the past year spending has gone through the roof. It continues to go through the roof. Is there any remnant left, a serious remnant in the Republican Party that's talking about reducing the size, scope and spending of government? It is so small and it is so overwhelmed by people who see no end to spending and don't want to be part of an end to spending. So I think the Republican Party has pretty much abandoned its concern about the debt and the deficit and spending. So the whole reason I ran for Congress and now ran for the Senate is because I'm concerned about the deficit and spending. But I'm in such a small minority of members who are concerned about it that we're going to lose. So that's one of the reasons that Bitcoin is attractive to me and I want to make sure we protect and nurture its capabilities because at some point if we had a black swan event, at least we'd have an alternative and Bitcoin represents that store of value that I'm concerned we might lose with the U.S. dollar. Are there any Democrats who are also worried about the spending? Absolutely. And I serve with some on something called the Committee for a Responsible Federal Budget. That was a very bipartisan group. It still exists. I had to leave that board when I ran for the U.S. Senate but I continue to use them for advice, counsel and policy ideas. But we know we're swimming upstream and I very much want to run parallel courses. One is to try to save the U.S. dollar. The other is to enhance the opportunity for Bitcoin and other cryptocurrency in case we jump the track and crash the train. Senator, thanks so much for talking to Ariza. My pleasure, Nick. Thank you.