Happy Friday everyone! This was the week the war was supposed to end and the hedges were supposed to work. Neither quite happened. Let's get into it.

1. Peace on paper, stalled within days

The United States and Iran signed an agreement this week to wind down the war that started in February: hold the ceasefire, reopen the Strait of Hormuz (the narrow shipping lane about a fifth of the world's oil passes through), and clear the way for Iran to sell its oil again. In theory, great news. The war had pushed oil prices up sharply, and expensive oil feeds into the cost of nearly everything. Then on today the follow-up talks in Switzerland collapsed before they even started, with the US delegation walking out over what the White House called unfinished logistics.

A signature is not a settlement. The relief everyone priced in is on hold. Why it matters for Bitcoin is indirect but real: high oil keeps inflation high, and as the next story shows, high inflation is exactly what's forcing rates up and weighing on Bitcoin.

2. Warsh's Fed turns hawkish

The Federal Reserve met June 17 under its new chair, Kevin Warsh, and left rates unchanged. But it signaled something markets didn't expect: it may raise rates later this year rather than cut. The reason is inflation. Prices in May ran 4.2% higher than a year earlier, the fastest in three years, with energy the main culprit.

Here's the part that hits Bitcoin. Short term, the hawkish talk is a headwind: bonds pay around 4.5% to lend to Washington for ten years, Bitcoin pays nothing, so money rotates toward the guaranteed yield. But the threat to actually raise rates is mostly hollow. The government is now sitting on more than $39 trillion in debt, with interest already past $1 trillion a year, more than it spends on defense. Hiking from here doesn't just cool inflation, it detonates the government's own borrowing bill.

That's the box the Fed is in: it can sound hawkish, but the math makes hiking nearly impossible to sustain. And when fighting inflation and funding the government collide, governments reach for the same escape valve they always have: print the money and let the currency absorb the damage. That's the slow gravity Bitcoin was built for, a supply no one can vote to expand.

3. Two hard assets, neither working

This is the part that frustrates a lot of holders. Middle East war, inflation at a three-year high, and the assets people buy to protect against inflation should be ripping. Instead, both fell. Bitcoin slipped to just under $63,000. Gold, geopolitics and all, sits near $4,100, about 24% below the record it set in January.

So what gives? Short term, both behave less like inflation shields and more like any other investment competing with those high-paying "safe" bonds from the last story. When the safe return goes up, gold and Bitcoin tend to fall together. However, Bitcoin's case as protection against money printing plays out over years, not weeks. A bad month doesn't break it. But it's honest to say the hedge didn't show up this week.

4. Miners hit break-even

Behind the scenes, the people running the computers that secure the network, the miners, are hurting. They earn newly created bitcoin for processing transactions, and at today's prices many are barely covering their electricity bills. So many have switched their machines off that the network's total computing power has fallen sharply since October, more than a quarter on VanEck's reading, one of the longest sustained drops on record.

Sounds alarming, but it's the system working as designed. Bitcoin automatically makes mining easier when miners leave, so the network keeps humming regardless. And there's a silver lining for holders: in past cycles, the moments when mining got this unprofitable, with Bitcoin trading near its production cost, have often clustered close to the price bottom, because the weakest sellers have already been flushed out. No guarantees, just a pattern worth knowing, which leads straight into this week's concept.

5. Bitcoin Weekly Concept: What It Actually Costs to Mine One Bitcoin

We keep saying Bitcoin is "trading at production cost," so it's worth knowing what that means. Mining a coin comes down to three things: the price of your electricity, how efficient your hardware is, and the network's difficulty level. Difficulty is the clever bit. Roughly every two weeks, Bitcoin automatically adjusts how hard the puzzle is, so new coins keep arriving about every ten minutes no matter how many miners come or go. When miners switch off, difficulty drops and mining gets cheaper for everyone still running.

Put those together and each miner has a rough all-in cost to produce one coin, set mostly by their power price. Across the whole network, that average cost has acted like a soft floor in past downturns. When price falls below it, the most expensive miners give up, the selling pressure clears, and the ones left standing are the cheapest and toughest. It guarantees nothing. But it explains why miners stop selling around a certain price, and why that level has mattered before.

That's the week. The war isn't over, the Fed isn't cutting, and the hedges took the week off, but the network kept running exactly as designed. If the Switzerland talks restart, next Friday gets interesting.

Stay humble, stack sats.

Stephan

Educational content only. This is not financial, investment, legal, or tax advice, and not a recommendation to buy, sell, or hold Bitcoin.