Cryptocurrency enthusiasts in the United States are mainly concentrated in specific areas, influenced by factors such as population, occupation, and politics. This article, sourced from William Baldwin, was compiled, translated, and written by Foresight News.
Cryptocurrency enthusiasts tend to gather in certain places rather than others. Now, there is a way to determine the distribution of cryptocurrency enthusiasts in the United States.
Based on indirect evidence, if your community appears on the cryptocurrency heat map, then the people around you are likely to be young, wealthy, or taxpayers involved in software development.
It is not surprising that California has the highest number of Bitcoin or other cryptocurrency owners in densely populated areas. However, in terms of state rankings, Washington State surpasses California.
It is worth noting that digital speculation is relatively unpopular in the Midwest region of the United States. Among high-income taxpayers, there is a 13-fold difference in the acceptance of cryptocurrencies between Washington State and West Virginia.
These revelations are the result of the government’s decade-long crackdown on cryptocurrency mischief. The Internal Revenue Service (IRS) is convinced that token owners have failed to report capital gains, and therefore requires exchanges such as Coinbase and Kraken to disclose their customer information. The US Department of Justice has fined Binance $4 billion for money laundering violations. The federal government has infiltrated seemingly anonymous blockchain transactions multiple times to recover stolen tokens or obtain other evidence of crimes, such as drug trafficking.
An important part of the crackdown is that starting from the 2020 tax return, taxpayers are required to disclose whether they have engaged in any cryptocurrency transactions during that year. Although the main target of this action is to catch those who have cashed out cryptocurrencies or received them as payments, in the first round, if you have done nothing other than purchasing digital assets during the year, you still have to answer “yes” in the checkbox.
The conclusion drawn from this phishing operation is that at least among the group of taxpayers who don’t want to risk perjury charges, this is a fairly good survey of the penetration rate of cryptocurrencies in the United States three years ago. The IRS recently announced this result in a statistical summary of Form 1040 listed by postal code.
The file probably contains at least 20 million data entries. I filtered through the massive data and focused on 9.3 million tax returns with adjusted gross income exceeding $200,000. The adoption rate of cryptocurrencies is highest among the high-net-worth population.
Nationally, 1 out of every 47 upper-income taxpayers qualifies. The geographical distribution of these taxpayers varies greatly. In the West Coast (the combined three states), there is 1 out of every 29; while in the other 21 states, this proportion is less than 1%.
Population statistics can explain some of these situations. Young people are fascinated by digital assets, while conservatives are not. In terms of median age, the populations of Washington State, California, and the District of Columbia are younger than the national average. Vermont, West Virginia, and Maine have populations that are older than the U.S. average.
Occupational choices may be a larger determining factor for the popularity of cryptocurrencies. California and Washington State have a large number of programmers and data scientists. It is likely that they are more willing to invest money in a range of digital assets. Bitcoin is like this: a string of 256 zeros and ones representing a large integer. Some of these integers are worth $42,000, while the rest are worthless. It may be difficult for corn farmers in Nebraska to accept.
Politics? This is also relevant. Blue states are more likely to enter the cryptocurrency field than red states. Maine and Texas are notable exceptions.
Now let’s focus on communities with higher cryptocurrency adoption rates. I found that the adoption rate in 44 postal code communities is at least 7%. Some of them are located in business districts, where addresses after the 1040 postal code may be the address of an accounting firm. However, most are near software-intensive companies or affluent residential areas.
Examples of communities near software job areas: near Amazon and Microsoft headquarters near Washington, and Apple and Alphabet headquarters in Silicon Valley. Examples of the wealth effect: the average income of two communities in San Francisco (tax returns show at least $200,000) exceeds $1 million. In the San Francisco area where Mark Zuckerberg owns property (zip code 94110), the digital asset tax rate is 9.3%.
Texas has a relatively high ownership of digital assets, attracting Bitcoin miners with cheap electricity and relaxed environmental regulations. No community is below 7%, except for a community in Austin (78704) which is close to 6.5%.
Cryptocurrencies may spread to more places where people have large portfolios but may not have any contact with Silicon Valley. If wealth management companies like Fidelity Investments convince their clients that allocating this asset class is a wise form of diversification, this situation may occur.
It is also possible that the price of Bitcoin is getting closer to the production value, which is $0, as believed by the famous Nebraskan Warren Buffett. Perhaps one day, the only fans of Bitcoin will be programmers staring at their 01 strings.