Cryptocurrency enthusiasts in the United States are primarily concentrated in specific areas, influenced by factors such as population, occupation, and politics. This article, sourced from William Baldwin and compiled, edited, and written by Foresight News, provides insights into the distribution of cryptocurrency believers in the US.
According to indirect evidence, if your community appears on the cryptocurrency heat map, it is likely that the people around you are young, wealthy, and engaged in software development, among other occupations. It is not surprising that California has the highest number of Bitcoin and other cryptocurrency owners, given its population and concentration of technology companies. However, in terms of state rankings, Washington surpasses California.
It is worth noting that digital speculation is relatively unpopular in the Midwest. Among high-income taxpayers, there is a 13-fold difference in the acceptance of cryptocurrencies between Washington and West Virginia. These findings are the result of the US government’s decade-long crackdown on cryptocurrency-related offenses. The IRS believes that token owners have failed to report capital gains, leading to demands for exchanges such as Coinbase and Kraken to disclose customer information. The Department of Justice has imposed a $4 billion fine on Binance for money laundering violations. The federal government has also infiltrated seemingly anonymous blockchain transactions multiple times to recover stolen tokens or obtain other evidence of crimes, such as drug trafficking.
One important aspect of these crackdown efforts is the requirement for taxpayers to disclose whether they have engaged in any cryptocurrency transactions in a given year, starting from the 2020 tax return. While the main target is to identify those who have converted cryptocurrencies into cash or received cryptocurrencies as payments, in the first round, even if you have done nothing other than purchasing digital assets throughout the year, you still have to answer “yes” in the checkbox.
The conclusion drawn from this enforcement action is that, at least among taxpayers who do not want to risk perjury charges, this is a fairly decent survey of the penetration rate of cryptocurrencies in the US three years ago. The IRS recently published this result in a statistical summary of the 1040 forms listed by postal code.
The file contains approximately 20 million records. After filtering the massive data, I focused on 9.3 million tax returns with adjusted gross income exceeding $200,000. The adoption rate of cryptocurrencies is highest among high-net-worth individuals.
Nationally, approximately 1 out of every 47 upper-income taxpayers is involved in cryptocurrencies. There are significant geographical differences in their distribution. On the West Coast (a combination of three states), the ratio is approximately 1 out of every 29; while in 21 other states, the ratio is even less than 1%.
Population statistics can explain some of these patterns. Younger people are more fascinated by digital assets, while conservatives are less interested. In terms of median age, the populations of Washington, California, and the District of Columbia are younger than the national average, while Vermont, West Virginia, and Maine have a higher aging population.
Occupation choices may be a larger determining factor for the popularity of cryptocurrencies. California and Washington have a large number of programmers and data scientists, making it easier for them to invest in digital assets. Bitcoin, for example, is 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 growers in Nebraska to accept this concept.
Politics also play a role, with blue states more likely to enter the cryptocurrency field than red states. Maine and Texas are notable exceptions.
Now let’s focus on communities with a higher adoption rate of cryptocurrencies. I found that the adoption rate in 44 postal code communities is at least 7%. Some of these communities are located in commercial areas, where addresses after the 1040 postal code may belong to accounting firms. However, most of them are close to software-intensive companies or affluent residential areas.
Examples near software hubs include Amazon and Microsoft headquarters near Washington, as well as Apple and Alphabet headquarters in Silicon Valley. Examples of the wealth effect include two communities in San Francisco with an average income (according to tax returns) exceeding $1 million. In the San Francisco area where Mark Zuckerberg owns property (zip code 94110), the digital asset tax rate is 9.3%.
Texas also has a high level of digital asset ownership, as the state’s cheap electricity and relaxed environmental regulations attract Bitcoin miners. No community in Texas has an adoption rate below 7%, except for one community in Austin (zip code 78704) with an adoption rate close to 6.5%.
Cryptocurrencies may spread to more places in a timely manner, where people have significant investment portfolios but may not have any connection to the tech industry. If wealth management companies such as Fidelity Investments persuade their clients that allocating assets in this category is a wise form of diversification, this situation may occur.
It is also possible that the price of Bitcoin will eventually approach the production value of Warren Buffett’s famous figure, which is $0. Perhaps one day, the only fans of Bitcoin will be programmers, staring at their 01 strings.