These are tough times for the crypto and blockchain sector, so it’s no surprise that industry proponents are taking advantage of any promising news to help charge struggling markets. A Reuters report from Uganda last week made a huge discovery of gold ore this fuel.

What does gold mining in Africa have to do with the global bitcoin price (BTC)? Quite a bit, probably.

Bitcoin has periodically claimed to be digital gold largely on the strength of a strict supply limit of 21 million, making it non-inflationary and a good store of value — in theory. Gold, of course, is a store of value par excellence, with a finite supply and a track record dating back thousands of years.

But, if Uganda has 31 million metric tons of gold ore, as the government announced, might it not lead to a significant increase in the world’s gold supply? This, in turn, can lower the price of gold – and make it a less safe “store of value” in general. The loss of gold could be the gain of the cryptocurrency.

Some were encouraged by this idea. For example, Michael Saylor, CEO of Microstrategies, posted a video on Twitter about Uganda’s discovery of a “massive gold deposit” of potentially 320,158 metric tons of refined gold “worth $12.8 trillion”. As Saylor noted on June 17: “#Gold is plentiful. #Bitcoin is scarce,” he told CNBC:

“Every commodity in the world looks good in an environment of hyperinflation, but the dirty secret is that you can make more oil, you can make more silver, you can make more gold […] Bitcoin is the one thing that seems like a scarce and finite good.”

But, there is probably less here than meets the eye. The 320,158 metric tons of refined gold that a Ugandan Ministry of Mining spokesperson said could be produced from the new deposits in the country’s northeastern corner would far exceed the 200,000 metric tons of above-ground gold found in the entire world today. One gold mining publication went so far as to suggest that the Ugandan government may have been confusing metric tons and ounces in its forecast.

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The World Gold Council was asked to comment on the Uganda discovery and the reasonableness of its figures. The council does not usually comment on media reports of gold discoveries, a council spokesperson told Cointelegraph, but added:

“In the absence of official ore/resource reserves announcements, we do not expect these ‘discoveries’ to contribute materially to mine supply for the foreseeable future.”

But on the bigger issue, Saylor may have a point. The truth is that more gold can always be extracted, whether in Uganda or elsewhere, especially with advances in surveying and mining technologies, including aerial exploration. And if so, wouldn’t that make Bitcoin, with its strict limit of 21 million BTC, seem non-inflationary by comparison – and perhaps the best store of value?

Garrick Hellman, Head of Research at, told Cointelegraph:

“The Ugandan discovery underscores why nearly 200 million Bitcoin holders believe that ‘digital gold’ – Bitcoin – will outperform physical gold in terms of its scarcity and reliability as a store of value in the coming decades.”

As was the case with other major gold discoveries in history, such as the South African gold rush in the nineteenth century, the introduction of this much new gold – or even just the heightened awareness of the Uganda discovery – “could have significant negative effects on gold prices over the course of the year.” Hellman said.

Not everyone agrees with this assessment, however. “People called Bitcoin ‘digital gold’ because it was considered a hedging asset, especially against the stock market. That hasn’t been true, at least for the past three years,” Ishwar Venugopal, assistant professor in the University of Central Florida’s Department of Finance, told Cointelegraph.

The increased participation of institutional investors means that bitcoin is now more tied to risky assets such as stocks, while a store of value should be unrelated to the stock market. Venugopal added:

When institutional investors enter such markets, the usual stop-loss limits for trading are applied, and the assets in their portfolios and thus the market become positively correlated with each other. The fact that bitcoin is bought and sold just like any other risky asset undermines the “digital gold” label given to it.

In fact, “it’s clear that the majority of investors don’t see bitcoin as digital gold yet,” Ferdinando Umtrano, founder and CEO of CheckSig — and founder of the Digital Gold Institute — told Cointelegraph.
Rwenzori Mountains in Uganda.

Meanwhile, Bitcoin is not subject to any entity or third party, and therefore is subject to price fluctuations based on how the market rates it, Vijay Ayyar, vice president of corporate and international development at Luno, told Cointelegraph.

Source: CoinTelegraph