Loading...
About this Episode
Good Morning Everyone,
6 months ago China made what I believe will turn out to have been one of the most significant geopolitical errors of this century by banning Bitcoin Mining. At the time Chinese mining operations were responsible for securing a majority % of global hash power. According to CBECI, at the beginning of 2021 53% of total network hash rate was from China. Down from 72% at the beginning of 2020. China had long occupied significant share of the hash rate due to considerable access to cheap energy in areas like Sichuan and Xinjiang where renewable sources like hydroelectric, solar, and geothermal are common.
In April 2021 China banned all mining operations. These mining businesses were forced to relocate their operations. At the time there was a high level of uncertainty as to how this would play out, which was reflected in the Price as this coincided with bitcoin printing a top at 64k and over the next 3 months retracing to as low as $29,000.
Despite the short term impact to price, this catalyst served as a powerful demonstration of resilience of the bitcoin computing network as some 50% of all mining rigs were taken offline while there was zero noticeable impact to the stability or security of the network. Pretty incredible stress test when you think about it. Tick tock, next block as the saying goes.
The US has been the main beneficiary of this exodus from China as Texas saw an influx of hash power. The US is now responsible for 34% of total hash power as of August 2021. Chinas dominance of the hashing power has long been a head wind and concern amongst the community. Would the CCP try to take control of it and would that impact the security and stability of the network with them previously having well in excess of 51% ? Thankfully, we’ll now never know.
Fast forward to December 2021 and the hash rate is back to the levels prior to this exodus, and has recovered in a V-Bottom style demonstrating the robust nature of this system.
It was in the interest of these miners to find cheap energy, and find it fast.
What other technology incentivises humans to source the cheapest energy on the planet, and also provides them with a way to monetize the energy if it is geographically inconvenient or not cost effective to do so? This is one of the Bitcoin networks super powers.
Pretty wild to see just 6 months later the mining hash rate is back near all time highs. While price currently lags this metric at around $50,200 - almost 30% below that of April.
I cannot predict the future, but i do know that hash rate typically proceeds price. It’s a leading indicator, while price is often a lagging indicator. With the end of 2021 coming to a close it’s anyones guess what happens from here, but i’m betting Q1 of 2022 is likely to be explosive. Regardless of the fact, the resilience and the robust nature of the worlds most sophisticated monetary system has been on full display this year running a clinic in free and open, decentralized systems.
It’s an absolute pleasure to be alive during this time to witness it. This is history in the making. The market is not even close to pricing in the power of this technology in my opinion.
Wishing you all the best, and hope you have a great day.
AK
I’m on a mission to get this information to as many people as possible. Please support this work by sharing, liking and following on twitter, youtube and instagram to help wake up as many people as possible and support the adoption of a system that enables humans to flourish! Appreciate you being here! 🧡
Thanks for reading Bitcoin Unlocked! Subscribe for free to receive new posts and support my work.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com
Hosts & Guests
No transcript available for this episode.
