Bitcoin Miner Capitulation | Cassie Clifton & Kevin Zhang
In this episode of Empire, Jason is joined by two experts in the Bitcoin mining industry, Cassie Clifton (Galaxy Digital) and Kevin Zhang (Foundry). Since the start of the bear market in November 2021, we've seen prices crash and contagion run through DeFi. But it wasn't until May 2022 that rumors started to spread of pain in the Bitcoin mining industry.
Profit margins are collapsing, debt obligations are coming due, and miners are fighting to stay solvent. Tune in for a complete breakdown of the state of bitcoin mining!
Highlights include:
- Miner economics
- Understanding the ASICs market
- How debt-fueled insane growth
- What China's ban meant for the industry
- Why Miners hodl their Bitcoin
- What led to today's pain
- Consolidation and M&A
- Bitcoin Mining pools
- What to expect next
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Follow Cassie: https://twitter.com/bitcoincass
Follow Kevin: https://twitter.com/SinoCrypto
Follow Jason: https://twitter.com/JasonYanowitz
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(00:00) Introduction
(01:45) Starting in March 2020
(07:10) The inputs to miner profitability
(10:42) How miners procure ASICs
(17:34) Miners prefer to HODL
(21:58) How miners reacted to macro volatility
(24:26) Avalanche Core Ad
(25:54) Second Order Effects of the China ban
(36:30) The State of Bitcoin Miners Today
(45:40) Are manufactures in trouble?
(47:08) Will miners flood the market with BTC?
(48:25) The end of ASIC backed loans?
(51:30) Consolidation and M&A
(54:30) Will Miners form an OPEC like committee?
(57:03) Renewable energy
(59:36) Changes in the energy market
(1:03:54) Bitcoin mining pools
(1:08:10) When will we hit rock bottom?
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Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, and our guests may hold positions in the companies, funds, or projects discussed.
The Bitcoin Hash Rate Has Dropped. How Long Will It Take to Return? - Ep.252
Kevin Zhang, vice president of business development at Foundry, breaks down the latest developments surrounding China and bitcoin mining. Show highlights:
how he came across crypto and which Bitcoin OG he joined at Bitcoin.com to help start its mining operations arm
what Foundry does and its relationship with Digital Currency Group (DCG)
why DCG wanted to build out a mining infrastructure business
what news from China in early March kickstarted the process of the mining ban
how China’s Central Television broadcasting company might have brought extra scrutiny to cryptocurrencies
what the 100th anniversary of the Chinese Communist Party has to do with its Bitcoin mining ban
why the Inner Mongolia and Sichuan Bitcoin mining bans were especially disruptive for Chinese miners
how much of China’s hash rate Kevin estimates has been shut down since May
where are miners relocating to
why Chinese mining equipment will not be allowed to turn on in the US
whether or not China’s Bitcoin mining ban will stick
why China banning bitcoin mining will be good for the network in the long run
what significant risk to Bitcoin’s network is solved by China banning bitcoin mining
how much Bitcoin’s hash rate will drop and what effect this will have on miner revenue
why Kevin thinks that Bitcoin is good for renewable energy
how immersion cooling technology works
what tangible benefits miners could find by moving to North America
if El Salvador’s volcanic bitcoin mining plan is feasible
what Kevin predicts will happen in the Bitcoin mining industry for the latter half of 2021
Thank you to our sponsors!
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Episode Links
Kevin Zhang
Twitter: https://twitter.com/SinoCrypto
Mining tweet storms:
https://twitter.com/SinoCrypto/status/1407524150885994497
https://twitter.com/SinoCrypto/status/1409227438262046723
Content from previous work experience:
Greenridge Generation
https://www.theblockcrypto.com/linked/57943/a-power-plant-in-new-york-is-reportedly-mining-roughly-50000-in-bitcoin-each-day
Project Spokane
https://medium.com/@derekbrouwer/the-bitcoin-barons-how-a-marketer-and-a-money-launderer-sold-montana-on-digital-gold-2a255c96c981
Foundry, Subsidiary of DCG
Twitter: https://twitter.com/foundryservices
Website: https://foundrydigital.com/
Foundry USA Pool
Bit Digital: https://www.prnewswire.com/news-releases/bit-digital-joins-foundry-usa-pool-with-5-679-machines-adding-up-to-280-phs-of-compute-power-to-the-pool-301283792.html
Bitfarms partnership: https://www.globenewswire.com/news-release/2021/04/23/2215897/0/en/Bitfarms-Partners-with-Foundry-to-Expand-Bitcoin-Mining-Fleet-and-Join-Foundry-USA-Pool-Instantly-Boosts-Operating-Hashrate-By-15.html
China’s Bitcoin Mining Ban
Travis Kling noted 25 different announcements from China in June alone:
https://twitter.com/Travis_Kling/status/1410630499748388865
Glassnode: mining difficulty to face its largest decrease ever
https://insights.glassnode.com/the-week-on-chain-week-26-2021/
The Block: hash rate dropped 50%, Foundry up while everyone else is hurting
https://www.theblockcrypto.com/post/109315/bitcoin-hashrate-declines-50-percent-china-mining-crackdown
Nic Carter: breaking down the hashrate migration
https://www.coindesk.com/bitcoin-unpacking-hashrate-nic-cart-migration
Secondhand mining equipment prices are spiking
https://www.coindesk.com/chinese-logistics-firm-airlifting-bitcoin-mining-machines-to-maryland-report
https://www.theblockcrypto.com/post/109301/secondhand-bitcoin-miner-supply-spiking-bitmain
Bitcoin miners shut down, 26 farms affected after Sichuan bans BTC mining
https://www.coindesk.com/sichuan-becomes-latest-chinese-province-to-order-bitcoin-miner-shutdown
https://decrypt.co/74075/bitcoin-hashrate-falls-17-overnight-after-china-mining-crackdown
China’s Inner Mongolia announced eight measures in its crypto ban
https://www.theblockcrypto.com/post/105973/china-inner-mongolia-crypto-bitcoin-mining-ban-measures
Hash rate hits yearly low
https://www.coindesk.com/bitcoin-mining-hashrate-drops-low
Miners are moving to Kazakhstan
https://www.coindesk.com/chinese-bitcoin-mining-company-delivers-first-machines-to-kazakhstan
Tweet thread on how bitcoin miners reacted to the PRC’s May crackdown
https://twitter.com/MustafaYilham/status/1396574185598590979
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Reinventing Upfront and building LA (with Upfront partner Kevin Zhang)
We’re joined by Upfront Ventures partner Kevin Zhang to discuss the evolution of both Upfront as a venture firm and the LA tech ecosystem more broadly. We cover the journey from Upfront’s founding as “Global Retail Partners” in 1996 to its place today as the premier and largest tech investor in Southern California. We talk about rebranding the firm and choosing Upfront as a name, launching the Upfront Summit, what LA is "good and not good at", and Kevin’s thesis around gaming as a great place for venture investing.
Sponsors:
Sierra: https://bit.ly/acquiredsierra