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The Bitcoin Hash Rate Has Dropped. How Long Will It Take to Return? - Ep.252

Jul 6, 2021

Guest

Kevin Zhang

Kevin Zhang, Vice President of Business Development at Foundry, shares his journey from skepticism to becoming immersed in Bitcoin mining. He discusses China's crackdown on mining and its impact on global hash rates, alongside the exodus of miners to new locations like Kazakhstan. Zhang highlights how the mining ban could ultimately strengthen Bitcoin's network. He also addresses the benefits of renewable energy for mining operations and explores the exciting potential of geothermal Bitcoin mining in El Salvador. Tune in for a deep dive into the evolving landscape of cryptocurrency!

01:01:14

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ANECDOTE

Bitcoin Mining Journey

Kevin Zhang's interest in Bitcoin was reignited through friends who introduced him to mining.
He joined Roger Ver's mining operation in California after leaving his corporate job.

insights

INSIGHT

Foundry's Purpose

Institutional investors saw Bitcoin mining as a risky and opaque industry.
DCG created Foundry to bring transparency and institutional credibility to the mining ecosystem.

insights

INSIGHT

China's Crackdown Rationale

China's crackdown on crypto is rooted in maintaining social stability and control.
The government's focus on financial risk and environmental impact led to increased scrutiny of Bitcoin mining.

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Kevin Zhang's Bitcoin Journey

01:47 • 5min

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The Shifting Landscape of Bitcoin Mining

07:15 • 24min

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The Resilience of Bitcoin Amidst Hash Rate Challenges

31:29 • 4min

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Impending Bitcoin Difficulty Adjustment: Impacts on Miners and Market Dynamics

35:16 • 3min

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Bitcoin's Evolving Energy Landscape

38:01 • 14min

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Geothermal Bitcoin Mining in El Salvador

51:34 • 5min

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Future Predictions and Developments in Bitcoin Mining

56:57 • 4min

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#281

• Mentioned in 73 episodes

The Cryptopians

Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze

Laura Shin

The Cryptopians delves into the story of idealists, technologists, and opportunists fighting to bring cryptocurrency to the masses. The book focuses on the founding of Ethereum by Vitalik Buterin and the subsequent crypto fever it created. It introduces readers to larger-than-life characters such as Buterin, Charles Hoskinson, and Joe Lubin, highlighting the personal and professional conflicts that shaped the early days of Ethereum. The narrative explores the booms, busts, and internecine wars within the crypto world, revealing it as a deeply personal struggle to influence the coming revolution in money, culture, and power.

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!

Crypto.com: https://crypto.onelink.me/J9Lg/unchainedcardearnfeb2

Tezos: https://tezos.com/discover?utm_source=laura-shin&utm_medium=podcast-sponsorship-unconfirmed&utm_campaign=tezos-campaign&utm_content=hero

Conjure: https://conjure.finance

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:

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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