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

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

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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