Adam Back's Six-Figure Bet

Mining one bitcoin at home in Lebanon cost 783 times less than in Italy, according to a CoinGecko study that opened the Mining Disrupt News Update for August 21, 2023. The host was quick to add the catch: that study counted only household electricity, and household solo miners are not where most bitcoin comes from. Only 65 countries were profitable for them at all, 34 of them in Asia and five in Europe. Anyone solo mining at home, the host said, is probably doing it for decentralization and freedom rather than the money.

Bitcoin sat at $26,185 on the host's screen that morning, with the hashrate "just blistering along" and a 6.85 percent difficulty increase on the way.

The middle of the show went to a letter to the editor from Marty Walters of Derby, written after a Buffalo News piece on bitcoin miners in North Tonawanda. The letter asked why the world needs cryptocurrency, what moral value mining adds, and whether the same energy could feed the hungry. It ended: "Hang up. Look up. Re-engage with the world."

The host agreed about the phones, then answered each question. Money, the host said, has to move as fast as the economy, and card payments still take months to settle. A money nobody can debase protects savers from politicians who can create money at will. And on crime, the host said cash, not bitcoin, is the black market's tool, because bitcoin leaves a trail investigators can follow.

The episode closed on a clip of Adam Back, chief executive of Blockstream and the creator of Hashcash, the proof of work system cited in the Bitcoin white paper. Back said a new all-time high, "like 100,000 or more, even before the halving," was possible after a few depressed years of bankruptcies and DeFi failures. He said he had made a small bet on it with someone on Twitter. He also said Blockstream hosts miners for institutional clients, Fidelity among them, which he called "kind of like co-location for mining."

The host went further, naming $200,000 to $300,000 as a realistic cycle peak, followed by a bear-market bottom around $75,000. The host also asked why Fidelity, with over $4 trillion under management by the host's count, would host miners unless there were profits in it, and pointed to the spot ETF filings from BlackRock, Fidelity and ARK. The spot ETFs were approved in January 2024.

Back's timing did not hold. Bitcoin was still under $100,000 when the halving came in April 2024 and crossed it that December. The price was $26,017 on the day of the episode and $80,145 today.

Read the full story at miningdisrupt.com.