I know this piece will come across as annoying to some, especially because I have only been bullish on bitcoin with some gusto for the last couple of months (though I first pointed it out to my readers in December 2022), but as a newfound member of the church of bitcoin community, I’d be remiss if I didn’t try out my voice a bit.
none or your pieces.....writings......are ever annoying......especially this Bitcoin one........and now that i have entered the Realm of Bitcoin with an ETF.......i am now a Bitcoin Watcher......and i am interested in every Truth Opinion
Many quotes come to my mind regarding bitcoin. When everyone and your shoeshine boy are buying it's time to get out, irrational exuberance, if you can't beat em, join em, etc. IMHO bitcoin is great for daytrading, not going to HODL. Buying it for the sake of defying the banking fiat currency system is like only investing in "green" companies. Not good for your bottom line? We will see.
Jesus, 2024 starts with AI chips, NVIDIA , melt up of SP 500 masquerading as the QQQ and now this? WTF is next? WTI to 200? GLD to 5000? My head can’t take it.
It will be whatever Elon eventually calls his centralized exchange token on X. The common man will never be able to buy beer or gas at a convenience store with Bitcoin (or any blockchain crypto) because of the transaction delay inherent in synchronizing the blockchain. Blockchains enable incorruptible archival access to public records, not instantaneous point-of-sale financial transactions.
Good post. I agree. In the past month I have onboarded a half-dozen people to River with a simple weekly DCA. Slow and steady wins the race. Loud and obnoxious turns people off.
The continually rising price is both hypnotic and seductive - but does nothing for spreading an understanding of why Bitcoin is so valuable a technology. For me personally, looking at the historical economic value of monopolistic networks made seeing the value easier.
Historically the price of bitcoin has gone up after each halving. Of course there have only been three previous halvings so not much history in that regard.
Actually, there is a huge shortage. About 70% of the existing Btc hasn’t changed wallets in over 3 years. That’s about 14m Btc owned by diamond hands. All the new money is chasing only the remaining tradeable 5.6m. When you consider there is 500m in fiat flowing daily into just the ETFs, and unlike most commodities supply cannot be ramped up …. all the ingredients are there for an explosive rally.
The second sentence is correct, not the first. The halving means the reward is cut in half.
PS 1 Bitcoin = 1 Bitcoin. Stop with the "dollars" BS. It's global and has already pushed through ATH in just about every other currency on the planet, including gold and silver. It's ok to be wrong. Just stop trying to infect others' thinking along the way.
It's pretty obvious to all in the thread that you're the dick here. You speak in absolutes like, "do the same amount of work and take the same amount of time..." and they aren't necessarily true. But you wouldn't know that bc you don't put the time into understanding. Some blocks are rewarded with less time, especially when/if the difficulty adjustment shifts lower.
I too, have seen some of the financials. I won't claim to have seen them all bc that isn't true. Breaking even when Bitcoin is undervalued isn't the worst thing tbh, especially if they're holding that Bitcoin on their balance sheet. With new FASB rules in place, some of those forced losses will take a different look in upcoming reporting as well. Your statement carries a huge "if" btw. BTC will go up SIGNIFICANTLY in any stated fiat currency, which is the basis for all of these business's existence.
It appears someone took the better part of a day to figure out how to use Chat GPT 👏👏
If you can name the source of this 3rd party data, I'd be obliged to think otherwise. I can say at a minimum that my pushback on your BS has forced you to at least learn a little bit more about Bitcoin. A few other things for you to research on your journey to enlightenment:
1. It does take time and energy. This is part of the value. However, it won't always be the "same effort for half the reward." Energy prices change, difficulty of the algo changes. This is why I am not willing to speak in such absolutes. You have to be open to a nuanced answer. You tend to take a lot of shortcuts in your arguments.
2. "If you do the same work for half the pay, then it is no different from doing twice the work for the same pay." This statement is only true for the laborer. What about the work being done/accomplished? Just something to think about (or ask Chat GPT).
2. When Chat GPT says the halving event MAY result in consolidation of miners, I tend to agree. The scaled firms who have built a large war chest of Bitcoin will undoubtedly go farther. Regardless of who stays/goes, Bitcoin marches on.
Calling people dicks, bit-tards, shit-for-brains, etc. doesn't make you any more of a man. Try some humility sometime.
I have questions regarding bitcoin (and other cryptocurrencies actually):
1) As bitcoin, et al. are all valued in dollars, and very few companies use crypto as a basis of payment, how does crypto hold value if and when the SHTF?
2) What makes any crypto holders confident government will not simply “regulate” (already going that way with crypto’s being listed on exchanges) or shutdown cryptocurrencies if it threatens their fiscal sovereignty?
1) outside the US or dollarized nations, they aren’t valued in dollars. It’s blasted through ATHs in almost every local political currency unit. Name another digital asset that can act as a better global bearer instrument (& be adopted by anyone) like bitcoin.
2) what does “fiscal sovereignty” mean? It doesn’t threaten any one. Trying to regulate it away is not going to make it go away, make it stop working, or prevent other nations from using it. More politicians running for office are supportive of bitcoin (or don’t say anything at all) because it’s becoming politically untenable to be anti-bitcoin, plus it solves a problem. Bitcoin is made up of people & its information (the money is the information); but the information can’t be corrupted or changed. Everyone has to play by the same rules.
1) Yes, I realize it would be denominated in local currency, but that reinforces my point. You exchange it based on fiat currency.
2) Since the Federal Reserve controls dollars and dollars are, for the moment, the currency used for most worldwide exchanges, you don’t see how an uncontrolled bitcoin might be threatening to them? The Fed manipulates and controls the dollar as it sees fit. And politicians lie in order to get elected, so I wouldn’t take their word for anything.
Most relevant part of the post today: "but as a newfound member of the church of bitcoin community". You would think in a long post like this you could find one reason to own bitcoin other than "greater fool theory", but I guess all those other reasons are secrets only known by the true believers.
QTR, some things to consider on the economics of Bitcoin:
At $60K per Bitcoin the current profit for mining bitcoin with 6.25 new Bitcoins created as rewards every 10 minutes is 60,000* 6.25*6*24 = $337 million per day. Those rewards are gonna shrink to $167 million per day come April at the Halving.
The Bitcoin hash rate is currently around 580 million Th/sec. ( https://www.blockchain.com/explorer/charts/hash-rate ) Conservative estimate : say all of these hashes are being done on the current most efficient mining rig (they're not) which is an Antminer S19K ( https://www.softwaretestinghelp.com/bitcoin-mining-hardware/ ). This uses a power consumption of 2760 W to achieve 120 Th/s. So there are AT LEAST 580,000,000 / 120 = 4.833 million physical mining rigs out there somewhere on Earth. They're using at least 4,833,000*2760 = 13.34 Gigawatts of electrical power. Every day they consume at least (13,340,000,000 * 24) / 1000 = 320.16 million kWh of electricity. At a conservative average electricity cost of 0.10 USD per kWh, the bitcoin network uses at least $32 million of electricity per day. There's currently only 19.6 million bitcoins in existence. So currently every single Bitcoin needs to burn 32.0 / 19.6 = $1.63 per day of electricity to live to see another day - actually more, if you consider less efficient mining rigs. That's almost $600 PER YEAR in power JUST TO KEEP ONE BITCOIN ON THE SHELF, ER, BLOCKCHAIN.
How about power cost to run a single Antminer S19K for a year? That's 2670*24*365 = 23.4 million watt-hrs/year or 23.4 kilowatt hours per year or $2340 per year in electricity per S19K - say $200 per month, roughly a power bill for a single home.
So Bitcoin uses enough electricity to power around 5 million homes.
Then there's amortization of the mining rig. An Antminer S19K cost around $3500. The 4.833 million S19Ks estimated above dividing up a daily pie of $337 million in Bitcoin rewards per day means each individual one is "only" making 337/4.833 = $70 per day. That's gonna be $35 per day come April and the Halving. So it takes 100 days of continuous operation to pay off a mining rig.
Bitcoin is a pretty nutty thing to commit devoting these kind of (ever growing) numbers to for years and decades to come. Gold sitting quietly in a vault uses a LOT less resources.
Therefore... Proof of Stake and Ethereum 2.0. Bitcoin will go down as a revolutionary proof of concept.
But you've otherwise missed the point, which is the Blockchain. If we draw out the energy consumption used across the entire legacy banking sector, Bitcoin is a drop in the bucket. Look past that and compare (for example) the informational friction of having a centralized network of banks, each with its own private ledger. Of course someone will say that ledger is audited. Yeah, that worked out real well in 2008.
What is most amazing about Bitcoin is not Bitcoin as money. It is how the Blockchain as technology renders the entire, massive landscape of banks networked to a central clearing authority entirely obsolete.
Blockchain as a distributed public ledger is indeed the revolution. "Proof-of-Work Bitcoin" is about the worst possible implementation of both "revolutionary blockchain" and "money". Give me Proof of Stake any day. Bitcoin is a absolutely gigantic casino table game like blackjack or roulette that uses greed and the lure of riches to facilitate the transfer of money from rubes to miners and exchange runners and now ETFs. The brilliance of Bitcoin is that anybody can set up shop anytime as any component of the con that they wish.
No, it's not PoW that will kill off Bitcoin; it's the hard cap. That + the USD monopoly on legal tender creates an incentive structure to hoard BTC. I just got done reading a review of a book on Milton Friedman... Gonna read the book for sure. We have to go back to his writing - "inflation" is not an increase in the money supply. It the increase of the money supply minus the increase in the volume and value of the transactions measured in that monetary unit.
So, consider: Steve Jobs comes out with something we didn't even know we wanted... We're all gawking at the iPad. At its price point (like all new tech) I doubt most of us have that kind of cash lying around. So we literally create new money. That is what a credit card is. It is a permission slip to create money on the balance sheet of the issuing bank. What has happened here is "demand" (i.e., "I want that.") has become a "market" (i.e., "Here's my credit card; give me one!")
You cannot do that with Bitcoin. And that is a bug, not a feature. And no, credit is not inflationary if it funds a transaction for a genuinely innovative product. Credit is inflationary when it supports perpetual governmental stupidities like what is going on in Ukraine.
The Blockchain is really a beautiful thing. It brings together three sets of rules: 1) Rules of title: Who owns what; 2) Rules of accounting: Who owes what to whom; and 3) Rules of money: How is monetary issuance tied to economic activity.
There are two things standing in the way: First, and most importantly, is the USD's monopoly on legal tender. Second, it Bitcoin's hard cap. Ethereum 2.0 fixes the former. This fixes the latter: https://www.amazon.com/dp/B0CL2HLC3N
Bitcoin's true flaw is that it is an open loop fintech system with absolutely no connection to production of tangible goods and services. This is what makes it inflationary, despite claims to the contrary. Hard cap at 21 million units? No problem if price can be levered ever upward. Something that can go up 50% in 30 days as Bitcoin just did without an underlying increase of 50% more available Lambos does not represent a gain in wealth but an increase in FOMO. Hodling to capture additional price gains is the only thing that keeps the con going. If everybody tried to cash out and get their non-existent Lambo the price would collapse in a hurry. Which it will.
As an aside, the same thing is increasingly true of the USD. The Fed is supposed to throttle the base interest rate up and down to tie the dollar correctly to actual production of goods and services, ie the economy. Increasingly, however, the Fed has been throttling and holding the base interest rate downward to generate more and more credit to keep the credit con going (COVID stimmies, student loan forgiveness, Ukraine weapons, trillion dollar Federal deficits).
As a long time holder of gold, I can assure you that the new ETFs are the worst possible thing that could happen to Bitcoin. When you move from "own a Bitcoin outright" to "own a stake in the price rise of Bitcoin", the middlemen have a huge incentive to keep the price of the underlying asset capped as they wrangle increasing numbers of sheep into the corral for fleecing. In gold, this is the dynamic that has held it ridiculously underpriced at $2000 per ounce for years.
I've been studying history - and for a lot longer than 5 years. "Shit" has been piling up in front of the "fan" since 1913. Currently unknown "when" it's going to be turned on - but that it WILL BE turned on is what's a certainty.
I know this piece will come across as annoying to some, especially because I have only been bullish on bitcoin with some gusto for the last couple of months (though I first pointed it out to my readers in December 2022), but as a newfound member of the church of bitcoin community, I’d be remiss if I didn’t try out my voice a bit.
none or your pieces.....writings......are ever annoying......especially this Bitcoin one........and now that i have entered the Realm of Bitcoin with an ETF.......i am now a Bitcoin Watcher......and i am interested in every Truth Opinion
thank you
All that’s left is The Pump.
So I should stay humble, and stack Sats. Got it!
Many quotes come to my mind regarding bitcoin. When everyone and your shoeshine boy are buying it's time to get out, irrational exuberance, if you can't beat em, join em, etc. IMHO bitcoin is great for daytrading, not going to HODL. Buying it for the sake of defying the banking fiat currency system is like only investing in "green" companies. Not good for your bottom line? We will see.
It is early spring in the Northern Hemisphere and the tulips are not yet in bloom. Just a little more time…..
stack sats, not sloots.
Great piece.
Lol now that you’ve capitulated… the bubble is about to pop!
Jesus, 2024 starts with AI chips, NVIDIA , melt up of SP 500 masquerading as the QQQ and now this? WTF is next? WTI to 200? GLD to 5000? My head can’t take it.
It will be bitcoin
It will be whatever Elon eventually calls his centralized exchange token on X. The common man will never be able to buy beer or gas at a convenience store with Bitcoin (or any blockchain crypto) because of the transaction delay inherent in synchronizing the blockchain. Blockchains enable incorruptible archival access to public records, not instantaneous point-of-sale financial transactions.
Good post. I agree. In the past month I have onboarded a half-dozen people to River with a simple weekly DCA. Slow and steady wins the race. Loud and obnoxious turns people off.
The continually rising price is both hypnotic and seductive - but does nothing for spreading an understanding of why Bitcoin is so valuable a technology. For me personally, looking at the historical economic value of monopolistic networks made seeing the value easier.
https://bagholder.substack.com/p/monopoly
Good article
So I have a question which is a very newbie question in my eyes and I know the answer is probably more complex then I realise.
When the Bitcoin halving takes place next month does that mean the valuation will go down or do we not know?
Historically the price of bitcoin has gone up after each halving. Of course there have only been three previous halvings so not much history in that regard.
Why would it make the price go up? Even the Bitcoin Miners? Is the halving already priced in?
No…it’s simply supply & demand
Actually, there is a huge shortage. About 70% of the existing Btc hasn’t changed wallets in over 3 years. That’s about 14m Btc owned by diamond hands. All the new money is chasing only the remaining tradeable 5.6m. When you consider there is 500m in fiat flowing daily into just the ETFs, and unlike most commodities supply cannot be ramped up …. all the ingredients are there for an explosive rally.
The second sentence is correct, not the first. The halving means the reward is cut in half.
PS 1 Bitcoin = 1 Bitcoin. Stop with the "dollars" BS. It's global and has already pushed through ATH in just about every other currency on the planet, including gold and silver. It's ok to be wrong. Just stop trying to infect others' thinking along the way.
My goodness you're triggered, friend. Again - embarrassing.
Awesome thank you!!
That’s not at all what the halving is.
It's pretty obvious to all in the thread that you're the dick here. You speak in absolutes like, "do the same amount of work and take the same amount of time..." and they aren't necessarily true. But you wouldn't know that bc you don't put the time into understanding. Some blocks are rewarded with less time, especially when/if the difficulty adjustment shifts lower.
I too, have seen some of the financials. I won't claim to have seen them all bc that isn't true. Breaking even when Bitcoin is undervalued isn't the worst thing tbh, especially if they're holding that Bitcoin on their balance sheet. With new FASB rules in place, some of those forced losses will take a different look in upcoming reporting as well. Your statement carries a huge "if" btw. BTC will go up SIGNIFICANTLY in any stated fiat currency, which is the basis for all of these business's existence.
It appears someone took the better part of a day to figure out how to use Chat GPT 👏👏
If you can name the source of this 3rd party data, I'd be obliged to think otherwise. I can say at a minimum that my pushback on your BS has forced you to at least learn a little bit more about Bitcoin. A few other things for you to research on your journey to enlightenment:
1. It does take time and energy. This is part of the value. However, it won't always be the "same effort for half the reward." Energy prices change, difficulty of the algo changes. This is why I am not willing to speak in such absolutes. You have to be open to a nuanced answer. You tend to take a lot of shortcuts in your arguments.
2. "If you do the same work for half the pay, then it is no different from doing twice the work for the same pay." This statement is only true for the laborer. What about the work being done/accomplished? Just something to think about (or ask Chat GPT).
2. When Chat GPT says the halving event MAY result in consolidation of miners, I tend to agree. The scaled firms who have built a large war chest of Bitcoin will undoubtedly go farther. Regardless of who stays/goes, Bitcoin marches on.
Calling people dicks, bit-tards, shit-for-brains, etc. doesn't make you any more of a man. Try some humility sometime.
I have questions regarding bitcoin (and other cryptocurrencies actually):
1) As bitcoin, et al. are all valued in dollars, and very few companies use crypto as a basis of payment, how does crypto hold value if and when the SHTF?
2) What makes any crypto holders confident government will not simply “regulate” (already going that way with crypto’s being listed on exchanges) or shutdown cryptocurrencies if it threatens their fiscal sovereignty?
1) outside the US or dollarized nations, they aren’t valued in dollars. It’s blasted through ATHs in almost every local political currency unit. Name another digital asset that can act as a better global bearer instrument (& be adopted by anyone) like bitcoin.
2) what does “fiscal sovereignty” mean? It doesn’t threaten any one. Trying to regulate it away is not going to make it go away, make it stop working, or prevent other nations from using it. More politicians running for office are supportive of bitcoin (or don’t say anything at all) because it’s becoming politically untenable to be anti-bitcoin, plus it solves a problem. Bitcoin is made up of people & its information (the money is the information); but the information can’t be corrupted or changed. Everyone has to play by the same rules.
1) Yes, I realize it would be denominated in local currency, but that reinforces my point. You exchange it based on fiat currency.
2) Since the Federal Reserve controls dollars and dollars are, for the moment, the currency used for most worldwide exchanges, you don’t see how an uncontrolled bitcoin might be threatening to them? The Fed manipulates and controls the dollar as it sees fit. And politicians lie in order to get elected, so I wouldn’t take their word for anything.
More dollars are a guarantee cause dollars are just 200 trillion+ in compounded debt notes
Most relevant part of the post today: "but as a newfound member of the church of bitcoin community". You would think in a long post like this you could find one reason to own bitcoin other than "greater fool theory", but I guess all those other reasons are secrets only known by the true believers.
QTR, some things to consider on the economics of Bitcoin:
At $60K per Bitcoin the current profit for mining bitcoin with 6.25 new Bitcoins created as rewards every 10 minutes is 60,000* 6.25*6*24 = $337 million per day. Those rewards are gonna shrink to $167 million per day come April at the Halving.
The Bitcoin hash rate is currently around 580 million Th/sec. ( https://www.blockchain.com/explorer/charts/hash-rate ) Conservative estimate : say all of these hashes are being done on the current most efficient mining rig (they're not) which is an Antminer S19K ( https://www.softwaretestinghelp.com/bitcoin-mining-hardware/ ). This uses a power consumption of 2760 W to achieve 120 Th/s. So there are AT LEAST 580,000,000 / 120 = 4.833 million physical mining rigs out there somewhere on Earth. They're using at least 4,833,000*2760 = 13.34 Gigawatts of electrical power. Every day they consume at least (13,340,000,000 * 24) / 1000 = 320.16 million kWh of electricity. At a conservative average electricity cost of 0.10 USD per kWh, the bitcoin network uses at least $32 million of electricity per day. There's currently only 19.6 million bitcoins in existence. So currently every single Bitcoin needs to burn 32.0 / 19.6 = $1.63 per day of electricity to live to see another day - actually more, if you consider less efficient mining rigs. That's almost $600 PER YEAR in power JUST TO KEEP ONE BITCOIN ON THE SHELF, ER, BLOCKCHAIN.
How about power cost to run a single Antminer S19K for a year? That's 2670*24*365 = 23.4 million watt-hrs/year or 23.4 kilowatt hours per year or $2340 per year in electricity per S19K - say $200 per month, roughly a power bill for a single home.
So Bitcoin uses enough electricity to power around 5 million homes.
Then there's amortization of the mining rig. An Antminer S19K cost around $3500. The 4.833 million S19Ks estimated above dividing up a daily pie of $337 million in Bitcoin rewards per day means each individual one is "only" making 337/4.833 = $70 per day. That's gonna be $35 per day come April and the Halving. So it takes 100 days of continuous operation to pay off a mining rig.
Bitcoin is a pretty nutty thing to commit devoting these kind of (ever growing) numbers to for years and decades to come. Gold sitting quietly in a vault uses a LOT less resources.
Therefore... Proof of Stake and Ethereum 2.0. Bitcoin will go down as a revolutionary proof of concept.
But you've otherwise missed the point, which is the Blockchain. If we draw out the energy consumption used across the entire legacy banking sector, Bitcoin is a drop in the bucket. Look past that and compare (for example) the informational friction of having a centralized network of banks, each with its own private ledger. Of course someone will say that ledger is audited. Yeah, that worked out real well in 2008.
What is most amazing about Bitcoin is not Bitcoin as money. It is how the Blockchain as technology renders the entire, massive landscape of banks networked to a central clearing authority entirely obsolete.
Blockchain as a distributed public ledger is indeed the revolution. "Proof-of-Work Bitcoin" is about the worst possible implementation of both "revolutionary blockchain" and "money". Give me Proof of Stake any day. Bitcoin is a absolutely gigantic casino table game like blackjack or roulette that uses greed and the lure of riches to facilitate the transfer of money from rubes to miners and exchange runners and now ETFs. The brilliance of Bitcoin is that anybody can set up shop anytime as any component of the con that they wish.
No, it's not PoW that will kill off Bitcoin; it's the hard cap. That + the USD monopoly on legal tender creates an incentive structure to hoard BTC. I just got done reading a review of a book on Milton Friedman... Gonna read the book for sure. We have to go back to his writing - "inflation" is not an increase in the money supply. It the increase of the money supply minus the increase in the volume and value of the transactions measured in that monetary unit.
So, consider: Steve Jobs comes out with something we didn't even know we wanted... We're all gawking at the iPad. At its price point (like all new tech) I doubt most of us have that kind of cash lying around. So we literally create new money. That is what a credit card is. It is a permission slip to create money on the balance sheet of the issuing bank. What has happened here is "demand" (i.e., "I want that.") has become a "market" (i.e., "Here's my credit card; give me one!")
You cannot do that with Bitcoin. And that is a bug, not a feature. And no, credit is not inflationary if it funds a transaction for a genuinely innovative product. Credit is inflationary when it supports perpetual governmental stupidities like what is going on in Ukraine.
The Blockchain is really a beautiful thing. It brings together three sets of rules: 1) Rules of title: Who owns what; 2) Rules of accounting: Who owes what to whom; and 3) Rules of money: How is monetary issuance tied to economic activity.
There are two things standing in the way: First, and most importantly, is the USD's monopoly on legal tender. Second, it Bitcoin's hard cap. Ethereum 2.0 fixes the former. This fixes the latter: https://www.amazon.com/dp/B0CL2HLC3N
Bitcoin's true flaw is that it is an open loop fintech system with absolutely no connection to production of tangible goods and services. This is what makes it inflationary, despite claims to the contrary. Hard cap at 21 million units? No problem if price can be levered ever upward. Something that can go up 50% in 30 days as Bitcoin just did without an underlying increase of 50% more available Lambos does not represent a gain in wealth but an increase in FOMO. Hodling to capture additional price gains is the only thing that keeps the con going. If everybody tried to cash out and get their non-existent Lambo the price would collapse in a hurry. Which it will.
As an aside, the same thing is increasingly true of the USD. The Fed is supposed to throttle the base interest rate up and down to tie the dollar correctly to actual production of goods and services, ie the economy. Increasingly, however, the Fed has been throttling and holding the base interest rate downward to generate more and more credit to keep the credit con going (COVID stimmies, student loan forgiveness, Ukraine weapons, trillion dollar Federal deficits).
As a long time holder of gold, I can assure you that the new ETFs are the worst possible thing that could happen to Bitcoin. When you move from "own a Bitcoin outright" to "own a stake in the price rise of Bitcoin", the middlemen have a huge incentive to keep the price of the underlying asset capped as they wrangle increasing numbers of sheep into the corral for fleecing. In gold, this is the dynamic that has held it ridiculously underpriced at $2000 per ounce for years.
I've been studying history - and for a lot longer than 5 years. "Shit" has been piling up in front of the "fan" since 1913. Currently unknown "when" it's going to be turned on - but that it WILL BE turned on is what's a certainty.
Even Noriel Roubini is now stacking "Shitacoina"
Another round of S&F...