Bitcoin Mining in Distress with Nick Hansen - WBD585

Nick Hansen is the CEO of Bitcoin mining software firm Luxor
Technologies. In this interview, we discuss the distress within
the Bitcoin mining industry caused by a perfect storm of
leverage, stagnant value, huge growth in capacity, energy price
shocks and wider headwinds affecting investment. This could
become a national security issue.


- - - - 


Exactly one year ago, US Bitcoin mining companies were posting
record quarterly profits. A huge amount of investment followed
China’s mining ban making North America the centre of global
Bitcoin mining. It spurred the development of mega miners:
companies developing industrial-scale operations. These companies
started building out new sources of energy and developing unique
relationships with grid operators. And Bitcoin’s price was at an
ATH.


Roll on one year, and the industry is facing a potential crisis.
Bitcoin price is at 2-year lows, the hash rate is at an all-time
high, investment is drying up due to a range of issues, rig
prices have tanked, whilst a swath of companies are struggling to
manage debt obligations. Add to this the wider fallout as a
result of the FTX collapse. It really is a perfect storm. 


At the same time, companies are being buffeted by widespread
disinformation, and polarised attacks predicated on energy usage
concerns. Regulators seeking to acquiesce to those promoting FUD,
have considered, recommended, and brought forward poorly designed
rules. See the NY moratorium on PoW mining using fossil fuels
just passed into law. 


This is more than a parochial issue for the Bitcoin community.
Bitcoin mining provides an unprecedented opportunity for wider
society. It’s the basis for an alternative to a broken economic
system and the means with which to incentivise and support the
energy transition at scale. It is the industry to help the US
navigate a host of strategic problems. Bitcoin mining is,
fundamentally, a national security issue. Its protection should
be our primary focus.