The Future of Bitcoin Mining & Security with Sam Wouters - WBD618
The Peter McCormack Show
Peter McCormack
4.7 • 2.8K Ratings
🗓️ 13 February 2023
⏱️ 88 minutes
🧾️ Download transcript
Summary
Sam Wouters is a Research Analyst at River Financial. In this interview, we discuss Bitcoin's hash rate: what it is, the factors affecting its growth, what this means for Bitcoin's security budget, and what this means for Bitcoin's energy needs. In short, there is a symbiotic relationship between expanding Bitcoin's real-world utility and securing the blockchain.
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Proof of Work is Bitcoin's central innovation: the development of a process that through game theory keep the network honest, and provides security from outside attack. It enabled a global store of value that does not need centralised armoured physical vaults for security. However, the process of hashing that enables PoW requires large amounts of power, and, with the halving mechanism, requires an increase in Bitcoin's price, transaction fees, or both, to maintain equivalent network security spending.
Bitcoin's energy debate in 2022 was completely realigned: rather than being an attack vector for opponents, Bitcoin mining's energy use has developed into a marketable attribute. Mega miners have sought new revenue streams and cheaper energy which has resulted in huge innovation in the industry. There is a growing realisation that Bitcoin's utility is a powerful tool in supporting the energy transition and mitigating climate change.
This means that we are potentially entering a paradigm, where knowledgeable decision-makers desire an increase in hash rate to satisfy other needs. But, there is a long list of variables affecting this: Bitcoin's price, base layer transaction demand, ASIC supply chains, ASIC efficiency, and domestic and international political pressures. This means there is a range of possible forecasts.
Irrespective of the potential future drivers that can influence Bitcoin's hash rate, fundamentally the issue is that the hash rate must continue to grow. It is Bitcoin's security budget that is of primary importance. All other demands fall away in this respect. Bitcoin's adoption, use and price are all critical in relation to this. As are the efficiency gains in mining rigs. If people want to use Bitcoin mining for other purposes they need to be cognizant of these issues.
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Transcript
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| 0:00.0 | We honestly just don't know how much do we actually need to fend off all of these potential attacks. |
| 0:10.0 | It's kind of like with physical security, you know, you could spend $100,000 every month on physical security and someone might still figure out a way to kill you. |
| 0:17.0 | It's just a tricky thing with security in general. |
| 0:20.0 | This is absolutely not unique to Bitcoin. It's just insanely difficult to model for. |
| 0:24.0 | Hello there, how are you all doing? |
| 0:26.0 | Did you have a good weekend? |
| 0:27.0 | Did you get a chance to relax? |
| 0:28.0 | Did you take some Bitcoin time off? |
| 0:30.0 | I hope you did. |
| 0:31.0 | Now I have just arrived in New York and I've got a massively hectic weekend. |
| 0:35.0 | Loads of shows we're doing this week. |
| 0:37.0 | We're making 15 shows a week which is going to be very hectic schedule. |
| 0:40.0 | So a big shout out to Danny, I forget this all in place. |
| 0:42.0 | I can't wait to get it started. |
| 0:44.0 | Anyway, welcome to the What Bitcoin did podcast, which is brought to you by Gemini, the only place I'm using for buying Bitcoin. |
| 0:49.6 | I'm your host, Peter McCormack, and today on the show I've got Sam Wooters. Now we've been |
| 0:54.7 | wanting to get Sam on the show for a while he's an analyst over at River Financial |
| 0:58.2 | and he recently dropped this amazing report on the future of Bitcoin mining called |
| 1:02.1 | what Bitcoin mining could look like at |
| 1:03.6 | one Zeta hash. So we've been talking to Sam for a while and after we dropped this report |
| 1:07.3 | Daniel was like, come on Pete, we need to make this show. So Sam was over in Nashville |
| 1:10.2 | when we were there anyway, he was there for the Bitcoin Mining Summit |
... |
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