The Great Hash Race

The fourth bitcoin halving is less than three months away, setting us up for a supply shock and competition amongst miners the likes we have never seen.

The Great Hash Race

Bitcoin hashrates continues to reach all-time highs. Despite the fact that bitcoin mining is getting more competitive by the day heading into the fourth bitcoin halving, hashrate is rising… rapidly. February is here but I’m already looking well into the future, 6-18 months from the next bitcoin halving when thinking about bitcoin. Today, I’ll dive into the following topics.

• the next halving

• ETFs update

• recent investments

• post-halving impact

The Next Halving

Reminder: the bitcoin halving is a mechanism by which the amount of bitcoin released into circulation is cut in half every four years.

The next halving will hit sometime in mid to late April. When it hits, the number of newly mined bitcoin that enter circulation each day will drop from 900 to 450. There aren’t a lot of new bitcoin to go around. Bitcoin’s 15 years old. More than 19.5 million of the total 21 million bitcoin to ever be mined have already been mined.

Bitcoin is the embodiment of digital scarcity. But, it goes beyond that. Bitcoin mining, the proof-of-work demonstration that provides the foundational backbone of the bitcoin network, is scarce in its own right. Miners will only mine so long as it makes sense to do so. They are constantly seeking out better, cheaper, and more efficient energy sources.

As mining gets more competitive post-havling, those miners who survive will be even more important long term.

Right now, we’re seeing mining companies such as Iris Energy and Bit Digital (two publicly-traded companies that I’m invested in) diversify their business strategies into artificial intelligence. Miners are uniquely positioned to not only support the bitcoin network, but to also act as AI data servers and demand-responses energy partners. The bitcoin mining landscape is changing quickly and the halving is an extra variable pushing those who wish to be here 1, 2, 10, or 20 years from now into long term mindsets in the here and now.

ETFs

US spot bitcoin ETFs have been live now for almost one month. With the exception of the 1-3 days immediately following their listings, the price of bitcoin itself is basically where it was two months ago.

When December kicked off, bitcoin broke $40,000 for the first time in more than a year and has traded within about a 10% range of that ever since. The natural volatility around ETF listings and outflows from Grayscale contributed to rocky days here and there but the initial takeaway from the ETF launch is simply that more bitcoin is being bought and held by institutional custodians, implying an increase in long term mindsets amongst both Wall Street and retail. The average investor with exposure to the US stock market already had bitcoin and crypto exposure whether they knew it or not and that’s only becoming more true as a result of the ETFs.

Recent Investments

In the last two weeks, I’ve added to positions I have in each of the following companies and funds: