Eleven Free Resources To Learn Bitcoin And Sharpen Your Knowledge


FILE – In this April 7, 2014 file photo, a man arrives for the Inside Bitcoins conference and trade … [+] show in New York. An Australian man long thought to be associated with the digital currency Bitcoin has publicly identified himself as its creator. BBC News said Monday, May 2, 2016 that Craig Wright told the media outlet he is the man previously known by the pseudonym Satoshi Nakamoto. The computer scientist, inventor and academic says he launched the currency in 2009 with the help of others. (AP Photo/Mark Lennihan, File)


Spending time learning more about a topic and refreshing your knowledge can be good. Bitcoin has vast knowledge embedded in the system, from technical details to economic tie-ins. As Bitcoin grows in relevance, now can be the perfect time to access these resources.

The “Why” Behind Bitcoin

The foundation behind the rest of the knowledge is the purpose of Bitcoin itself – something that isn’t clear to everybody. This section highlights some good resources to browse or think through.

Bitcoin Explained

This primer on Bitcoin comes from Jameson Lopp, who founded CasaHODL, a security service for Bitcoin. It goes through the basic tenets and easily explains through illustrations why something like Bitcoin is different – and makes sense for passing transactions without the need for a custodian of funds.

Learn Bitcoin in 21 Days

Suppose you prefer more text-based sectioning on the “why” behind Bitcoin and the details. In that case, this section of Bitcoin Magazine offers a comprehensive view and goes all the way down into how you can use Bitcoin and the importance of concepts like self-custody.

Bitcoin Wiki

The Bitcoin Wiki is a wiki set up to define Bitcoin deeply. It often goes many layers deeper than Wikipedia and includes articles on topics that aren’t often addressed, such as applying economic theories to Bitcoin.

Bitcoin Whitepaper with Annotation

The Bitcoin Whitepaper set Bitcoin into motion. Published by Satoshi, nine pages of somewhat technical details set clearly how the network is framed. Yet, since it’s written through a more academic lens, the annotations help us understand how Satoshi intended Bitcoin’s creation.

Economic Resources

Once you understand the “why” of it a bit more, Bitcoin’s first topic is economics and why it is a differentiator regarding ideology and practical application. A grounding in some economic topics can help evaluate and sharpen your understanding of the mechanics and purposes behind Bitcoin.


One of the first things that most people know about Bitcoin is the deflationary tendency of the cryptocurrency conveyed most clearly with the 21 million Bitcoin limit: there will only ever be 21 million Bitcoin mined if it follows current network rules, which contrasts with most currencies we know, such as the United States dollar. Understanding inflation is critical for understanding Bitcoin. This Econlib summary offers many perspectives on the definition and causes of inflation – and can help create a grounding to understand inflation.

Money, banking, and central banks

This Khan Academy section offers a free summary of one of the trickiest parts to understand about Bitcoin – the modern banking system and how it works with reserves issued from central banks. Appreciating this helps people understand why Bitcoin matters, how it’s different from the conventional banking system, and what traditional finance has meant for many.

Why economists don’t like Bitcoin

This post by Joshua Gans and the series goes into why economists seem to hate Bitcoin – through counter-example, you can start to understand why conventional economists can’t seem to understand Bitcoin – and with a more nuanced perspective, this resource allows one to explore some of the economic, practical and ideological space around Bitcoin.

Privacy Resources

Bitcoin helps people sharpen and maintain their digital privacy knowledge – it gives you the tremendous responsibility of protecting your private credentials in return for censorship-proof transactions and the ability to transact value without a bank. The following resources help shape digital data practices.

Financial Freedom Report

The Financial Freedom Report that the Human Rights Foundation puts together is a valuable source of stories about Bitcoin and its usage by human rights activists. It also offers many practical resources and tips for privacy in practice with Bitcoin and other adjacent tools.

Privacy Tools

As one gets into using Bitcoin, digital security and privacy become more and more critical. It’s essential to have clean digital data habits to ensure that self-custody assets are not stolen or misused.

Technical Resources

One of the things that are hardest for most people to understand is the technical details behind Bitcoin: how does it work the way it does, and why is the Bitcoin network set up this way? The following resources can help put everything together – and even send you on your first steps towards understanding how to build with Bitcoin.


Awesome Bitcoin is a GitHub repository filled with technical resources, from sandboxes where you can play with Bitcoin code to learning resources and data dumps. While it has more of a developer focus, some more general resources are worth it, even for those without a technical bent.


If you want to set up a Lightning node, this guide helps you turn old hardware to do just that. By following the easily digestible steps, you can also learn how to install and configure Bitcoin Core on your machine and be part of a network of nodes that ingest Bitcoin’s blockchain.

The Debate On Bitcoin Ordinals Is A Fight Over Bitcoin’s Future


Cryptocurrency ATMs, operated by Coinhero in Hong Kong, China, on Tuesday, Dec. 5, 2023. … [+] Bitcoin shrugged off a dip in global stock markets to set another more than 19-month high, a sign of its decoupling from other assets. Photographer: Paul Yeung/Bloomberg

© 2023 Bloomberg Finance LP

Factions have emerged throughout the history of movements and new technologies. The Bitcoin world is no stranger to this. Ethereum split from Vitalik’s contributions to Bitcoin Magazine, and since then, different individuals have created a variety of altcoins. The blocksize wars put Satoshi’s block size limit to the test after some demanded faster scaling, with fewer transaction fees and more transaction volume – the split between “Big Blockers” and “Small Blockers.” The wars ultimately resulted in further splits of Bitcoin into Bitcoin Cash and a Bitcoin with activation of SegWit closer to the “Small Blocker” principles – the Bitcoin of today that primarily relies on Layer 2 solutions like the Lightning Network to scale past the problem of transaction fees. Today, Bitcoin has a similar forum for debate – regarding the economic use of transactions versus their non-economic use. Specifically, some argue that ordinals (a sort of NFT import to Bitcoin) and BRC-20 tokens (an ERC-20 equivalent) can be a savior for the chain – and some argue that they are “spam.”

To start, it’s helpful to summarize some of the debates. Eventually, Bitcoin miners will be compensated only by transaction fees. Block rewards for mining, which powers most revenue for companies mining Bitcoin today, will cease to exist – a part of the 21 million Bitcoin limit placed in the chain in the first place. As a result, securing Bitcoin will come primarily through transaction fees – put simply; the more people are using Bitcoin, the more likely it is that companies dedicated to mining and securing it will exist. Public miners have enjoyed a boost in their revenues because of the high transaction fees due to people trying to place ordinals on Bitcoin. Ordinals essentially benefit from putting 4MB of data (the new block size limit after multiple hard forks) and associating it with a sat. They’ve pushed NFT economics of scarcity for putting non-economic data in a blockchain and imposed them onto Bitcoin.

Enter the two broad camps on ordinals. Some decry the use of Ordinals as spam and claim ordinals are defying the original intent behind Bitcoin to become a focused global financial network. Others think Ordinals are saviors – and have helped solve Bitcoin’s security budget well into the future – ensuring there will always be miners.

For those who think ordinals are harmful, the original intent of Satoshi rings clear. The OP_Return function that Satoshi originally designed was 80 bytes – barely enough to make small text notes for each transaction. If Bitcoin is a financial network, the focus should be on lowering transaction fees. After all, Bitcoin will compete with central banks’ digital currencies. In the design of the e-CNY, China’s digital Yuan, the focus is on keeping transaction fees for end customers at 0%.

Critically, this applies to both merchants and payers. It’s clear that many people see value in a decentralized peer-to-peer network of economic value – and people are willing to pay to send transactions to others in this way. The question is: how much, and at what stage of Bitcoin’s development are we in? Dedicating focus and energy to non-financial uses of Bitcoin helps increase fees for financial uses of Bitcoin – for example, Lightning nodes, which isn’t an abstract debate: Lightning fees have raised significantly for those routing payments – and the Lightning Network perhaps represents Bitcoin’s best current shot at on-boarding the next billion people – and creating a medium of exchange utility for Bitcoin and wide merchant adoption that has been missing at scale up to now.

On the other hand, those who argue that ordinals are helpful to the chain talk about the security budget and the activity that ordinals have helped create—an analysis by FSInsight points to the increased activity on Bitcoin as a reason for a bull run. Mining profitability has hit new highs since March 2022 – and it has much to do with transaction fees rather than block reward fees. Some blocks now have more rewards for Bitcoin miners in the transaction fees than the block rewards. However, some Bitcoin mining pools are against this. Ocean, the decentralized mining pool, has a founder known for being very anti-Ordinal. Yet, the pool now offers miners the option to choose a block template with minimal non-financial transactions – or the Bitcoin Core default, which provides for BRC-20 tokens and ordinals.

Finally, a third camp (perhaps the silent majority) has feet in both camps – and wants to see less conflict on a topic that might be perceived as ridiculous for outside audiences to Bitcoin. Robert Hall summed up this view in Bitcoin Magazine.

Whatever your beliefs on the topic of ordinals, it’s clear that they have been a forceful prompt for debate and discussion on Bitcoin in 2023 – and likely beyond. Which side you subscribe to depends on your belief on what Bitcoin should look like in the future – and the timeless principles and debate over the scaling roadmap needed for Bitcoin to realize its potential fully.

The Prospect Of ETFs Could Bring A Bitcoin Santa Rally


Bitcoin could be getting ready to run at the end of December



The idea of a “Santa Claus” rally, a term used to define regular market surges in traditional finance occurring at the end of December, has become a rallying cry for traders. However, the same effect has only occurred 50% of the time over bitcoin’s short history, whose idiosyncratic trading patterns do not always match mainstream markets. This year crypto traders are hoping for a very happy holiday season.

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Key Background

The Santa Claus rally happened about 76% of the time in equity markets since 1950. There’s no singular reason for the surge, but one common explanation is investors waiting to sell profitable assets until January to defer a capital gains tax bill by an additional year. In addition, December is bonus season for many industries, which can lead to additional funds being put into the market. Plus people are more generally more likely to take vacation and feel optimistic overall, which can buoy markets.

Since 2013, there has been a technical Santa Claus rally in Bitcoin five times. But the good years far outweigh the bad. The positive turns averaged a 11.76% return, with three years exceeding a 20% jump. By comparison, the five down years only averaged a 7.1% fall. For instance, 2020 saw an interesting correlation with Bitcoin benefiting from the Covid-19 pandemic and more institutional demand from companies like MicroStrategy, Tesla, and Block. 2016 was similar as well. It was a year of geopolitical uncertainty with President Trump getting elected which ended up buoying markets, the initial coin offering craze was just getting started, and it fell on the calendar six months after a major bullish event in crypto called the halving (more in the next section).

Santa Claus Rally table for Bitcoin price between 2013 and 2022


Outlook and Implications

Throughout December, Bitcoin has surged, notably testing a $44,000 USD level that hasn’t been seen since April 2022 due to three letters, ETF. This acronym stands for the term exchange traded fund, a common financial instrument that will allow anyone with a brokerage account to easily get access to bitcoin without the headache of signing up for a platform or needing to safeguard it. The industry has been trying to get the greenlight from the SEC for such a product for 10 years.

Some analysts have speculated that the SEC would approve all spot bitcoin ETF applications (of which there are around 10-12 total from the likes of BlackRock, Fidelity, and Invesco) at the same time, and all of this needs to happen before January 10th, a week after the Santa Claus period.

Bitcoin/ U.S. dollar, Bitstamp data


But there are more considerations. Bitcoin’s 24/7 market structure allows for people to quickly add leverage on either side of this bet: leading to potential long liquidations that can plunge prices or short squeezes that will dramatically raise prices. In fact, investors are already anticipating big price jumps. An implied volatility metric from crypto derivatives provider Deribit, known as DVOL (a product similar to the CBOE Volatility Index) is around the highest that it has been since April, when bitcoin was riding the regional banking crisis roller coaster.

The implied volatility metric is now the highest that it has been since April 2023


Again, it is important to remember that implied volatility means that prices can move in either direction. Case in point, as you can see in the chart above after bitcoin tested $45,000 a couple of times it is down to $41,000. There are several potential reasons such as buyer exhaustion as well as the fact that the next bitcoin halving, a quadrennial event where bitcoin’s issuance rate per block gets cut in half, will occur in April. These events have historically been very bullish for the industry, but the six months before each event have historically been bearish. Bitcoin is right in the beginning of that period right now.

Plus additional data from Deribit suggests that traders are not quite as optimistic about bitcoin’s short term through the end of the month as they are for later in the year. The put-call skew, which measures the volume of sell vs. buy options on the exchange right now measures .66 for expiries on December 29. However, that number drops as low as .21 for the end of the June.

Traders are not as optimistic about bitcoin’s short term prospects.


All of these variables make it difficult to make an exact prediction on the likelihood of a Santa Claus rally. However, the expectation of multiple spot ETFs works strongly in its favor. In addition, if history is any guide, positive rallies tend to exceed 20%. If this trend continues, then bitcoin would be testing $50,000 by January 1 based on current prices. In fact, you can see above that there are plenty of traders betting on price jumps higher than $50,000.

Decision Points

There are no financial products available to U.S. customers to get direct exposure to an implied volatility index such as DVOL like traders can get with the VIX. But that does not mean that there are no alternatives. Given the heightened levels of volatility and possibility of rapid movements in either direction, traders looking to go long on bitcoin may want to consider buying short futures or options to hedge spot long positions on regulated entities such as the Chicago Mercantile Exchange. The opposite would be true if you have a bearish outlook through the rest of 2023.

It is also worth considering whether there are other complementary assets worth buying along with bitcoin during this time. While most cryptocurrencies and risk assets are positively correlated with bitcoin, Bitcoin mining equities, which tend to trade like high beta plays on bitcoin, could be appealing to investors looking to achieve greater gains in the spot market.

Further Reading

Trump’s Former Chief Of Staff On The Power Of Bitcoin And Crypto


WASHINGTON, DC – DECEMBER 05: U.S. President Donald Trump (R) and Acting chief of staff Mick … [+] Mulvaney (L) listen to comments during a luncheon with representatives of the United Nations Security Council, in the Cabinet Room at the White House on December 5, 2019 in Washington, DC. (Photo by Mark Wilson/Getty Images)

Getty Images

I caught up with Mick Mulvaney at the Collision Conference in Toronto this summer to talk about a variety of topics, from his role with Astra, cryptocurrency in general, to policy issues concerning Bitcoin. As the former Chief of Staff for the Trump Administration and the head of the Office of Management and Budget, Mick Mulvaney had a role in shaping the federal budget during a critical moment in geopolitics.

The interview notes were rearranged chronologically and copyedited for style and not substance. His thoughts follow here:

Do you think it’s possible Operation Chokepoint 2.0 is that happening right when it comes to Bitcoin and cryptocurrency – where the US government is applying backdoor pressure to shut the industry down, much as the Obama Administration did with the gun industry?

So when you ask me do I think it’s happening, I have an opinion but it’s not a necessarily informed opinion. I do know that Operation Choke Point 1.0 was happening – I saw the data for that. Is it possible that there’s an Operation Choke Point 2.0? Absolutely. Do I see some of the symptoms that could be happening? Absolutely. But I don’t have the same data on the inside that a member of Congress would have or a member of the Administration would have, but I think the industry is right to be concerned about it because politicians of both parties are always tempted to use whatever tool is available to them to affect the policy they want to implement.

And as long as Choke Point is a doable, usable tool, there will be politicians that use it both ways. Believe me, there would be Republican politicians right now that would do an Operation Choke Point 3.0 to prevent gender transition for kids under 18. Just like Democrats would love to use operation Choke Point to prevent you and me from buying assault rifles. So that’s just the nature of the beast. So I do think the industry is right to be wary of it. The fact that the way they handled Signature I thought was bizarre. That they can offload the regular assets but couldn’t offload the digital assets. Even when people wanted to buy them. That’s just wrong. Whether or not it’s evidence of a larger Operation Choke Point 2.0 – I don’t know.

What’s your stance on central bank digital currencies (CBDCs)?

The United States should probably be pushing towards one. I think everybody else is going to do it or at least a lot of the other major players worldwide are going to do it, and if we don’t, we’ll be behind the curve.

At the same time, I fully recognize the concerns over privacy and government control. I talked at great lengths with Chris Giancarlo about his digital currency project – and I think Chris might be in the sweet spot – how do you do this and still have protections for privacy and individual freedoms? So you can get the benefits of a central bank digital currency, but not expose yourself to the gargantuan risks of overreach by a government into individual liberties. We saw a little bit of this in Canada I think during some the protests.

And that frightens me to death. I’m a libertarian leaning Republican. But at the same time, I also consider myself to be fairly, you know, forward looking when it comes to tech. There has to be ways to marry these two concerns to solve these problems to have a digital currency but still protect individual liberty.

I think you’ve been on record saying Gary Gensler is the worst possible option [for regulation]:

I don’t think I said that. But I will say something on the record – when people ask me and say who would you like to see as the primary regulator I say it has to be the CFTC. And they say why are you so quick to say that? Gensler has done one of the worst things you can do as a policymaker, which is to allow your personal opinion [to enter the picture][…].

You want a regulator that doesn’t bring preconceived notions of your industry into play. You want a regulator who calls balls and strikes and shoots you right down the middle and just enforces the law. They don’t want you coming in and saying- I really don’t like what you do and I’m going to use all the authority I have available to me to make sure you can’t do what you do, even though it’s legal. I just don’t like it. I saw that at the CFPB all the time with Richard Cordray on payday lending. It’s legal, but he didn’t like it.

I think that is the worst thing you could do as a regulator. So if I’m on record as saying Gensler was the worst of anything, and maybe something along those lines, but I think he doesn’t like [cryptocurrency]. And I think he’s using his authority to stifle innovation and stifle industry and I think that’s wrong. That would be Congress’s job. If you want to ban Bitcoin, you want to ban crypto, Congress should pass a law. One member of the executive branch should not have the de facto authority to do that.

Talk to me about the Congressional Blockchain Caucus, which you co-founded.

David Schweikert had to beg people to do it because nobody else knew what it was. And David Schweikert, good friend of mine, had the office next to me in Congress had heard about it. [I decided to join] because you have to have two people that have a caucus. […]

I think Tom Emmer runs it now. Emmer came, I think, the next year and got involved heavily involved with the caucus. […] Jared Polis was very interested in it, the governor of Colorado. He was an early person. Justin Amash was an early person. Thomas Massie might not have joined the caucus because I don’t think Thomas joins a lot of caucuses, but he was interested in it. So it was a very small group of folks. Not surprisingly, a lot of overlap with the Liberty Caucus […].

And what was the intent of getting the Caucus together?

Pure education. “What is this?”

Do you think the United States should regard bitcoin as a threat? How can the United States Government leverage bitcoin?

[…]So I don’t perceive it as a threat. I do understand how other governments might. I do understand, for example, why the Europeans may be more concerned about Bitcoin than we might be. Chances of us losing the dollar anytime soon are about zero. Chances of them losing the the Euro at some point in the next 20 years, is a nonzero number. You know, for whatever reason, the Germans want to leave or the French want to leave. It’s never been a stable system like the dollar has been. Because it’s a currency that doesn’t have a banking union so I’m not sure how you have a currency.

So I understand other governments might perceive it as a threat, but I don’t. And I think if other governments perceive it as a threat, it’s not because of the strength of Bitcoin but the weakness of their own currency. […] If I was a policymaker now, what would I be doing? Trying to figure out a way to incorporate the benefits of bitcoin and isolating the detriments? And I don’t think there’s that many detriments.


The Bitcoin Policy Institute, a non-for-profit organization that researches the social implications of Bitcoin and convenes meetings between the Bitcoin ecosystem and politicians was able to provide some additional ideas on how the United States government can leverage Bitcoin. Matthew Pines, their National Security and Geoeconomics Fellow, noted that “Bitcoin and stablecoins could help counter the expansion of China’s digital authoritarianism, bolster U.S. sovereign debt markets, and foster individual autonomy in developing countries with extractive and oppressive regimes. The strategic benefits of a pro-Bitcoin policy stance to U.S. national security and geopolitical advantage are worthy of serious analysis.” In a more global, geopolitical context, David Zell, co-executive director states that “America wins when everyday citizens living under authoritarian governments gain the ability to transact freely, divest from their regimes, and access the global financial system.”

As Sam Altman Is Celebrated, Beware His Projects – Such As Worldcoin


SAN FRANCISCO, CALIFORNIA – NOVEMBER 16: OpenAI CEO Sam Altman looks on during the APEC CEO Summit … [+] at Moscone West on November 16, 2023 in San Francisco, California. The APEC summit is being held in San Francisco and runs through November 17. (Photo by Justin Sullivan/Getty Images)

Getty Images

Over the weekend, Sam Altman’s legacy was at stake. Ex-Google CEO Eric Schmidt called him a “hero of mine.” Some openly speculated about Sam’s turn in the “Steve Jobs” narrative of technology being ousted by a board coup from a company he led before he was reinstated as CEO. It has been a weekend of reflection for many and what some called “the night of one hundred hearts” as old OpenAI team members showed their support for Sam on social media. Yet it also offered an opportunity to scrutinize Sam’s many connections and companies – amid reports that he would still play the same role he always has with Worldcoin.

Worldcoin presents a dystopic version of what it means to be human in an “age of AI” — giving people a small flow of tokens worth whatever the cryptocurrency market will bear in return for having their iris scanned. It’s similar to projects like central bank digital currencies, which seek to give small token amounts in return for an enduring cost – though Worldcoin is only backed by private speculators.

In the privacy FAQ of Worldcoin, the idea of having “proof of personhood” preserved by local devices is mentioned as the most privacy-preserving option; a simple question remains: why should anybody prove themselves to this network in the first place?

Unlike emails or other identifiers, Worldcoin proposes to provide an ID tied to an enduring trait – albeit one that they claim isn’t preserved on their devices in the form of raw biometric data. Whether or not cryptographic primitives are properly enforced and the company implements its policy is up to the Cayman Islands-based company’s public statements.

While one can argue that user privacy is an essential part of the product of Worldcoin, that may not be sufficient protection from a company that can decide to change its technology and data practices at any time without recourse for most of its users.

There are more concerning parts of Worldcoin, though. Its fundraising mechanism is similar to other ICO/Web 3.0 projects. By proposing to create a token economy, Worldcoin is making in miniature what techno-pessimists think will happen to the world at large: namely, that most human effort will be wasted in the face of silicon replacements and that the human economy will largely stop, save the ownership structures that persist to this day.

Who benefits most from the idea that this arbitrary token, issued by a private entity, is worth some money? Its owners – the entrepreneurs beyond the device – and its financiers who hold equity in the underlying company, possibly some of the tokens. After all, pre-mining is a common concept for venture-backed tokens – one where a privileged elite get any number of tokens before the public does.

It’s unlikely governments will adapt this at scale partly due to this fundraising and user acquisition model, as most are skeptical of private companies and private tokens. American citizens or residents cannot use Worldcoin due to fear of a lack of compliance with SEC regulations on similar initial coin offerings. Kenya suspended Worldcoin operations in the country with data privacy concerns and notably called Worldcoin’s airdrops “inducement.”

However, the long term is where this concern deepens. The vision of a world where the vast majority of humanity depends on the benevolence of a few should concern us with Sam Altman’s roles in OpenAI and adjacent companies like Worldcoin. The idea is to automate all possible economic activity from humans – some might see this as a path to Keynes and Marx’s vision of a “paradise, where machines provide the platform for humans to labor.”

Yet they forget the lessons derived from the practical application of Marx – which is that humanity tends towards hierarchies and acceleration forges hard ideologies. Assuming a world of philosopher-regents, this might be a utopia – but assuming the default nature of human leadership and governance where absolute power tends to foster corruption – it would easily be a dystopia.

As Liu Xiaobo, the Nobel Peace Prize laureate who died while imprisoned by the Chinese party-state put it – at least he could dissent because “our rice bowls were [not] still in the hands of the Communist Party, as in the 50s.”

A world with OpenAI and other companies seeking to automate away human economic activity and divide most of the proceeds to “owners” and some of the proceeds to a drip of dependency-building income leans towards dystopia for individual agency, human purpose, and individual freedom – and perhaps for the very concept of individualized humanity as a whole.

How Investors Should Approach Bitcoin Miners As The Halving Approaches


The upcoming bitcoin halving presents appealing opportunities to investors in mining companies.



Every four years, the Bitcoin halving cuts rewards for mining bitcoin in half. It will happen again in April 2024, when the block subsidy will drop from 6.25 bitcoin (worth $221,000) to 3.125 units ($110,625). Miners will also continue to receive transaction fees paid by network participants, but those are a de minimis part of their compensation. While the practical effect of the halving will be to double production costs for bitcoin miners, bitcoin mining shares may still be a great fit for some crypto portfolios.

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Key Background

The Bitcoin network uses a process known as mining to add transactions to the network. As compensation for expending computing power and incurring energy costs, each block’s miner is currently allowed to create 6.25 new bitcoins. This is the only way that new bitcoins are generated, and halvings serve as a way to slow down the pace of inflation, making existing assets more scarce. The process will continue until the 21 millionth unit is minted in the year 2140.

When bitcoin launched 15 years ago, and bitcoins were worth just a few cents, mining could be done on a basic laptop computer. Today, it is big business where top miners combine to run more than 450 EH/second. In fact some estimates put the annual energy consumption of the bitcoin network on par with a middle income country.

Bitcoin’s hash rate over the past market cycle


With this arms race comes millions of dollars in annual costs (such as the procurement of specialized hardware, energy bills, and general overhead), so many miners have evolved into multinational corporations with global supply chains. In fact, there are 15 major miners listed on major stock markets such as Nasdaq and the Toronto Stock Exchange with above 0.5 EH/s of realized hashrate in October 2023. Here are the ten largest.

*- Core Scientific used to be the world’s largest bitcoin miner by hashrate, but it declared Chapter 11 bankruptcy in December 2022. **-The majority of hashrate on the bitcoin network resides with private miners, many of which operate pools where individual miners join together to increase their chances of finding a block.


It is also worth noting that the bitcoin halving has historically been an extremely bullish marker for the asset. In the 12 months following the halving in 2016, bitcoin surged by 287%. In the midst of the covid-driven financial boom, bitcoin surged by 542% in the 12 months-post halving. Back when bitcoin was still in its toddler stages, it surged by a staggering 8,256% in the year after its first halving in 2012.

The past Bitcoin halving schedule


Outlook and Implications

As demonstrated above, miners have had a positive 2023 on the whole. Still, they could face a difficult 12-16 months until the effect of the next halving fully kicks in to compensate for the shrunken rewards, assuming that past performance will repeat itself again. A big reason for this complicated picture is that mining profitability is already at an all-time low based on industry averages, and the halving is going to take place during a period of heightened interest rates for the first time, which can weigh on assets such as bitcoin and gold that do not provide extra yield. Post halving, many bitcoin miners will need to immediately shift into cost-cutting mode in order to ride out the potential trough and catch the next wave. They may also decide to dilute shareholders to raise capital.

On the other hand, there are bullish indicators. Bitcoin has surged by more than 30% since June, when the asset management giant BlackRock filed to list a spot bitcoin ETF, and it is up 120% on the year. As shown in the chart above, miners are some of the largest corporate holders of bitcoin in the world, so if a series of ETFs launch in the U.S., which is expected to occur no later than March 2024, the value of these holdings could soar. The size of this impact will depend on how much capital gets allocated towards these new products.

The price jump in the latter half of 2023 suggests a lot of excitement, but estimates vary widely. For points of reference, the first bitcoin futures ETF in the U.S., the ProShares Bitcoin Strategy ETF (BITO) set a record by bringing in $1 billion in its first 24 hours. In addition, the first gold ETF founded in the early 2000’s, the SPDR Gold Shares (GLD), received $1 billion in its first three days, which was a record then. Spot bitcoin volume sits at around $17 billion per day, so a $1 billion influx would comprise almost 6% of the daily volume. A sudden rise could also liquidate short positions, which could accelerate any upward movement.

Decision Points

It is important for investors to find the right balance in their portfolios for crypto overall, but even when it comes to exposure to bitcoin. Miners tend to provide more beta (return/volatility) than just holding bitcoin outright. In 2023, for example, among the nine leading public bitcoin mining stocks, their value increased by 250% – almost more than three times bitcoin’s price gain. Of course the opposite was true in 2022 when the market declined.

It may not be prudent to keep most bitcoin exposure in mining stocks, but it can be a helpful accelerant during bullish periods. The majority of your exposure to bitcoin could be better apportioned to directly holding the asset or purchasing an exchange-traded product such as a potential spot-ETF, a stock such as MicroStrategy (the world’s largest corporate holder of bitcoin), or a closed-end fund such as the Grayscale bitcoin trust, whose shares currently trade at a discount of 13% to its underlying NAV.

Regarding the specific stocks to own, it is important to consider several factors such as the cost of production, debt on its balance sheet (which could increase the need to sell bitcoin to pay expenses and hurt the long-term exposure of its treasury). Here are some helpful data points to use as a reference, but it is important for any investor to do his or her own research.

  • According to one independent analysis comparing the enterprise value of bitcoin mining stocks to their revenue, market leaders Marathon and Riot appear to be slightly overvalued. On the other end, companies such as BitDeer and Stronghold Digital trade at lower ratios. This does not mean that an investor should immediately target the left side of a chart such as this, as there are reasons for blue chip mining firms such as Riot and Marathon to trade at premiums, such as an expectation that they are better positioned to ride out a difficult post-halving period. It is also worth noting that they have by far the two largest bitcoin treasuries of any publicly-traded miner, which could prove to be extremely valuable over the next 12-16 months. Therefore, every aspect of a miner’s business must be taken into account when making investment decisions.

*Using EV data and run rate revenue from the last quarter. Companies without quarterly updates were left out.


  • One company that is getting more attention from the investment community is TeraWulf because of an ultra-cheap nuclear energy contract that it signed in Pennsylvania in March that insulates it from geopolitical driven energy-price increases.
  • Although Applied Digital Holdings (APLD: NASDAQ) is not by definition a miner – it is an infrastructure provider that houses and operates miners on behalf of their beneficial owners – it is also on the top of mind of investors because of some nine-figure artificial intelligence customers that it recently signed. A lot of bitcoin miners are making noise about dipping their toes into artificial intelligence, but for most it is just marketing speak.
  • Core Scientific may seem appealing to investors given its large hashrate an expected relisting on Nasdaq in January. However, it is important to note that even if the company successfully emerges from Chapter 11 proceedings it will carry a high debt load that will need to be serviced by continuing to sell every bitcoin that it mines. This means that its treasury will remain at 0 for the foreseeable future.

Further Reading

After China’s Bitcoin Mining Ban, Bitcoin Is Stronger Than Ever


HONG KONG, CHINA – 2020/09/24: A woman wearing a mask stands next to a bus stop covered with … [+] Cryptocurrency electronic cash Bitcoin advertisement in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

The relationship between Bitcoin and China has always been a complicated one. China is where bitcoin mining truly built its scale from an individual hobbyist project to an economic force that could shape the world. Yet, China’s bitcoin mining ban shut down the whole industry and scattered bitcoin miners to the winds. It’s been two years now – and it should be said that Bitcoin and the hash power built on securing it is stronger than ever.

In an ironic twist of fate for the discussions about bitcoin’s environmental impact, it’s also highly likely that shifting from China’s energy mix has helped make bitcoin more “green” – and emit less carbon emissions.

Now, as of late 2023, the largest mining pool in the world is based (Foundry) in the United States, and several miners trade their shares on public markets. One of these, Riot, has an explicit mandate to bring more large-scale Bitcoin mining to the United States. While many of the old China-based mining pools in the past are still around, they no longer hold the dominant share of the hash rate they once did.

Jurica Bulovic, the Head of Mining at US-based Foundry, shared a report that the miners that belong to the pool have 71% usage of what is “green energy” or ESG-friendly energy. It’s probably better data than an analysis that relied on regional electricity trends and IP addresses, which are malleable and not an accurate indicator of mining – though of course, Foundry is just a part of the hash rate story.

The amount of energy in Foundry comes (71%) from ESG-friendly sources/green energy – screenshot … [+] provided by Foundry

User screenshot provided by Foundry

What’s clear in even that regional analysis is that moving from China (coal-fired power in the majority) to a cleaner mix of energy in the United States can help improve the energy profile of bitcoin. What stranded hydropower is left – built during an era of overinvestment in ghost cities – will have to be left to power a craze in “AI”, or the Chinese party-state’s fascination for “blockchain” as a frontier tech.

Overall, the hash rate (the amount of computing power dedicated to securing Bitcoin) has steadily doubled from 2022 to 2023 – and bitcoin has moved past its geographic concentration problem to be dispersed around the world – showing that it’s a fluid technology that can survive and even thrive after significant blows.

All you ever needed was power and computing resources. China aimed to “ban” bitcoin mining in its territory, but a couple of years later, bitcoin continues to hum along – and is stronger than it’s ever been.

Chinese Miners, Not Chinese State Miners

Critics of Bitcoin, including Ripple, said that “China” overly controlled Bitcoin mining. When that angle failed, they said that proof-of-work had too many environmental consequences – ironically taking the official Chinese state position on bitcoin mining.

Chinese miners and mining pools based in China (and might have had hardware contributing from any point in the world) were never a state-controlled entity – they just had an aggregator based in the People’s Republic of China. They had a conflicted relationship, at best, with the state authorities. In many ways, this argument reflects an ugly point often floated by the Chinese party-state that those of Han Chinese ethnic origin “belong” to the Party.

Chinese miners acted with great risk to support Bitcoin. Though many may have been motivated by profit, this is part and parcel of the game theory incentives that allow Bitcoin to continue pushing transaction blocks one at a time.

Since the 2021 ban, there haven’t been overt conferences in the Mainland about mining as there once were. Chinese entrepreneurs who took a bet on a new technology that fell afoul of the Chinese party-state’s opinion now suffered the consequences.

Bitcoin Mining’s History in China

China became a concentration of bitcoin mining hash rate because some of the most sophisticated hardware and exchanges developed there first. Chief among these was Bitmain, which Micree Zhan and Jihan Wu co-founded. Zhan was the previous co-founder of a streaming startup. Jihan Wu did financial analysis and private equity.

It was a mixture of China’s startup scene and the bustling manufacturing capability that defined China’s economic rise. By 2018, their mining chips dominated the market share. They were the only mining hardware company that was given exclusive access to TSMC’s 5nm process – giving bitcoin mining cutting-edge semiconductors to work with.

The different mining pools that grew in China included f2pool, which was China’s oldest Bitcoin mining pool. It became known for having a coinbase mark named after one of its co-founders, the mysterious Discus Fish. To this day, it is the third-largest Bitcoin mining pool.

Bitmain founded Antpool to offer a hardware advantage with its application-specific chips and a software advantage for miners to mine blocks. Today, it remains the second-largest Bitcoin mining pool.

There are also various mining pools built by exchanges, many of which came from China. Binance Pool is an example of this. As exchanges grew more powerful in the Bitcoin ecosystem (partially through getting more crypto trading fees), they could offer miners more services regarding their liquidity preferences. Binance Pool is now the fifth largest Bitcoin mining pool as of October 2023.

New Horizons – And Stronger Than Ever

In 2023, however, the movement of physical miners from China to be more geographically dispersed is now more complete. The world’s largest Bitcoin mining pool is now in the United States, with corporate leadership based within North America: Foundry. Other miners are listed on public indices in North America, bringing immense hash power to securing the Bitcoin network – in jurisdictions that aren’t outright hostile to the idea.

As Brian Morgenstern from Riot puts it: “Bitcoin is empowering people all over the world just as the United States has advanced the freedom to succeed for generations. It only makes sense that the mining industry should thrive here.”

After 2021 and the State Council’s decision to push provinces towards bitcoin mining bans, some miners may have stayed. However, even “Chinese” mining pools blocked Chinese IP addresses for mining hardware.

While tracking the physical location of miners is notoriously tricky – after all, IP addresses are very malleable across borders, and there’s much incentive to hide Chinese IP addresses now – it’s clear that quite a few Bitcoin miners have left China with their equipment, and that the world’s largest bitcoin mining pool is now in the United States.

Juri from Foundry states that some of the growth Foundry’s mining pool has seen has come from its innovations for institutional-level clients, things as simple as better customer service with dedicated account executives but also adding a lot more transparency into how the pool payout structures work, or adding enhanced account security controls – a need for public-traded companies.

Coupled with more institutional interest in Bitcoin and more sophisticated financial practices for miners – you get the beginnings of the demand for Foundry. But Juri admits that some of this explosive growth to the world’s #1 mining pool was accelerated by Chinese mining pools losing hash rate while Foundry gained it.

This diversified geographical growth is a sea change from Bitcoin’s early history and an adaptation that had to come because of the Chinese party-state’s actions. Yet, it’s made bitcoin stronger than ever – resilient in showing that geographic displacement barely affects its health. What doesn’t kill you makes you stronger – this certainly seems true for China and Bitcoin mining. What China has lost – bitcoin and other countries like the United States have gained.

From WikiLeaks To China: Censored Texts Endure In Bitcoin And Ethereum


LONDON, ENGLAND – MAY 19: Julian Assange speaks to the media from the balcony of the Embassy Of … [+] Ecuador on May 19, 2017 in London, England. Julian Assange, founder of the Wikileaks website that published US Government secrets, has been wanted in Sweden on charges of rape since 2012. He sought asylum in the Ecuadorian Embassy in London and today police have said he will still face arrest if he leaves. (Photo by Jack Taylor/Getty Images)

Getty Images

Bitcoin is many things to many people: digital money, a digital store of value, a platform for censorship-resistant data. At its root, the technology is available to anybody to get data and upload data – bitcoin has turned that data into direct economic value by creating a bearer asset that can be exchanged for fiat currencies or goods. One of its more romantic uses, however, is its use to spread texts that are censored in one country or another.

This new use case is the origin of Project Spartacus, an attempt to inscribe every war log in Wikileaks into a block through ordinals. Another censored text was an interview with Dr. Ai Fen, the original “whistleblower” doctor during China’s COVID-19 pandemic, placed in the Ethereum blockchain as the original interview, and many of the materials about her gradually were censored from the Chinese Internet.

In a fanciful flight of the Chinese Internet’s energy, versions of her interview were spread in different forms and translated into other languages – though perhaps none will be as enduring as the record in Ethereum.

There has been debate over whether or not adding more data to Bitcoin’s blockchain is intended behavior – and, to a lesser extent, Ethereum. Ordinals are a new approach that allows each sat in Bitcoin transactions to be linked to a corresponding resource in Bitcoin’s memory pool. This has allowed people to create the equivalent of NFTs on Bitcoin.

A purist camp exists that says ordinals are wasteful and create the conditions for high transaction fees, distracting people from the goal of making Bitcoin “magic Internet money.” Others say that ordinals bring more people into Bitcoin and create more versatility and a larger market for transactions on the chain – allowing miners to gross more fees and strengthening both Bitcoin adoption and use cases.

Project Spartacus uses ordinals to help people commit images of war logs from Wikileaks into Bitcoin. In this case, the objects in question are a permanent record of documents for which Julian Assange faced prosecution. They can choose to commit one of the war logs to each block, ensuring that the economic might behind Bitcoin will be committed to protecting the logs. There’s also a section for Bitcoin donations that go to various not-for-profit foundations.

This isn’t the only non-economic data that’s been put into Bitcoin’s blocks, but with ordinals, the demand and ability for people to implement inscriptions programmatically have never been higher. The trick is to inscribe multiple images or actions with a script that can look like just one transaction to the end user.

At the beginning of Bitcoin’s history, it was feared that governments might track down the chain for individual blocks. A proposed attack vector was for China to block miners with specific IP addresses from mining certain blocks containing censored Falun Gong information. But in reality, China tried to ban bitcoin mining within its physical territory – and bitcoin grew better and more diverse in its hash rate.

This new censorship-resistant way of spreading information stems from Bitcoin’s creation and ideological nature. One of the earliest forks of Bitcoin – Monero – is named after the Esperanto word for money. Esperanto, the ill-fated attempt for globe-thinking anarchists to connect, was co-opted by socialist states like Vietnam and the People’s Republic of China to reinforce their state power.

By anchoring bitcoin’s value in much more recent technology (Esperanto had been created centuries after the printing press, after all) and creating financial incentives for its survival, bitcoin has a much better chance of survival and propagation.

Ever since Satoshi embedded a message in the coinbase of the genesis block, the first operational block in Bitcoin history, seeming to decry the bailout of banks after the Great Financial Crisis of 2008, there has been the possibility of adding data beyond transmitting financial value to bitcoin’s blocks and to convey a broader message.

One of the more beautiful things about Bitcoin’s ecosystem is that it has not just created a financial means to an end. The ecosystem that has had to evolve around Bitcoin has created, in many ways, its own peer-to-peer network of communication and media to survive.

Bitcoiners have found one another on social media and created their own podcasts and magazines. Education and culture have grown around Bitcoin – centered around the technology and its abilities, but also spreading its capabilities, adding a social layer to the game-theory economics that powers the nodes/miners that support Bitcoin.

Though Bitcoin, at the beginning, was too fragile to support projects like Wikileaks (Satoshi famously warned against the idea at its inception), now billions of dollars go to support the continued survival of the chain. Bitcoin has been around for more than a decade – it has weathered theoretical nation-state attacks that have become real and found a place in the most significant investment firms in the world.

Project Spartacus is part of that evolution – and as censored texts and other materials make their way into Bitcoin and Ethereum, it surely won’t be the last initiative in that vein.

What Does The Shanghai/China Court Ruling Really Mean For Bitcoin?


Xi Jinping, China’s president, casts his ballot during a vote at a session at the first session of … [+] the 13th National People’s Congress (NPC) at the Great Hall of the People in Beijing, China, on Monday, March 19, 2018. China named Yi Gang to run its central bank, elevating a long-serving deputy governor with deep international links to the forefront of efforts to clean up the nation’s financial sector and modernize monetary policy. Photographer: Qilai Shen/Bloomberg

© 2018 Bloomberg Finance LP

Chinese party-state actions have recently generated “positive” news for bitcoin. Hong Kong has seemingly embraced cryptocurrency exchanges by offering a regulated platform for them – some writers suggested that this represented the Chinese Communist Party supporting bitcoin.

Then, there was news that a Shanghai court seemed to be validating bitcoin as a unique digital currency. Media sources linked to a report posted on Weixin by the official account of the Shanghai Second Intermediate People’s Court and generated a wave of social media response, partly helped by a tweet by Justin Sun on the topic.

Watcher.Guru comments on the Shanghai ruling

Author Screenshot

Placing the Report in Context

The Shanghai No. 2 Intermediate People’s Court is the second lowest level in the court system of the PRC, tasked to handle local issues and to be a court of appeal from what are known as “Basic People’s Courts.” They’re usually found in all prefectures and cities. One similarity the Chinese court system shares with the American court system is that each city’s cases bring different exposure for courts to consider.

So, while the Southern District of New York court has a reputation for “policing” Wall Street, it’s likely that disputes arising from cryptocurrency and bitcoin are going to pop up in both Beijing and Shanghai, which are China’s two largest commercial and financial hubs.

This is the context behind why the Court made the report. The Beijing Arbitration Commission, a non-for-profit focused on legal arbitration, also made a similar report in 2020.

The overarching number of Chinese laws focused on cryptocurrencies and bitcoin were drafted by the administrative entities in this part of the law: namely, the country’s central bank (The People’s Bank of China or PBoC), the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission.

Their regulatory notices in 2013, 2017, and 2021 are cited throughout the report. The 2013 and 2017 notices cover the People’s Bank of China banning domestic banks from transacting in bitcoin, while the 2017 notice banned initial coin offerings. The 2021 notice served as a reiteration of these two notices, making it clear that centralized exchanges were conducting illegal financial activity.

This Report Isn’t That Different

That the Shanghai No. 2 Intermediate People’s Court analyzed bitcoin this way is similar to previous reports – and describes the status quo in China regarding Bitcoin and cryptocurrencies. Namely, that the use of Bitcoin as legal tender is something that has been made illegal in several ways, and that several courts have interpreted the overarching framework of cryptocurrency regulatory notices in the following form:

1- Bitcoin is not currency according to the Chinese party-state, and use of it as such is not allowed by the Chinese party-state. This includes people transacting with one another in cryptocurrency. Since this behavior is not lawful, the state is not actively involved in stopping it, but you may not find recourse for invalid contracts/payments in the court system. Different courts have ruled differently on whether the usage in a particular situation was related to this “illegal” usage.

2- Bitcoin and other cryptocurrencies are seen as commodities/property and are protected from seizure under Chinese law. Chinese law doesn’t prevent the circulation of bitcoin and its possession. Absent a significant shift in Chinese party-state policy on the topic, courts will likely continue reading the broad confines of the regulatory notices that form the centerpiece of Chinese law on bitcoin as protecting the ownership of bitcoin.

The first three paragraphs of the first section cite the 2013, 2017, and 2021 regulatory notices and general bans on bitcoin-related settlements for domestic financial institutions and the closure of Chinese-based cryptocurrency exchanges.

The question here isn’t so much whether bitcoin is illegal in some contexts but how the Court can handle custody of this new asset and the “embarrassment” of potentially needing to use a third party to dispose of a valuable yet illegal usage of bitcoin.

The second section reinforces that bitcoin and other cryptocurrencies are illegal when used in a monetary sense based on the regulatory notices above. The last paragraph is the one where everybody has focused: in struggling to understand how to fit bitcoin as a commodity, the Court struggles through to a definition that a commodity is produced by social labor – and that bitcoin’s unique and non-repeatability gives it space to operate distinctly from other cryptocurrencies.

The last sections reinforce the specifics of bitcoin-as-commodity regarding specific cases and resolutions. The United States and its treatment of bitcoin as a commodity is cited as a precedent – in the end, bitcoin’s attributes as property “cannot be denied” – a well-known and litigated line in Chinese jurisprudence.

The One Evolving Difference

One exciting element of this report is how it teases out bitcoin from other cryptocurrencies. This isn’t something new from a global context.

For example, the SEC in the United States does not seek to regulate bitcoin because it regards its decentralization as more complete than other tokens and cryptocurrencies. Under Gary Gensler, the SEC has become more aggressive against even ethereum on this foundation. Having state authorities determine that bitcoin is distinct does matter.

That’s the one part of this report that stands out. And while this is more of an interpretation from one (relatively low-level) Court of how China’s regulations should be implemented with regards to bitcoin, it may be part of the more significant, global shift towards viewing bitcoin as being genuinely distinct, separate from even ethereum, nevermind other cryptocurrencies.

Can China Still Affect Bitcoin Prices Before The Next Halving?


BEIJING, CHINA – NOVEMBER 22: Chinese President Xi Jinping and Vice Premier Liu He (L) attend a … [+] meeting with delegates from the 2019 New Economy Forum at the Great Hall of the People in Beijing, China November 22, 2019. (Photo by Jason Lee-Pool/Getty Images)

Getty Images

Bitcoin has been relatively flat this year, stuck between bull and bear rallies but trading within a range. While far off from COVID-19 highs, it is nowhere near the lows when bitcoin touched just above $16,000 USD per 1 BTC after the fallout of cryptocurrency exchange FTX failing.

The halving is traditionally a price-boosting event for bitcoin. Halving is when the reward for miners is reduced in half, so less bitcoin is available. This happens in programmed intervals based on the number of mined bitcoin blocks. The next bitcoin halving will happen around April 24th, 2024, when block number 840,000 is mined. It’s the living embodiment of bitcoin’s creed that the price for a scarce asset will increase as you decrease its supply.

Bitcoin’s programmed deflation is the opposite of the inflation that comes with growing fiat monetary supply, like with the US dollar. For example, one year after the 2020 halving, bitcoin’s price was up 533% at one point.

Will the same thing happen again? Or will this halving cycle be taken up with another cycle of bad news, such as the implementation in force of China’s proposed cryptocurrency mining ban that pushed prices down soon after in 2021? These are questions I’ve dealt with significantly as part of my research into China and bitcoin.

Perhaps no country has affected bitcoin’s price history more than China, but there are several reasons to believe China’s actions might be more neutral for the market until at least the next halving.

The Current State

China has cracked down on bitcoin mining through a State Council decree and banned most forms of transacting bitcoin on exchanges. The State Council is China’s highest state administrative organ. The American system and the Chinese system are hard to compare. Still, one way of thinking about the State Council is that it’s a “super-Executive Branch”, reporting to the Premier, who is the #2 in the Chinese power system behind the General Secretary (currently Xi Jinping), and generally seen as the head of the administrative state – and responsible for regulating and developing economic growth.

When the State Council speaks about a topic, other branches of the Chinese government fall quickly into line. Provinces like Sichuan and Inner Mongolia that had previously been dragging their feet and giving bitcoin miners more time to phase their operations out gradually – turned out stricter plans to end bitcoin mining within the province as soon as the State Council weighed in.

The Vice Premier who chaired the committee that implemented the effective bitcoin mining ban, Liu He retired from the Politburo. Though he still consults informally on economic matters, it’s unlikely that bitcoin will return to a Politburo-level event as Xi’s state administration and Liu He both focus on a battle of systems and investment flows and “trade and economic matters” with the West.

Bitcoin is also recognized as virtual property and a defensible virtual commodity by some Chinese courts – this has been the case in the Chinese court system for many years. China’s regulations on cryptocurrencies are known as the “Key Prohibition Rules”: it is illegal to act as a central counterparty for the exchange of cryptocurrencies for legal tender or each other, and it is unlawful to raise funding through ICOs.

Thus, no bitcoin exchange exists at scale headquartered in China. There is also a strict ban on using cryptocurrencies as legal tender or circulating currency. The right for Chinese citizens to hold bitcoin as a virtual commodity, though, has been affirmed by multiple courts.

It’s unlikely the Chinese party-state will go after people who hold bitcoin and are Chinese citizens due to the mix of virtual property protections and bans being focused on the use of bitcoin as legal tender but implemented on the application rather than network level. This means that centralized businesses like exchanges and bitcoin miners are targeted. But individuals who hold bitcoin, and maybe run a bitcoin node, are still not.

China, so far, hasn’t adopted the most extreme measures it could to stamp out bitcoin as a result. While those looking to do bitcoin mining should beware as there have been confiscation of bitcoin miners for power usage, there haven’t been widespread seizures of bitcoin from Chinese citizens or a Great Firewall level ban on the protocol ports.

While the Chinese state has made it difficult to buy bitcoin with Yuan, using Tether and buying bitcoin with it is still an open secret for OTC exchanges. The likely disruption here will come if more exchanges or a major stablecoin fails rather than the Chinese state’s actions. The Chinese party-state might have to react if that’s the case – but there are likely very few actions it’ll take proactively for the moment, as no announcements are on the horizon (while the Chinese party-state had warned of the bitcoin mining ban for years).

Hong Kong And Shanghai

Two pieces of “bullish” Chinese bitcoin news have come out recently.

First is the Shanghai court ruling, which, while being a bit more nuanced on Bitcoin being separate from cryptocurrencies, more or less follows the same trendline of Chinese courts recognizing that bitcoin and other digital assets are commodities and worthy of protection from seizure under China’s civil code.

In Hong Kong, there are signs a need for capital inflows has led to Hong Kong embracing cryptocurrency exchanges. It’s perhaps a way to push forward the idea that in Hong Kong, it’s “business as usual” after protests asking for universal suffrage froze the city.

However, there are early signs of trouble as Hong Kong-based JPEX failed. JPEX is an unlicensed cryptocurrency exchange and not one that went through the new proposed regulatory structure.

Nevertheless, it is probably a reason for Hong Kong’s executive branch to get involved – which probably doesn’t auger well for the licensing regime, which securities regulators and the central bank mostly pushed forward.

Exporting Philosophy

An underrated aspect of how China can affect bitcoin prices is the export of its ideology. China was one of the first state movers to try to clamp down on bitcoin, partly due to its sensitivity to capital controls in a closed system and also due to the large amount of bitcoin mining activity within its borders.

The same arguments about proof-of-work bitcoin being energy-wasteful are already popping up in individual states of the United States such as New York State’s temporary ban on certain bitcoin mining activities and European legislation. Other states may soon follow in China’s footsteps, which will have the effect of moving bitcoin’s price, as those differences will be newer than what China is likely to do now.

The Next Halving

Usually, a halving event will increase bitcoin’s price – however, it’s more uncertain this time whether that’ll be the case. It’ll be the first halving for China since the bitcoin mining ban came into play.

While Chinese social media used to light up with each bitcoin halving because of the large amount of bitcoin miners present in China, it’s possible 2024 will be a bit more dull. It’s unlikely that major Chinese political events will shape bitcoin prices until then, though there might be more demand for bitcoin as capital flight takes hold across the country.

Proton’s CEO On Why They Continue To Take Bitcoin And The Future Of Encryption


( Boston, MA,05/30/14) Andy Yen, cofounder of ProtonMail. (see Jordan Graham story) (Staff photo … [+] by Stuart Cahill) (Photo by Stuart Cahill/MediaNews Group/Boston Herald via Getty Images)

MediaNews Group via Getty Images

I caught up with Andy Yen, the founder and CEO of Proton, this year at the Collision Conference in Toronto to discuss his views on bitcoin, encryption, and what trends will affect both technologies long-term. The following is an excerpt of that interview, though it’s been copy-edited for clarity, and some parts of the interview have been rearranged.

Did PayPal’s censure of your initial crowdfunding campaign lead you to accept Bitcoin and adopt it?

Andy: I think when that happened in 2014, what we did eventually – actually, at that moment, was we set up a Bitcoin address and said “Okay, you know, PayPal is blocking us, we don’t know when we’re getting our money out. You can donate with crypto.” And that was the instance that maybe opened our eyes to the power of crypto.

The fact that it’s decentralized – the fact that no government can just come in and block you. The fact that you’re not beholden to a single traditional financial institution that can do frankly, stupid things, because they misunderstand what you’re doing. It’s a sort of liberation and freedom, right?

And the reason that we have been accepting Bitcoin for 10 years, which I think makes us a bit of an early adopter, and still to this day, I think the reason that we hold on to our bitcoins as well, is because we learned the hard way – the value and need for diversification. I would never wish this type of ordeal on any other company. But it does happen, it can happen. It has happened. And I think it’s just prudent that you spread your risk a bit.

What’s your general view on Bitcoin now that it’s matured past these days? There’s a lot of news about institutional support for Bitcoin, such as the BlackRock
ETF passing – what do you think about that?

Andy: It’s quite interesting. If you look at BlackRock, well, I don’t think BlackRock needs to be supporting or endorsing crypto to even do what they’re doing. BlackRock is the bank. And it’s not exactly a bank, but it’s a financial institution, right. So, you know, what does a baker do – a baker bakes bread, right? What does the financial system do? It makes money. That is its purpose.

There’s institutional pushes [into bitcoin] because there’s money to be made. So if you run an ETF, you can manage more assets, because there’s maybe a certain fraction of the world that wants the asset class in crypto, and that is big enough, where they can get a good ROI for doing that.

So that’s the obvious reason why they’re jumping into it. And from a technology standpoint, and from a settlement standpoint, [bitcoin and cryptocurrencies] actually do work right and they allow you to settle much faster than SWIFT would do in potentially a more reliable way as well.

So I think it’s sensible that you see kind of mainstream adoption because the technology is sound, but what probably isn’t so sound is the players that have been involved so far – as we’ve seen.

What about the future of encryption – something that is related both to your work running one of, if not the largest encrypted products providers and as an early adopter of bitcoin – how can it continue to be resilient and evolve even in a policy context that seems more hostile?

Andy: I think we need to look at this from a long term lens.

Encryption: there’s always support, there’s always opposition. It comes in waves, it comes and goes, it shifts back and forth depending on the administration, the year and what’s going on in the world.

But having been in the space for close to 10 years now – we started back in 2014 – I can kind of tell you what the long term trend is. And back we started in 2014, it was a truly tough space to be in. So you know, in the very beginning, PayPal actually shut down our PayPal account for a bit of time. […] They thought encryption was was actually illegal, right?

And back in those days, governments across the world really viewed encryption as an enemy. We were like the hostile force that they were afraid of. So that was the environment in which we started out in.

And what has happened since then is, you know, we saw Europe pass GDPR, we saw the rise of state actors like Russia, China, North Korea, Iran, hacking systems and representing the kind of new cyber threats in which encryption is opposition to tackle.

We’ve also seen many incidents where governments have realized over time that security and privacy are two sides of the same coin. So you can’t really rally against encryption, because encryption oftentimes is the shield. It’s the barrier that prevents you from going into the abyss online.

Many of these same governments that in 2014 were strongly opposed to what Proton is doing – today and I can’t tell you which governments because you know, we’re a privacy company. We’re very discreet. But a lot of these governments today, they’re actually our customers, they’re actually buying various programs, services in order to protect their own infrastructure and protect their own communications.

And so I think what that really shows is that if you take a longer lens over a decade, the trend has really shifted right, you know, we’ve gone from things like, try to shut us down. We’ve gone from the famous Apple versus FBI case, to kind of a broad acknowledgement across most governments that encryption is necessary and end-to-end encryption is needed.

And if you look at the number of people in government today that either use Signal, they use Whatsapp or they even use Proton – like if I’m on Capitol Hill, a decent amount of people that I talk to actually are our users.

I will say that the success of these products – they make encryption more mainstream. Getting it into the hands of policymakers, has helped to spur the understanding that encryption matters.

But that doesn’t mean that we’re always in the clear. Of course, there’s always forces that are trying to put more stringent regulations and you see that in UK, the Online Safety Bill. You see that in the EU’s new proposed chat control legislation. These things are always coming up.

And the core conflict here is governments are trying to on the one hand, protect privacy and encryption. But on the other hand, they want to do things like block Child Sexual Abuse materials and things like that to be incorporated online. And essentially, it’s a struggle because they’re looking to legislate a solution that technology is not able to fix.

There is still no way today to build a backdoor that only lets bad guys in. In fact, you may never be able to do that. And the outcome of this is you have legislators who are confronted with trying to solve this problem and if you look at the EU, the chat control legislation and you look at the language – on the one hand, it says well, we need to ensure that privacy and encryption are protected.

On the other hand, the language is saying at the same time, we need to have ways to get access to information to verify that illegal materials are not being disseminated.

And those two statements, which are in the same draft bill, are from a logical standpoint, fundamentally incompatible and this is something that I think policymakers just don’t fully understand yet. So it’s a process of educating them.

And also hoping to understand that legislation is usually needed to fix problems that the market economy doesn’t resolve. But on this issue, whether it’s Proton, whether it’s Apple, whether it’s Facebook, whether it’s you know, Google nobody is financially incentivized to let crimes occur on their platform. And if you take Proton ourselves, we probably have up to 10% of our staff working on abuse. There are ways to tackle this problem without defeating encryption. So I think it is a matter of education to communicate this.