🚨 Trump Tariffs VS Bitcoin Mining! ⛏️ | Hashpower Academy

Video Transcript:

well it seems that Donald Trump has kicked up quite a financial energy and compute storm because he has applied tariffs to the world reciprocal tariffs in relation to the uh amount of import export difference between countries and in the context of Bitcoin mining has done a few interesting things both on the producer of Bitcoin AS6 such as Bitmain and Watts Miner but also the consumers of those A6 Bitcoin miners who are seeking to purchase machines in bulk get them at a cheap price and so some form of percentage increase on top of the cost to buy mining machines that could go from 34% up to 60% plus What this does is it changes the economics of Bitcoin mining in the sense of the capex of buying the most expensive part of deploying a mining operation which is the machines And what this is going to do to the decision-m of where to deploy these machines a physical computer that needs to connect to local energy and an internet to export that energy and produce Bitcoin blocks in the world of global finance And what this means for those Bitcoin miners is they have that choice of whether to import machines into the US or to find other places in the world to deploy those computers But also what if that the fact that the US has such great access to energy and geopolitical safety versus uh the lead times to get something else set up in another location another country and other different risk factors on top of that or the grid stability might not be the same There’s all these different moving parts that’s really uh ripping up the script of mining economics But let’s start with this If import right now getting getting machines into the US costs 34% What it does is the the machines that are already available to be purchased through hardware sellers Well they’re going to make some short-term income because the price of machines available to buy in the US are going to go up So if you’re looking to get machines now’s the time if you’re in the US And on the other side of this the producers of those machines the the planet and we could basically say China with this everything with manufacturing has shifted towards China They’ve massively subsidized their input costs for manufacturing at a at a national level And so all of their companies can heavily out compete just about everyone else in the world across the board with just about everything And what this has done is shifted our uh approach to globalized trade from uh more localbased production such as here in the UK We used to produce a lot of stuff and uh I even find old things that say made in England in my grandma’s house that are from like 40 years ago but not anymore Everything’s made in China and it comes within days or weeks And so the supply chain has essentially uh shifted to just in time which means you buy it and it just appears poof Consumption at its peak embodiment uh buying something and it’s there when we need it how we need it and these sorts of tariffs They also lean on the money manipulation side of things which is countries will devalue their currency so that others can buy their currency and buy their goods to essentially stimulate export That the reason why Trump has imposed tariffs which is the cost to import is because he wants to stimulate more export in his country And on the other side of things that export stimulation is these manufacturers such as Bitmain and Watts miner wanting to potentially explore the idea of producing Bitcoin AS6 in the US And so we sort of shift to a a supply chain of just in case that is having multiple different locations to produce the same thing And so you’re hedged with the risk of if you have two different supply chains for the same good well you have more opportunity that if one supply chain has a problem that the other one has uh availability for you And this was very evident during COVID where uh just about everything is produced in China And so when we all need we didn’t really need them but when we needed face masks um and the the backlog and costs to actually find them because no one could produce them because it all got produced pretty much in the same sort of places And when they all shut down everyone realized that they couldn’t really produce anything anymore This also goes on another tangent related to defense that no one really produces the steel and the uh the conversion of that steel into into armor and machinery for for warfare Well uh if you don’t produce anything you don’t you’re depending on others If you don’t produce any food you’re depending on others And that’s the sort of um global collective globalized world sort of thing And with the pendulum has really swung in that direction and it does feel that we are swinging back to more uh nationalization of producing food producing your own money potentially you know bitcoin mining and yeah the the just in case is hedging your risks and from the producer side that’s nearshoring which is moving your production into the US so that you don’t have to pay those tariffs and the reason why Trump can do this at such an extreme level is because the US dollar is the n is the world’s reserve currency and the biggest buyer of bitcoin mining hardware is the US The biggest buyer across the world for many things is the US because they issue the money and goods and services move in the opposite direction of money If you are a producer you send out goods receive money If you are a consumer you pay money receive goods and consume them And what this is going to do in terms of uh different locations on the the Bitcoin miner side is their access their access to power is uh a lead time problem I mentioned maybe just before if you produce um power then great If you produce power outside the US now’s the time because the premiums for buying machines in the USA are going to go up whilst uh machines potentially will go at a discount So we’ll draw this in just for for easy numbers that yeah the the price of machines are going to be very expensive but here around the world they might have a discount because if there’s less demand from the the key purchase the the key manufacturers um selling machines in in majority to the US if that buyer drops out then there’s a a greater supply of machines and and less demand potentially so the prices will drop outside of the US and then that location aspect of things If a Bitcoin miner is a person that has a very global perspective on where they want to be to produce uh or access energy and produce compute to produce Bitcoin that’s their business They might decide to go to places such as Paraguay and other different areas that have an access to power And um yes there’s more there’s more geopolitical risk in those sorts of areas versus the safety of the USA but Trump’s really making things interesting And the other thing is this the more old inefficient machines are cheaper in price So there might be a more justified approach to to send really old lowpriced machines and yes they’ll get tariffed at a high tax rate so to speak but if they’re really really cheap in of themselves and you have access to electricity in the US that’s the only combination because the more efficient the machine the higher the dollar per terahash rate for example the most latest generation machines could be $25 per terahash and that’s producing a quantity of bitcoin but the most the oldest uh least efficient machines could be $2.5 per terahash So if you have cheap or near free power because you produce it yourself now’s the time to get an old machine And also that slowdown of the amount of machines going into the US and being deployed might actually slow down the growth of network hash rate So if the Bitcoin price beyond these geopolitical tensions were to take off hash rate won’t keep won’t hash rate won’t come online as quickly and you’ll see everyone that does have Bitcoin mining compute deployed such as the existing Bitcoin miners They’re going to receive a greater quantity of income relative to more hash rate potentially coming online if tariffs didn’t exist And overall you’ve got this aspect of if the US is the world reserve currency and the ability for any nation to for well essentially forex is that exchange rate between countries of import and export between them and the the exchange rate of their national currencies between different national currencies is is understanding well how much economic flow and relationship between those nations And again if the US is the world reserve currency they are constantly sending out dollars and receiving goods but also nearshoring the manufacturers having manufacturers come into the US on the microchip side of things on the energy production side of things Um all of those different uh manufacturers create closer more circular economies which is another interesting aspect of what Bitcoin is doing that we are creating more closer more intimate circular economies between production and consumption whether it’s electricity and Bitcoin mining or the financial aspects of things and there’s so many different moving parts to this but the key thing is this if you are a Bitcoin miner you’re looking at an extra cost on the most expensive part of your operation ation the machines versus the the cost to deploy the energy the energy infrastructure or just you know transformers and switch gear which are the key components u between the source of power and the actual mining machines themselves the internet side of this is uh is free because uh this this is all on the this is all an issue on the physical side of Bitcoin which is energy electrical infrastructure and the computers themselves everything on the digital side there’s there’s no import export costs on the on the uh digital side of Bitcoin so that access and location these become the key pieces because if uh if the world reserve currency status was to change with the US but they also had nearshored lots manufacturing That would be a very interesting dynamic But a final takeaway I think is this Bitcoin introduces a world where energy has a standardized price And what I mean by that is two identical Bitcoin mining machines one in the US taxed at 34% or somewhere else in the world two identical machines produced by the same manufacturer approximately the same uh name plate hash rate they are going to consume about the same electricity They’re going to produce about the same compute and produce about the same amount of Bitcoin So their pricing system between that global financial consumption of block rewards Bitcoin fees and subsidy um is the same for both computers from the the the block reward level down to the hash rate level down to the the quantity of energy consumed So what Bitcoin does is actually standardize a global price for energy I use the example of two machines that are the same If you have a more efficient machine that price goes up Less efficient machine the price goes down of Bitcoin per kilowatt And so if you have a standardized price for energy it means that manufacturers uh and producers of goods and services that need a lot of electricity when they’re looking at the world as to that access to electricity and electricity potentially being on a Bitcoin unit of account in the future this sort of interplay of global power money and politics would be a little bit more efficient because if the same the same energy is accessible for the same price just about anywhere in the world relative to the the local efficiency of the computers consuming it as that uh first and last buyer of that energy we’re going to enter a more efficient world where where companies have to be productive and offer other different incentives instead of taxation on the import export dynamic And if we are all trading in a world where the costs to produce things are all the same it just removes the inefficient aspects of trade where things are being moved around just because of these sorts of taxation games I think I’ll leave it there I think I’ve talked all different things here Um but the key takeaway is uh this is a very interesting power play where he is nearshoring manufacturing still exporting the dollar bond yields are dropping which is also another financial issue the the debt burden of the US to constantly pay and roll over its debt um at lower interest rates that’s also a potential so this is quite a smart move I will give him that um but in the future on a Bitcoin unit account I think tariffs will be far less less effective if the cost of energy is standardized at a global price based on your local efficiency Thank you for listening I hope you enjoy and I’ll see you in the next one