3 Cycles of Bitcoin Price: Secrets of the 2030s | Hashpower Academy

Video Transcript:

Hello there and welcome to the Hashpower Academy, your place to learn anything and everything to do with Bitcoin from the fundamentals. Now, the topic of today’s video, we’re going to look at the three cycles of Bitcoin going into the future. So, that being up to 2028, 2032, up to 2036 and beyond, understanding that lots of things change, but things tend to stay the same whilst changing a lot. And what I mean by this is the network’s going to use more energy. Efficiency is going to do go down. Hash rate is going to increase. Mining rewards are going to decrease per terahash. And obviously we hope that the fee market increases. So as you can see there’s lots of paradoxical chopping and changing through the entire network. But what we need to understand about where Bitcoin goes to the upside is how low it can go to the downside. The retracement back to reality is where things could be best built off in terms of fundamental understanding. So right now we’re 50k production floor which is creeping up and up and up. But guess what happens when we hit 2028? The h havinging to every bitcoiner is the doubling to bitcoin miners. Because if your energy bill stays the same, but the amount of Bitcoin that you earn when the hing comes along cuts in half, it means that it cost you twice as much in electrons to produce the same amount of Bitcoin and thus the production floor doubles. So let’s say production is 75K and that’s being generous for 2028. This is probably I’m actually going to delete this. We are going to go up to 100K. I do believe that by the next h havinging the production floor for Bitcoin miners will be about $100,000. Now if the fee market is abysmally low as in the amount of Bitcoin per virtual bite that you are paying to store your transaction data in the blockchain forever all the nodes to hold on to that data forever. Well, if that’s very low and subsidy is still the majority of miners revenue, the amount of Bitcoin they earn per terahash per day, we could see the production floor doubling. It happens every single time there’s a hing. So, we could see this uh shoot up to say 200k production floor. Right now, what happens over a four-year cycle? More hash rate coming online, more efficiency, yes. uh subsidy stays the same over the four-year period. Fees continually, we don’t know. We hope that it goes up, which actually lowers the rate of the production floor relative to the price. So, we could see hopefully a creep up to $250,000 by 2032. That is very loosely suggesting that the network increases by say from a $200,000 price production floor to say 250. That’s about 25% increase in network hash rate. I 100% believe that we’ll be at a,000 xahash um one zetaash one zeta of hash rate. Having comes along, the amount that we’re earning per terahash per day cuts in half. So, can 25% more hash rate can another 250 xahash come online over four years? It’s probably a lot higher than that. And why am I showing you all this? Well, guess what sits on top? It’s the price. So somewhere the price takes off maybe retrace is down and continues. Price always sits on top of production because um the asset is more freely available to use. So it builds up a premium in several other ways. Um and it’s that direct exchange rate to dollars that what is the upside to the dollar to bitcoin exchange rate? It’s infinite because there’s no top to Bitcoin’s dollar price because there’s no bottom to the value of the dollar until it goes back to its reality of being worth zero. So, do I see the price of Bitcoin shooting above 200,000 this cycle? Yes. I see it retracing um back down to during that sort of hinging period. I do see it being able to trace back down to before 20 2028 I it has the potential to to drop down but this is what it did um during the 2020 h havinging was that um you can replace 100k and 200k for $4,000 and $8,000. the price crashed to $4,000 um in the h havinging um just before the h havinging sorry and it retraced up to 8,000 very quickly. The recovery from COVID the price recovered really quickly. So even if this um energy energy exchange rate for Bitcoin reality check just raises the production floor every h havinging the doubling as I like to call it. Um and again this is where it gets crazy. If we’re at a 2 $150,000 production cost for Bitcoin in 2032. What do you think? The next h havinging comes along and cuts it in half again. But again, fees begin to take over. So we might we might not see the h havinging um double the production cost, but it may just increase it say 30 40%. Um we truly don’t know. It’s all about the block reward being a combination of subsidy and fees in combination. Right now subsidy is 99%. So if the 99% of revenue cuts in half, pretty much 50%. Um if fees start becoming 10 20 30 40% of block rewards, which is fundamentally what we want, um the h havinging has this lesser and lesser effect. But I still think confidently at say $250,000 production cost in 2032 that if subsidy represents half of uh mining rewards and cuts in half to 25% that means that fees begin to stop being the the 75% and the uh subsidy cutting in half from 50 down to 25% in terms of its relative of the total block reward. board. If it only increases the production floor by 25% from 250K, that’s roughly 50 50 to 70ishk. So, I’m just going to say $300,000 on this one. So, where do I think price will be in 2032? This is being generous but that way that’s the short answer. Now this is basing off the pure math maths and physics of Bitcoin of knowing that our production cost right now is creeping up because when the price shoots above 100K whilst people are producing at 50, it means miners are capturing a 2 to one premium. They are capturing $2 of economic value for every $1 of input value. And a bull cycle can make that ratio go up to eight n 10 times where $1 of energy input is recovering $10 of economic output. And that signifies the top as well. And when it’s one to one, that signifies a bottom. That’s why I say that the production floor tends to function as a floor price for Bitcoin. And it has throughout all the cycles. And when price in dollar terms absolutely deviates and takes off, a Bitcoin price of a million dollars for example right now would enable miners to be earning 100 no sorry $1 per kilowatt hour which means that they would be say paying the typical miner is paying between four five six seven eight cent per kilowatt hour. So if they start earning a dollar per kilowatt hour, they’re going into 2030 times their money. Input $1, output $30. That is insane. And what that means is what do you think miners do with said economic returns? They stack it in Bitcoin. Yes, with that very high valuation of Bitcoin, but it accelerates the process. They go and reinvest in more machines capturing that massive premium. And this is why Bitcoin mining always seeks to find a steadystate equilibrium between the economic potential to be captured on the financial side and the amount of compute in terms of you can think of hash rate as network shares. They are if you own 10% of the hash rate that’s online, you’re capturing 10% of the network’s fees and block rewards roughly. And luck is is what changes that. Now, what I’m trying to explain here in terms of these three cycles of Bitcoin price is we don’t know how much hash rates coming online or how efficient the next wave of machines are relative to this production floor because efficiency of machines lowers the production floor. But efficiency represents uh an advancement on the technology side. An increase in energy consumption. It’s not just uh machines being replaced, it’s machines being added to the network in conjunction with other machines in other um economic setups such as someone that’s got a uh solar farm and they don’t need machines running 24/7. They just want to have a few old mining machines capturing some of that economic return when um when there’s some when there’s some excessive sun. So they’re not even running the machines 24/7. They’re just capturing it. So there’s all these different older uses for old machines. So there’s hash rate always coming online and hash rate raises uh the difficulty which reduces the amount of Bitcoin that you earn per terash per day. And so this floor price keeps going up. But why I base it say on these hinging events is because everything to do with the future is unknown. But what we do know is that h havinging event is coming. This one’s coming. This one’s coming until all 21 million are distributed. The monetary policy of Satoshi Nakamoto for the full distribution of 21 million of these units. That was set over a decade ago at least. Now that’s not going to change hopefully. And what this means is that we have this ability to anticipate what is being issued at any moment in time. So from that point it’s working it back to how much hash rate is capturing said blocks and then the efficiency goes down to the energy level of how much energy is being used to produce the amount of hash rate online to capture said 144 blocks of time regulated energy monetary units per day. Now, what this basically means is we are going to see some obnoxiously high price in Bitcoin relative to today. Um, yes, there will be people from the crypto world that think, oh, why would I buy Bitcoin at 100,000? If it goes to 200,000, I only make double your money. um they’ve completely lost the point as to why we are trying to preserve our economic energy as a collective pool of wealth across the planet where the very pricing system fundamentally comes from energy but it respects other people’s ability to buy, send, and spend it because it has that direct alignment with how everything else in society is produced and consumed with energy. I think I’m going to stop it there. The premise of this is the Bitcoin price is going to go obnoxiously high by 2036 at least. I’m most excited about block 1 million. I think that would be quite an interesting event just before the havinging which could see a load of fees and other alternative use cases of the blockchain that we don’t particularly want to see. But also people see the importance of fees increasing because that accelerates because again if these are payments of fees to miners and miners then plug in more machines which raises the difficulty and thus the value of Bitcoin as well. When more miners plug in, its exchange rate between energy and Bitcoin increases, thus raising your purchasing power in literal sense, as well as the uh ability to spend it. Thank you for listening. I hope you enjoy. This is a bit of a different video, probably a longer one, but uh I’m back. I’m ready to produce lots of content and uh I want your thoughts, feelings, questions, queries, emails, inquiries, consult consultations on different business ideas that you have and I will see you in the next video.