The Electron Liquidity of BTC vs BCH | Hashpower Academy

Video Transcript:

hello there and welcome to the hash power Academy this is where we talk about anything and everything related to bitcoin and its underlying infrastructure network of Technologies and commodities today’s topic is the electron liquidity of Bitcoin now that is not a typical term referred to bitcoin and I’ve used it in a financial context of liquidity but for a particular reason and the only way we can understand it is by comparison so we’ve got two examples here of the Bitcoin Network and its Network hash rate the amount of compute power out there Bitcoin miners plugged in producing hash rate to find the next block of BTC and also the Bitcoin cash blockchain which is much smaller with its tick ticker symbol bch so the first key takeaway here is that bitcoin’s hash rate online is about 250 times larger than Bitcoin cash and Bitcoin cash came about in 2017 from a a little bit of a debate in the Bitcoin space as to whether we should have Big Blocks or smaller more constrained blocks so that the fee Market is a bit more competitive shall we say um but that’s for a different discussion the the topic of today electron liquidity that is to say that well how much energy is available in each Network to sell locally on the grid and Bitcoin being the significant amount of hash rate we’ll start there I’ve used the conversion efficiency of the average mining machine at 20 Jews per terahash now if you know your units an ex aash is a million terahash so we can multiply this into megawatt and it’s roughly [Music] 17,000 megawatts that is approximately the amount of energy right now trying to produce about that much hash rate to produce Bitcoin and I’ve got the conversion here as well and for Bitcoin cash multiplying by 20 it’s about 68 megaw that’s quite a fundamental difference this is the equivalent power of 171 gwatt nuclear power stations that’s a massive country’s worth of energy and this is barely one mining site and so there is a significant scale difference there so click clearly we can say that the electron liquidity of Bitcoin is significantly larger because if you were a Bitcoin miner and you had a mining site of 20 megaw your Opex your how much you’re spending in real time on energy is 20 megawatt hours roughly and the amount of Hardware asset you have the capex you’ve got about one xash of Hardware that’s consuming that 20 megaw to produce that one ex hash and you’re earning about 6 of a Bitcoin per day now if you was to send that one x a hash into Bitcoin cash you would significantly increase the hash rate of this chain and dilute the amount of Revenue that you would be earning significantly because you would raise the difficulty adjustment and if you add your 1 exra hash to bitcoin well you not diluting much at all you would slightly incrementally increase uh hash rate but that would be represented in your in the pace of how many blocks you’re Mining and so firstly the contribution being increased in each different network well you would cause less disruption on the Bitcoin side but you’ve got less probability of going for finding a block so you’d probably join a mining pool to get more regular payouts but here may you’d be uh you’d be be earning nearly a quarter of the blocks and um that may be convenient but you would be diluting the amount that you could possibly earn and the key takeaway here on the other side is well if you were plugged into either either network if you sold uh you switched off one xash from Bitcoin cash you’d be switching off onethird of the network hash rate and slowing blocks down significantly but if you Switched Off Your 20 megaw 1xa hash on this side you would barely be a drop in the ocean of the amount of energy available to be sold on local grids and that’s what’s key that’s that’s what is of fundamental importance here because if 20 megaw of power can be consumed to produce an x 1 x aash and exported to the internet to issue Bitcoin per you know per exra has per day well that’s a good amount of money on the consumption side but if the local grid will buy the power for more than this amount per day why would you mine you could switch the machines off and sell the energy back to the grid and the whole point is here that your your capacity your ability to use energy gives you those two options you’ve got the power contract because you can consume the energy and when the price on the price on the grid goes really high higher than this in a day you have two different options to push and pull you can consume the energy and turn it into digital money or sell the energy and buy the digital money and this sort of dynamic is what’s going to come in the future on the the aspects of Bitcoin as a unit of account because right now the perception of a quantity of Bitcoin is dollar IED we understand this as a certain amount of dollars and energy is also dollarized but you can cut the dollar out of both and electricity and Bitcoin now have a direct pricing system and it’s all through compute power but the representation of how much compute power is within each different blockchain in this example signifies how much energy is available available to be sold and it also represents essentially the security budget the amount of compute dedicated to each different blockchain both different chains are regulating blocks to about 10 minutes and so the difficulty adjustment here is going to be 250 times higher than here and that means that the the ability to crack into blocks and uh be a bad actor so to speak uh it’s 250 times harder on this side of things all of these things come into fruition but that long-term trajectory of that ability to sell power back to the local grid is of fundamental importance in anything you learn about Bitcoin from the energy and compute layers you can go and learn everything about the financial side of Bitcoin from all different people but here we’ll delve into everything to do with compute and its relationship to energy and Finance on both sides this is why we call it the hash power Academy I hope I hope you enjoyed thank you for listening like subscribe All That Jazz and I will see you in the next one goodbye