USA vs UK | Bitcoin Strategic Reserve | Hashpower Academy

Video Transcript:

hello there and welcome to the hash power Academy my name is Jake scanland I’m the lead educator here at the Academy and this is a place for you to learn anything to do with Bitcoin and everything to do with Bitcoin starting with the fundamentals and the fundamentals of Bitcoin are electricity is converted through Bitcoin mining machines into compute and that compute adds Bitcoin blocks to the chain and what is issued in that process Bitcoin and so we have these three core Commodities of energy compute and finance as in Bitcoin database units and they are all mathematically linked together and this is important in the context of today’s video about the US strategic reserve and for example I’ve made a comparison between the UK and the USA so right now the UK has 61,000 Bitcoin which is. 29% of the total 21 million and the USA has 23,000 Bitcoin which is about roughly 1% now this is where it gets interesting okay the countries of the world all race to accumulate Bitcoin the data money on the blockchain what happens the price in dollar terms races up but the production flaw stays the same or relatively tries to keep up at the rate of physical infrastructure of of well load Center sites of energy being consumed to produce compute which means loads of microchips from China so there is this massive race underneath the price of Bitcoin that any significant accumulation from countries is only going to widen the gap between price and production and that that Gap is what miners will Arbitrage and this is where it gets interesting what percentage of this hash rate is in the USA this isn’t a quiz it’s 40% it’s 40% in the UK I’m going to politely write zero because it’s pretty much zero now this is interestingly in a Bitcoin unit of account approach this is more strategically significant You could argue than this why well this is the amount of subsidy being distributed per 144 blocks which is one day and every 210,000 blocks that cuts in half the harving event which happens every four years and it halves again halves again 100 years later there is no Bitcoin being issued as subsidy and that full 21 million has been distributed and it gets distributed through uh compute power so right now the UK has none so it’s not earning any of this and the and the USA is capturing 40% because it produces 40% of the hash rate so it’s earning approximately 40% of the Bitcoin and this is important because the other component of subsidy is fees and fees are effectively a redistribution in the Bitcoin system it’s inefficiency paying to efficiency and what I mean by that is fees represent some form of consumption I send you uh $100 worth of bitcoin I pay a $1 fee that fee along with all the other fees and the volume is much larger than the small fee that’s paid and redistributed to those producing compute and so if the USA has 40% of the compute all they’re capturing 40% of transaction fees the UK is not why is this important well you pay Bitcoin to pay a fee and so there is a natural economic leakage when you consider the UK side of things where we hold a load of Bitcoin but it can only be spent and yes it’s powerful in of itself it holds all this economic power over these two Commodities that are continually expanding underneath this fixed quantity of Bitcoin to reprice the Bitcoin in Greater quantities of electricity and compute now what’s important for here is although they own 1% % of the supply of Bitcoin they are redistributing the network is redistributing Bitcoin through fees and subsidy on top of that and the US is collecting 40% of it so uh the US is experiencing economic inflow because it it in a sense it holds more Bitcoin um in greater amount in quantity yes but it’s also accumulating 40% of what is continually redistributed in the system and as we transition away from subsidy and more onto fees and fees represent people of the world all sending and receiving Bitcoin and those fees are essentially a red redistribution mechanism based on efficiency well the US is uh sorry the UK is is going to really suffer because we don’t we don’t produce compute as a as a country in a sense and so we are suffering economic leakage whilst the US is uh experiencing in the benefit of economic inflow so the approach of this video is I’m trying to say that the US strategic Reserve needs to consider the amount of Bitcoin it holds but also the amount of issuance power because that’s essentially what compute power is it’s issuance because with Bitcoin you pay to store your transaction in a block when you produce compute power you produce the blocks you decide what goes in a block you hold the pen of the accounting system for 10 minutes and that ability to issue uh new Bitcoin into circulation and settle people’s transactions or settle your own transactions in your own country that may be the the path of Bitcoin mining pools whether you’re for or against that that would be the case because they will want to retain issuance power within the network and this is why Bitcoin mining is decentralized it’s smashing the central banking system issuance power into a thousand pieces and people are picking it up in 144 blocks per day and the third component of this is well um Bitcoin miners uh representative here as 800 xash of compute multiplied by 23.5 Jew per terahash that is converting xash into megawatts which comes up with 18.8 gws when you make it even larger in the units 18.8 gaw that is an insane amount of power that’s the uh Power of an entire country as the news and media like to say which means that there’s an entire country’s worth of energy infrastructure under this network all across the world and uh well the US is continually building this out the US is 40% of that uh approximately and the UK is not so they are not getting the benefits of grid stability that the miners can offer because mining is is buy energy sell Bitcoin because you’ve turned the computer on and consume that power that you purchased but inversely they can sell the power and buy the Bitcoin with the machine off they’ve sold the power so they’ve sold the power back to someone else on the grid but the computer there in the first place is what allows them to get that power contract and these pieces are very important because it requires uh it requires Bitcoin mining to be local because that’s where it is bit Bitcoin mining is loc local and the blockchain is global and all these different pieces ensure that you have um currency units which um if you have compute power you’re earning the issuance of the global monetary Network to your local country so right now obviously the UK is suffering Bitcoin unit of account economic leakage and the US has the benefit of 40% of all the fees going to them but they also have the grid stability aspect of um all the 40% of this power effectively being um available to be sold at that theoretical amount not every minor is able to sell power but I do see that path in terms of a strategic Bitcoin Reserve acknowledging the energy and compute layers of the network to use the the cryptography and security of the Bitcoin blockchain as a communication system to miners all across a country and actively they can coordinate demand response together on an electrical grid pay them for it they’ll do it it’s a it’s just computers that can under and overclock with their power you could design uh an electricity grid that could be hit by a missile and the second there’s some form of surge or drop in power you have the machines manage manage that that fluctuation to a grid that’s the extreme sense but you could also have it in the sense that if there’s a massive amount of solar you’ve got all these machines that absolutely crank up to the max to consume that excess power because from the energy side of things Bitcoin is effectively a recycling system it’s a mycelium network of energy and finance but it’s a recycling system for wasted energy all you need is a computer with an internet connection to to produce the digital money and a local energy connection so it’s local energy connected to Global Finance so yes it’s strategically important to store and own the digital monetary units that reference the entire under Ling Network and priced against energy at the rate of issuance per day and and settlement fees against that amount of energy and as more energy joins the network the price of energy gets cheaper so who doesn’t want stabilized energy on their local electricity grid which produces and issues and collects Global monetary fees as a redistribution system of a fixed Supply monetary unit where there’s only 21 million and your country already owns for my case 61,000 the US is in a massively strategic position to continue its path and all it needs to do is coordinate these underlying layers I don’t think the US government should uh effectively mine Bitcoin Beyond producing a few blocks themselves um maybe they run a mining pool there’s U there’s going to be lots of uh happiness and unhappiness about these sorts of Integrations but Bitcoin is effectively for everyone um freedom of speech it’s can your enemy say something you don’t like don’t agree with um and if it’s in your country that Civil Society so to speak when you start breaking that down such as pausing the Swift payments system in every country realizing oh we can’t trust this anymore um the veils dropped um and then you’ve got countries coordinating some form of gold token or whatever it is um but here’s the problem you can’t if if someone sends you a gold token how do you know the gold is in the vault there is no mathematical or physics connection between the physical Atomic chunk of gold in a vault and your digital token there is only two Commodities directly that are digitally native but physically proven Bitcoin and through compute power the very cost of spending energy to Brute Force crack the next block in the chain is what allows you to um prove the the amount of Bitcoin that you’ve mined in a block because you’ve spent the energy Brute Force cracking it so there’s a direct uh alignment between local energy being consumed and Global money being produced and the analogy I’d like to help you remember that forever is uh if you meet a friend that’s just had a child you see they had a child you didn’t need to you know they did something shall we say you didn’t need to see that part you saw they have a child so there’s it’s the proof of work so to speak so Bitcoin does the same in the sense that there is proof that energy has been expended to produce compute which produces that Bitcoin and that’s a memorable way to to think of it so in terms of us strategic Reserve as a recap the Bitcoin uh Network being 40% uh redistributed to the US versus 0% to the UK it means my country is suffering economic leakage in our Bitcoin unit of account and the US is continually accumulating more Bitcoin over time whether it’s to their citizens or investors um or the country level but I would I wouldn’t be surprised if they do dive into Bitcoin mining just for that ability to produce a couple blocks um and and that that settlement space being very critical to say um future grid systems that use the cyber security applications of compute in the middle as a way of securing the electricity grid by uh the the the the control systems of the grid only being communicated through the Bitcoin blockchain and all of that stability of um those machines being able to dynamically change the amount of energy that they use to stabilize the grids that have lots of Renewables on them I think that was a different sort of approach for a US strategic Reserve to include compute power but here we are I hope you enjoyed this video and I will see you in the next one goodbye