2020 was unforgettable, especially for Bitcoin. To commemorate our readers this year, we asked our network of contributors to reflect on the pricing, technology, community growth, and more of Bitcoin in 2020, and to think about what all of this could mean in 2021. These authors responded with a collection of thoughtful and thought-provoking articles. Click here to read all of the stories from our End of 2020 series.
It is likely that 2020 will be remembered by most as a year of hardship, lockdowns, masks, and lonely holidays.
While the world has dealt chaotically with pandemics and politics this year, bitcoiners have built. The past 12 months have been big for Bitcoin, the entire ecosystem, and Bitcoin mining in particular. Let’s take a look at some aspects of how Bitcoin has strengthened over the course of 2020.
The hash rate
Bitcoin’s hash rate has grown incredibly fast this year. The hash rate (arithmetic work to find the next Bitcoin block) started at 100 Eh / s this year – an immense amount of arithmetic work.
By the end of October this number had risen by around 50 percent to 150 units / s. The hash rate has been down since October but is still 35 percent higher than the year.
This growth is very strong and serves as evidence that more Bitcoin miners are entering the market, as well as evidence that current miners are investing to increase their hash rate.
This is an especially bullish data point considering that the Bitcoin block reward was cut by 50 percent this May, which directly affects the amount of Bitcoin miners earn. Critics often speak of a “mining death spiral” – a situation in which the price, combined with the halving of the block subsidy, drops and causes Bitcoin to fail indefinitely.
Many have said this could happen in 2020, but we’ve seen the exact opposite. We have seen sovereign nations nationalize their mining pools and effectively sell their hydrocarbons to the Bitcoin network. We have seen large oil and gas companies invest large amounts of capital to reduce their waste of energy by converting that energy into computational work and mining the Bitcoin network. We have only seen growth in the Bitcoin mining sector and in my opinion this is the most important indicator of Bitcoin’s overall health. Bullish.
The influence that companies like MicroStrategy, Square, Galaxy Digital and others had on the legitimation of Bitcoin in the minds of old investors cannot be underestimated.
Michael Saylor, CEO of MicroStrategy, alone has led serious institutional investors to question the legitimacy of Bitcoin. He forced smart people who likely ignored or discounted Bitcoin to take a second look and find out what this magical internet money actually is.
Additionally, Square and MicroStrategy both released their “Playbooks” which explain why / how they decided to use a percentage of their cash on hand on Bitcoin. This type of behavior causes every CTO on the Fortune 500 list to wonder if allocating a percentage of their company’s cash on hand would bring similar benefit to Treasury’s risk portfolio.
So far, MicroStrategy and Square have only had success with their decision to hold Bitcoin as a corporate reserve – with $ MSTR coming back for seconds offering convertible senior notes to buy another $ 650 million bitcoin at a price of around $ 18,500.
Will this trend continue in 2021? Are we going to see other public companies using Bitcoin as a means to get excess cash? Probably yes. Bullish.
The core bitcoin community has found its voice
With the help of many smart people who have taken the time to educate the world about making better money, the Bitcoin community has become more fluid overall and better able to articulate / defend the properties of Bitcoin.
I have noticed that the concepts of healthy money are becoming more prominent as central bankers and modern monetary theorists become increasingly erratic. The Bitcoin community has done a great job this year interacting with Keynesian ideas and challenging the devaluation of fiat currencies.
We (yes, I am a bitcoiner) have refined our message and cemented our beliefs – we are not going anywhere and we will not be silent. We are committed to a tool that will help create a more honest and fairer world, and we are better than ever. Bullish.
Look to 2021
Based on these facts, I can hardly contain my anticipation when I look to 2021. I’m most excited to see how bitcoin mining will affect the power generation and power generation industries. It’s also exciting to see governments get involved in mining as Bitcoin is an immutable energy demand market. Nothing stands in the way of this growth in 2021.
I fully expect more governments to announce some sort of oversight, nationalization, and commitment to the Bitcoin mining process. I expect the network hash rate to rise to over 275 Eh / s (around 100 percent from current levels) by the end of 2021. I expect the price to go above $ 75,000 before the end of the year.
Am I irrationally bullish? Inconsiderately long? Yes – but that doesn’t mean I’m wrong.
What a time to be alive
This is a guest post from Denver Bitcoin. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.