Bitmain’s Market Director Lin Han PoW Ecological Construction, Preparing for the Next Bull Market

Bitmain's Market Director Lin Han is preparing for the next bull market by focusing on PoW ecological construction.

On August 8th, LianGuai hosted an offline Web3 industry exchange event called LianGuai Salon. This edition of LianGuai Salon was themed “Crypto new cycle, new narrative trends”. Lin Han, the Market Director of Bitmain, gave a speech titled “PoW Ecological Construction, Empowering the Next Bull Market”. Here is the content of the speech:

(Lin Han, Market Director of Bitmain)

I come from Bitmain, and I will use the term “blockchain server” instead of “mining machine” below.

What is PoW? PoW is calculating random numbers, and once the answer is calculated, you can seize the right to bookkeeping. This is a probability problem. To increase the probability, you need to continuously calculate, use better machines, and greater computing power. What is PoS? It means that in a blockchain network, the more coins you hold, the greater your computing power. Ethereum has many bookkeeping nodes, and some early PoS currencies only have a dozen nodes for bookkeeping. This leads to the concept of staking, so PoS has more financial attributes.

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The industry has been debating the two mechanisms of PoW and PoS for a long time. Some are staunch supporters of PoS, such as Vitalik Buterin. When Vitalik Buterin initially designed Ethereum, he incorporated PoS into the Ethereum vision. He believes that PoS is safer and more in line with the spirit of blockchain. Just as there are people who insist on PoS, there are also people who believe in the PoW mechanism—I believe in the PoW mechanism.

Next, let’s consider the issue of Bitcoin’s value anchoring. Throughout human history, all currencies have started with a gold standard—the US dollar was anchored to gold, and later the gold standard system collapsed. The current world monetary system is based on the consensus of the US dollar, which is the US dollar standard. Some people propose using oil as the value anchor behind a currency. In contrast, Bitcoin is energy-based, and its basic value is strongly tied to electric power. I think this is a very ingenious design because it binds energy and currency value together.

We will enter the era of metaverse and virtual worlds, and energy can penetrate both the real and virtual realms. When I first read the Bitcoin whitepaper, I was shocked by this, and it was also one of the important reasons that drove me to join the blockchain industry.

We all call Bitcoin digital gold, not digital diamonds. Because there is a fundamental difference between the two: “gold” is a chemical element that originated from the Big Bang, and its scarcity is determined by its production mechanism. On the other hand, artificial diamond synthesis technology is very advanced now, and it is almost indistinguishable from natural diamonds. Therefore, from this perspective, we call Bitcoin digital gold. We also need this kind of digital currency as a communication currency for the future civilization era of mankind, just as precious as gold.

Many people argue: Why can Ethereum issue NFTs, but Bitcoin cannot? Because some everyday NFTs do not require high prices, not all NFTs need to become artwork or have scarcity value. Of course, there are already many Bitcoin NFT projects on the market.

Next, let’s discuss Bitcoin halving. Bitcoin was born with this mechanism, which ensures that it is a deflationary model by halving every four years. At the beginning of its creation in 2009, the block reward was 50, which became 6.25 in 2020 and will become 3 next year. This deflationary mechanism can increase the long-term value of Bitcoin.

The upcoming Bitcoin halving event in April next year will be a milestone event for the industry. In terms of the expectation of Bitcoin halving, the price of Bitcoin will definitely rise after halving. Since the foundation of the blockchain industry is consensus, once everyone believes that Bitcoin halving will bring about a rise in Bitcoin price, then the Bitcoin price will indeed rise.

Coincidentally, the current cryptocurrency market is in a bear market phase, which coincides with the expectation of the halving cycle. It is believed that the market is in a bear market before halving, and will usher in a market takeoff after halving. Looking back at previous market data, such expectations have indeed been realized, but whether it will be the same in the future, no one can say for sure.

The impact of the Bitcoin halving event on blockchain servers is even more profound, as some low-end servers will not be able to operate and eventually shut down. For mining companies, this is an important opportunity for reshuffling. If you have high-performance blockchain servers before halving, you will have an unparalleled advantage during the halving cycle. What we need to do is to be prepared before halving and welcome the arrival of a bull market. In a real bull market, it will be difficult to buy blockchain servers because demand will exceed supply.

That’s all I have to share. Thank you, everyone.

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