Why is the founder of Layer1 saying that Bitcoin is actually an energy storage industry?

Source: Chain smell

Author: Pan Zhixiong

A recent financing news may have strained all Chinese bitcoin mining machine manufacturers and mine owners. It is necessary to know that more than half of the global bitcoin mining industry is in China. It is exaggerated that the industry is almost monopolized by China, but in fact the leader of traditional chip design is the United States.

The two most important variables in the bitcoin mining industry are chip and electricity prices. China can be said to have considerable advantages in both variables. China's Bitland is the world's most highly valued non-listed company in bitcoin mining chip design, and many mines choose to compete in China's Sichuan and other competitively priced regions. Of course, China's own grid technology is global. leading.

The US's Layer1, after gaining financing from top investors, tried to fully challenge China's leading edge.

Who is Layer1?

That's right, this Layer1 is the name of a company, not the term "layeral network" in a blockchain project. Layer1 was a cryptocurrency hedge fund in the beginning, and received a seed round of Peter Thiel and DCG at the end of last year for $2.1 million. Layer1 plans to invest in blockchain infrastructure projects, will adopt the "deep intervention" model, participate in the operation and subsequent development of the invested projects, and invest in the related aspects of the encryption project Grin, hoping to deeply intervene in the development and operation of the project. Transaction.


Introducing the background of these two investors, Peter Thiel is an American entrepreneur, co-founder of Paypal, co-founder of Palantir, Facebook's first peripheral capital investor, and co-founder of venture capital fund Founders Fund In the blockchain field, I have invested in the parent company Block.One of the public chain EOS. DCG's full name, Digital Currency Group, is one of the cryptocurrency giants, with not only venture capital, but also asset management company Grayscale Investment, US compliant OTC trading platform Genesis Trading and vertical media CoinDesk.

Trump, Peter Thiel and Tim Cook

Nearly a year later, recently, Peter Thiel, Shasta Ventures and a number of unnamed cryptocurrency investors re-raised Layer1 to raise $50 million for their Series A financing, with a valuation of $200 million. After the fundraising, the company's business scope has also changed. According to the information disclosed by Layer1, the “full-stack” renewable energy bitcoin mining plan will be launched, that is, the mining machine designed and manufactured by itself will be used. With its own energy supply, it opened a mine in the United States to dig bitcoins.

Layer1 has substation and land ownership in western Texas. In addition, the company's co-founders have pioneering expertise in hardware and mining. The company will use Texas's wind energy to produce power mining, and plans to increase the current US Hash computing share from 5%. Increased to more than 15%. Company founder and CEO Alexander Liegl said that Layer1 aims to be Bitcoin's largest mining company in the world and wants to control all the factors in the mining process: from proprietary ASIC chip production to power supply to cooling systems.

Layer1's view on the bitcoin mining industry

Probably because they contacted Grin after the first financing to make them aware of the importance of the mining industry, or because they deliberately did not disclose their true intentions before the second financing. But in any case, their views on the mining industry are worth seeing.

CEO Alexander Liegl made his comments in nine consecutive tweets yesterday: In fact, bitcoin mining is not only a topic of safety and economic incentives, but also closely related to the energy storage industry.

The full text is as follows:

1/ Most people still don't understand, in fact, Bitcoin mining is fundamentally an energy storage industry. Bitcoin has become the medium of trade for exporting local electricity worldwide.

2/ Our (US) current grid and power transmission infrastructure is facing huge technical debt, so technical capabilities are outdated and inefficient. The recent bankruptcy of California's Pacific Gas and Power Company (PG&E) is a recent example.

3/ Bitcoin can be stored locally and distributes cheap electricity around the world. This is a digital approach to exporting high-efficiency power generation and “arbitrage” in inefficient power generation areas.

4/ Look at the booming energy storage industry, where battery storage costs billions of dollars. Bitcoin is a missing link between "intermittent renewable energy" (such as wind energy) and 24/7 reliable energy throughout the day.

5/ In a sense, Bitcoin is a testimony to the experience of Jevons Paradox . Energy consumption is increasing because Bitcoin is improving energy efficiency.

6/ This creates a positive feedback loop: as Bitcoin continues to improve energy efficiency, Bitcoin's electricity consumption will also increase.

7/ Now is a digital era where data can be replicated indefinitely and inflation. Because Bitcoin is a way to anchor provable scarcity in this era, bitcoin mining is by expanding the real world for efficient power generation. A way of digitally assigning provable scarcity.

8/ This is why bitcoin is more than just money.

9/ Bitcoin energy storage cycle:

US Dollar –> Energy –> Bitcoin –> Energy –> US Dollar

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