Thread by @DoveyWan

What to expect as the last strike in this rolling adversity, a reasonable guess and what can be the worst case

A thread 🧵

Hashrate redistribution (happening)

Hashrate has dropped 1/3 since the VP memo, this might be first time of such a big scale of hashrate plummet considering miner are not forced out economically (as designed by PoW game theory in most “real bottom”)

Mining is profitable for Bitcoin at 30k even with ATH hashrate. whoever can still turn the miners on are literally printing as total hashrate drops so much but reward stays the same

economic incentive will drive hashrate redistribute as soon as capacity is available out of China

Capacity is in severe constraint atm but will largely relive in 3 months

In Q1 next year is a non issue. Know a few 200mw-500mw sites are planned out for Q1 production

miner sell pressures comes from leveraged miners who were mostly liquidated in the first sub 30k dip already

And the cost for actual rig owners are minimal if rigs are off

Additional sell pressure can come from collocation operators (site ops) who take BTC for opex in managing others rigs, this group is literally out of business so it’s a business liquidation

—— ✅ Mining ——

Mainland China fiat channels suspension

Since 2018 local Chinese banks have deployed very sophisticated detection on whether crypto OTC transactions, local crypto players banks accounts are frozen for months without accessibility is common

PBOC’s announcement re-emphasizes it

The OTC figure head @zhaodong1982 were arrested last year so it just manifested at a greater scale this time, making local fiat liquidity hard to scale.

Over time the OTC trade will retreat back to a local bitcoin style, pure peer to peer basis without facilitator in between

This can cause RMB to Bitcoin pricing acting funky, ie large discount/premium

During this time, we will see who’s life rely (most Chinese ppl) heavily on fiat but with crypto net worth cash out until a safety fiat buffer

Tether is the offshore bank acct proxy for most Chinese

I expect this sell off to be relatively short lived (ie once most ppl hit a good fiat reserve level it stops) and the remaining will be circulating as crypto only hands which is very positive for the long term

—— ✅Fiat Channel ——

Huobi/Okex Operations (maybe other tier 2 like Gate/Kucoin but less significant)

This is most uncertain one can range from mild to worst

even tho these legal entities are offshore, but are effectively still running largly in mainland

Most importantly, actual owners of the business won’t be able to get out of mainland makes it very tricky

it happened in a smaller scale last ye when OKex owner Star Xu was under the Chinese police custody for a month it had to suspend the withdrawal completely for cooperation

So it does not matter whether the servers, some employees are out of mainland only whether the owners can be free from any regulatory scrutiny physically is the key, and obviously both Ok and Huobi won’t be immune

So the worst case will be a complete shutdown of the ops

The chance is small imo given they’ve paid ransom so many times b4. if showing enough dedication in ruling out local Chinese users participation I think the business can go on

reasonable guess will be strict firewall/KYC on anything from mainland, close out of perp/lev trade

—— ✅ Exchanges ——

It’s a short term pain, long term gain, the last time of any meaningful China FUD

The material of future China FUD won’t be existing since it opts out of the game voluntarily

Bitcoin is a true manifestation of anti-fragility

https://twitter.com/doveywan/status/1406876531360559104?s=21