2020 was unforgettable, especially for Bitcoin. To commemorate this year for our readers, we asked our network of contributors to think about Bitcoin’s price action, technology development, community growth, and more in 2020, and what all of this could mean for 2021. These writers responded with a collection of thoughtful and thought-provoking articles. click here to read all the stories from our End Of Year 2020 series.
It is likely that 2020 will be remembered by most as a year of hardship, lockdowns, masks and lonely vacations.
While the world has been chaotic with pandemics and politics this year, Bitcoiners are building. The past 12 months have been big for Bitcoin, the entire ecosystem and bitcoin mining in particular. Let’s take a look at a few aspects of how bitcoin has strengthened in 2020.
The hash rate
Bitcoin’s hash rate has grown incredibly strongly this year. The amount of hash rate (calculations aimed at finding the next bitcoin block) started around 100 Th / s this year – a huge amount of math.
At the end of October, this number had increased by about 50 percent to 150 Th / s. The hash rate has been declining since October, but is still up about 35 percent from the year.
This growth is very strong and serves as proof that more bitcoin miners are coming to the market, as well as proof that current miners are investing to increase their hash rate.
This is a particularly bullish data point, as the bitcoin block reward was cut by 50 percent in May of this year, which has a direct impact on the amount of bitcoin miners earn. Critics often refer to a “mining death spiral” – a situation where the price drops along with the block subsidy being halved and causes bitcoin to fail indefinitely.
Many said this could happen in 2020, but we’ve seen the 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 a lot of capital to reduce their waste energy by converting that energy into computational work and mining the bitcoin network. We have seen nothing but growth in the bitcoin mining sector and in my opinion this is the most important indicator of bitcoin’s overall health. Bullish.
The impact that companies like MicroStrategy, Square, Galaxy Digital and others have talked about legitimizing bitcoin in the minds of legacy investors cannot be underestimated.
Michael Saylor, CEO of MicroStrategy, serious institutional investors alone have questioned bitcoin’s legitimacy. He forced intelligent people who had likely ignored or discounted bitcoin to take another look and find out what this magical internet is making money really is.
Additionally, Square and MicroStrategy have both released their ‘playbooks’ on why / how they decided to allocate a percentage of their available cash to bitcoin. This kind of behavior makes every CTO on the Fortune 500 list wondering if a percentage is allocated of their the company’s cash and cash equivalents would provide a similar benefit to the Treasury’s risk portfolio.
So far, MicroStrategy and Square have seen nothing but success from their decision to hold bitcoin as a corporate reserve – with $ MSTR coming back and offering seconds convertible senior notes to buy another $ 650 million worth of bitcoin at a price of about $ 18,500.
So, will this trend continue in 2021? Will we see other public companies turn to bitcoin as a means of retaining excess cash? Probably. Bullish.
With the help of many intelligent people who have taken the time to help educate the world about better money, the Bitcoin community as a whole has become more fluid and can better articulate / defend the characteristics of Bitcoin.
I have found that as central bankers and modern monetary theorists become more erratic, the concepts surrounding healthy money emerge more clearly. The Bitcoin community has done an excellent job of communicating with Keynesian ideas and challenging the cut in fiat currencies this year.
We (yes, I’m a Bitcoiner) sharpened our message and solidified our beliefs – we’re not going anywhere, nor will we be silent. We advocate for a tool that helps create a fairer and fairer world and we are better at advocating than ever before. Bullish.
Looking to 2021
Because of these facts, I can hardly contain my excitement as I look ahead to 2021. I am very excited to see how bitcoin mining is impacting the energy production and power generation industries. It’s also exciting to see governments get involved in mining as Bitcoin is an unchanging market for energy demand. Nothing can slow this growth in 2021.
I fully expect more governments to announce some sort of oversight, nationalization and commitment to the bitcoin mining process. I fully expect the network hash rate to grow above 275 Th / s by the end of 2021 (about 100 percent growth from current level). I fully expect the price to rise above $ 75,000 by the end of the year.
Am I irrationally bullish? Recklessly 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 views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.