On November 22, 2024, a single Bitcoin was valued at $100,000, reaching a historic high and a market capitalization of $2.1 trillion. It officially entered the six-digit price range. The once seemingly unattainable and almost fantastical $100,000 for Bitcoin is now history.

Behind the market value of any asset reaching trillions from zero, there is always a remarkable story, and Bitcoin is certainly no exception. Those of us in the midst of it all, especially feel that Bitcoin's journey of over a decade can only be described as magical. The Bitcoin network was officially launched on January 3, 2009, with an initial trading price of $0.0008.

At a price of $100,000, Bitcoin has surged by over 125 million times. Let's go back to the origin of crypto and commemorate the release of the Bitcoin whitepaper.

The 2008 Financial Crisis: The Beginning of Everything

Compared to Bitcoin's glory today, its birth seems insignificant.

In November 2008, a paper authored by Satoshi Nakamoto was published online, titled "Bitcoin: A Peer-to-Peer Electronic Cash System." The paper detailed how to create a "trustless electronic transaction system" using a peer-to-peer network.

The birth of Bitcoin directly reflected Satoshi Nakamoto's profound disappointment in the existing financial system at the time. In September 2008, triggered by the collapse of Lehman Brothers, the financial crisis erupted in the U.S. and quickly spread globally. To save the teetering economy, the U.S. government took unprecedented intervention measures: massive public fund injections to stabilize the market and quantitative easing leading to currency overissuance. Although these actions temporarily alleviated the crisis, they also brought a series of consequences such as inflation, market turmoil, and exchange rate fluctuations.

As a result, Satoshi Nakamoto conceived a bold idea: to create a currency system independent of governments and financial institutions. In the traditional system, currency is issued by central banks, and transactions are recorded and confirmed by banks. Bitcoin, on the other hand, broke this pattern by enabling peer-to-peer transactions through decentralized blockchain technology, eliminating the need for third-party intervention.

Bitcoin's core design also reflects its philosophy: its total supply is capped at 21 million coins, avoiding the devaluation risks caused by unlimited issuance of traditional currency. This design ensures the scarcity of Bitcoin, allowing it to act as "digital gold" in an inflationary environment. This feature has drawn widespread attention from cryptography enthusiasts and economists.

However, there is a debate in the economic community regarding Bitcoin's fixed supply design. Scholars from the Keynesian school believe that the fixed total amount deprives monetary policy of flexibility, and the deflationary effect may hinder economic development. On the other hand, supporters of the Austrian school argue that a fixed money supply helps reduce human intervention, and deflation may actually incentivize market efficiency improvements.

Two months after the publication of Satoshi Nakamoto's whitepaper, on January 3, 2009, at a small server in Helsinki, Finland, Satoshi Nakamoto himself mined the Genesis Block of Bitcoin. As a reward, he received the initial 50 bitcoins, and the first bitcoin came into existence.

The Silk Road, Meeting Black Market Demand

For a long time after Bitcoin's debut, it remained in obscurity. People wondered: What practical use does this invention have? Even Satoshi Nakamoto, the founder hailed as a genius, did not provide a clear answer. In December 2010, after leaving his final message online, he mysteriously disappeared.

During the early years of Bitcoin's existence, its value hovered around $0.1 per coin. The most famous transaction during that time was someone purchasing a pizza for 10,000 bitcoins. Despite Bitcoin's near-perfect design, it played out like an unwitnessed play, deemed to lack real-world significance—until it encountered another "eccentric genius."

Ross Ulbricht, born in 1984, dabbled in drug trafficking since his college days. Restricted by strict government control over drugs, his business could never scale. The turning point came in 2010 when he learned about Bitcoin from a customer.

Ross Ulbricht

The key to governments cracking down on illicit activities lies in monitoring the flow of funds, a surveillance heavily reliant on the traditional banking system. However, Bitcoin, as a decentralized, hard-to-trace payment tool, naturally lends itself to evading regulation. Ross keenly realized that this was the tool he needed. In January 2011, 26-year-old Ross created a deep web platform—often referred to as the dark web. He named this platform "The Silk Road," symbolizing a free market of trade.

However, the transactions on the "Silk Road" were not about tea, silk, or porcelain but illegal goods like drugs, human trafficking, child pornography, hired assassins, arms, and fake IDs. This platform quickly became the world's most notorious dark web market, attracting a large number of illegal traders.

With the rise of the "Silk Road," Bitcoin finally found its first large-scale use case: a payment tool for illicit transactions. According to statistics, the Silk Road once circulated over 9.5 million bitcoins, accounting for 80% of the circulating supply of Bitcoin at that time. This undoubtedly catapulted Bitcoin into the public eye.

Ross's criminal activities eventually caught up with him. Not only did he use the Silk Road for drug trafficking, but he also attempted to resolve business disputes by hiring hitmen. In August 2013, he was arrested at a public library in San Francisco. In 2015, Ross was sentenced to life in prison without the possibility of parole.

Silk Road Website Screenshot

Just as fool's consensus is still consensus. The demand for black is still demand.

Fueled by criminal transactions, Bitcoin experienced its first major price surge, reaching $31 in June 2011. Just two months after Ross's arrest, Bitcoin soared to $1,100 per coin. It is safe to say that Ross was a significant figure in Bitcoin's development history. At a time when Bitcoin was about to be overlooked by the world, he ended the era of Bitcoin as a mere toy, giving it real-world significance — serving crime.

"Criminals are the ones most embracing new technology," summarized Xu Zhihong, a partner at CoinBest. Law enforcement agencies have gradually mastered the technology to trace Bitcoin transactions, diminishing its allure in the illegal market. More and more criminal transactions began to shift to more untraceable cryptocurrencies like Monero, leading Bitcoin into a long bear market that lasted for years.

Block Size War and Fork in the Road

Fast forward to 2015, the Bitcoin community witnessed the most intense controversy in its history — the block size war. This "block size war" not only caused a community split but also led to the largest-scale hard fork in Bitcoin's history.

Since Satoshi Nakamoto designed Bitcoin in 2009, the block size has been limited to 1 megabyte. This design was intended to prevent meaningless transactions and network data inflation. However, as the number of users grew, this limit proved to be inadequate: transaction congestion, skyrocketing fees, and delayed confirmation times. In 2013, core developer Jeff Garzik proposed to increase the block size to 2 megabytes, sparking intense community discussions on scaling for the first time.

By 2015, the rapid growth in transaction volume had made the scalability issue urgent. The Bitcoin developer community split into two camps: supporters of big blocks advocated for direct scaling to address congestion issues; opponents believed that decentralization was more important and advocated for improving transaction efficiency through technical optimization.

Supporters of scaling, developers Gavin Andresen and Mike Hearn, believed that Bitcoin's goal was to serve as an efficient "electronic cash system," rather than just a store of value tool. To that end, they proposed the BIP-101 proposal, suggesting increasing the block size to 8 megabytes. They argued that Bitcoin transactions were becoming increasingly slow, and the required transaction fees were rising. If this continued, Bitcoin would become as mediocre as bank card transfers.

Opponents, including core developers Greg Maxell, Luke-Jr, and Pieter Wuille, warned that big blocks could increase the hardware costs of running nodes, reduce the number of full nodes, and weaken the decentralization of the Bitcoin network. They were more inclined to adopt second-layer solutions like "Segregated Witness" and the "Lightning Network" to optimize transactions without changing the block size. Related Read: "Today in History | Eight-Year Block Size War, Revelation of the Balance Philosophy of Blockchain"

This dispute also directly led to the birth of Ethereum. Ethereum's founder, Vitalik Buterin, was a staunch supporter of big blocks for Bitcoin. When he realized that Bitcoin might have difficulty moving towards big blocks, he took a different path, transferring the scalability issue to a new chain, with larger blocks and flexible smart contract designs to reduce transaction fees so that Ethereum could do more.

On February 20, 2016, the two sides reached the "Hong Kong Consensus" in Hong Kong. The agreement included the implementation of Segregated Witness technology and subsequent scaling plans, which was seen as a significant breakthrough to appease the controversy. However, the agreement was quickly denied due to the lack of participation and full endorsement by Bitcoin Core's core developers. The collapse of the Hong Kong Consensus intensified community conflicts, with trust between miners and developers almost nonexistent.

With the failure of the Hong Kong Consensus, the controversy escalated into a philosophical confrontation over the future direction of Bitcoin. One side emphasized transaction efficiency, while the other side insisted on decentralization. This divergence ultimately led to the hard fork of 2017. Bitmain co-founder Wu Jihan became the representative of the big block camp, advocating for creating a new chain through a fork to support an 8-megabyte big block solution.

One day in March 2017, Wu Jihan tweeted, "I believe the economic majority is not that important. I started investing in Bitcoin in 2011 and ignored the so-called majority." He decided to go his own way and no longer play with Bitcoin Core.

At that time, Wu Jihan, as one of the founders of Bitmain, the world's largest cryptocurrency mining machine manufacturer, was ranked on the Hurun 80 Post-90s Self-Made Billionaires List. At the age of 32, Wu Jihan was ranked among the top 50 self-made entrepreneurs born after 1990 with assets of 16.5 billion RMB. Bitmain controlled over 60% of the Bitcoin network's hashrate, and Wu Jihan was considered the "only person at that time with the opportunity to destroy and control Bitcoin." Therefore, Wu Jihan's fork plan received support from miners and some developers.

On August 1, 2017, the fork officially occurred, giving birth to Bitcoin Cash (BCH). BCH is designed to support large blocks, is incompatible with Segregated Witness technology, and can process more transactions. At the same time, the Bitcoin Core camp adhered to a small block solution of 1 megabyte and optimized transaction efficiency through Segregated Witness and the Lightning Network.

After the fork, Bitcoin and Bitcoin Cash developed along different paths. Wu Jihan fought for market acceptance of BCH by boosting the BCH price and weakening BTC's hashrate. In the short term, the BCH price surged from $200 to nearly $900, triggering a wave of miner defections. However, Bitcoin's brand effect and massive ecosystem always maintained its dominant position. Over time, BCH's price and market value gradually shrank, and its hashrate share continued to decrease.

However, with the arrival of the bear market in 2018, BCH's price plummeted, causing heavy losses to Bitmain, which was heavily invested in BCH. Subsequently, whether in price or hashrate, BCH roughly maintained a 1:20 ratio with Bitcoin. Also, due to an excessive BCH holding, Bitmain was questioned during its 2018 Hong Kong IPO for relying on selling BCH for revenue.

Looking back two years after the Bitcoin fork, the BTC fork event has long settled, and BCH has also taken a different parallel path. However, this fork has had a profound impact on the entire Bitcoin ecosystem. Related reading: "The Past of the Bitcoin Fork".

A Miner's Story

If today someone told you that ten years ago, Bitcoin had the opportunity to be controlled by the Chinese, would you believe it?

On a night in May 2010, a hungry programmer exchanged 10,000 bitcoins for two pizzas worth $30, giving Bitcoin its first valuation—$0.003. This invisible and intangible protocol now had real value, leading to a round of wealth creation myths in a bull market filled with the rise of the crypto mining industry.

Early Bitcoin had no value, with few people participating in the network, and mining only required a computer CPU. Hal Finney was one of the earliest miners, mining thousands of bitcoins with his computer's CPU in just a couple of weeks. He later turned off the mining software due to his CPU overheating and the annoying noise from the computer fan.

However, the $0.003 valuation transaction changed everything. Seeing that Bitcoin mining was profitable, more and more people joined the network. Soon, various geeks began writing their own GPU mining programs, building specialized mining machines known today as miners.

Quickly, this wave of tech frenzy spread to domestic geek forums, sparking intense discussions among a small group of people. In 2011, Wu Jihan funded Chang Xialing to establish China's earliest Bitcoin forum, 8btc, and started discussing mining on the forum. Zhang Nangeng, who was studying integrated circuit design at Beihang University, rose to fame for producing FPGA miners, earning the nickname "Pumpkin Zhang" among online users. Additionally, there was Watermelon Li, a software engineer from Guilin, who developed the famous "Watermelon Miner."

While GPUs were reigning supreme, a small American company called Butterfly Labs began publicly announcing its intention to develop a machine specifically for Bitcoin mining—an ASIC. This machine abandoned all other computer functions, focusing solely on the Bitcoin SHA-256 algorithm, with a speed far surpassing GPU miners.

Butterfly Miner, image from the internet

After the concept of ASIC miners reached China, people quickly took action. In addition to the aforementioned "Pumpkin Zhang" Zhang Nangeng, there was another legendary figure in the mining circle, Jiang Xinyu, also known as "Baking Cat." Jiang entered the China University of Science and Technology at the age of 15 and later pursued a computer science doctorate at Yale. He was attracted to Bitcoin's ideology the first time he heard about it and quickly returned to China to become a miner before finishing his studies, becoming the second person in China to develop an ASIC miner after Zhang Nangeng.

In August 2012, Kao Cat established a company in Shenzhen and conducted an IPO on the external network, issuing 160,000 shares at a price of 0.1 BTC per share, with the code ASICMINER. After that, he used the crowdfunded funds to open a mining farm in Shenzhen, using his own mining machines to mine Bitcoin, reportedly earning 200 million RMB in just 3 months.

Kao Cat (left) in one of the few public photos, image source from the internet

17 days after Kao Cat's ASIC prototype was released, Zhang Ngan Geng also formed his own Avalon team and completed the delivery of the first mining machine, Avalon 1. While Kao Cat and Zhang Nan Geng were rapidly growing, another competitor entered the scene. In the first half of 2013, Wu Jihan founded Bitmain and in just 13 months, launched 3 models of mining chips, creating a three-party competition with Kao Cat and Zhang Nan Geng. As winter approached, Bitmain's Antminer S1 swept a large number of competitors, allowing their mining machine agents to earn a hefty sum of money.

Kao Cat and Zhang Nan Geng also faced a situation where demand exceeded supply, and business was booming in the Bitcoin ASIC mining machine era.

The significant wealth effect attracted numerous entrepreneurs to join the industry, producing various types of Bitcoin mining machines, including models like Chrysanthemum, Little Strong, and Silver Fish, among many others. Manufacturers competed fiercely, and the iteration of mining machines became faster and faster, to the extent that early reservation futures for mining machines led to a crazy phenomenon of them becoming outdated upon arrival. Later, manufacturers found that while their mining machines were still on the production line, their competitors' customers had already received better-performing machines. Companies that entered the market early, like Bitmain, had begun deploying larger-scale hash power measured in P. From this point on, over 70% of Bitcoin's hash power firmly established itself in China.

On the other hand, under the leadership of geek miners, a large number of gold rushers flooded into the Chinese Bitcoin market. Driven by the "Chinese Mom," the price of Bitcoin skyrocketed, breaking the 4000 RMB mark and quickly approaching 7000 RMB within a few days, while at the beginning of the year, Bitcoin was worth less than 80 RMB. In just a few months, about 10 billion RMB was invested in the market, making China the world's most enthusiastic market for mining and trading Bitcoin.

In 2013, Bitcoin created one wealth myth after another, with Li Xiaolai being the most typical example. This former New Oriental English teacher purchased 100,000 BTC in 2011 and has now become the "richest Bitcoiner in China," not only establishing Bitfund but also founding Yunbi. Lao Mao is another example, as in 2010, on a business trip with his boss, Lao Mao saw a report about Bitcoin in a newspaper at a newsstand, changing the trajectory of his life.

Related Reading: "The End of Ethereum's 8-Year Mining Era: Vitalik Buterin, Chinese Miners, and NVIDIA"

The Great Migration

The year 2021 arrived swiftly, bringing with it a dark moment for miners.

At midnight on June 20, all Bitcoin mining farms in Sichuan were forcibly shut down under a government order. Prior to this, from Inner Mongolia to Qinghai, then to Xinjiang and Yunnan, domestic Bitcoin miners continuously relocated their machines under the pressure of policy directives, with Sichuan becoming the final gathering place. However, the issuance of the shutdown order in Sichuan dashed the miners' hopes, marking the theoretical end of mining farms within China. The Chinese hashrate, which once accounted for 75% of the entire Bitcoin network, will disappear from the map entirely.

After that unforgettable night, the epicenter of the domestic crypto mining industry, Chengdu, was filled with miners who were anything but lacking in despair and confusion.

On June 22, on the top floor of a luxury jazz bar in Chengdu, groups of solemn-faced middle-aged men sat together, smoking and conversing. Their T-shirts sporadically bore slogans like "Bitcoin" and "To Da Moon," and their discussions were laden with keywords such as "mining machines," "going overseas," and "connecting with foreign resources." In the corridor outside the bar, scattered individuals paced back and forth, some making phone calls to sell mining machines while others smoked one cigarette after another.

On the same day, another five-star hotel in Chengdu hosted a low-key "Global Mining Resource Connection Conference." Miners from various parts of Sichuan, where power had already been cut off, gathered here to systematically learn about the process of going overseas from introductions by various offshore companies. They hoped to find the "Noah's Ark" to sail to the other side of the ocean through group cooperation and collective wisdom.

From the miners' demeanor, it was evident that the suspended Chinese Bitcoin mining industry was in a state of confusion and panic.

Located 50 kilometers from Chengdu in Dujiangyan, the mighty Minjiang River surged downstream. During the Warring States period, Li Bing and his son saw the world-famous hydraulic engineering project in the rushing waters, while contemporary Bitcoin miners saw the power resource on which mining machines relied for survival.

Miner Lao Wu's mining farm is nestled in the mountains of Dujiangyan, covering an area of about 1,000 square meters. It relies on the impact of the water flow to sustain the constant roar of tens of thousands of mining machines day and night.

Bitcoin mining farm in the mountains, image from the miner

"When the policies to shut down mining farms in Inner Mongolia and Xinjiang were announced in May, I wasn't worried," Lao Wu told BlockBeats. Having been in this industry for a long time, since 2013, there has been a severe crackdown on mining almost every one or two years. This was especially true for Inner Mongolia, which relied on thermal power generation. "We are used to it."

Therefore, when mining farms in Inner Mongolia were shutting down one after another, Lao Wu was still buying second-hand mining machines online and attracting more machines to be hosted at his mining farm. At that time, when chatting with friends, he calmly said, "Don't panic."

As time went on to June, even Lao Wu was starting to feel restless. The mining farm was on the front line locally, and had already received information from various channels, but Lao Wu still held hope. "Sichuan is different from Inner Mongolia and Xinjiang. Here, there is a large amount of abandoned water and power resources, all of which are clean resources. If we don't use these resources, they will be wasted in vain."

The unsettling news initially came from Ya'an. On June 17, there were market rumors that Ya'an, Sichuan, was implementing a "one-size-fits-all" policy for mining farms, requiring all of them to shut down within 25 days, including consumer electricity and abandoned water electricity. On June 18, a notice issued by the Sichuan Provincial Development and Reform Commission and the Sichuan Provincial Energy Bureau began circulating in the community, requiring 26 suspected cryptocurrency mining projects to be shut down by June 20.

On the evening of the 19th, Lao Wu finally let go of his luck and sighed, "I have to switch careers again," as he turned off the constantly roaring mining machines and began to prepare for transferring the mining farm.

Compared to miner Lao Long, Lao Wu was considered lucky, as Lao Wu's mining farm had been operational for several years, and the returns from the previous years were still considerable.

"In March of this year, I started building a hosted mining farm in Ganzi Prefecture. It was completed in May, with a capacity of 50,000 kilowatts, able to accommodate over 30,000 mining machines, but it was blocked by policies on the eve of construction." Lao Long told BlockBeats that the total investment in this mining farm was close to over 20 million RMB, which can be said to be a total loss. "After all, the profit of a hosted mining farm comes from the price difference in electricity and hosting management fees."

This time, the swift and forceful government policy and the resolute national stance made Lao Long somewhat desperate. "I have been in this industry for 5 years. Every one or two years, I would face policy setbacks, but this time it is too severe. Mining farms, miners, mining pools, all mining communities have been affected."

In the mining circle, Lao Long's situation is still not the most bitter. "I have a friend who also has a hosted mining farm that was already in operation. His mining farm had an investment of 160 million, and the total value of the mining machines reached 400 million. However, after the policy was implemented, not only was the mining farm and mining machines shut down, but the road in and out of the mining farm was also blocked. The machines couldn't be removed, causing a huge mess."

Faced with the mining disaster, selling mining machines has become a forced choice for many miners.

Unlike the famous mining machine sales point "SEG Plaza" in Shenzhen, although Chengdu is an important city where miners gather and is known as Chengdu's "Zhongguancun," the computer city has not seen a bustling scene of selling mining machines.

BlockBeats' on-site investigation found that in Chengdu's Computer City, there were no booths visible related to mining machines. Upon further inquiry with the merchants, it was discovered that the merchants were not unfamiliar with mining machines. "There are few Bitcoin mining machines flowing out through offline channels at the moment. We also need to ask the supplier. Instead, graphics card mining rigs are more common," a salesperson at the Computer City told BlockBeats.

In contrast to the quiet offline market, online Bitcoin mining machines are undergoing a 50% off sale.

In the mining circle, which values reputation and privacy, information from strangers can easily make them wary. They prefer to transact with familiar miners and mining farms within the same circle. Therefore, the main trading market for this round of the [mining crisis] is still large online intermediaries and communities.

Mr. Tu from Bitmain told BlockBeats, "Now, the price of mining machines has more than halved, and it has entered a buyer's market, where the price is determined by the buyer." Taking the Antminer S19 Pro 95T, commonly seen in the market, as an example, the price at its peak during the bull market could reach 60,000 to 70,000 RMB, but currently, the domestic price is only slightly above 30,000 RMB.

Antminer S19 online quote at the time of publication, image from a miner

BlockBeats also found that although foreign mining companies and mining farms are taking advantage of the domestic "mining crisis" to buy mining machines at low prices, they are pushing the prices even lower. Some foreign buyers have stated, "We hope to receive the S19j Pro at $40 per T," which is equivalent to only 252 RMB per T, with the total selling price of a 100T machine being only 25,200 RMB, which can be considered the "floor price" in recent months.

Such low prices indicate that the second-hand mining machine market has become saturated. Previously, Bitmain also announced the suspension of spot mining machine sales. However, some miners believe that the prices are too low and are choosing to wait and see.

"Perhaps because I have experienced multiple rounds of severe policy crackdowns, I have always believed that the mining industry has a future," Lao Long told BlockBeats. "Now that the mining machine prices are too low, I would rather shut down and wait to see, rather than sell at a loss."

A veteran figure in the mining circle, Ah Hao, also told BlockBeats that most mining farms are currently shut down and waiting, not selling, and are waiting for clearer policies. "Most are struggling like this now."

With the shrinking space for survival domestically, miners who are unwilling to sell their mining machines and exit the industry are looking to go overseas to find a lifeline.

Currently, there are approximately over 10 million mining machines in Sichuan that are ready to go overseas. Ah Hao told BlockBeats that if they remain stagnant within China, the owners and investors behind these mining machines will face a significant financial cost. Similar to using leverage in real estate speculation, the mining industry also sees miners using borrowed funds to purchase machines and establish mining farms, carrying the burden of hundreds of millions of yuan in debt. "They have to inject funds every day and are very anxious," Ah Hao said.

Faced with the demand for going overseas, mining companies that have long been positioned internationally have seen a business opportunity. They have designed custom-made "offshore modular containers" tailored to address the miners' challenges, integrating equipment such as temperature control, fans, networking, monitoring, and switchgear—essentially a mobile mining farm constructed within a container.

Such a design naturally comes with a high price tag. Taking BitDeer as an example, the minimum price for each container is 142,000 yuan, capable of accommodating 180 units of the S19 series mining machines. Considering that domestic mining farms easily reach scales of over a thousand machines, the offshore cost for a small to medium-sized mining farm through a container alone could amount to nearly a million yuan, while a large-scale mining farm could require tens of millions.

Currently, the main directions for mining going overseas are North America and the Middle East. In North America represented by the United States and Canada, the local policies are relatively stable, and the legal system is relatively sound. Many large mining companies have established a presence there. However, the overall cost of operating mining farms in North America is high, and the U.S. imposes a 25% tariff on Chinese electronic products.

Another relatively cost-effective option is Kazakhstan. This region has abundant energy resources, is closer to China, has lower labor and construction costs, and much lower tariffs compared to the U.S. However, the legal system is not well established, the business environment requires improvement, and like China, policy is the greatest risk.

The road to going offshore is long, and on the journey to "obtaining scriptures," there is not only no "Monkey King" to provide escort, but you may also encounter countless pitfalls.

Recently, industry insiders have stated that at a mining site in Kazakhstan, the mining machines were robbed as soon as they arrived, leaving the miners in tears.

"There are too many pitfalls in going offshore; it's not that easy," Ah Hao also believes. "Initially, Kyrgyzstan discussed investment promotion and attracted mining farms, but in the end, the military directly seized the Chinese mining farms, leading to a total loss."

In countries with a strong legal system like the United States and Canada, setting up factories overseas faces extremely high costs. Ah Hao told BlockBeats that constructing a 10,000-unit mining farm domestically requires around 3.5-5 million yuan. At the same scale, overseas, the cost could range from 18-40 million yuan. Currently, Bitmain offers a quote of 18 million, while BitDeer quotes 40 million.

It is worth noting that despite various resource alignments and turnkey services during the offshore process, the ultimate losses often fall on "the miners' shoulders entirely."

Related Reading:《China's Last Bitcoin Miner》

Western Development

Since the comprehensive ban on Bitcoin mining activities in the Chinese mainland in June 2021, the Bitcoin hashrate center has shifted from China to North America.

By the end of 2021, this change was visible to the naked eye. According to the Bitcoin Mining Map developed by the University of Cambridge's Bitcoin Electricity Consumption Index, if we use the data of average monthly hash rate share as the criterion, in January 2021, the global Bitcoin mining center was still in China, but by December 2021, this center had moved to North America.

Left: January 2021; Right: December 2021. Source: University of Cambridge's Bitcoin Electricity Consumption Index

Behind this shift is the continued rise of mining companies in North America. Since 2020, leading North American mining companies such as Core Scientific (NASDAQ: CORZ), Riot Blockchain (NASDAQ: RIOT), Bitfarms (NASDAQ: BITF), and Iris Energy (NASDAQ: IREN) have begun buying a large number of mining machines, listing in North America one after another, and embarking on the path of compliant operation.

In February 2020, Bit Digital (NASDAQ: BTBT) went public; in June 2021, Bitfarms, Hut 8 (TSE: HUT), HIVE Digital (CVE: HIVE) went public; in November 2021, Iris Energy went public; in January 2022, Core Scientific went public; Riot Blockchain, formerly a biopharmaceutical company, took off after joining the mining boom.

These mining companies' main business is Bitcoin mining, so their development is also closely related to the price of Bitcoin. During the bull market from January 2021 to May 2022, the stock prices of these companies soared. According to Nasdaq data, compared to their initial public offering, Core Scientific, Bitfarms, Hut 8, and HIVE Digital saw their stock prices peak at 57%, 707%, 371%, and 228%, respectively, during the cryptocurrency market bull run.

Bull Market Status from January 2021 to May 2022. Image Source: Coingecko

During this period, most mining companies achieved profitability through a combination of hash power mining and debt/equity financing. Taking Marathon Digital (MARA) as an example, its main business is self-operated Bitcoin mining, with a strategy to fund the purchase of mining machines through financing, deploy mining farms, pay for the operational cash costs, and hold Bitcoin as a long-term investment. Data shows that in 2021, Marathon Digital spent $120 million to purchase 30,000 Antminer mining machines in one go from Bitmain. It also obtained a $100 million revolving credit facility from Silvergate Bank and planned to raise $500 million in debt through the issuance of senior convertible notes to continue purchasing mining machines, making it the largest Bitcoin holder in North America at one point.

Similarly, Core Scientific was even more extravagant, operating over 200,000 Bitcoin mining machines across five states in the United States. In June 2022 alone, it produced over 7,000 Bitcoins. Furthermore, Core Scientific had received a $54 million investment from Celsius and also signed a $100 million equity investment agreement with B. Riley.

However, due to the high-leverage nature of their operations, the sudden bear market caught these mining companies off guard.

Firstly, Marathon Digital recorded a net loss of $6.867 billion for the full year of 2022; Riot Platform incurred a net loss of $5.096 billion in 2022; Bitfarms reported a net loss of $2.39 billion in 2022; and Core Scientific had already accumulated over $1.7 billion in losses in the first 9 months of 2022, leading to Core Scientific facing imminent bankruptcy by the end of 2022.

According to a report from Hashrate Index, the collective debt of mainstream centralized mining companies is expected to exceed $4 billion by the end of 2022. Core Scientific holds the highest debt, owing creditors $1.3 billion as of September 30, 2022; Marathon Digital owes around $851 million, but most of it is in convertible notes; the third debtor is Greenidge Generation, with a debt of $218 million.

Image Source: Hashrate Index

Many institutions believe that the development of centralized mining companies is highly correlated with the price of Bitcoin. Therefore, the "financing to purchase Bitcoin mining machines mining" business model is very challenging for cash flow management in a bear market and easily faces the risk of insolvency.

Related Reading: "A Market Worth Far Exceeding $9 Billion, the Bitcoin RWA Paradigm Transfer Is Underway"

Regular Army

In 2017, Bitcoin ushered in an epic bull market, and the cryptocurrency frenzy quickly swept the globe. In China, a Bitcoin exchange platform named OKCoin was quietly established, later hailed as the "West Point Military Academy of the Coin Circle." Its founder, Star Xu, was originally a technical expert in the Internet field and served as the CTO of Douban. Star Xu's goal was clear: to make it easier for ordinary people to access and buy Bitcoin.

There is no shortage of people with the same vision as him. From miners to mining machine manufacturers, and then to blockchain developers and tech geeks, more and more people have joined this emerging industry. They realize that Bitcoin is not just a decentralized currency; its growth also requires a deep connection with the traditional fiat world. Electricity bills, equipment R&D costs, technology development expenses... all of these require support from the fiat economy, making the trading platform an essential bridge.

With the advent of the first bull market, a wave of Bitcoin trading platforms quickly emerged. Platforms such as OKCoin, Huobi, Binance, Coinbase, BitMEX, Bitfinex, and others rose to prominence. These platforms not only provided investors with a gateway into the cryptocurrency world, but also injected a continuous flow of funds into the Bitcoin ecosystem. Through these platforms, investors could easily trade Bitcoin as if opening a stock account. At that stage, trading platforms almost became the sole entry point for the general public to touch Bitcoin.

Despite Bitcoin's price fluctuating, the steady inflow of traditional capital helped its price steadily rise. At the same time, the prosperity of the trading platforms has also fostered innovation in more fields. From infrastructure development to exploring payment methods, Bitcoin is gradually transitioning from a niche experiment to the mainstream market through these platforms.

However, for Bitcoin to truly enter mainstream society, relying solely on investors' interest is far from enough. Bitcoin needs to be understood, used by more people, and even enter daily payment scenarios. In February 2021, Bitcoin's price surpassed $50,000, setting a new historic record.

At this juncture, Meituan founder Wang Xing posted on the social platform Fanfou, expressing his high recognition of Bitcoin. As an early investor in 2013, Wang Xing had bought Bitcoin at a very low price and regarded it as a "highly imaginative creation."

Few of China's Bitcoin supporters come from the financial industry. Most supporters, like Wang Xing, come from the Internet.

Xu Zhihong, a partner at CoinBest, once gave a friend a Bitcoin as a wedding gift. At that time, the value of this Bitcoin was only $300, but he repeatedly advised the recipient, "Keep it. When your child gets married, it might be able to buy a house in Beijing." Today, ten years later, such a gift has become a rare luxury item.

"Bitcoin will rapidly (within 1.5-2 years) approach 80% of gold's market value, around $400,000 per coin," predicted Fastblock founder Chen Weixing. After the merger with Didi, Chen Weixing once dabbled in blockchain and founded Dache Chain. With Bitcoin's rise, similar predictions are becoming more common.

Related Read: "Bitcoin Saga: Meituan's Wang Xing Holds for Eight Years, Profits Hundredfold Theoretically Making Satoshi Nakamoto the World's Richest"

Back then, in front of Bitcoin, there were two even bigger peaks—how to enter the investment portfolio of mainstream financial institutions and how to enter the balance sheet of a public company.

“Currently, most financial institutions and banks cannot buy Bitcoin. It will take a long time to reach further consensus.” Zhu Xiaohu from GSR Ventures said in an interview with Tencent Technology. He has invested in companies at the forefront of technology such as Didi, Ofo, and Yingke. Wherever there is a trend, he is there.

“Currently, the biggest restriction for institutional participation in Bitcoin investment is the financial regulations of each country.” Yuan Yuming, CEO of Huobi Technology, said. In 2018, Yuan Yuming, who was still the chief analyst in TMT at CINDA Securities, caused a stir in the industry when he announced his job switch to join Huobi China.

And today, with the Bitcoin price at $100,000, both of these peaks have been achieved.

MicroStrategy, Silicon Valley, and Wall Street

When asked why there was this new round of bull market, almost all practitioners in the crypto industry gave the same answer—America.

“The center of blockchain innovation has always been in the United States, and in the past two years, blockchain innovation, Ethereum innovation, basically have nothing to do with China anymore.” Chen Yong, the founder of Coinbest, believes that before entering the crypto industry, he was the Senior Vice President of Cheetah Mobile. “It still cannot change the fact that financial innovation in the U.S. is the foundation.”

Also joining the Bitcoin purchase is the U.S.-based company MicroStrategy. As the first publicly listed company to adopt Bitcoin as its primary reserve asset, MicroStrategy was founded in November 1989 and went public through an IPO on June 11, 1998.

As of the writing deadline on November 21, MicroStrategy's Bitcoin holdings hit a new all-time high: 331,200 BTC with an average purchase price of $49,874.

MicroStrategy's founder Michael Saylor stated that MSTR and BTC have a symbiotic relationship and has released MicroStrategy's 9 BTC principles, including: 1. Acquire and hold BTC as a long-term investment strategy; 2. Prioritize creating long-term value for MSTR shareholders; 3. Treat all investors with respect, fairness, and transparency; 4. Use intelligent leverage to enhance MSTR, beyond BTC; 5. Continuously acquire BTC, while achieving positive BTC returns; 6. Grow rapidly and responsibly based on market dynamics; 7. Issue innovative debt securities backed by BTC; 8. Maintain a strong, robust, and clean balance sheet; 9. Promote global adoption of BTC as a treasury reserve asset.

Under such a strategy and principle, MicroStrategy has also benefited greatly from the growth in Bitcoin's price.

"This year, MicroStrategy's treasury operations achieved a 26.4% BTC return, bringing approximately 49,936 BTC in net gain to shareholders," MicroStrategy founder Michael Saylor announced on November 12, 2024, on social media. Following the confirmation of Trump's return to the White House as the "Bitcoin President," MicroStrategy's after-hours price briefly broke through $360, reaching a high of $355.43, setting a new all-time high.

On the other hand, Silicon Valley, as an innovation hub, is caught in the FOMO frenzy. Twitter's co-founder Jack Dorsey, a well-known American tech leader, is even more adamant about cryptocurrency than Musk and believes that cryptocurrency will become the world's "single currency."

While Twitter is a household name, it is not the most successful business venture founded by Dorsey. Dorsey's Square, a pioneer in the Bitcoin innovation space, currently valued at $120 billion, is twice the size of Twitter. If Grayscale Fund acts as a pump, drawing fiat wealth into the Bitcoin world, Silicon Valley's tech companies have invented new tools to migrate Bitcoin holdings like a termite infestation.

In January 2018, Square's Cash App introduced a new feature allowing users to buy Bitcoin. "In 2020, a total of 3 million people bought Bitcoin through Cash App, with an additional 1 million in January 2021," as revealed by Square's CFO, indicating that Bitcoin is finding its way into the wallets of the masses through various avenues.

Under pressure from its competitors, in October 2020, PayPal, the world's largest online payment tool, announced its support for purchasing Bitcoin, Litecoin, and other digital currencies.

Research shows that the amount of Bitcoin held on trading platforms has decreased from 3 million coins to 2.2 million coins over the past year, a reduction of 800,000 coins, with the amount of Bitcoin held on trading platforms continuing to decline.

In February 2021, Tesla announced that it had purchased $1.5 billion worth of Bitcoin and would accept Bitcoin as payment for Tesla vehicles. Bitcoin's price surged by 10% instantly. Musk also announced that customers would be able to buy Tesla cars with Bitcoin, and Tesla would not sell these Bitcoins.

Tesla is not the first tech company globally to try something new. In 2020, Square invested around $50 million to purchase 4,709 BTC. Square's attempt marked the first time Bitcoin appeared on a U.S.-listed balance sheet and was recognized under accounting standards.

The limited supply of Bitcoin and increasing demand are creating a growing supply-demand imbalance. The approval of a Bitcoin ETF in early 2024 directly exacerbated this supply-demand imbalance.

Spot ETF

On January 11, 2024, the U.S. Securities and Exchange Commission (SEC) finally approved a Bitcoin ETF application, with 11 Bitcoin ETFs being listed.

"Guys are no longer just meme coin traders; they are now legitimate stock traders" was a popular joke at the time, but it truthfully reflected Bitcoin's transformed status in the financial industry.

Among these approved ETFs, Grayscale (GBTC) stood out with its approximately $46 billion in assets under management, while iShares, a Blackrock entity, led the industry with a massive $9.42 trillion in assets under management. Following closely behind was ARK 21Shares (ARKB), managing around $6.7 billion in assets. Bitwise (BITB), although smaller in size, still held approximately $1 billion in assets under management.

Other key participants include VanEck, managing around $764 billion in assets; WisdomTree (BTCW) with $975 billion in assets under management; ProShares Invesco Galaxy (BTCO) and Fidelity (Wise Origin) managing $15 trillion and $45 trillion in assets, respectively.

One of the most anticipated applications was BlackRock's spot ETF. Looking back at 2023, BlackRock's application for a Bitcoin spot ETF was seen as a significant turning point in the crypto market's bearish trend. As an asset management company with over $10 trillion in assets under management, BlackRock's managed assets even exceeded Japan's 2018 GDP of $4.97 trillion. BlackRock, Vanguard Group, and Deutsche Bank were once referred to as the "three giants," controlling the entire U.S. index fund industry.

More importantly, BlackRock has an impressive success record in the SEC's approval of its ETF applications. Historical data shows that BlackRock's ratio of successfully approved ETFs by the SEC is 575 to 1, meaning that out of its 576 ETF applications, only one was rejected. Therefore, when BlackRock submitted the spot Bitcoin ETF file to the SEC in June 2023, it sparked significant community discussion as it was widely believed that BlackRock's entry meant an inevitable approval of a Bitcoin spot ETF.

The approval of a spot Bitcoin ETF has two main implications.

Firstly, it enhances accessibility and mainstream adoption. As a regulated financial product, a Bitcoin ETF provides a way for a broader range of investors to access Bitcoin. With a Bitcoin spot ETF, financial advisors can now start guiding their clients to invest in Bitcoin, which is significant for the wealth management sector, especially for capital that couldn't directly invest in Bitcoin through traditional channels.

Put simply, this opens up an easy buying avenue for many "old money" without worrying about the potential rug pulls of crypto exchanges. In contrast, a spot Bitcoin ETF lists on regulated securities exchanges, allowing investors to hold Bitcoin exposure through their traditional brokerage accounts, gaining Bitcoin's price exposure without dealing with the complexity and risks of holding Bitcoin directly.

Moreover, the ETF structure also enhances the possibility of institutional investors accessing Bitcoin, as some institutional investors are prohibited from directly investing in alternative assets. Such a product as an ETF will attract large-scale capital, further boosting the Bitcoin market.

The approval of a spot Bitcoin ETF also signifies regulatory acknowledgment and enhances market acceptance. An SEC-approved ETF will alleviate investors' concerns regarding security and compliance since it provides more comprehensive risk disclosure. A more mature regulatory framework will attract more investments, and such regulatory clarity is crucial for market participants to conduct business in the cryptocurrency industry.

The legitimacy of the cryptocurrency industry is heightened, propelling Bitcoin further into the mainstream. This marks a step in changing the game rules of the cryptocurrency industry, with continuous inflow of funds. The entire crypto sphere experienced a new round of uptrend upon this news. Therefore, after briefly dropping from around $49,000 to $38,500 at the time of approval, the Bitcoin price gradually recovered and successfully broke the $53,000 mark.

With 10 months elapsed, Bitcoin's price surged under bullish momentum. As of now, according to Trader T's monitoring, the total holdings of global Bitcoin ETFs have exceeded the holdings of Satoshi Nakamoto's wallet addresses. Nate Geraci, President of The ETF Store, also revealed that the assets under management of the BlackRock Bitcoin ETF have surpassed its gold ETF, achieved in just 10 months.

At this point, it's impossible not to mention the "First Bitcoin President" of the United States, Donald Trump.

The "Bitcoin President" Set to Return to the White House

There was a time when Trump was a staunch critic of cryptocurrency. In early 2019, during his term as president, Trump publicly criticized Bitcoin and other cryptocurrencies, calling them "based on thin air" and considering that crypto assets could be used for illegal activities. He stated that Bitcoin "is not money" and is highly volatile.

After leaving the White House, Trump continued to be skeptical in interviews, calling Bitcoin a "scam" and insisting that the dollar should be the sole global reserve currency. During this time, Trump's attitude towards cryptocurrency was mostly negative. However, the 2021 NFT craze quickly began to influence Trump's views.

The story begins in 2022. At that time, the cryptocurrency market was in a "winter," with many crypto projects on the brink of bankruptcy and low market confidence. Just then, Trump's long-time advisor, Bill Zank, appeared in his life with a suggestion that would change Trump's mind: issuing Trump-themed NFTs.

Trump expressed unexpected interest in this—though he didn't like the term "NFT" and instead preferred to call it a "digital trading card." Despite seeming peculiar, these cards were highly popular, priced at $99 each, and almost sold out shortly after release. Trump's NFTs unexpectedly placed the former president "among the crypto crowd" for the first time, not only bringing him tens of millions of dollars in income but also introducing him to a new, powerful support group.

As a result, Trump's attitude towards crypto underwent a complete reversal in the following years.

November 1, 2024, marked the 16th anniversary of the Bitcoin whitepaper. Trump tweeted his blessings for Bitcoin, stating that if elected, he would end the Harris administration's crackdown on cryptocurrency, even calling on supporters to help him realize the vision of "Bitcoin made in America." At this point, he was no longer an opponent, not even just an observer, but a "presidential candidate" who supported crypto.

An iconic event was attending the Bitcoin 2024 conference in Nashville, where Trump declared himself a staunch supporter of cryptocurrency. He even clearly understood the crypto community's biggest pain point, promising to dismiss the current SEC chairman, Gary Gensler, and appoint a "regulator who understands crypto."

He boldly stated that "anti-crypto is the wrong policy" and that he would make the U.S. a "Bitcoin superpower," hoping to lead the global crypto industry's development through a more crypto-friendly regulatory environment. He even praised Bitcoin as the core of the modern economy, expressing his desire for the U.S. to be a leader in Bitcoin's potential "moon landing" in the future.

Trump at the Bitcoin 2024 Conference, Image Source: WSJ

In his speech, Trump made a strong contrast between himself and the Democratic Party's harsh stance on crypto, especially juxtaposing himself with Elizabeth Warren, known for her cryptocurrency regulation. He also mentioned that if elected, he would establish a "Presidential Crypto Advisory Committee," sparking enthusiastic applause and cheers from the audience. Most shockingly, he suggested that Bitcoin's market value could eventually surpass that of gold and openly criticized the Biden-Harris administration's anti-crypto policies.

During the conference, Trump seemed to have gone through a "public awakening," no longer the former president skeptical of cryptocurrency, but emerging as a staunch defender of Bitcoin and the free market. The audience was infected by his attitude shift, seeing him as a "hero" of the crypto community.

Trump attending the Bitcoin 2024 conference, image source The New York Times

Another detail behind this transformation further revealed the subtle connection between Trump and cryptocurrency. At this conference, he looked at the crowd of crypto supporters and mentioned how Bitcoin had surged during his previous term by 3900%, skyrocketing from under $1,000 to over $30,000. His speech not only ignited the entire audience but also garnered support from Bitcoin industry giants. Figures like Elon Musk, the Winklevoss twins, and Marc Andreessen, the founder of A16Z, all came forward to support his crypto policy.

Apart from Bitcoin itself, Trump also gradually realized the vital role of Bitcoin mining in U.S. energy security and economic sovereignty. In June 2024, he met with executives of several large Bitcoin mining firms in the U.S. and pledged strong policy support for cryptocurrency mining activities. He even posted on the Truth Social platform stating that Bitcoin mining was the "last line of defense" against central bank digital currencies (CBDCs) and hoped that "all remaining Bitcoins are made in America." To Trump, Bitcoin mining was not just an economic activity; it symbolized America's resistance against central banks.

By September, Trump purchased a cheeseburger at a Bitcoin-themed bar called PubKey in New York with Bitcoin, pushing Bitcoin's potential role back from a financial investment to a daily transaction currency and becoming a symbol of his crypto stance.

Trump also made more significant commitments to the crypto community, not only publicly stating his intention to hold Bitcoin as a strategic reserve but also planning to pardon Ross Ulbricht, who was sentenced to life in prison for operating a dark web platform. Through these radical actions, Trump successfully crafted himself as the "savior" of the crypto community, pledging to protect Bitcoin from excessive government regulation and vowing to make the U.S. a global cryptocurrency hub. Read more in "Review of Trump's Commitment to Bitcoin: Fire the SEC Chairman, Never Sell Your Bitcoin."

With the dust settled on the U.S. election and Trump securing swing state votes, sweeping both houses and confirming his presidency for the next term, Bitcoin could no longer hold back its surge. On November 14, according to HTX market data, Bitcoin temporarily broke through $93,000, setting a new all-time high.

According to data from the Stand With Crypto website initiated by Coinbase, a total of 247 cryptocurrency-friendly candidates won House seats, while there were only 113 members opposed to cryptocurrency. The Stand With Crypto website also shows that the Senate also leans towards supporting cryptocurrency, with 15 supporters and 10 opponents.

Coinbase CEO Brian Armstrong praised the results of this congressional election as a watershed moment for cryptocurrency, writing on Twitter, "Welcome to the most pro-crypto Congress members in U.S. history."

The House having more members, representing diversity, usually initiates legislation, while the Senate, being smaller and more conservative, typically reviews proposals initiated by the House. As both the House and Senate are inclined to support cryptocurrency, the path to favorable legislation may be smoother, and industry insiders are optimistic about the potential for supportive regulation from the U.S. Congress in the future.

Bitcoin has traversed 16 years of tumultuous ups and downs, with its price rising from zero to six figures. This is not only a triumph of technological innovation but also a bold attempt by humanity to reconstruct the trust system. From the whitepaper amidst the financial crisis to today's global financial giant with a market cap exceeding $2 trillion, Bitcoin has, in an unforeseeable way, changed our understanding of money, wealth, and power.

Behind all this are the efforts of countless evangelists: early miners, platform founders, developers who ignited the flame of belief in uncertainty; and ordinary investors who held onto their faith during drastic fluctuations, weathering bull and bear markets. This revolution spanning technology, philosophy, and economics is not just a wealth transfer but also a transformation of ideas.

Yet Bitcoin's story is far from over. It continues to evolve, attracting more institutions and individuals to participate, driving a new balance between regulation and the market. From Satoshi Nakamoto's original vision to today's glory, Bitcoin is not only chronicling a legendary past but also scripting the prologue to the future. Just as many supporters firmly believe, Bitcoin is not the end but rather the starting point for redefining global finance.

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