Cofounder, Bitmain
Will China Ever Ban Mining and What Will Happen at the Next Halving? - Jihan Wu Interview
Jihan Wu talks about his history, Bitmain, China's take on mining, the ecological footprint of the industry and what to expect at the halvening.
TIMESTAMPS:
0:14 - How did you get into Bitcoin?
1:29 - What was your first wallet and how do you look back on the last 6 years?
3:24 - What's up with Bitmain?
4:27 - Will China ban mining?
7:45 - What do you think about the ecological impact of mining?
10:07 - How do you see the upcoming halvening?
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About Jihan Wu
In an October 2019 interview, Bitmain cofounder Jihan Wu discussed the possibility of China banning cryptocurrency mining. Wu stated that while "everything is possible," he did not think a ban would be easy due to mining being an economic activity where miners "pay taxes" and "contribute to the local economic activity." He added that even if China banned cryptocurrencies, miners would be able to "ship to overseas" and the overseas market would "recover some of the losses." Wu also commented on the upcoming halving events for Bitcoin and Bitcoin Cash. He expressed optimism about the price of cryptocurrencies, noting that "according to historical experience, at the halving event the price really surged." Regarding Bitcoin Cash's earlier halving, Wu said that while the hash rate might "drop suddenly," he did not believe it would be a "fatal security issue" and that mechanisms to address 51% attacks have evolved. On the ecological impact of mining, Wu stated that "70% of the energy is from clean energy" and that miners in China often use "excess energy that wasn't consumed by the grid."
Transcript (15 segments)
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Interviewer0:10
We have Jihan Wu from Bitmain and Matrixport here with us. He was doing a financial analyst in an investment firm. At that time I got a Google Reader subscription, and there were lots of things about the evolution of the internet and software, and I happened to read something about Bitcoin. It was really interesting at that time, so I looked into it. Just taking like two days after that, I think this is a good idea.
But you were one of the first people to actually translate the white paper into Chinese for the domestic market in China, right?
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Jihan Wu0:52
Yes, actually I was the first one to translate the white paper. It's a very high-level principle of computer science, so it works both in economic ways and the computer science works. So I translated the white paper and tried to get more positive feedback from Chinese social media.
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Interviewer1:32
First wallet I think was Bitcoin-Qt, yeah? Mine was a big coin, a wallet. Yeah, and so you've been in since 2011, then 2013 you went full crypto, and now it's 2019. How do you see that whole evolution, and how do you look back on it, and how do you feel?
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Jihan Wu2:14
Well, this is quite an amazing journey. I believe that as actual users are getting involved into the cryptocurrency economy, and those users really start to use currency as a payment, as a way to store cash accounts, I believe such kind of user base will increase more and more. This is kind of a network economy. It's quite difficult in the beginning, but now I think we're already almost started to hit the critical mass. So we have about 40 million users worldwide in terms of number of wallets out there, anywhere between 40 and 60 million.
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Interviewer3:11
And how do you see lots of sophisticated investors like bankers or programmers nowadays more and more? Where are people getting to this, especially young people?
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Jihan Wu3:27
After we found the bottom of the bearish trend of last year, we see a very fast recovery of the mining industry. We can see that hash rate goes up very fast, and that means the sales volume increased a lot. We have new chips and our main product added new kinds of currencies and still stayed at the top ranking of the main product. It's quite a good year for Bitmain.
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Interviewer4:33
80% of the world's hash power is in China? No, I think just 60%. Half of the world's mining power is in China. How do you think the Chinese government sees that and struggles with that, and how do you view the opportunity for all the mining companies and where they will want to go? Because we feel that they want to expand internationally.
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Jihan Wu5:12
I think the government is controlled not to have too much collective impact over the existing regulatory framework. I think they keep some regulation like this, which is actually a good thing for the country and the practitioners in China. So it's still possible to do cryptocurrency business in China, but it needs more communication, more work, even more reports to local authorities. So it's a much more complicated system to work in a realistic way. But the key thing is really a story. First, if such an opening in a relational way, it really leads to going through some very complicated process inside the Chinese legislation or regulation process. It needs to be a very high-level decision. I don't think that's easy. It's a real economic activity, and most of the activities work closely with the local authorities, and they pay taxes, they contribute to the local economic activity, and hiring.
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Interviewer7:12
Properties, this means will be able to ship overseas, either will be running some other places, and mining spaces will somehow be slightly impacted, but as the overseas market will be able to recover some of the losses. So I think there will be impact if the Chinese government could conserve money, but I think the impact will be minimal.
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Jihan Wu7:48
Firstly, the cryptocurrency mining consumes about 7,000 to 9,000 megawatts somewhere between. It's actually much less than the power stored in a single year globally. That's much larger, so cryptocurrency mining only consumes a very small portion of the electricity power installed, especially comparing to the renewable energy installed every year. And it's actually good for the renewable energy to evolve because renewable energy when they install their capacity, they need to go to a lamp because the community is staying in faraway places and it's very hard to find customers. But after cryptocurrency mining, they are managed to pay off the bank notes and become profitable business. So cryptocurrency in some kind of cases actually helped the renewable energy.
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Interviewer9:41
For those of you that don't know, in China the miners actually moved their hosting facilities close to the energy generation and the dams, and where it's very cold, so they actually helped take out excess energy.
The halving is coming up pretty soon, in about six to twelve months, six to eight months, and then Bitcoin Cash is likely to come earlier, and then we have the Bitcoin Core halving. How do you see that affecting the overall mining, particularly now as hash power is just continuing to grow? And how is the difference between Bitcoin Cash and Bitcoin Core?
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Jihan Wu10:33
Firstly, the halving happens every four years, and it has always been a challenging issue for the miners to think about the future risks. But according to historical experience, at the halving event the price really surged. Whether it's just a coincidence or not, we have experienced a bearish market. This is a highly cyclical industry. If you have a bad year, you have two or three good years after that. And we also have more retail users and institutional investors getting into this industry. So I'm quite optimistic about the price. If the price of currencies can increase, then the miners will be good, and the security of the network will not be affected so much. Bitcoin Cash will be really a fatal security issue because there are some dedicated miners watching the network, and they can attack a lot only if the hash rate exists on the network. But they're also facing the hash rate that is behind the scene. So I don't think that it's a security issue. People have used to cover 51% attack, but after so many years, people are getting off.
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Interviewer13:10
I think it was really nice to get your insights. Yeah, thank you for investing the time with us here at Bitcoin.com. Thank you, Jihan Wu. Thank you everybody, thank you very much.