Key Takeaways

The Pubkey mining meetup in December provided an open format discussion on various topics related to bitcoin mining, including network updates, market updates, and the broader mining ecosystem. The conversation was led by co-founders of Pubkey, Thomas and Drew, along with special guests Will Foxley and Dylan LeClair. The discussion touched on several key points:

1. Network Hash Rate and Transaction Fees: The network hash rate has seen a significant increase over the year, doubling from around 235 exahash to 480 exahash. Simultaneously, transaction fees have also seen spikes, particularly due to activities like ordinals and inscriptions.
2. Ordinals and Inscriptions: These have become a substantial part of the conversation around bitcoin's use cases. While some view them as spam transactions, others argue they are a testament to bitcoin's adaptability and the economic incentives that drive the network.
3. Bitcoin Mining and Energy: The role of bitcoin mining in energy grids was discussed, highlighting how miners are becoming energy buyers of last resort, seeking out the cheapest energy to monetize. This has implications for grid balancing and the revitalization of old industrial sites.
4. Capital Markets and Mining Companies: The past year has seen bankruptcies and consolidations within the mining industry. Publicly traded mining companies have faced challenges, but there's also been growth and mergers, indicating a maturing market.
5. Layer Two Solutions: The impact of off-chain or layer two solutions like the Lightning Network on mining was addressed. While they offer scalability, they don't directly contribute to on-chain metrics important for miners.
6. Contentious Hard Forks: The potential for contentious hard forks leading up to the bitcoin halving was considered. The consensus was that while forks are possible, they would likely be driven by significant issues beyond just ordinals or inscriptions.
7. Bitcoin ETFs and Hard Forks: The question of how bitcoin ETFs would handle a hard fork was raised, with the understanding that ETFs have the discretion to define what constitutes bitcoin.
8. Mining Pool Centralization and Death Spiral: Concerns about mining pool centralization and the hypothetical 'mining death spiral' were discussed, with the conclusion that economic incentives would likely prevent such scenarios.

Best Quotes

• "Bitcoin mining is like pouring a glass of water over a terrain mapped by electricity costs, and it will naturally settle in the areas with the cheapest energy." – Drew
• "If you either believe that bitcoin works via economic incentives or you don't." – Dylan LeClair
• "Bitcoin miners are the most incentivized to monetize wasted energy." – Thomas
• "I think the most important thing is dilution in public miners... read what the founding team is talking about, and pay attention before you buy something." – Will Foxley
• "The narrative shift from bitcoin being a monstrosity that just burns the planet to bitcoin being good for the grid is encouraging." – Dylan LeClair

Conclusion

The Pubkey mining meetup offered a comprehensive look into the current state and future of bitcoin mining. From the growth of the network hash rate to the advent of ordinals and inscriptions, the conversation highlighted the dynamic and evolving nature of the mining industry. The discussion also addressed the integration of bitcoin mining with energy grids, the impact of capital markets on mining companies, and the potential for contentious hard forks. As the ecosystem matures, it's clear that economic incentives continue to be the driving force behind bitcoin's resilience and innovation. The meetup concluded with a reminder to investors to stay informed and consider the broader implications of their investments in the mining sector.