During the 2024 Hong Kong Web3 Carnival, Cobo and Antalpha Prime, together with BounceBit, SYS Labs, and Rollux, organized the “BTC Friends” offline event on April 7th, supported by Tether Gold. Bitcoin old miners and BTC Layer2 pioneers gathered together to discuss the early years of Bitcoin mining and the future of the BTC ecosystem.
During the dinner, Cobo co-founder and CEO, Fish, shared interesting anecdotes about early Bitcoin miners, recounted the various challenges miners faced when going global, and shared insights on BTC Layer 2 and AI, as well as Cobo’s involvement in them.
Fish’s self-introduction as an old miner:
“Hello everyone, I’m Fish, an old miner, a veteran investor, an NFT collector, and a victim of on-chain inscriptions. Over the past decade, I have experienced the ups and downs of the industry, from the early days of GPU mining to the birth of ASIC, China’s first mining pool, the first halving of Bitcoin, Mt. Gox… We’ve come a long way, and in 2017, the ICO of Ethereum brought about smart contracts and the issuance of new assets. In the previous cycle, we witnessed the DeFi Summer and the explosion of NFTs. A year ago, we experienced a boom in the Bitcoin ecosystem, with the emergence of many inscriptions from the bottom up, including various second layers and sidechains of Bitcoin that have been very hot in recent months.
Over the past decade, we have witnessed the entire Crypto industry’s journey from nothing to something. Fortunately, today in 2024, Bitcoin has reached a turning point in its early stages. The launch of the Bitcoin ETF in January 2024 means that Bitcoin, as a mature financial asset, has officially appeared before the public.
Standing here in 2024, at this moment, we can clearly see the infinite possibilities of the future of blockchain. The core issues that have plagued our industry for a long time are now basically clear, and what we are about to face is the final wave of growth in the entire industry, making blockchain truly popular and even allowing end users to use blockchain technology’s convenience and security without any sense. I believe that this can be achieved on a large scale in the next one or two cycles.
Opportunities and Mining History of Institutionalized and Professionalized Mining:
One interesting aspect of this industry is that it grows through cycles, through continuous iteration and trial and error. The story of institutionalized mining began in the late 2014 and early 2015 bear market. At that time, the price of BTC was dropping too fast, ASIC had already reached a small scale, and profit margins suddenly plummeted. The initial payback period for Bitcoin mining was 3 to 6 months, but later it became 1 to 2 years. In a rapidly declining bear market with the price of the coin staying at the bottom, miners had to optimize electricity costs, and mining on a company and large scale became necessary. Otherwise, the marginal profit became very low, and the ability to withstand risks became very poor. This market situation forced miners to move from the initially favorable mining farms.
You may not believe it, but my first large-scale mining farm was located in the center of Nanjing, only two kilometers away from Wanda. The conditions were excellent, and we used IDC central air conditioning. Those mining machines were very precious. In that mining farm, we mined over 20,000 Bitcoins and over 100,000 Ethereum. But when the bear market came, we couldn’t mine anymore because the electricity costs were too high. Although the conditions were very good, the living conditions were very good, and the mining farm was well decorated, we had to move the mining machines to places where electricity costs had a competitive advantage.
At that time, these miners traveled all over China, holding provincial power grid maps, looking for places with surplus electricity resources. They traveled along the Dadu River, driving in the environment of mudslides, conducting field inspections at one hydropower station after another, and then negotiating and building mining farms.
In that wave, the global cryptographic computing power began to scale and centralize. At that time, about 70-80% of the global computing power was concentrated along the Dadu River, and in winter, it was near the power stations in Xinjiang. The power consumption was not that high either. This scale development was due to the prolonged bear market, and everyone had to optimize costs and improve efficiency.
Problems and Thresholds Faced by Miners Going Global:
When it comes to mining overseas, everyone was initially very interested and wanted to make a big impact. However, after arriving in the United States, they discovered that there were indeed many challenges: from early legal frameworks and tax planning to later mining farm operation and maintenance, repair efficiency, and online rates; and finally, there were many unstable factors such as electricity costs and the need to shut down in special events. In the end, the comprehensive cost was very high, and the efficiency was very low. Many miners found that the United States was not such an ideal market and started looking for other markets, leaving only South America and Africa. South America and Africa present different problems, such as political stability and security. In this process, everyone still misses China’s rapid infrastructure construction and relatively good environment, and there are relatively fewer pitfalls.
Currently, another situation overseas is the resources of new players, especially their political resources. Many sovereign funds of sovereign countries have started mining, and they don’t even care about the payback period issue. This has resulted in very low profit margins for everyone.
It has been a difficult journey for these miners going global, and there are only a few mining farms that can finally run stably.
BTC Layer 2 Projects and Cobo’s BTC Ecosystem Layout:
In the recent years, the prosperity and development of the Bitcoin ecosystem have seen the emergence of new asset issuances and types from the bottom up. In the process of Bitcoin’s ecosystem development, the entire Bitcoin mainnet has been congested for a long time, and eventually, these demands overflowed. Based on these overflowed demands, everyone has been exploring solutions like sidechains and Layer 2 networks. In addition, the development of modular blockchain technology on the EVM side over the past few years has also become relatively mature. Therefore, we have recently seen a rapid emergence of projects and entrepreneurial directions that aim to build Layer 2 networks on top of the Bitcoin ecosystem.
In this process, the biggest core difference between Bitcoin and EVM is that Bitcoin’s support for smart contracts is relatively limited. To quickly solve this problem in the short term, Bitcoin’s assets can only be mapped to Layer 2 networks or EVM through bridges in some way. How to solve the security and decentralization issues of these bridges? In the short term, there can only be some compromise solutions.
Cobo provides a solution based on MPC, which is similar to multi-signature solutions based on multi-party computing. This solution allows the project party to hold a fragmented private key, Cobo holds another fragmented private key as a co-manager, and a third fragmented private key is backed up by a third-party security company or insurance company selected by the project party. This solution can effectively avoid single point of failure risks and enhance the overall bridge’s fund security through collaboration among multiple entities. In this process, Cobo can only assist in the risk control specified by the project party and cannot decide the direction of the funds.
At the same time, we have also seen some new technical solutions, including updates and iterations at the Bitcoin Opcode level and cross-chain communication solutions. In the long run, I believe this problem will gradually be improved and solved. Therefore, in this process, we strive to provide a relatively secure and reliable solution in the early stages to ensure that we have the opportunity to try and observe its further development.
Cobo’s AI Layout:
The development of AI has brought significant changes to individuals. Many of our workflow and information flow pressures can be solved by AI, resulting in a significant increase in efficiency. From a company perspective, we have been constantly thinking about AI, especially after the accuracy of AI agents has greatly improved, whether it can be combined with the blockchain industry. From the current perspective, because the native information flow and asset flow of the blockchain are publicly transparent on the chain, if future AI agents have high accuracy and execution efficiency, they should interact with the blockchain.
We can imagine a scenario: for example, two AI bots representing two different entities can deploy corresponding smart contracts on the chain, and the two AI bots can interact and trade with each other. One scenario we envision is that after the performance issues are resolved in the blockchain, the on-chain costs will be greatly reduced, and the final state may be that there are a large number of AI agents conducting direct transactions and using smart contract technology on the chain. Humans may only provide simple risk control for these AI agents, establish some rules, and let them execute on their own. It is expected that in the next three to five years, we may see some more mature prototypes.
Based on this vision, Cobo, a company focused on the underlying private key security management of wallets and using good risk control, is working hard to unify the underlying layer and risk control layer of our various wallet product lines, and provide a standardized API to integrate with AI agents. We hope to see the widespread deployment and application of AI technology in the blockchain field in the future.
It is expected that the prototype of this product will be available in the second half of this year, and we welcome everyone to try it out.
Tags:
BounceBit
Rollux
SYS Labs
Tether
WEB3
Ethereum
Fish
Source link: https://mp.weixin.qq.com/s/7q6R_VjzZ3tvWqa3YNW4bA
