When innovation meets network effects, its impact and value will rapidly expand, as if suppressed desires have found a space for release, and energy bursts forth. The value of networks like Bitcoin should be used correctly.

Author: ZK

Fred Thiel, CEO of Marathon Digital Holdings, one of the largest Bitcoin mining companies, recently stated in an interview: "I don't believe in the Bitcoin halving bull market, I call it a 'fantasy'."

Marathon Digital Holdings is one of the largest, most energy-efficient, and technologically advanced Bitcoin mining companies. It is also one of the largest Bitcoin holders among publicly traded companies in North America, established in February 2010.

Bitcoin Halving and Miner Exodus

On September 6, Marathon Digital Holdings CEO Fred Thiel participated in an online interview with Brave New Coin and was asked how miners should cope with the halving. Fred Thiel said, "We cannot control the price of Bitcoin, nor can we control global mining power. We can only focus on our own mining efficiency and income and expenses. We hold about 39,000 bitcoins and $1 million in cash. If the price does not improve significantly after the halving, we will continue to sell the bitcoins we obtain until 2026. If the price rises as it did in the previous two halvings, it will be very beneficial for us as miners. But I don't think this will happen. The relationship between Bitcoin's trading price and liquidity cycle is closer than the halving. Perhaps the dollar will collapse and save us, otherwise we will sell the Bitcoin reserves for a period of time."

Fred Thiel also mentioned, "The block reward decreasing from 9 to 4 will not have a significant impact on the trading market. However, it can be foreseen that if the price does not rise, many miners will leave mining due to imbalanced income and expenses, leading to a decline in mining power. At that time, mining efficiency is the most important factor. In the next 10 years, Bitcoin will undergo two halvings, and mining revenue will decrease to less than 2 BTC per block. I hope that Bitcoin will be adopted by more people during this period, thereby increasing Bitcoin's transaction fee income."

Fred Thiel's remarks largely represent the views of miners: "If there is no benefit, miners will be forced to sell and leave Bitcoin."

This also implies another situation that will be faced: "If there are more profitable opportunities, miners will also leave the Bitcoin network for more lucrative places," such as Ethereum.

Bitcoin has been around for nearly 8 years longer than Ethereum, but its on-chain transaction volume is less than half of Ethereum's.

What level of income are we talking about?

Running an Ethereum validator requires staking 32 ETH. With the help of various staking applications such as Lido, the validator's cost can be reduced to 1 ETH. With the hardware costs of running the software, the coin-based return on investment can reach 5% to 20%. On the other hand, the decrease in validator costs also contributes to the decentralization of the network.

The U.S. exchange Coinbase, using Ethereum's Layer 2 Optimistic OP Stack technology, has built the Base chain, and the transaction fees generated by the social applications of Friend tech on the chain exceed the transaction fees of the entire Bitcoin network.

More comparisons can be seen at https://cryptofees.info/, where Ethereum's ecosystem income far exceeds that of Bitcoin.

"Bitcoin's transactions are too few and are being taken away by CEX and the Lightning Network." In contrast to the thriving Ethereum ecosystem, Bitcoin miners are about to face halving of their income. On one hand, there is low investment and high returns, while on the other hand, there is high investment accompanied by continuously decreasing returns. It is difficult to prevent miners from feeling shaken after seeing such a comparison of data.

While the crypto world is anticipating Bitcoin halving, "miners can only hope for the collapse of the dollar to save them." This is ironic; decentralized cryptocurrencies do not choose to make themselves better, but rather wait for their enemies to weaken.

Bitcoin is the best Layer 1

Bitcoin is not without a way out. In this interview, Fred Thiel also expressed the view that "I believe Bitcoin is the best Layer 1, and various interesting applications can be built on top of it."

This is also a common idea among miners: "The number of transactions based on Bitcoin is increasing, and miners still need to mine and verify transactions."

Bitcoin is the best Layer 1, with the premise that it must be the most secure network to become the ultimate settlement layer. The security of the Bitcoin network is directly proportional to the network's computing power and the income it can bring to miners. Scaling Bitcoin is the only solution to this problem.

"Network scaling—increased miner income—more miners joining—improved network security—increased users—increased miner income"

Just as network security must be ensured, the scaling route cannot be a horizontal scaling method like increasing servers continuously, as seen in Web 2. These methods will significantly increase the cost of running Bitcoin software, thereby affecting Bitcoin's security.

Where there is Layer 1, there will be Layer 2. A vertical, layered scaling approach is an effective way to solve the blockchain's impossible triangle: "Layer 1 ensures security and decentralization, while Layer 2 provides high scalability and strong performance, providing economic incentives to maintain network security."

Based on BIP-300/301, DriveChain can extract the value of Bitcoin as the best Layer 1. Satoshi Nakamoto also designed such a feature in 2010, and the merged mining design acknowledges the existence of sidechains.

Bitcoin is the best Layer 1, and through layering and sidechains, it is an ecosystem of mutual prosperity and loss.

DriveChain Unleashes the Value of Bitcoin

DriveChain provides a secure and simple way to achieve layered scaling of Bitcoin, meeting the needs of all parties.

DriveChain provides developers with the opportunity to leverage the powerful value and effects of Bitcoin at very low costs and with complete design autonomy.

For Bitcoin holders, DriveChain can bring more utility and value-added opportunities, allowing Bitcoin to fully realize its attributes as a currency and asset.

In the thriving Bitcoin sidechain ecosystem, miners will receive substantial and sustained income, and the Bitcoin network will continue to operate healthily.

We must recognize that the network effect of Bitcoin is a double-edged sword. After Bitcoin's success, the Maximalists are known for their religious-like fervor and zeal, "this fervor has created a powerful network effect, but has also blinded some people": under the long-term influence of the powerful network effect, holders seem to have a sense of disdain for everything and believe that Bitcoin is impeccable.

Compared to miners who check Bitcoin usage data every day, their perception is outdated. They believe that everything does not need to change and will be minimized or even negated under the influence of the network effect, lacking the sense of urgency and motivation to make changes. They are also afraid of change and afraid of making mistakes that could affect the network's reputation.

When innovation meets network effects, its impact and value will rapidly expand, as if suppressed desires have found a space for release, and energy bursts forth. The value of networks like Bitcoin should be used correctly.

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