The Big Interview

Christian Richards: Bitcoin mining is ‘not going into a death spiral’

Christian Richards says for many small miners it is now uneconomical, but large-scale mining will continue to be profitable at scale

For many small miners it has become uneconomical to mine Bitcoins as a result of the rapid fall in the price of cryptocurrency over the course of 2018, but it will continue to be profitable at scale, according to a leading consultant.

Christian Richards is director of business development Blockchain and Mining Operations for the Canadian Fibre Centre.

He says the peak in the price of cryptocurrency in December 2017 led to “regular and retail ghetto crypto miners in their basements and garden sheds mining.”

But the “biggest drop in cryptocurrency price means for so many it is now uneconomical.”

Richards is in touch with “large-scale miners” and says it remains profitable at scale and will continue to do so going into 2019.

“Everything is pointing to mining at scale,” he says. “Essentially the smaller Bitcoin miners are exiting, but it is not going into a death spiral. Larger mining operations are wanting to expand.”

Expand operations

Richards is also in touch with “some of the largest mining pools who are seeking to double down – or to expand their operations.”

He says the hard fork late last year and hash wars involving Calvin Ayre and Dr Craig S Wright – the brains behind Bitcoin SV – helped to drive down the price of Bitcoin and cryptocurrencies.

“It’s like the concept of the combustion engine and a horse as they are looking to increase their hash power and forking away from Bitcoin Cash. There is vested interests in the different camps with different currencies,” he says.

Manipulated down

“The likes of Goldman Sachs and JP Morgan are beginning to understand the future value of cryptocurrency. It is unregulated and skinny and probably the price has been manipulated down.”

Some people look to mine on the basis that they own all the equipment, racks and data centre where the racks sit. Others have looked to rent the electricity and spaces and to deploy miners, he says.

“Some of the largest companies are going bust as they cannot afford the operating costs with the prices declining so rapidly,” he adds.

Wild ride

Richards has been “heavily involved” in cryptocurrency since August last year and describes it as a “wild ride.”

Satoshi’s vision, he says, was to enable people who had no access to banking in South America, Africa and India, to have access using this disruptor technology. But mining has fallen victim to human greed.

He says Ethereum’s plan to create a proof of stake is the “complete opposite” of the proof of work created in the Satoshi vision.

“The intricacies of the crypto world mean there is heavy manipulation driving down the price so it can be acquired for its future speculative value.”

He praises Tim Draper, the American venture capitalist who bet $400,000 that Bitcoin will increase in value and “stands by his prediction that they will rise to $250,000 by 2022. No other investment is performing that well.”

“It is a very disruptive technology and Tim Draper says it is the most disruptive since the printing press,” he adds.

Sorry state

The earth is in a “sorry state” debt-wise and needs the GDP of 300 other planet earths to write off the debt. “There’s so much debt there’s no way on earth it will ever be paid off,” he says.

Stock markets are going through their worst period since the Great Depression which provides another catalyst for the potential for huge growth in Bitcoin, which has “a lot of positives.” “I am a maximalist,” he adds.

“There has been countless people arrested and disappeared with money over ICOs, however they have transformed the way of funding. It’s a really interesting time to be alive with what’s happening with the world.”

He says some people in the space “are not talking from an informed perspective – they are trying to create headlines and there’s a lot of vested interest.”

He points out that even the International Monetary Fund’s Christine Legarde has spoken of how cryptocurrency “cannot be ignored.”

“There is talk of potentially governments issuing their own decentralised cryptocurrency. This is completely opposed to Satoshi.

Blockchain has the potential to improve archaic processes and its ability to deliver value is “really exciting.” In Dubai, they are using blockchain to increase efficiency in real estate, he says. It has uses in the production of organic food to show provenance.

Richards says young people should be taught about the “disruptive capability of blockchain”. He urged people in the UK to use their talent and capability so the space is not just dominated by China and America.

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