On The Brink with Castle Island - Mustafa Yilham (Bixin) on the industrial Bitcoin miner perspective (EP.155)

Episode Date: December 7, 2020

Mustafa Yilham, VP of global business development at Bixin, joins the show. Bixin is an early Asia-based Bitcoin miner; they operate a popular wallet app, and they run a Bitcoin-denominated quant fund of funds. We cover prevailing myths around industrial Bitcoin mining and the reality of sourcing energy at competitive prices for mining. In this episode:  The story behind Bixin's Bitcoin-denominated quant fund How Bixin's fund of fund employs a Bitcoin benchmark Why Bixin as a firm is not market neutral and does not hedge their mining operation Whether miners have a procyclical or countercyclical effect on the price of Bitcoin Whether or not miners are fundamentally long Bitcoin The key considerations for finding a good source of electricity for mining Why Central Asia, Russia, and North America are promising locations for mining Why Mustafa expects more hashpower to end up in North America in the near term The factors leading Mustafa to expect less hashrate concentration in China in the future Whether the CBECI mining map is a reliable guide to where mining is located Miner attitudes to Iran and OFAC Current electricity prices required to competitively mine What sold out hardware means for the price of Bitcoin Was the hashrate drop earlier this year was due to the seasonal migration of hashpower in China? Bixin's approach to seasonal electricity costs Whether the withdrawal issues at Okex and Huobi prevented miners from selling and 'caused' the recent Bitcoin rally Mustafa's take on the "China controls Bitcoin" narrative Why Bitcoin mining is getting progressively more decentralized Why Bitcoin miners are positively disposed towards Bitcoin Whether Bixin plans to support Taproot Mustafa's view on who controls Bitcoin Mustafa's experiences in Turkey and why it is so popular there Why central asian and post-Soviet households like gold Sponsor notes:  Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today's complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

What's up, everyone? Welcome back to On the Brink, Simply the Best Bitcoin Podcast in Cambridge, Massachusetts. This episode is brought to you by Witham, a top 25 accounting firm with a digital asset practice. More about them later in the episode. So this episode is one that I've wanted to do for a long time. There's a lot of these myths about mining floating around, whether China controls Bitcoin through mining, whether or not the miners are mercenaries or whether they're positively inclined towards the Bitcoin Protocol, how electricity is sourced for miners, what are the key considerations, whether miners actually care about Bitcoin Protocol upgrades. So who better to talk to than a representative of a large industrial miner?

So I invited Mustafa Yulham on the show. He is the VP of Global Business Development at Bixen. Bixen is an Asia-based industrial Bitcoin miner. They operate a material portion of Bitcoin's hash rate. They also manage a Bitcoin super app with over a million active users. And they manage a Bitcoin denominated fund of funds, which Mustafa talks about in the episode. So he's perfectly placed to really shed light on these questions, which opponents of Bitcoin love to seize on. And so we'll get his opinion on that and see what he has to say. Do miners control Bitcoin? Let's find out. So I won't tell anymore. Let's dive right into the

episode. It's one of my absolute favorites. I think you're really going to like it too. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. the Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry.

So out of this worry, we have something called the Bitcoin. Bistofa, welcome to the show. It's such a pleasure to have you with us today. Yes, thank you so much for having me today, Nick. We really appreciate it. I've really been looking forward to this conversation, actually. I think we're going to learn a lot about mining in particular. You're a wealth of knowledge on the topic. So I'm super, super pumped.

Why don't you tell us a little bit about your role at Bixen and sort of your responsibilities over there? And also, tell us about Bixen too, because I don't think Americans are sort of as familiar with it. Sure, sure. So my current role at Bixen is, Vice President of Global Business Development. And my main task is to help different subsidies on their Basing Group to expand internationally.

And to tell you a bit more about B-C mostly have two different business focus. One of them is B-Cin wallet and another is B-C finance. We are one of the largest off-chain crypto wallet provider in Asia, which I think currently 1 million registered users. And B-Cin wallet offer different services to its retail clients, such as custody, escrow, trading, lending, payment, cloud mining, etc. As part of its ecosystem.

And at B-CIN finance, we run to a very large operation like B-C mining and the fund of fund. We currently manage around 300 megawatt of power, roughly that's currently equivalent to 2% of global Bitcoin network. We are also very early investor in Woods Miner, which is one of the largest mining manufacturer. And on the fund of fund side, which we announced earlier this year, we currently have an asset under management around 7,000 Bitcoin with the main purpose of investing in global crypto-quant funds. And the fund is completely Bitcoin denominated and also

supported by our prop capital. And lastly, we also have a $100 million fund that is focused on open finance venture investment. Previously, we invested in companies such as microBT, Watsminer, Nervos, AlgoLand, CERTIC, RV, etc. And, you know, our newest investment is to a $2 million dollar Asia lead investment to Mina Protocol, formerly known as CODA. That's a lot of separate concerns within one institution, Mustafa. Yes. You manage it all. There's so many things we can cover.

Maybe we can start with the Bitcoin denominated quant fund, because that totally blew my mind when I first heard about it. So the objective of that fund is to invest Bitcoin in sort of arbitrage, your quant funds and actually you're not targeting fiat returns, you're targeting returns against your Bitcoin benchmark, right? Yes. So the fund of fund is completely Bitcoin denominated. So we are targeting returns only in BTC. And the main goal is to obviously increase our Bitcoin holding and at the same time hopefully provide liquidity to global Bitcoin. network.

Have you found that the managers that you approach have been amenable to using Bitcoin as the index and only kind of taking carry if they beat Bitcoin? So I think that I have a slight difference between Quant Fund in the West and Asia. And we actually started investing in Crypto Fund since last year in China. And after we announced the news this year, we started to build more global presence on the investment side in U.S., Europe, Russia, and Singapore. In China, most of the quant managers are very used to Bitcoin-denominated terms when investing in crypto-quant funds. And outside of China, most team we spoke to offered USD-denominated terms. I think that's mostly due to regulation and institutional investor preference that these teams are,

they're a potential investors. But I think that's like rapidly changing now. Starting quarter to this year, more team actually have come back to us and told us, you know, they now have a Bitcoin denominated terms and more U.S.-based teams, we spoke to now also have a Bitcoin denominated terms. And so your perspective as an institution is you're just interested in increasing your stack of Bitcoins as opposed to its value in Fiat terms. Because I guess in your view, that's the most important thing is gradually growing your share of Bitcoins. Kind of on your balance sheet. Is that right?

Yes. And, you know, when we first announced the news, it was a huge surprise a lot of people. I think it was May where we put in, right, 6,600 Bitcoin. And at the time, you know, people were very surprised because this portion is all hatched. It's zero Fiat, 100% Bitcoin denominated. But, you know, six months later now, the original value, I believe, was around $66 million with $6,600,000. And now the asset on the management is at 7,000 Bitcoin with overall value, in Fiat value, over $130 million at the fund of fund alone. So that's like two acts within, I think, now six months.

And, you know, people start to change their view on whether we made a right decision or not. Right. So as a firm, like Bixen, you're minors, but you're not trying to actually hedge your exposure and be market neutral, you are sort of directionally long on Bitcoin, generally? Generally, we are Bitcoin denominated, but, you know, as a minor, we still have operational costs, such as electricity, labor costs, etc. So, you know, obviously we do have a risk department that constantly ensure, you know, we are hatch to a certain degree, but largely speaking, yes, we are very Bitcoin denominated.

So let's talk about mining for a little bit. This is a topic of endless fascination for me. I think a lot of traders are paying attention to mining. There's been a huge amount of chatter recently about miners not being able to sell their coins, or that was the rumor at least, which I think you helped dispel a little bit on social media. But I think the one big question that people ponder is, you know, what is the effect of minor behavior on Bitcoin cycles? You know, because there's this one theory that, you know,

miners have a pro-cyclical effect on Bitcoin in terms of they sort of hoard the coins that they're mining during both phases. And then in bear markets, they are forced to liquidate a lot of their coins. And so that actually adds to the cell pressure in bear market. So it sort of intensifies the price action in both directions. Is that kind of consistent with your experience? I mean, that's definitely the popular narrative around minors. Does that align with what you've seen?

Yes, most miners are like these. But I think it's very important to note that it has nothing to do with the situation that's going on in China right now. It has always been like this. And it's for a very simple reason. because for most miners, after they invested a lot in purchasing mining machine and setting up operation, they don't have a lot of extra capital just sitting there to pay for electricity. So they need to sell their Bitcoin to cover that. Now, obviously, during a bull market, you can sell less to cover your cost so you can hold more

Bitcoin. And during the bear market, you know, our experience is that electricity costs can be as high as 90%. So for most miners, during the beer market, you would have to sell more to cover your cost. So I think that statement hold true. But again, I don't think it have anything to do with what's going on in the China ecosystem currently. Right, right. Yeah, I didn't mean to imply they're related. Would you say just as far as attitudes go, I mean, the entrepreneurs that set up mining farms,

are they doing it because they want to accumulate as much Bitcoin as possible? are they doing it because they see an arbitrage and they feel that they can mine Bitcoin more cheaply than the sort of median Bitcoin is mined and they just want to play that arbitrage and they don't really care about the asset in the long term? I think that really depends on different miners. From our experience in China, most large-scale miners are very firm believers into Bitcoin. Take Bicing as an example. The founder actually started mining Bitcoin, I believe, in 2009. And since then, you know, himself and the firm have been a very firm believer into Bitcoin and we are Bitcoin denominated. And I think there are other miners that hold different

view and constantly liquidate their portfolio. So I think that, it really varies. Yeah. Yeah, that's fair. So part of your mandate in your role is actually finding suitable electricity for mining. And this is another topic which really fascinates people because there was all this chatter, you know, about like you want to have a cold climate and you want cheap electricity, you want sort of geopolitical stability and so on. But I figured I would ask. you know what are the traits you look for in a an energy you know center you know when

you're scouting for a suitable place to mine what are sort of the key considerations for you yeah so when we are looking at different market to source electricity i think the most important thing to note is that we're looking for electricity surplus or waste energy And to give you an example, China has a lot of electricity surplus during summer months, especially in the Sichuan region, which produce a lot of hydro power during the rainy season. So the price of electricity is much cheaper compared to the rest of the world. In addition, we also consider costs such as like logistic cost and labor costs. And we have also been paying attention to overseas market and already made some significant investment in Central Asia. And during the due diligence process of mining farm investment, there are few key factors we look for, such as energy type, price, voltage, and capacity and location, geolocation.

The price of electricity normally is the most important crucial component in crypto mining, and the voltage oftentimes determines our potential cost for infrastructure investment. I think in addition, we also pay very close attention to other factors such as local regulation, policy, taxation, governmental support. we also want to pay close attention to reliability of the local energy company, our local partner's background. So I think during this initial due diligence and the sourcing process of electricity, there's a lot of factors that we normally put in taking place. And so, I mean, your role basically involves scouring the globe and scouting out these locations. I mean, is that, are you, even during sort of COVID times, are you still sort of trotting around finding cheap electricity sources?

Yeah. So, yes, that is part of my role because, you know, I spent like three to six months in Siberia and this far east of Russia, for example, in end of 2018 and the 2019, which was a very, very fascinating experience. And, but during the COVID time, our overseas expansion was kind of put in halt temporarily, just because labor and logistic are very difficult to arrange at this time. What are the most promising jurisdictions? I mean, you know, you don't have to give up the full secret sauce because I'm sure there's some, you know, Some proprietary, you know, information as far as it pertains your business. But what generally, you know, geographically, what are some interesting locations that you've

discovered for mining purposes? So, so I would say like, you know, when we look at a geolocation, so, you know, price, regulation, temperature are like the most important factors. I think Central Asia is great for mining outside of China. Speaking, Central Asia is great. Russia, I think, have huge potential. North America, I think, have the probably most potential in the next few years for a few different reason. But I think those are generally the regions we look at when I source electricity.

And so with North America, I mean, would it be because, I mean, I know there is Hydro here. I actually visited an old aluminum smelting plant in Messina, New York, which was powered by Hydro, which had been converted into a Bitcoin mine. So, you know, I've certainly seen some of that firsthand. What is it that makes you bullish on North America as a potential venue for mining? So I think based on our conversation with different mining manufacturers, on average, right, like around 60% of the mining machine cell in past two quarters or so have been outside of China in recent months and mostly actually in North America. And I think that there's few factors that plays into why North America could be huge in

mining in the future. One of them is price. I think I'll be surprised to hear that, in fact, the price right now in North America, nowadays are cheaper than the average price in China. And in the past, we used to think, you know, U.S. have high labor costs, less mining ecosystem. But we can clearly feel that things are changing rapidly within past one to two years. And I think during the next cycle, you will see a much higher involvement from U.S. and other country into mining. And I think the most important factor also for U.S. miner is that they have access to cheap capital cost, meaning they have the ability to go out there and, you know, basically borrow at a much cheaper rate than Chinese miners are able to.

Is there an element of political stability that comes in? I know certain jurisdictions in the U.S. you know, kicked out foreign miners or said they didn't even want Bitcoin mining to happen at all. But I guess there is probably slightly less capriciousness in terms of, you know, local regulators changing their minds on mining as compared with China. That's sort of just me speculating. Does that political stability come into play at all for you? So I think for, so next three to, I mean, next two to three years,

I think you will see more local miners from US increase their hash rate. But I think the cross-border geo relocation, we don't see that happening quite a lot. just because at least under the current environment, like you said, there are a lot of uncertainty on political, economical, and overall macro side. And so I think you will see Chinese miners continue to grow in China, but a lot of the hash rate will also start to grow in other countries like Russia and, you know, U.S. and North America. So listen, if you are a regular listener of this show,

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They support that. If you want to learn more about Witham, go to Witham.com slash crypto. That's W-I-T-H-U-M-com slash crypto. And now back to the episode. Have you, I'm sure you've looked at this. Have you looked at the Cambridge Center for Alternative Finance their dashboard on Bitcoin mining location-wise? Yes. And I think most of them currently are located in China, right? Yeah, yeah, yeah. Maybe you'll pull it up right now. We had Apolline Blondin on the show to talk about it. They partnered up with pools and did some work on geolocation. Let me see if I can, yeah, so right now China's got 65%, U.S. 7%, Russia, 7%, Kazakhstan, 7%, Malaysia, 4%, around 3.8%.

Do these numbers seem kind of reliable to you? You know, you do see these numbers and think, yeah, this is sort of roughly, you know, consistent with my experience, or is it sort of wildly, wildly, you know, different in your experience? I think for now it is consistent with our experience, but I think within next one or two years, those data will change drastically. What do you make of the kind of significant mining in Iran? Do you, does that strike you as the state subsidizing Bitcoin mining?

I know the Iranian government has recently. recently indicated their desire to be more active with Bitcoin. Or have you anecdotally seen big mining operations kind of locating themselves in Iran? Yeah. So this might come quite surprise to you, but I think even as a Chinese miner where we, like B-Sing for example, I'm sure there are some miners who does not pay too much. attention to, you know, OFAC and other sanction lists. But for us, we have always avoided Iran. And we, I mean, I haven't even looked at the region or did any due diligence on that.

Just because, you know, I think even as a Chinese minor, we do not want to, you know, just violate any OFAC regulation. That's wise. I think that's wise. Right. Yeah, that strikes me as a good idea. Yeah. I know you don't have to answer this if you don't want to, but what would you say, you know, to someone who's like thinking of getting into mining, what would you say it would be a good electricity price for them to even be competitive in the market today?

Would you say it's sort of in the five, five, six cent per kilowatt hour range? I think it depends on the scale you're trying to go for and the price of Bitcoin, I think, under, I mean, right now, if you are a retail customer and you're trying to go into Bitcoin, I think it's very difficult for a few reasons. Number one, you need to purchase mining machine, which I think both Watts Miner and Bitcoin are booked out until next year, April to June. Right. You need to find investment, like investment, very large-scale investment mining farm, build that out. I mean, it requires a lot of capital and it requires a lot of experience to run a mining operation properly. If you are just trying to purchase mining machine and there is a way for you to purchase and you're trying to host, I think maybe, you know, four to five cents, five point five point five could be a competitive price.

And I think that on the current Bitcoin price, and I think that that's a general price we see in North America for hosting at the moment. Yeah, but so you wouldn't encourage anyone listening to to get into mining as an individual as a profession. At this stage of mining cycle, probably wouldn't. What does it tell you that the hardware from what's minor in Bitmain is sort of spoken for? I mean, that sort of implies that people are like, if you think about what an ASIC is, it's like a physical instantiation of future Bitcoin rewards. So it's kind of like people have bought these forwards or these physically settled Bitcoin futures in hardware form. I mean, that strikes me as pretty bullish.

What's your interpretation of that? I think, you know, a lot of the purchaser, like we discussed earlier, for this round of purchasing are from outside of China. A lot of them are very large institutions, some even publicly listed company in United States. I think where you previously worked at, Fidelity is one of the large minor in North America, alongside few others. for institution to mine Bitcoin, you know, I think that's really due to the fact that for them, you're right, it's a very long option and also probably better option than to buy Bitcoin directly. So there was a huge discussion point earlier this year. I'm sure you saw this hash rate dropped dramatically a couple of months ago.

And a lot of people were speculating that it was due to the seasonal migration. where I believe it's, you know, the rainy season, this is dry season, and the volume of water flowing through hydro in, you know, provinces like Sichuan declines. And so then maybe the miners base there, migrate their hardware to other regions in China with sort of non-renewable sources of energy. That was certainly the speculation out here in the West to explain the hash power dynamics Is that something you've noticed?

I mean, are you aware of this, the seasonal migration? People talk about it, but is that something that you know about? Absolutely. Seasonal migration, I think, really depends on geolocation, but it does hold true for Chinese miners. So like for Beijing during the summer months in the rainy season, our operation are mostly based in Sichuan, you know, and during the winter, we migrate to Xinjiang

and the Inner Mongolia. We also have mining farm in Kazakhstan, where we deploy some of our mining machine. But in countries like Kazakhstan price are same all year round. So migration is not required within the border. But it definitely holds true for Chinese mining community. Do you think that actually explains the really dramatic drop? we saw in hash rate or, you know, is it, could it just be normal variance? Yeah.

I think during, I think during the past cycles, each year during the mine miners are migrating during the rainy and the dry season, you will see a drop in the hash rate. And I think it's just normal because, you know, if you look at China, it's very huge and, you know, most of them are going by train. and Sichuan to Xinjiang have quite a distance for them to do that logistic and set it up locally afterwards. Yeah, it is a long way. Yeah. It's different sides of the country entirely.

Yeah. I'm so curious about mining. This is amazing. It's amazing a lot of information. There's so many myths that were busting or confirming this conversation. You wouldn't believe, I mean, I guess you would, the chasm in understanding between, kind of east and west. I guess one thing is, you know, you had these withdrawal issues at the major Chinese exchanges. You mentioned on Twitter that you didn't think that was the cause of the

Bitcoin rally. I certainly agree with that. I mean, I had the team of coin metrics look at this, and they found that miners were able to liquidate their coins as normal. So I guess we can sort of put that one to rest. In your view, the withdrawal issues at various Chinese exchanges did not cause this current rally, correct? Yeah, I think that statement is not true. That's for several reasons, which, you know, I made that statement, but didn't explain on the social media. So the reason why that statement is not true. First of all, when OKEX incident happened, most miners that we know immediately left OKEX mining pool and redirected their hash rate to other mining pool, such as F2 pool or HOB mining pool. So the notion that because of OKEX, miner can't sell their Bitcoin to pay for electricity does not exist because everyone just simply switched their mining pool.

very quickly, especially to, you know, F2 pool where you saw huge increasing hash rate in recent weeks. And I think that's due to a growing concern among miners to exchange-based mining pool after OK, yes, incident. And second point, which can be a bit more sensitive topic, is OTC trading in China, right? And it is true that in recent months, China have been more strict on OTC for AML purposes. But it is not banned. It became a little difficult but not impossible. And nowadays, I think people are just being a much more careful with their OTC counterpart

and taking extra step to ensure that their source of fund is legitimate and their counterpart's source of funds are legitimate. And yeah. So, okay, so on that same topic, so our, our lovely friends over Ripple here in this country, keep saying that this is crazy. They keep saying that China, the Chinese state somehow controls Bitcoin due to the fact that, you know, hash power is physically located there. Can we put this myth to rest? What's your perspective on this particular piece of FID?

Sure. So I think we disagree with this statement. So although currently largest top mining pools are based in China, but you can see that from OKX mining pool incident, we discussed earlier, miners are not loyal to certain mining pool. Once you see a regulatory price or other action that they disagree with, they will switch mining pool very quickly. And if any of the mining pool is trying to harm the ecosystem, I think mining community will also switch right away. And also for most of the large-scale miners and mining pools in China, at least, they hold a significant amount of Bitcoin. And I think it is against their interest to do anything that can be potentially harmful to the ecosystem. And, you know, as we

start to see more mining operation from North America. We will also start to see more U.S.-based mining pool. Bitcoin mining, I think over next one to two years, will be more decentralized compared to any of the previous years where mining became a large operation in China. And lastly, I think it's important to note that over 18.5 million Bitcoin have already been mined. And there are less than three that have yet to be mined. It's going to take a very, very long time to mine them, right? So the impact of miners on price action, I think, is definitely decreasing. And lastly, if you look at just Coinbase and Gray's Skill alone,

they probably custody more Bitcoin than the entire Bitcoin holding of greater China region. And by the way, there are also other players like, you know, Fidelity, which you're very familiar. there is, and all of them are U.S.-based firms. So I think overall speaking, I think the United States have the most power when it comes to Bitcoin, not China. That's an amazing answer, Mustafa. I think I'm just going to take that clip and post it whenever Ripple has their terrible articles about China control of Bitcoin.

Thank you. I mean, that's the most thorough rebuttal of this notion that I've ever heard in my life. I mean, I think you're absolutely right. I think you're absolutely right. I think people don't understand that miners are pro-Bitcoin. They don't just treat it as a trade or a way to make money through arbitrage. I mean, Bickson is a great example. You guys are directionally long.

Bitcoin as an institution. You make investments to support Bitcoin. You run a very popular Bitcoin wallet. So it's about more than just making money. I mean, it's about supporting the phenomenon. So you wouldn't want to do anything that would actually harm it. Yeah, absolutely. And like even speaking from custody perspective, right, again, like I think U.S. institutions

hold a lot more bitcoins than China. That's true. And we do need to be wary of those institutions as well. I mean, that was the whole point behind the 2X debate back in 2017, as I'm sure. You remember, I mean, we're talking about largely U.S.-based institutions that tried to force through a protocol change, and they were defeated. So I think the point is that no matter what your influences, whether you're a minor or you are a large U.S.-based custodian, if you try and change the protocol in a way that the users disagree with, you're not going to succeed. Yes. So that's something that I think outsiders don't often understand about Bitcoin is the users.

the people that run the software come first. And, you know, the service providers have their part to play, for sure, but they're not sort of fully sovereign. They don't have full discretion over the future of the protocol. Yeah, I definitely, definitely agree with that statement. So on that same topic, we have an interesting development. We are potentially looking towards our first new protocol upgrade in three years. time with Taproot and Schnorr.

And I'm don't worry, I'm not going to ask you to explain Taproot. I probably couldn't explain it either. But we are seeing this interesting thing where certain miners are signaling their support for implementing Taproot. What is the, what's the view of Bixen on this upgrade? Do you plan to support it? Yes. And I think both currently like a few large mining pool, such as,

you know, pull in and after pull have all expressed support for the taproot upgrade. And as an institutional minor, Basing also signal support for tap route. Technically speaking, we think it improves, you know, Bitcoin privacy, scalability, and the flexibility on the smart contract. I love to hear it. That's absolute music to my ears. Thank you. And I really want to add out what you have said earlier.

I think when it comes to protocol upgrades, people really don't realize that miners tend to listen to the voice of, you know, community and the market and what's best for Bitcoin development. And I think that have hold true again and again in past protocol upgrade attempts like, you know, BCH and Bitcoin. Bc spent a lot of money to, you know, fight against that. that and like to support bitcoin during that time and i think the power is really on the hand of the market and community not the bitcoin miner or service providers wow i think this is the most bullish interview have ever done on the show i'm not even kidding i mean it's just i've i've never heard it put so clearly uh you know directly from some of the represents a large miner too. This is really revelatory. I'm very excited that you guys are going to support Taproot.

I think, you know, a lot of developers here are nervous, you know, about how exactly we're going to activate it and whether we're going to get, you know, like in 2016-17, the miners kind of blocked Segwit or, you know, a subset of miners were blocking it. And so everyone's very nervous about it. But I think, you know, since the Bitcoin Cash factions split off, it's less likely that we get anything, any conflict and any, I haven't seen any opposition at Top Route at least as far. So hopefully we push it through. So before we wrap up, you know, you're telling me you spent a lot of time in Turkey, which a lot of Bitcoiners are paying attention to these days. Apparently, there's a thriving local exchange environment there where they think BTC Turk is the biggest. They're obviously having a currency crisis with the lira right now.

Tell me about your experiences there and why Bitcoin is kind of popular there. What factors correlate with sort of local enthusiasm for Bitcoin? Sure. So I think people are definitely very excited about crypto in Turkey. And overall, trading volume grows several times. this year compared to last year and I think a few factor on why we should pay very close attention to emerging markets such as Turkey. Number one, Turkey have a very relatively young population compared to its neighboring countries in Europe or Asia. Overall, I believe 46% of the population

on a smartphone device in Turkey, 17% of the population are bilingual in both English and Turkish. government remain neutral toward cryptocurrency. I think it's largely currently still unregulated. And last year, I hosted a dinner in Turkey that was sponsored by Turkish president's investment office. And so, and like on a macro level speaking, Turkish lira is currently near an all-time, you know, low. And political and economical instability really further enhanced adoption.

I think most importantly, there's no tax, I believe, for capital gain of crypto in Turkey. And lastly, if you have a chance to visit Istanbul, you will see that there are as many as foreign exchange shop and gold shops as McDonald's in the States on the street of Turkey. So I think people are already very used to this, you know, trading for an exchange, commodity trading. And that was an easy migration to Bitcoin, I believe. Yeah, it's so interesting. I mean, we hear this a lot about the jurisdictions where Bitcoin is popular with retail. Oftentimes, it's places where there's a cultural affinity for gold as a savings device for households. And it's clearly the case in Turkey.

not really the case in the U.S. at all, although there's a lot of American gold bugs and American institutions that were solely gold, but it's not really common to have your household gold as your savings, which I think is part of the reason Americans don't understand Bitcoin as much because they're not used to trying to store value

outside of the financial system. But in places like Turkey, people are used to that, And so Bitcoin kind of comes naturally to them. Yes. And, you know, to tell you like a personal story, you know, personally I grew up in West part of China and Central Asia. I speak fluent Uzbek language and saw firsthand as I was growing up in Central Asia, how elders in my family or in the regions are so attracted to gold, right?

And I think mostly for two reasons, one, to fight against currency. is inflation and volatility. But number two, I think it's just more resistant toward, you know, governmental scissors, especially in a CIS, a lot of Central Asia region. And unlike cash, you can also pass it down to different generation within your family. So people are very accustomed to that gold,

purchasing, silver purchasing culture. Now, you have an, entire youth population growing up in that region, comparing gold to Bitcoin. And, you know, what do you think will happen? I think people really underestimate the adoption of cryptocurrency emerging market. For some people in certain jurisdiction and situation, I think involvement in Bitcoin is the only way to fight back and voice their opinion. And... Wow. Yeah.

And, you know, like, keep in mind, globally, there are 1.7 billion adults that remain unbanked, but two-third of them have access to a smartphone that could help them access the financial services. So I think the, you know, the potential is really, really huge. Yeah, the post-Soviet states are really so interesting to me as potential breeding grounds for Bitcoin. in adoption because there will be that collective cultural memory of devaluation. I mean, you had really serious episodes of inflation in the ruble after the Soviet Union collapsed. So that looms large in the memory.

You know, that's really not too long ago. Those in the 90s. So I think it's kind of the same reason the Argentines have an affinity for Bitcoin. They remember currency failure. They've lived through it. So it does sort of strike me as quite reasonable that there would be more enthusiasm for Bitcoin in these places. Absolutely. You're right. And I think especially post-Soviet Union, people started to collect a lot more commodities. And I think for a younger generation, it will really transfer to Bitcoin.

Well, Mustafa, this has been such an edifying conversation. We busted so many myths today. we learned so much about actual minor attitudes to Bitcoin as opposed to just speculating as to what miners think. You know, I went on your, I did the equivalent. I went on the Bixen super app and did a session, which was translated into Mandarin in real time, which was really fun. And people were gifting me red envelopes full of Bitcoin when I was doing that. So unfortunately, we have no equivalent rod envelope that our listeners can give you. But certainly you're doing us a favor by helping elucidate, you know, minor attitudes. So I want to thank you for coming on.

How can people follow you and sort of follow your work more closely? And where would you point people, you know, to follow Bixen? Yeah, first of all, Nick, really, really appreciate you inviting me to your show. It was a huge pleasure for me to join the show, and we were very happy that you had the chance to come to B-Cin to join the show. We really follow a lot of your research closely at B-Sing, and it's fascinating to see the contribution you're making to the space. And if people are interested to reach out and follow B-Cin, I think Twitter is the best way. for people outside of China. My DM is always open on Twitter.

Okay. Well, Mustafa, this has been so, so, so fun. Hopefully we can have you on again in a year's time. We can do update. We can see where hash power went. We can see if your forecast came true. Thanks again for coming on. Thank you so much.