Post the Bitcoin ETF approvals, the price corrected a little and then proceeded to climb, and climb, and climb...
To understand the significance of what occurred recently, one has to realise that since Bitcoin's first major all time high, the halving(where the amount of computation required to earn Bitcoin increases by 100%) has always been the base from which Bitcoin puts in a new all time high roughly 18 months later.
Apparently, no more.
We are currently around 3 weeks away from the Bitcoin halving, and Bitcoin just put in an all time high, 19 months before schedule.
TLDR; boomers are exchanging their gold for crypto at an alarming rate.
The above is Part 1 of the puzzle.
Next, Nvidia and AI.
The surge in AI usage has resulted in massive GPU price hikes. For perspective, it took Facebook 8 months to reach 1 000 000 users. It took ChatGPt only 5 days. Paraphrasing Musk "You will be competing with AI for electricity." The huge advantage AI has over everything else that came before it is its use cases. But those use cases require computation. Here is how Nvidia have done over the last year...
"Nvidia, on Wednesday, posted record Q4 revenue of $22 billion, boasting a 265% increase from the same quarter the prior year and earnings that blew past expectations."
"Chipmaker Nvidia Corp has become the world's fourth largest company by market capitalisation, after a 16.4% surge on Thursday when a quarterly earnings report surpassed analysts' expectations. The company's market cap has swelled by $740.2 billion this year, the largest increase worldwide."
The market penetration of AI is still at roughly 10%, and with the vast majority of use cases still left unexplored and unrefined.
That is Part 2 of the puzzle.
For the final part, we look at crypto projects that are integrating distributed computation through blockchain technology. DePIN
- DePIN stands for Decentralised Physical Infrastructure Networks.
- It refers to a system that uses blockchain technology and tokenized incentives to build physical infrastructure in the real world.
DePin chains currently make up less than 1% of the total crypto market cap.
And that's part 4 of the puzzle.
Now, let's put it all together...
AI is here, and it requires computation like never before.
Will ChatGPT be able to buy more GPUs than those sitting in private hands? In a country like the USA, there are probably around 300 mobile phones of reasonable quality. The latest Nvidia GPU is about 20x faster than the GPU within the latest iPhone, meaning 15 000 000 of Nvidia's latest GPUs equate to the total processing power of the cellphones in the USA.
And now you're thinking...$15 000 000 000(the rough price of those 15 000 000 GPUs) isn't too much for a large company to pay. But remember, we were only comparing the mobile phones in the USA. Here are rough estimates of the number of devices capable of computing used on a daily basis around the world.
- Desktops: 2 billion
- Laptops: 1.5 billion
- Tablets: 1 billion
For companies like ChatGPT and Google, it will start to make more and more sense to outsource microcomputation through blockchain technology. It will save them on hardware, maintenance, and energy costs, and allow them to focus on the innovation of their software rather than the boring hardware stuff.
The work required to mine Bitcoin is probably best described as being similar to Bart Simpson writing lines on the blackboard. There is information flow, but really, it's empty information, and work is simply being done for the sake of work. In Bart's case, to write a particular amount of lines on the board...in a BitCoin miner's case, to be rewarded with Bitcoin.
DePIN networks will be different. The work your device does will provide a product. Even if that product is only a few bits of information, it would still be part of the larger product that is useful to the user.
In my estimation, this is the first true mass adoption case for blockchains technology. The adoption of blockahain in banking and other sectors is all good and well, but DePIN is going to make blockchain mainstream.
TLDR: AI is the next leap forward for humanity. It requires a boatload of computing. Companies cannot compete with the collective computational power of billions of devices owned by people around the world, and Crytpo DePIN projects are linking those people, and rewarding them for pooling their computational power.
Well done if you managed to read all of that.
At elast it wasnt another political post, right?