Peter on Farcaster

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https://warpcast.com/~/channel/btc

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1/ Would it make sense for the US or China to mine Bitcoin to protect their bags? At first glance, yes. Big holders want to defend their asset. But dig deeper, and it’s not so simple. Here’s a breakdown of the incentives, tradeoffs, and why this approach might break Bitcoin 🧵👇 #Bitcoin $BTC

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2/ The idea: If Bitcoin hits $1M or $10M, it becomes a $20T–$200T asset. If governments or whales hold large amounts, they should want to secure it. That means preventing 51% attacks, censorship, or network collapse. So… run your own miners, right?

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3/ It sounds rational. ✅ @drakefjustin says today’s Bitcoin security budget is fragile which is only 6.5 BTC/day in fees. https://x.com/drakefjustin/status/1928025981270519924?s=46 ✅ A permanent 51% attack could cost ~$20B in hashpower. ✅ For a $200T market, that’s cheap defense. ✅ US defense budget = $800B/year

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4/ And there’s precedent: - Governments already protect financial assets: - Central banks stabilize currencies - China pegs the yuan If Bitcoin becomes systemic, state mining might look like financial hygiene.

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5/ But here’s the problem: Bitcoin doesn’t want to be protected by governments. That violates its core principle: decentralized trustlessness. 🙅‍♂️ Let’s talk about why the “gov-mining” model is way messier than it looks. 👇

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6/ First: The tragedy of the commons. @benediktbuenz warns: Why would the US pay to secure Bitcoin if China might? Why should anyone spend billions if someone else will? https://x.com/benediktbuenz/status/1928192930012954870?s=46 Result: no one does enough. The network is left vulnerable.

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7/ Second: The cost of carrying. Mining isn’t cheap: 💸 $1B = 1 GW of hashpower. 🧱 Bitcoin uses ~20 GW today. 🔌 That’s $20B in infra for 51% defense. 💡 Ongoing energy cost = billions/year. That’s a constant burn by just holding $BTC

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8/ Third: Centralization kills credibility. If the US + China run 80% of Bitcoin's hash rate, it’s game over for decentralization. No longer censorship-resistant. No longer trustless. Just a state-backed database with Proof-of-Work lipstick.

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9/ In fact, the US already controls 75.4% of Bitcoin hash rate. (Source: jbs.cam.ac.uk/faculty-resear….) Add China? Now the two biggest surveillance states run your “freedom money.” That’s not antifragile. That’s capture.

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10/ So what happens if they do it anyway? Yes, they might prevent 51% attacks. But it comes at a cost: 🚫 Network trust collapses. ⚠️ Smaller miners exit. 🪓 Bitcoin forks. 🧨 Price volatility spikes. They may protect their bags... but destroy the asset’s thesis.

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