The Hashrate Arms Race: Conflict in a Softwar World | Bitcoin 2026

Everybody, thank you for joining us at the energy stage. My name is Kent Egan. I'm head of government affairs at the Bitcoin Policy Institute. Like to take a minute to introduce our our uh Well, first let's let's start here. Um so today we're going to we're going to I think we have you ready for a very timely discussion that we're calling the hash rate arms race conflict in a software world. Um I think you'll get a flavor for how timely this is when we get started. But yeah, let's start first by introducing our our our panelists, my good friend Kyle Schnips. >> Yeah, good to see everybody again. Uh Kyle Schneps, director of public policy at DCG. Uh been doing this for 5 years in the policy space. Uh advocating for for Bitcoin proof of work. Um and other aspects uh focused on decentralization of some of the most important assets. background in US national security uh the federal government and uh very happy to be here with with uh my good friends here and with you all. >> So we have Ben Concincaid. >> Hi everybody. Good to see everyone. uh former diplomat uh Bitcoiner uh worked around Bitcoin mining uh opportunities in Africa and currently uh helping to run a critical minerals business on the refining side where we are trying to take the decentralization step and apply it to the critical mineral supply chain. Good to be here. >> Last but not least for marine Jake Iron Camp. Hey everyone, Jake Laneamp. Um, as stated a couple times, I was in the military and then worked for uh the DoD as a civilian. In the last couple years, I've been uh running a a company called Bridger, where we're trying to uh mine internationally, particularly in Africa, but other parts of the world as well. >> All right. Um, let's let let's kick it off. So, last week in Washington DC, the software thesis was front and center. Um Admiral Sam Paparro who is the commander of Indopaccom um testified in front of the Senate Armed Services Committee and the House Armed Services Committee. Um among the things he discussed was his view of the importance of the Bitcoin network and proof of work as a potential tool of national power. Now for those of you that don't know, IndopayCom is responsible for securing the Pacific region. That of course involves any potential conflict with China. So his testimony raised a lot of eyebrows. Um, there were also back to the software thesis some deep reflections of Jason Lowry's software work. You pretty saw on X people were posting pictures of their copies of uh of software. Um, and the discussion is back front and center. So, I'd like to get your thoughts on that. We'll start with you Jake. Did you I know you we discussed briefly the admiral's testimony and you know what this means for Bitcoin and financial security. What you take away from it? So I think that Bitcoin probably carries uh the most democratic ideals of any technology u and therefore is uniquely American. I think that was kind of along the lines of what the admiral said and and what Jason Lowry has said. Uh you know for BPI uh I forgot to mention that I'm also a fellow there. The first thing that I wrote was talking about how uh this current administration wanted to uh be the headquarters for uh AI compute. Uh but they also wanted to make uh Bitcoin in America or make American Bitcoin. And my thesis was uh by American companies uh exporting hash rate to other local uh that that would count as American Bitcoin. And I think that uh is is very uh along the lines of what the admiral was saying of that American power projection through uh energy and and foreign markets. >> Ben, as you know, we occasionally see commentary from China about Bitcoin. A lot of stable coin talk to, but Bitcoin is occasionally front and center. I'm sure that Beijing, they were watching the Admiral testimony, looking for hints as to what US strategy is going to be in the Pacific. What would you take away from the Admirals discussion? >> Yeah. Well, first I just have to say that as uh one of uh a small handful of national security practitioners when in government um that were also you know also Bitcoiners um hears something like this. It's still almost hard to believe because we spent a lot of time wandering in the wilderness talking to our colleagues about the intersection of Bitcoin and national security, why it's important. I don't know if you guys had the same experience, but most of the times uh most of those times folks would look at me like I had something growing out of my forehead and uh and try to change the conversation. So fast forward to today and obviously you know huge changes since uh this administration took office but to hear you know the commander of of Indopom talk about the Bitcoin network as a tool for uh national security is just an extraordinary an extraordinary thing to uh to hear obviously thanks to Jason Lowry and his influence there. Now, you know, I think on what he said specifically, very interesting and maybe even still a little controversial within the Bitcoin community about Bitcoin and the network as a uh utility or a tool for national security objectives, but it is the by far strongest computing network through proof of work and that mechanism uh you know really uh creating extraordinary cost foreign adversary like China to be able to attack networks one and he hit that uh head on. Um what I would love to layer on to that would be kind of a step uh maybe upstream which would be the truth layer and how protocols uh or using uh Bitcoin timestamps. There's a great company called Simple Proof that can actually uh you know help ensure that we've got truth and integrity in all of our data. And you think about the strategic uh impact of that as um AI in the hands of our adversaries can be used to um uh you know wage propaganda campaigns. We need truth in the digital realm and I think and we'll see if it plays out that Bitcoin can play a big role in that. So really interesting. Now maybe I'm getting greedy, but what I would love to have heard from Admiral Paparo is what I I know uh senior officials at the Department of of War are thinking about and that is the trade-offs that we're trying to resolve on having the the reserve currency with the dollar and how a strong dollar has come at the expense of uh industry being built overseas. And of course we're going through massive re-industrialization. But there is no organization um uh that understands the importance and the uh the challenges around that than the department of war as you have to have supply chains and munitions and everything that goes into our defense industrial base free of uh of China and the supply chain. So I think we'll talk more about that. Uh but I do believe that probably behind closed doors, Admiral Paparo and others are talking to uh Treasury Secretary Bessant about how uh Bitcoin is sound money can resolve that issue as well. >> I'll give you my my my very quick anecdote about when I felt hope as a national security person in Bitcoin really quickly. You know, I'm retired CI officer. When I first got into Bitcoin, I thought I was by myself. And walking through the halls of my office was a cubicle, a young guy, and he had a bumper sticker on it on his wall. We are all Satoshi. I thought, okay, fine. I think we're going to win. It may take a little bit of time. Um, but back to a party. Yeah, I agree with you, Ben. And also remember, he has certain constraints, right? He's testifying to things that he's not going to get involved in legislation. He's not going to advocate for controversial political issues. So, I tend to agree with you. He's not said it. Um, but Kyle, so I know that Jason Lowry's overall software thesis is controversial. Some people some people think it has legs, some people don't. Um, Admiral Paparo clearly ascribes to at least some aspects of that. Um, you've got a lot of experience in the Bitcoin mining realm. What do you think that means? Um, if you your perch at DCG and as someone who's been, you know, in government and in the space for a long time, what' you take away from the Admiral's testimony? >> I think it was uh, I mean, of course, it was positive. as somebody who's, you know, to Ben's point as well, I mean, as somebody who's been working in the policy space, especially, uh, has been one of few people with national security backgrounds, um, it was heartening and it is something that we are going to be able to point to. >> It's a lonely road for a while. >> We're going to be able to educate on that. U, we've already received outreach to, you know, learn more about what he may be talking about. And so I think from the the policy realm, it's kind of opened up a lot of doors and windows in in terms of curiosity and interest in what this technology uh means. I've already done briefings on this and and different aspects. And I think that in general, I mean, without getting too far into the weeds on it, it's it's it's a great way of introducing the concept of America participating in the largest computer network in the world uh in some way, shape, or form. and and I've had conversations with my colleagues on the stage and in different forums about, you know, this is a a digital belt and road in many ways. And we want to embrace that because we're not going to catch up with with China, so to speak, on an actual physical belt and road. They're too far ahead. They have invested in that realm, but it may not be the right realm in terms of the future digital and AI world. And so I think just as Rails um it is incredibly important and then hopefully once that interaction gets started it shifts over to this larger concept illustrated in software of of having this sort of hash force of having uh power restriction that can allow the US to operate in cyberspace um by providing you know huge hurdles to adversary attack. No, very good. Let's sort of stick with that basic theme. So, I mean it's not not enough not a tough guess that this this crowd would agree that Bitcoin mining is overall good for America. Let's even accept the thesis that um there are proof of work does present provide some sort of novel national security applications to it. um but that you know but so let's start from there but a lot of the discussion in Washington now and you sort of you kind of nipped this at the edges a little bit is about reshoring bringing back the industrial base supply chains um you know there are there are some companies doing the lord's work trying to build predominately American as6 of course the block I think is probably the most prominent among them um but let's let's talk to the idea of of of supply chains and domestic manufacturing um if we assume that bitcoin mining is a national asset What do we have to do if you you were king for a day? What do we have to do to help encourage the construction of domestic A6 bringing those supply chains back to the United States? So I'll give two answers which is my first is well I'll set the stage by saying it's really important to understand that in the decentralized bitcoin network it is a little bit uh contrary to have most machines made in a centralized fashion and even taking nationalities out of that it is concerning to have them all come from one place. Um that said uh what I had brought up previously in a conversation we had is you know if the roles were reversed in terms of AI if if all you know if Nvidia had been a Chinese company the United States would embark on a sort of huge well-funded Manhattan project so to speak in order to compete because of the value and the future of AI. I would argue that that is important, but so is Bitcoin, but it's now reversed. And so, well, we need to in a blue sky scenario, I would love to see some sort of heavy investment, a Manhattan project for for a Bitcoin mining machine developed in the United States to compete with, you know, uh, foreign manufactured machines. Um, in a realistic scenario, I'd love to see incentive, tax incentives from the government for developers of these machines, subsidies, um, in order to support the development. And right now, we have some really productive bills out there, but they're offering more emotional support than actual financial support. So, I'd love to see the finance side. >> Yeah, it's a cont throw us out to everybody. It's a controversial topic, right? the majority of bit of of A6 United States are made by Chinese companies. Um there's a lot of sort of FUD out there that if you connect them to the power grid, they could turn the lights off. Um I and I and I think the part of what we do at BPI is trying to form policy makers about what that really means. Um but I'll throw it to you guys. You know, what is the what is the core problem we face? Um having um having most of our most the most of Bitcoin mining infrastructure produced in China inside the United States. Yeah. So if you if you all will indulge me for a minute to uh just kind of paint a picture of where we are right now on supply chain uh dependence on China for literally everything that goes uh into powering the modern world from the cell phone in your pocket to the car that you drive to exquisite uh defense applications on the uh uh strategic side uh CPUs and of course um purpose-built processors AS6 for Bitcoin mining and this is what I've lived and breathed on the uh critical minerals side for the last couple of years working for Reelement Technologies uh which is yeah endeavoring to bring non-Chinese critical minerals processing to the United States overseas do it in a decentralized fashion so that we can have resilient supply chains. So, you know, when we came together and chatted about the discussion that we were going to have today, my my mind goes directly to connecting the dots. So, drawing a straight line between Bitcoin uh and specifically Bitcoin mining and the hardware that underpins it and the knowledge that I've gained over the last couple of years on critical mineral supply chains. So um you know Kyle spoke about you know manufacturing AS6 and we have fantastic you know companies Orodine is one I believe that there are others that are going to be you know manufacture and and probably employ more innovative better technology and I think we'll compete well there but let's go upstream to where you know the raw inputs come from to build every single component of an ASIC and China is the origin story. So it goes back to something that we in the Bitcoin community care very deeply about and is what makes Bitcoin such a powerful protocol and that is decentralization. So Kyle uh made reference to this, but I think it's really important. I'll get to where I think there's going to be opportunity, but uh I'll be a little Cassandra to start. Uh today, um 90% of the rare earths that go into uh manufacturing around the world are processed in China. Uh to get a little bit more technical, they have almost a pure monopoly about 99% of what are called heavy rare earths which go into the applications that need to resist heat. You can think military side of that. Uh you can think AS6 again because of heat resistance that's needed in those processors. It's not just rare earths. It's titanium. It's tin. It's germanmanium. It's gallium. It's a whole list of things that you will remember from your high school chemistry class. And the reason why that's really important is because what we watched unfold early in the Trump administration was the beginning of a trade war. And that trade war was defined by on one side the tool that we had in our toolkit which was uh putting tariff regimes on uh countries around the world in order to promote reshoring to promote uh and protect industry in the United States. I believe the first tariff number for China was 185%. So forget military for a second. I don't know this for sure, but I'm guessing that within about five or six days, large OEMs like General Motors, Ford, others called the White House and said something like, "We've got I'm sorry, I'll back up. China's response to the tariffs was, "We're going to cut off export of the rare earths." OEMs called the administration and said, "Hey, uh, we've got about three to six months of stockpile before we are shutting everything down." This happened about, uh, two, I think three times where things went back and forth and the administration was called to the negotiation table and obviously had to make big concessions on tariffs. So it is a massive point of leverage that China has and where we are today is not much better but we bought ourselves time to not only you know uh really ramp up our industrial manufacturing but to figure out how we can get mining going in the United States and with partners how we importantly because it's the choke point can get refining going so that we can get those materials that come from mines in the United States that come from mines in Africa that come from mines around the world, refine them in the United States or with American or Western technology. Otherwise, the alternative is it continues to go all the way to China for processing and they continue to have that tool in the kit that says, "Hey," and this is something that they did. We're going to let the rare earth flow. We'll let the rare earth magnets flow. But for defense customers, for strategic customers who are using these materials to point weapons at us, we need to see IP. We need to see what it's going uh downstream into. And if we were China, we would in that position, we would do the same thing. So, how long is it going to take for as the Bitcoin network continues to grow, as Bitcoin becomes more understood as a geopolitically relevant strategic uh asset for China to to apply that same uh thought process towards what they have control over that flows into the production of uh of AS6 and the ecosystem of infrastructure around data centers. that support it. So, we've got to move, we got to go, we've got to go fast. Uh, and I think that is what absolutely is happening on the critical mineral side on mining and refining. What I offer to you guys today is drawing that line back to what is extraordinarily important for our network to be for the Bitcoin network to be truly decentralized and that is to have a decentralized supply chain. So, as government is employing industrial policy and supporting companies like ours on the critical minerals side, I think we're going to see a great opportunity. And this is where I get much more optimistic. And that is that we're going to build refining and mining capacity in the United States, in Africa, in Latin America. And this is going to open up additional opportunities, I think, to decentralize the hash rate because we're going to uh this is a thesis that Jake had a couple years ago and I think we're going to watch it play out over the next two to three years that as these industrial processes, mining and refining and manufacturing start coming online, it's going to be foolish for any company to not have as a profit center Bitcoin mining embedded integrated into their operations to soak up every spare watt of power for the economic side of it. So that's exciting, but we got to go because we're digging ourselves out of a hole, so to speak. >> I just want to foot stomp one very quickly like if to answer the question to foot stomp one of his points. If we are just importing components and and then assembling it in the United States, we're not solving anything. There needs to be some sort of innovation and actual, you know, ground floor development. >> Welcome to predict. The world is a market. Everything is a market. Every headline moves the line. Every moment is your market. Call the moves. Bet on your instinct, your prediction, your edge. Dual bits predict where everything is a market. >> So yeah, that's that that you rais a good point. So Jake, I want to ask you about geography, but first give us you've got I think probably more frequent fly miles across the the continent than everybody else does. um give us sort of your view on the state of competition with China for energy infrastructure for critical mineral infrastructure and how Bitcoin mining can possibly give the United States a leg up. >> Yeah. So I think to dovetail on what Ben was saying, you know, the US side of it before I jump to the international side of it, um we've come a long way in the last like four or five years of destigmatizing Bitcoin mining. you don't see nearly the amount of uh environmental hit pieces that's kind of either gone away or gone towards AI HPC data centers. Um but the idea of the pendulum hasn't fully swung the other way. There's some great success stories that are known within this community uh and grids like Urkot and and places that allow the flexibility of Bitcoin mining to be that capacitor on the grid and soak up the extra energy. But uh along with Kyle's idea of of really champing manufacturing of AS6 in the country, I think there's some great uh companies. I think Block is a great product company. If given the time and given the runway, they'll they'll get, you know, competitive or even surpass uh other machines out there that aren't being manufactured in the United States. But they need to ruin the run. And I think uh if I was king for a day with US policy, I would have you know US policy makers embrace that kind of idea of optimizing the grid, especially as we're putting so much AI on it that is uh inherently inflexible, unflexible. But as far as the international component is concerned, you know, and and going back to your original question about uh the admiral's testimony and and where we're at uh visav, you know, soft power and competition with China, I think clearly in this, you know, second cold war that we've already entered into, uh the monetary domain is is one of the arenas of combat. you know, we're pushing stable coins uh very hard through the Genius Act and trying to have that proliferate throughout the world. Uh China, to their point, has been pushing their CBDC to mix results. But they're also trying other things like in Africa uh pushing countries to redenominate uh their debt that they owe to China as part of the Belt and Road initiative to denominate it in the yuan instead of the dollar. And so I think by exporting our lessons learned of like how we've optimized like Urkot for instance and taking that to these countries, we're bringing them something that they don't necessarily have to opt into the dollar system, but it's more analogous to the US dollar system than it is the yuan because it's open. It's an open capital account. And so I think both um you know dstignifying um the Bitcoin mining as as an energy resilient tool both here in America but then exporting that to other countries serves US policy goals. >> Yeah. And to that point and I thought this help we'll start with Jake but everybody can answer. Um you know the president has made it clear he wants United States to be the Bitcoin mining capital to make the most amazing Bitcoin. Um, do we do we for that to happen, do we necessarily have to have hash rate geographically all inside the United States or is there room for American companies to like like Bridget works on to build infrastructure uh in different countries and is that still fulfill the goal of making America the dominant bitcoin mining uh state? So clearly I'm very biased uh but uh you know as I thought through this and and the reason why I positioned the company to do what we're doing is because I think emphatically American companies going overseas partnering with uh these nations to mine Bitcoin serves their interest but it also serves America's interest because you think about it an American company is going to be uh importing IP into that country. they're going to be making that grid more resilient. So, it's furthering uh the, you know, pardon the pun, but soft power agenda of that diplomatic mission in that country. But as an American company, like we're going to export that commodity over the internet and it's going to be injected into the US economy. So, uh in our little dose, you know, we're going to be pushing American GDP. If we sell Bitcoin to pay the bills, we're going to be selling it into a US exchange or a US OTC desk. So, it will benefit the US economy, but it'll also bring the type of mutual benefit that is those countries aren't used to. Uh, you know, if you go to those countries almost universally, they want to do business with America. Uh, I think that's a misnomer that we have with our kind of inward cynicism in the media. We are by far the preferred business partner in these countries. They want to do business with us. They want to do uh they want to work for an American uh company. We always kind of do what we say and and almost unanimously they kind of tongue and cheek say, "Hey, uh China stuff breaks, but they're here. They're doing business." And and that's the kind of the way that uh that things are perceived. So I I think emphatically, yes. uh us going overseas utilizing their infrastructure in a way that is mutually beneficial is also very very productive for the American economy and the American policy goals. >> Kyle, please. >> Yeah. So, I I actually agree tremendously with with Jake's points and especially with uh just Bridger's business model in general. I I do not think that the actual physical location of what is ultimately a decentralized network of machines is totally central for the US to be number one in Bitcoin or proofof work mining. Um, one of DCG's subsidiary companies is Foundry USA, which is the the largest Bitcoin mining pool in the world, uh, with around 30% of hash rate. The next three or four companies, next three or four largest are Chinese operated companies. Um, the reason I bring this up is because it is incredibly important that US pools are supported in the United States for the US to be number one in Bitcoin mining and crypto. It is something that doesn't get talked about very much. Um but the pools as the aggregators of hash rate and the distributor of rewards uh serve a really important function with the Bitcoin network. And if there is any part of this decentralized network that does have some governance influence um not on the rules of Bitcoin of course those are firm and it's decentralized but if there's one area where there's a little bit of influence that can be had on governance you want it to be one that's in the United States and has US values which are so analogous to Bitcoin values as we've heard on this stage and so um that is a really important point and I can tell you that over the last 6 months there has been an tremendously renewed interest from US policy makers on just that point. I get outreach all the time to learn more about it because it is uh evident, it's important and it's imminent. >> Yeah, Ben, so there is obviously some tension between the core software thesis of hash rate dominance and the decentralization of the network. >> Yeah. Yeah. So, I I think I' I'd simply state that what is what is good for the network is good for the USA. Uh and I think that that is is something that needs to be or we can need to continue to foot stomp that with uh with this administration. Thankfully, we've got uh a number of folks uh across the inter agency that understand this and we've got a lot of open ears. uh you know having Patrick Wit, head of um digital asset task force, is that what he's Yeah. is uh is fantastic and I know he gets it. So that takes you Yeah, it takes you back to uh what is good for the network and decentralization is good for the network. So, foot stomp again um I think what uh can go into the programmatics of industrial buildout with our partners in the French shoring portion of industrialization. my critical minerals world working with friendly in-friendly jurisdictions that already have mature mining projects that can feed refining that we put alongside them there as opposed to sending all of that to China where all of the processing is done today is a great example of that integrating as part of that industrial buildout uh uh Bitcoin mining um which uh you know, I think goes to if any of you follow Bob Bob Bernett and what he talks about as extremely important on the uh on the Bitcoin mining side to have more small and medium-sized jurisdictionally spread across the world um uh Bitcoin mining projects as something that is extremely important uh long-term for decentralization of the network and the hash rate. >> Right, Jake? billions of people are going to watch this this panel. Maybe a few of them are going to take away that maybe their country should also get into the hash race. Um what do you what does that look like for other countries adopting what we think amaro talked about what we've been talking about looking for hash rate dominance? >> So I think at the beginning it's it's almost kind of backing into it. our our pitch our our business proposition is essentially hey you've got a lot of wasted energy a lot of times that's either due to lack of infrastructure like transmission and distribution or uh countries overindexing on renewables uh I think renewables are great especially in places like Africa the capacity factors are through the roof you know four times the the capacity factor of solar in Africa than it would be in in Europe so it makes a ton of sense but at least leads to a lot of variability. So we come in, we say, "Hey, we can turn this wasted energy into dollars, which is by far their commodity that they're the most short on." But I think over time, one of the most underdised aspects of Bitcoin, where I see it going, is its utilization and trade. I think there's going to be a growing bifurcation between uh the Chinese yuan economic system, the US dollar economic system. So for middle powers uh that can be regional powers like Brazil, Turkey, Saudi Arabia, you countries like that, they they're not going to want to be pigeonhold into either of those. So if you want to float in between those systems, you need a true na neutral reserve asset. And there's basically two options. Uh there's gold which you know is very slow, very expensive to ship all over the world. We've tried that a couple of times. Um and there's Bitcoin. So if Bitcoin goes to that place where it is truly a global macro asset, it's used in trade. Then uh dominance of the hash rate becomes every country's interest. So it goes from being this oh this is a cool novel technology where I can monetize unused energy to it being okay, we need to have as much control of the hash rate as possible. We don't get there overnight, but I think uh starting now, these smaller countries can kind of frontr run where that's going. So, it's a huge opportunity. >> All right. Um we have two minutes left. Let's let's let's play a game. Uh Kyle Schneps, you'll be given access to President Trump's truth social account. He wants a tweet on he wants a post on Bitcoin mining. What are you what are you posting? So I think I would post something uh all caps. >> Of course. >> Of course. >> Um no, I I think the most important message is actually to prepare the United States for the things we don't know yet about what the Bitcoin network can bring. We you you've heard you will hear a on the panels we we're on right now and many others you will hear a lot of the amazing things that people are using this for and could use but we want to understand what it could be used for in the future and what that's going to mean and I think it is going to revolve around AI payments and privacy and how the Bitcoin rails are going to be able to enhance that, protect that. Um, I think those three factors are going to be huge. So, I would post all caps, Bitcoin, >> AI, privacy. Let's figure it out. >> Ben, chance of a lifetime. >> So, I I may have gotten some intel that this uh question was going to be asked uh ahead of the panel. Uh the so I wrote I wrote it out, but I am not a Donald Trump impersonator. So Lucas is going to come up and do his best. There's way too many machines and way too many minerals all in China. No longer. You're welcome. >> Make Bitcoin mining great again. All right, everybody. Jake, you have the last last last word. >> I can't top that. I would just add a thank you for this attention. Thank you for your attention to this matter. >> Thanks everyone. The gents are available for autographs, selfies, whatever you want afterwards. But thank you for your attention. We really appreciate it. Enjoy the rest of the conference. Let's keep it going. Ladies and gentlemen, I do want to make a special note. These men spent their lives defending American freedom and liberty. And it's no joke that they are now doing it for Bitcoin. This is American values that are being extended to the world. It's an incredible opportunity for us to take advantage of their knowledge, their patriotism, and their dedication. Please give them a round of applause. Every year, this community comes together to celebrate, to debate, to build what comes next. And every year the stage gets bigger. Sound money center stage. So where do you go to celebrate the next chapter in Bitcoin history? You come home. Nashville. July 2027.