Arthur Hayes, the founder of BitMEX, believes that a war in the Middle East could actually boost the price of Bitcoin (BTC).
In his latest analysis, he explores what might happen if the conflict between Israel and Iran escalates. Hayes points out that Iranian Bitcoin miners account for about 7% of the global hash rate. But he doesn’t think that if Israeli attacks take out these mining operations, it will significantly impact Bitcoin’s price.
He recalls when China banned Bitcoin mining back in mid-2021. The hash rate dropped by 63%. However, it bounced back to its previous high in just eight months. Miners moved to other countries, and new players entered the market, benefiting from better conditions. Interestingly, Bitcoin reached a new all-time high in November 2021, despite the drop in hash rate not affecting its price.
Hayes argues that even a complete destruction of Iran by Israel or the U.S., which would eliminate that 7% of the global hash rate, wouldn’t have a lasting effect on Bitcoin.
He also speculates that if the conflict escalates, oil prices could surge due to damage to oil infrastructure in the region. This could lead to a spike in Bitcoin’s price, too. He describes Bitcoin as “stored energy in digital form.” When energy prices rise, Bitcoin gains value in fiat currency.
While mining profitability might remain stable, large industrial miners could struggle to secure energy. Utilities might invoke force majeure clauses and cancel contracts under government pressure. However, if the hash rate drops, mining difficulty decreases, making it easier for new miners to profitably mine Bitcoin, even at higher energy prices. Hayes emphasizes that the resilience of Bitcoin, as envisioned by its creator Satoshi Nakamoto, will shine through in these situations.