# Yang Haipo: Bitcoin and Cryptocurrencies Have Reached The…

# Yang Haipo: Bitcoin and Cryptocurrencies Have Reached Their Endgame

Author: Yang Haipo
Original Link: https://www.haipo.me/2026/04/blog-post_10.html?m=1

## I. Bitcoin Is a Pure Consensus Asset
Bitcoin generates no productive output, holds no consumption value, and lacks genuine monetary functions. Throughout history, few pure consensus assets have managed to survive long-term.

The gold analogy is invalid. Nearly half of gold’s demand stems from physical consumption (jewelry and industrial use); it has served as a sovereign currency for thousands of years and incurs zero maintenance costs—a gold bar locked in a safe requires no upkeep for a century. Bitcoin possesses none of these three attributes. In the fiat currency era, gold remains the most robust form of cross-sovereign money: it is the only substance discovered by humanity that can store value independently of any third party. Bitcoin, by contrast, relies entirely on power grids, the internet, miners, and exchanges; the failure of any single link will paralyze its entire network.

Bitcoin once held limited practical monetary utility, including darknet transactions, cross-border remittances, and small-sum payments—anchors that could have underpinned its intrinsic value. However, during the block size scaling debate, the Core faction prevailed by adopting a small-block roadmap, voluntarily abandoning payment functionality. At that moment, Bitcoin devolved from a flawed currency into a purely speculative asset sustained solely by consensus. Subsequent institutional adoption and Bitcoin ETFs have merely prolonged the lifespan of a functionally obsolete asset.

Bitcoin’s block subsidy halving mechanism acts as a self-destructive force. As block rewards dwindle toward zero, network security will eventually depend entirely on transaction fees. Yet an irreconcilable internal contradiction persists between the “hodl-only” value narrative and a security model reliant on transaction-generated fees, with no viable solution.

Bitcoin’s price surge has masked all these structural flaws. Price stands as the market’s most overwhelming signal, one the vast majority cannot resist. Sustained price appreciation created path dependency: rising prices spurred ETF approvals, institutional holdings, and the “too big to fail” narrative. Nevertheless, this entire framework rests on fragile consensus. Once price trends reverse, the same interconnected mechanisms will trigger an accelerated downward spiral.

Cryptocurrencies will not collapse to zero entirely. The inherent value of censorship-resistant, permissionless, and unrestricted peer-to-peer transactions will establish a long-term floor far below current valuations. Even so, a drastic collapse from today’s multi-trillion-dollar market capitalization is inevitable.

## II. First Principles of a Negative-Sum System
One simple equation defines the entire crypto ecosystem:
**Net Capital Inflow = Cumulative Historical System Consumption + Margin Balances**

Capital entering the system has only two destinations: it is either permanently consumed (covering electricity bills, payroll, rent, legal fees, personal extravagance, and other operational costs) or retained within the ecosystem as margin liquidity (stablecoin and fiat balances). No third outlet exists. All quantitative analysis in this article derives from calibrating variables within this core formula.

The crypto industry incurs rigid annual operating costs ranging from $35 billion to $50 billion, with higher spending during market booms:
- Mining operations: $10–15 billion (covering electricity, mining hardware, and facility maintenance)
- Exchange operations: $15–25 billion (labor, cloud services, regulatory compliance, and marketing)
- Project development: Billions in annual expenditure
- Auxiliary peripheral services: Additional multi-billion-dollar costs

Workforce metrics further validate this cost scale. The global crypto industry employed approximately 1.6 million participants in 2025, most of whom work part-time as content creators, influencers, or casual traders. The core full-time workforce dependent entirely on crypto revenue totals 100,000 to 200,000 individuals: 50,000–100,000 exchange staff, 30,000–50,000 project team members, 20,000–50,000 mining personnel, and 10,000–30,000 service providers (law firms, compliance agencies, media outlets, venture capital, and market makers). Estimating an average fully loaded annual cost of $200,000 per core employee—encompassing salaries, office overhead, infrastructure, compliance, and marketing—yields annual labor and associated expenses of $20–40 billion. Combined with $10–15 billion in mining costs, total annual system consumption ranges from $30 billion to $55 billion, aligning with the baseline $35–50 billion annual estimate.

The industry suffers from severely weak external revenue streams. While stablecoin payments, cross-border remittances, and on-chain settlement generate marginal real-world demand, suc…