At the beginning of the week, Chamath Palihapitiya, CEO of Social Capital, stated that Bitcoin faces two major problems. One problem highlighted was where speculators put their money, and another was where miners directed their power.
However, Palihapitiya’s claims saw significant pushback from Bitcoin bulls within hours of his posts, most of whom disagree that any of the highlighted issues are permanent.
What did the moles say?
In a Share on X On Sunday, Palihapitiya revealed the headwinds he sees, writing: “There are two issues facing cryptocurrencies and, specifically, Bitcoin bulls.”
The first problem, according to him, is that the next marginal dollar of speculative money would rather chase prediction markets and stocks than buy Bitcoin.
As for the second problem, he said: “The marginal energy of Bitcoin mining is worth 10-20 times more if it is reallocated to serving AI tokens.” He also added that both transformations could be structural, while noting that he could be wrong.
Who are the ones who are going back on Palihapitiya’s predictions?
CEO of Coinbase Brian Armstrong didn’t quite agree With introductions from Palihapitiya. He sees the first problem as temporary, while he sees the second as more permanent. However, he opposes the logic that links mining energy to price.
He wrote: “Hash power or the energy that goes into mining Bitcoin does not determine its price (the network difficulty adjusts if miners go offline to maintain the same block mining pace).”
Armstrong added that in the long term, Bitcoin’s price is mostly a measure of how much people fear inflation, and there appears to be no end in sight for deficit democracies everywhere.
Jack MallersThe CEO and founder of US bitcoin payments company Strike took a tougher stance. He stated that he had issues with Palihapitiya’s position, noting that the money circulating in prediction markets, meme currencies, or AI was never a loyal demand for Bitcoin to begin with; He said her loss changes little.
According to Mallers, Bitcoin wins by replacing savings into money, not by competing with the latest speculative venues.
Matt Hogan split the lead. he Delivered the first point True, he said, it helps explain why Bitcoin’s volatility is low and why the next uptrend is likely to be slower. The second problem is largely self-correcting and not a near-term concern, he wrote.
David Hernandez Refuse to frame Frankly, they described the two problems as cyclical and not structural. He pointed out that speculative liquidity is always transferable, whatever the next opportunity. James Van Straten He pointed out Miners moving rigs and power toward AI is not a new development, having started about two years ago.
Background
The miner’s argument is not hypothetical. Bitcoin mining has turned into a losing business on the margins. A CoinShares study cited by Cryptopolitan estimated that the average cost of mining a single coin would be around $79,995 for public miners in the fourth quarter of 2025, a stretch when Bitcoin was trading near $68,000 to $70,000.
This resulted in miners losing approximately $19,000 per coin. In response, the industry has signed contracts worth more than $70 billion in artificial intelligence and computing, and companies like Bitfarms started selling Bitcoin and rebranding around high-performance computing.
The liquidity argument has its own supporting data. Prediction markets It set a record high of $28.4 billion In monthly trading volume in May, according to Artemis figures reported by Cryptopolitan, Kalshi handled $17.3 billion of that and Polymarket $8.4 billion.
The sector has now recorded higher trading volumes for four consecutive months, a sign that the speculative money described by Palihapitiya has started somewhere.
