Hashrate and Hurt Knees 🏍️
On Bitcoin, burnouts, and why GPUs don’t age like wine
Hello!
Every Saturday I dive into a podcast by our partners at Decentralised.co and share what caught my attention.
This week I reflect on the chat with Nick Hansen, CEO and co-founder of Luxor Technology. It was about the paradox that Bitcoin mining is and its many nuances around energy, hash rate and the impact of hash rate on Bitcoin price.
Listen to the full episode here.
Nick Hansen was supposed to be a dirt bike racer. He travelled the country with his family, number plate #600 on the front of his bike, gunning for a pro career. But then came the crash. "I tore my ACL," he says. Another fall in his mid-20s convinced him to hang it up entirely.
From dirt biking to Bitcoin mining might sound like a leap (pun totally unintended). Yet, I felt there was something natural about it, especially when Nick was narrating the DIY phase of mining in the early 2010s: GPUs in basements, ASICs arriving late, your profitability decaying by the day. Nick started off exactly there.
It’s funny how much of early crypto involves stories like this. Just two weeks back, I wrote about Larry Cermak’s basketball to builder stage. Today, we have Nick’s story: a mix of bruised bodies, junk hardware and amateur rig builds. That phase, messy as it was, gave rise to Luxor.
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Luxor focused on being a full-stack services company with firmware, analytics, logistics, machine procurement, and now financial products like hashrate futures.
One of my favourite bits in the episode is Nick’s clarity on why Luxor stayed away from setting up its own mining operations.
If you’re running a pool or building tools for miners, self-mining turns you into competition.
“Every machine that we add to the network would reduce the earning potential of all of our other customers,” he explains. Worse, it creates distrust. “They probably have way better stuff underneath the hood if they’re out there doing this big self-mining operation.”
Instead, Luxor focused on building the stack: pools, firmware (LuxOS), ASIC procurement, and more recently, financial products.
He also spoke about one of the most vital cogs of mining – energy.
Nick spoke at length about the entire economics of energy, but it was the anecdote of cold winters in Texas and its impact on Bitcoin miners’ plans.
Nick explains curtailment — the phenomenon of shutting down rigs when power prices spike. “It’s very cold in Texas… people are turning on their heaters. The wind turbines and solar panels are not producing as much energy. So power has gone up to like $20 a kilowatt hour (from a few cents).” That’s over 1000% of what miners usually pay. “So they just turn off.”
And this is where Nick’s organisation steps in.
Luxor lets them buy hashrate exposure elsewhere via financial contracts. “You’re getting exposure to hashrate where the operational costs are still lower,” he says. That’s the core idea behind hashrate derivatives. Like oil refiners hedge their spread between input and output, Luxor lets miners lock in their margins. This creates the equivalent of a crack spread in oil, a predictable delta between energy input and mining output. “We call it the hash spark spread.”
That also makes miners more creditworthy. “If you can hedge your energy cost and your hashrate, someone can issue you more debt,” he says. For miners, that means more capital to buy better machines, access better PPAs, and scale.
For once, listening to this made mining sound less boring and more like running a hedged energy fund.
Nick’s take on other financial products also sounded interesting to me.
Unlike many builders in crypto who heavily lean towards the benefits of AI, Nick’s objective stance on implications of AI stands out. He’s cautious about its existential implications and how division of labour might break down under autonomous agents. But he’s open to the token side of it.
“You can’t really just go buy OpenAI stock,” unless you are a VC, he points out. It’s not perfect, of course. And he is wary about that too.
“It’s rife with scams and rugs… be very, very careful,” he warns.
Nick discusses other themes through the podcast that gives off one clear impression.
He doesn’t dress up mining in ideology. For him, it’s just infrastructure, and he treats it like a systems engineer would. “Energy is the number one cost,” he says. And everything else – hardware, location, strategy – revolves around that.
He is not someone who treats Bitcoin mining as an ideological movement or a black-box arms race. This is despite his admission that the majority of his crypto portfolio rests in Bitcoin. He treats all this as pure infrastructure. He talks about uptime models, hardware ageing curves, and the trade-offs between new machines and curtailed grids precisely the way a construction builder would narrate the procedure of building structures. Even when the conversation turned to fees, ordinals, or Bitcoin’s emission curve, the takes were grounded and not maximalist.
Nick’s views on the mining industry portray proof-of-work mercenaries as more than just miners. He shows them, through his words, as layered professionals: traders, energy consumers, hardware analysts and even diplomats negotiating with local grids.
But what does he know? Maybe they’re just old dirt bikers who traded ACL tears for GPU burnout.
That’s it for this Saturday. See you next week.
Prathik
Check out the full episode to hear Nick Hansen full conversation with Saurabh Deshpande.
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