Bitcoin Brings Energy Abundance

Mainstream objections to Bitcoin’s electricity use betray a fundamental misunderstanding of energy’s role in prosperity and abundance.

As you can clearly see below, there are no low-energy wealthy countries. Energy production is truly what makes the world go round.

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The Bitcoin network does require an enormous amount of energy to operate. Let’s set aside the fact for a moment that this is a critical feature that brings with it massive security benefits and instead explore the positive externalities that come as a result. Here are just a few examples…

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First, imagine you live in a remote village in Africa. Perhaps you have abundant sunshine throughout the year, or a major river running through the town.

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With a small population, it might not be worthwhile for the government or local energy authority to power your town; you may simply lack the revenue potential to justify such a capital-intensive project.

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But suppose a Bitcoin mining company recognizes the potential for untapped, renewable energy in your area. Someone like Gridless might come in and provide cost-effective power using water, wind, or sunshine that can fuel the city but remain profitable using Bitcoin mining as a buyer of last resort. In other words, the profit incentive created by Bitcoin - in a constant push for the cheapest available energy - brings with it opportunity for electricity where there once was very little or none at all.

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Another common example is flared methane produced by oil and gas wells. Until recently, this was wasted energy thrown into the atmosphere for lack of utility.

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But companies like Giga Energy are making use of this stranded energy and enabling companies themselves to mine Bitcoin. This turns toxic waste into a new revenue source, regardless of the company’s conviction in Bitcoin. If you can afford to kickstart the operation and have any level of confidence that Bitcoin’s price will hold or increase, this is a no-brainer.

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Finally, and more generally, Bitcoin mining is a cut throat and competitive industry. Those fueled by more expensive forms of energy, such as oil and gas, will (over time) struggle to compete with miners coming online that use renewables.

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The disadvantage of most renewable sources are intermittency - the sun doesn’t always shine and the wind doesn’t always blow. But then again, the inputs (wind, sun, water, etc.) don’t cost a thing, which means after upfront expenses are covered, you have a very low cost of energy production.

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So while today a high percentage of Bitcoin is mined using traditional energy sources, the same may not be true five, 10, or 20 years from now.

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Part of the problem that Bitcoin solves is that fiat money can be “mined” (i.e., printed) at effectively no cost - it is as simple as running a printing press or changing digits in a spreadsheet. Energy is a must when it comes to the production of money, if you want to rein in the supply.

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The good news is that:

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1) energy production is good and crucial for economic prosperity

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and

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2) Bitcoin mining incentivizes energy that even the most environmentally-conscious person can support.

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Bitcoin’s energy use, ultimately, is a win-win attribute that many still fail to understand.

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