The energy sector is seeing a complete paradigm shift:
- Bitcoin’s monetary network effect
- Monetization of energy
- Leads to an arms race of energy tech becoming more and more efficient and productive
- Cheap energy production allows for cheap energy utilization
- Cheap energy utilization allows for cheap manufacturing, mineral mining and product R&D
Bitcoin
Ripples and splashes are being made in the financial realm. Since its entry onto the world stage, the Bitcoin network has been growing. With each addition to the horde of nodes and miners that are scattered across the globe, Bitcoin continues to dig in. Supplying the world with a financial vehicle that provides solutions to the failed experiment that is Keynesian economics, inflationary monetary policy, savings, and it cannot be forcibly removed from an individual or entity. If you can’t see the value there, then I won’t hold you.
Fixing money fixes the world. Fiat currencies have allowed a disease of the mind to proliferate. That disease is living beyond our means. With the popularity of this false currency, companies and individuals are incentivized to spend more than they earn. We are at a time in history where companies that earn little to nothing are being valued higher than those that turn a legitimate profit. And that is just from the monetary side. Social media has seen a rise in popularity for groups and individuals to go into debt to simply project a life of luxury and excitement, while the reality is the opposite. Luxuries and services supplied by debt get rapidly destroyed when reality comes knocking and the bill is due.
Bitcoin’s hard money philosophy rewires the thought processes of those that turn to using bitcoin as a savings vehicle. The individual begins to worry less about impressing those around them and narrows their vision onto purchases that provide the most utility and value to their life. Frivolous spending becomes a practice of the past, as they focus more on stacking, saving and building their financial independence. For without financial independence, you are also without true freedom.
Bitcoin Mining and Energy Production
Bitcoin mining is energy intensive — this is true.
Is there anything that isn’t, though? Consider the amount of energy that gets expended mining gold from the earth. The amount of fuel and power utilized to power the mining industry, that is also tearing up our planet , all to acquire a heavy substance. What about the energy that gets used in the refining process? Then the transportation, packaging and shipping said gold across the world. What of the energy dedicated to handling the paperwork of this whole process? Those are man hours that somebody is paying for.
Bitcoin has come under recent fire via energy utilization moralization.
Are we guilt-tripping anyone that is using up energy to watch Netflix in their free time? Or what of those individuals playing video games? Are we considering the amount of energy that gets wasted in politics? When a speaker is engaged in a filibuster? The amount of billable man hours that goes into this process — the work of interns, analysts and drones that collect intel for politicians just so a speaker can practice a legal waste of time? And that’s without considering the valuable energy that goes into the lighting, wi-fi and heating/air-conditioning of the building!
Energy moralization is the podium from which the village idiot crows.
What bitcoin mining does is far more revolutionary.
Right now the energy sector is stuck. Fossil fuels provide energy production but at a massive loss. Not only in the energy that is capable of being captured but also at great cost to the health of our global ecosystem. Similar to the gold mining process, fossil fuel extraction is extremely destructive. Renewable energy can provide energy at less ecological cost but is not free of the mining process. These renewable projects are also being financed by the fiat monetary system that is rapidly being exposed as a disease. As the collapse of fiat money approaches its crescendo, the renewable energy sector stands to suffer heavy losses. Bitcoin fixes this.
Bitcoin mining allows for renewable energy sources to directly monetize their capture process during non-peak hours. As the energy sector operates today, the majority of the operating time is not at 100% demand or utilization. Energy production and capture stands to gain massively by incorporating bitcoin mining during their non-peak times. By shifting their production to power bitcoin miners (and mining pools) these entities get a direct monetary reward which can then be stacked onto the corporate treasury as savings or sold onto the market. Bitcoin’s trading market is active 24 hours a day, 365 days a year. This allows greater liquidity to power production.
These operations require minimal human presence once they are fully deployed. Because of this simple aspect, humanity can begin to monetize geographically dispersed energy sources. Rivers and waterfalls can provide hydroelectric power without a heavy human presence. Wind and solar farms can be built in rural or barren areas that would make life for humans difficult. The fragility of humanity becomes less of a liability when it comes to energy capture and deployment with Bitcoin.
Game Theory
Because of this radical shift in energy production profitability, we will see an arms race play out. Companies and countries will begin to scramble to bring more energy production online to earn bitcoin. Cheaper and cheaper energy sources will become the focus of desire. Cheaper energy also entails cheaper upkeep costs. Renewables provide energy with far less cost to the environment, which may be the greatest cost of all. What little does money matter if we strip-mine and burn ourselves to oblivion? The future lies with zero-cost energy. With Bitcoin — that future inches closer.
Editor’s note: Fossil fuels continue to account for a majority of domestic energy production and consumption in the United States according to the US Energy Information Administration.
Cheap Energy and Tech (Industrial Revolution?)
Cheaper energy production and storage has been a focal point for the past decade in particular. In the summer of 2016, Tesla’s radical attempt to revolutionize the battery game was met with ridicule and laughter. Look at where the company is now – a mere 5 years later.
As Bitcoin causes energy production to become radically cheaper, those dwindling costs bleed into manufacturing. Cheaper manufacturing of goods allows for higher quality products to be sold at cheaper and cheaper prices.
These goods include: household items, cleaning products, food, phones and computers, homes themselves, and so on. As more Bitcoin-focused power production comes online, the cost of living will go down. As these costs come down, it also makes improvements much, much more actionable. Research and development is a costly process — trying new things costs man hours and goods to be expended and wasted in order to trailblaze new technologies and theories. Energy production that is made profitable by Bitcoin ( both the network & the currency) allows for this process to become rapidly cheaper via free-market competition.
“Bitcoin power” (referring to the power that is made profitable via bitcoin monetization) will propel the human species into the next technological era, an era we were supposed to be in decades ago.
This process allows for us to fix the issues that plague the United States of America today: education, healthcare, employment and manufacturing. Bitcoin is the most American technology that has ever been brought into existence.
Cheap improvements on tech plus a population reverting back to financial resilience equals a healthier and better educated population. Financially stable families are physically and mentally strong. These families become capable of partaking in higher education, possibly in the way of mentorships (not the farce of “higher education” that has become the collegiate stage).
Conclusion
Ultimately, what I am suggesting is that Bitcoin is, in fact, a singularity event. Whereas it is a network effect upon the financial system that is exorcising Keynesian economics, it is also inadvertently exorcising inefficiencies in the energy production sector as well. A network effect in economics that is causing a reflecting network effect upon energy.
While money is the vehicle that facilitates human ingenuity, energy production and utilization is the super highway upon which that ingenuity vehicle travels.
References:
- Angelo, Steve St. “Market Underestimates Energy Consumption By The Gold Mining Industry.” Money Metals Exchange, Money Metals Exchange, 25 Jan. 2018, www.moneymetals.com/news/2018/01/25/gold-mining-energy-consumption-001386.
- Banerjee, Ryan, and Boris Hofmann. “The Rise of Zombie Firms: Causes and Consequences.” BIS Quarterly Review, September 2018, Sept. 2018.
- Hodge, Tyler. “U.S. Energy Information Administration – EIA – Independent Statistics and Analysis.” Hourly Electricity Consumption Varies throughout the Day and across Seasons – Today in Energy – U.S. Energy Information Administration (EIA), 21 Feb. 2020, www.eia.gov/todayinenergy/detail.php?id=42915#:~:text=This%20variation%20in%20electricity%20demand,dependent%20on%20weather%2Drelated%20factors.&text=During%20the%20winter%2C%20the%20daily,peak%20and%20an%20evening%20peak.
- Rider, Christopher I. “Constraints on the Control Benefits of Brokerage: A Study of Placement Agents in U.S. Venture Capital Fundraising.” Administrative Science Quarterly, vol. 54, no. 4, 2009, pp. 575–601, doi:10.2189/asqu.2009.54.4.575.
- Ross, Sean. “What’s the Average Profit Margin for a Utility Company?” Investopedia, Investopedia, 16 Sept. 2020, www.investopedia.com/ask/answers/011915/what-average-profit-margin-utility-company.asp.
- Steffen, Bjarne, et al. “Experience Curves for Operations and Maintenance Costs of Renewable Energy Technologies.” Joule, Cell Press, Dec. 20, 2019, www.sciencedirect.com/science/article/pii/S2542435119305793#abs0010.
- Truong, Cong, et al. “Economics of Residential Photovoltaic Battery Systems in Germany: The Case of Tesla’s Powerwall.” Batteries, vol. 2, no. 2, 2016, p. 14, doi:10.3390/batteries2020014.
- Weitzel, Tim, et al. Reconsidering Network Effect Theory, Association for Information Systems, 2000, aisel.aisnet.org/cgi/viewcontent.cgi?article=1083&context=ecis2000.
- Denver Bitcoin
- https://gam.ai/blog/bitcoin-a-way-to-make-the-oil-and-gas-industry-more-resilient.html
- https://journal.bitcoinreserve.com/bitcoin-a-bold-american-future/amp/?__twitter_impression=true
- https://medium.com/coinmonks/american-firesale-making-america-cheap-again-9f19747b1ef2
- https://medium.com/coinmonks/extortion-valuation-manipulation-and-rigging-the-system-how-america-plays-the-monopoly-game-9612727b2418
This is a guest post by Mike Hobart. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.