This is an opinion piece by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the infantry before moving to the Finance Corps.
In a previous article, I discussed probability-based energy systems, how they can negatively impact the grid, and how Bitcoin helps solve some of the problems associated with wind and solar power.
In this article, I would like to address the most frustrating criticism I hear all the time: Bitcoin is a waste of energy.
What else are you going to do with it?
The fact is that Bitcoin does not use a lot of energy. The big brains at Harvard estimate that the Bitcoin network consumes only about 0.55% of the world’s electricity production. By comparison, it is estimated that 6-10% of electricity production is lost in transmission and distribution alone.
If Bitcoin used an order of magnitude more energy, that still wouldn’t be a problem. What most people don’t understand is that if you don’t use energy, you lose it, so what are you going to do with it anyway?
Real batteries? Good luck with that. California plans to achieve carbon neutrality goals through heavy industrial-scale battery use. This plan directly conflicts with its own goals, requiring the extraction of millions of tons of raw materials in order to produce said batteries. Additionally, the goal only allows them to power about a million homes for four hours. To achieve their goal would require a battery capacity that exceeds the current global capacity by five times. That’s a lot of batteries.
The fact is that currently there is no good way to store the huge amount of energy that is not used every day. That is, until bitcoin and bitcoin mining came along.
bitcoin is the battery
Energy production is a costly and complicated activity. Power producers must maintain sufficient capacity to serve not only the most energy-intensive days of the year, but also sufficient capacity to accommodate projected population growth over long periods of time. This means that most businesses are operating well below capacity on most days.
Bitcoin mining allows electricity service providers to monetize all of their unused capacity, only releasing to the grid the electricity needed to meet demand on a given day. This allows companies to slow or stop the pace of rate hikes. It helps businesses help those who can least afford a higher energy bill.
Businesses don’t even need to hold bitcoin. The market is liquid; by mining and selling the coins immediately, they can meet their revenue goals, help secure the network, and help low-income people amortize their monthly budgets. This even adds to a wider distribution of mined coins, as large miners will no longer be single-purpose mining companies or de facto Bitcoin ETFs.
With more cash on balance sheets, network operators can also invest more money in maintenance and development, making the network more resilient, and dare I say, sustainable, for future generations.
So for those who say Bitcoin uses a lot of energy, who cares? It uses far less than what we waste every day. I say they should stop wasting energy and money while leaving capacity unused. Convert energy to another type of battery for a more sustainable future. The battery of time, effort and human ingenuity: money.
By using bitcoin mining as a sponge for excess and unused capacity, we can help those who need it most and we can contribute to a future of plentiful and reliable electricity for all.
This is a guest post by Mickey Koss. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.