The recent incredible price increases of Bitcoin came with equally sensational headlines about its energy use. There are many reasonable voices on the subject; I particularly recommend Ars Technica and TechDirt, and also this researcher who suggests that (at least last spring) miners use less than the annual consumption of Christmas lights. However, there are also people who suggest that bitcoin extraction will boil the oceans. We will publish soon a more detailed information paper on the use of energy by Bitcoin, but today I wanted to briefly present an alternative to the thesis of apocalyptic consumption: if the bitcoin mining became the main engine of the energy consumption, so that could be a good thing for the environment! Just as the consumer electronics revolution spawned the massive computing efficiency known as Moore’s Law; the Bitcoin revolution could lead to a similar explosion of innovation in clean and efficient energy.
Everyone knows that heavy industry is the engine of energy efficiency. Why? Because heavy industry can usually be based anywhere, and electrical costs tend to be a significant percentage of their total costs. Electricity accounts for 40 to 45 percent of the costs of manufacturing chemicals (such as chlorine production) and 30 to 50 percent of the costs of melting steel and aluminum. This means that heavy industry will be based on the lowest cost, and this will tend to be everywhere where electricity is affordable because its production is more efficient. Demand stimulates supply and rewards those who develop less expensive electricity generation. Lately it has been a green affair lately. The cheapest electricity on the planet is now wind and solar power. Geothermal and hydropower are also the main competitors and do not have to deal with storage problems.
However, electricity costs may not always be in the foreground for your typical heavy industry owner. They can withstand dirty and expensive energy if other costs determine their decision-making. Industries also like to be where their customers are, where it is cheap to ship material inputs like scrap, and where governments give them subsidies to encourage industrial growth.
But the costs of electricity are even more important to a Bitcoin miner than the typical heavy industry. Electricity costs can account for 30 to 70 percent of their total operating costs. In addition, Bitcoin miners do not need to worry about the geography of their customers or shipping routes of materials. Bitcoins are digital, they have only two inputs (electricity and hardware) and the network latency is trivial compared to a truck full of steel. A miner has moved a whole GPU farm across the United States because of cheap hydropower in the Pacific Northwest and, according to him, “it’s worth it!” That’s also why we see miners in Iceland. Apart from beautiful views, you can find abundant geothermal and hydraulic power in the country’s volcanoes and waterfalls.
If Bitcoin mining really begins to consume large amounts of global electricity, it will lead to massive growth in efficient electricity generation, that is to say. in the green energy revolution. Moore’s Law was in part a story about the incredible advances in materials science, but it was also a story about the incredible demand for computer science that drove these advances and made sure that the research and development of semiconductors becomes profitable. If you want to see a similar energy revolution to Moore’s, then you should be rooting for, not against, bitcoin. The fact is that the Bitcoin protocol, right now, provides a bonus of $ 200,000 every 10 minutes (the reward of bitcoin extraction) to the person who can find the cheapest energy on the planet. Do you have cheap green energy? Bitcoin could make the construction worthwhile.