Thread by @saifedean

Bitcoin allows for the monetization of stranded energy sources

upstreamdata.ca/post/natural-g…

Bitcoin changes the global electricity market because it can buy electricity anywhere it's made.
Instead of taking delivery of electricity in bulky metal wires, bitcoin takes it in the form of digital hashes, which is far cheaper. The implications are mind-boggling.

Bitcoin's difficulty adjustment always prices out the least efficient miners, with the highest electricity cost. The only serious scale mining operations that survive in the long run are ones that can secure electricity at prices significantly lower than common electricity prices

Bitcoin's difficulty adjustment means mining on commercial or industrial rates is doomed. Bitcoin will grow by devouring off-grid energy whose transportation would otherwise be too expensive. Bitcoin is effectively a global bounty program for the development of off-grid energy.

The world's renewable & isolated energy sources (mainly hydroelectric, geothermal, and oilfield gas flares) have just found themselves a new insatiable buyer. This will result in enormous capital expenditure in the development of these resources & increase their capacity.

Bitcoin will not "consume most of our energy". Energy is not a finite resource we're about to run out of. Energy is a product we produce, and bitcoin is providing a huge economic incentive for producing more energy, and in particular, cheaper energy.

Whereas in primitive government-based moneys the seigniorage goes to finance government spending and war, in bitcoin, seigniorage goes to finance the development of cheap and isolated energy sources, which are the only sources that can succeed in mining bitcoin in the long run.

The economics of bitcoin mining and energy consumption is a topic I will discuss extensively in my next book. If you want to support publishing the book independently & to get access to the chapters as they are written, you can subscribe to my patreon: patreon.com/posts/23051967