Thread by @gladstein

1/ My latest essay is live:

"The Humanitarian and Environmental Case for Bitcoin"

Could Bitcoin reduce "middleman" corruption in aid, bootstrap electrification via untapped renewables, and help developing nations end dependency on foreign powers?

🧵

bitcoinmagazine.com/culture/bitcoi…

2/ Helping those less fortunate is noble.

Since the 1960s, more than $4 trillion has been sent from rich countries to poor countries in what is now a $200 billion foreign aid industry.

But does humanitarianism sometimes help create the hardship it is supposed to solve?

3/ Three of aid's major flaws:

-Much of it is skimmed off along the way, or ends up propping up dictators
-Aid creates dependency + discourages economic independence
-Donors rarely help nations become *energy* independent, as renewable farms aren't quickly sustainable/profitable

4/ On middleman corruption, estimates vary, but scholars and even the @UN Sec Gen have said that anywhere from 15% to 30% of all aid "leaks" along the way.

Much is siphoned off to patronage networks, lining the pockets of bureaucrats instead of supporting intended recipients.

5/ Bitcoin's value here is straightforward. Donors can now have p2p relationships with recipients.

Especially through Lightning and tools like @ln_strike, philanthropists can easily, directly, and instantly fund individuals + projects anywhere. Tiny fees, no third parties.

6/ On energy independence, Bitcoin mining can provide immediate revenue for new renewable farms that aren't yet fully linked to grids.

Mining can "bootstrap" projects by providing revenue until transmission lines are hooked up and other customers start to connect.

7/ Bitcoin miners won't be able to compete against other energy consumers in developing nations. Miners need energy that's 2-5 cents/kw. In developed nations, industrial consumers might pay 5-6 cents, with residential consumers paying 10-15 cents, but in Africa it's *20-40 cents*

8/ Hence Bitcoin does not "compete" with or "waste" energy that would otherwise be used.

If it would be otherwise used, it would be actively used.

Bitcoin miners are generally using energy that no one else can get, or no one else wants. This point is crucial.

9/ To learn more about this in action I spoke to @SebGouspillou, a Bitcoin miner who relies on renewables in Africa + beyond.

In particular we spoke about his project in the DRC where a hydro plant in Virunga National Park is generating Bitcoin revenue:

https://twitter.com/BigBlock_DC/status/1350405207302287363

10/ *Less than 10%* of the DRC has access to the electric grid. Numbers are similar or worse across 8 other African countries. Few govts on the continent even provide electricity to 50%+ of their population. In DRC, electrification is expanding more slowly than population growth.

11/ Traditionally citizens without electricity cut down trees for charcoal to cook. This is bad for people and bad for the environment.

But if Bitcoin mining can subsidize more hydro power to come online in the DRC, it could stop deforestation and empower the people.

12/ The dream of powering Virunga w/ hydro is compelling. As the NYT wrote, these plants "may save a park, and aid a country" -- but these operations aren't always sustainable or profitable right away, and a lot of the energy goes unused or is curtailed:

nytimes.com/2017/08/30/bus…

13/ In this way, Bitcoin mining could very well be a mechanism to help align incentives + spark more electricity/agriculture for a part of the world that is underdeveloped + dependent on imports.

@SebGouspillou is working on other sites too, like a solar farm in South Africa.

14/ France, Seb says, could also benefit. Around 70% of the grid is nuclear-powered, but at nights and in summers there is less demand.

Bitcoin could "flex" in and provide revenue, but state officials ignore the idea.

Seb loses sleep thinking about the lost opportunities.

15/ Other developed nations like Germany have famously built more renewable power than they can use.

But the disregard for the benefits of Bitcoin mining is most tragic across the developing world.

Humanitarians can change this.

16/ Could Sudan + Ethiopia, with massive wind and solar resources, be Norways of the future?

A rosy outcome is, of course, far from sure.

The societies would have to grow from "extractive" to "inclusive" -- per Acemoglu + Robinson's "Why Nations Fail":

amazon.com/Why-Nations-Fa…

17/ Bitcoin has open and decentralizing characteristics could help lead in this direction.

But it could also be captured by outsiders, colonialists, and dictators, just as other natural resources like gold and oil always have been.

18/ Can Bitcoin mining be set up in a non-extractive way, that sparks local economic activity and reduces dependence?

That is the question.

Foreign donors and investors can help make this happen.

But will they want to?

19/ It may be cynical, but we have to ask: will the foundations and government agencies that make up the $20B aid industry actually want to reduce bureaucracy, corruption and dependence through Bitcoin, if they themselves benefit from it?

20/ In sum, my essay examines how middleman corruption and forced dependency plague the humanitarian industry, and how a lack of infrastructure prevents emerging markets from digging out by capitalizing on stranded renewable energy resources.

21/ Whether as a corruption-resistant p2p rail for transferring funds abroad, a spark for economic independence, or a subsidy for sovereign renewable electrification in developing nations, Bitcoin's future impact outside of traditional finance is just beginning to be understood.

22/ Intrigued? Check out the full essay at @BitcoinMagazine:

bitcoinmagazine.com/culture/bitcoi…