by Sasha Hodder (Opinions expressed by FBBA contributors are their own.)
Biden Report. Last week, the Whitehouse released a new report on the climate and energy implications of crypto assets that suggested the Biden administration will seek to limit proof of work mining. The report said, “The Administration should consider working with Congress to enable DOE to promulgate and regularly update energy conservation standards for crypto-asset mining equipment, blockchains, and other operations.” It sounds like they will create a moving target kind of like the CPI Inflation basket.
Nic Carter made an annotated version of the report which I highly recommend! Some notes he pointed out
- 145 billion was cited as the cost of climate change – that includes EVERY natural disaster from last year!
- The report’s citations were largely rejected from the Bitcoin wiki page for lacking academic integrity.
- Some citations used were from De Vries, a completely unreliable source that is a Dutch central bank-paid opposition to Bitcoin. It would have been wise to have done their research or used Cambridge or NYDIG.
- The numbers they based their findings on didn’t account for technology improvements in mining equipment, or the shift coming in 2035 once the miners switch to transaction approvals as opposed to bitcoin mining.
- They over-inflated the industry’s energy demand by quoting non-binding indications of interest from the crazy bull market of 2021 as the bitcoin miners were migrating from China.
- They compared Proof of Stake and Proof of Work mining as being the same thing, but POS is a controlled system like we already have, and POW competes against it.
- The report assumes energy consumption is proportional to hash rate, but that’s not true, the consumption depends on the efficiency of the ASIC mining rig used.
- The report said China banned Bitcoin mining because of its climate goals – which is delusional because China is opening more coal plants than the rest of the world combined. China banned mining because they want total control over their citizens, and based on the Thai report, so does the Biden Admin.
- The whole report uses lazy assumptions by hobbyists, not academics.
The Biden report is, unsurprisingly, closely aligned with the WEF & Green Peace FUD campaigns against Bitcoin in favor of proof of stake.
Bitcoin mining is negligible on a global scale. The narrative in the Biden report states that Bitcoin uses somewhere between 120 and 240 billion kilowatt hours per year – which is more than some small individual countries, like Argentina or Australia, countries which outsource almost all their manufacturing to China.
Put in perspective, the Bitcoin network uses less energy than youtube or gold mining. A report by NYDIG research shows that in 2020, Bitcoin represented only 0.04% of global primary energy consumption, 0.2% of global electricity generation, and 0.1% of global carbon emissions. These numbers are so small for what Bitcoin offers the world, which is the best form of currency that has ever existed.
Bitcoin mining is actually solving major energy problems. One of the characteristics of POW is that the mining is done with cast-off energy in politically welcoming jurisdictions. Any country that would decide bitcoin miners are not welcome, the miners will just move to another country.
The energy used for POW creates multiple layers of security.
- First, they incentivize all the energy producers worldwide to secure the network because it’s the highest-value use of energy in the world.
- It incentivizes technological innovation because the miners are continually building better equipment that is more energy efficient.
- It incentivizes the politicians in the mining regions because it brings massive revenue and jobs to the locations,
- It incentivizes Wall Street because the mining companies are largely financed there,
- Mining decentralizes the Bitcoin network geographically because they can’t all be located in the same area or there wouldn’t be enough energy in that spot.
- The hundreds of miners have a major vested interest to defend the network. (Saylor)
Arcane research says bitcoin mining is: strengthening electricity grids, improving the economics of renewable energy, mitigating natural gas flaring, and repurposing wasted heat.
- Strengthening the grid – one of today’s biggest energy challenges is replacing the electricity grid’s lost flexibility. Fossil-fuel power generation allowed seasonal supply-side adjustments, but as we move closer to the international energy association’s net-zero goals for 2030, the increased energy from solar and wind make it difficult to adjust power generation based on demand. If there are conditions where more energy is required than is available, miners will temporarily turn off, and let the utility providers use all the energy for the good of the community – to prioritize houses and hospitals getting proper air conditioning. For example, Bitcoin miners can react quickly, at a very low cost compared to something like a data center, or steel plant, which would have an extremely high cost of temporarily turning off its energy consumption.
- Improving the economics of renewable energy. According to a report by the Bitcoin Mining Council, the global Bitcoin mining industry ran on an estimated 58.5% renewable energy by Q4 2021. Bitcoin mining’s combination of location flexibility, and the fact it can be interrupted without a high cost, means it is the perfect buyer for excess renewable energy. Miners can seek areas with excess wind and solar and consume the surplus of energy. Having a bitcoin mining load right next to remotely located wind and solar plants prevents energy waste and improves the economics of these projects. The future of these wind and solar projects depends on flexible consumers that can purchase the excess energy.
- Mitigating natural gas flaring. Gas flaring is the 160-year-old practice of burning off the uneconomical natural gas that is in the way of oil extraction. This flaring was used to create heavy emissions without any utility – until bitcoin miners started harnessing the excess natural gas to avoid the flaring altogether. It’s worked out well for Brent Whitehead and Matt Lohstroh, the 23-year-olds made $ 4 million so far this year from repurposing natural gas flares in Texas. Their company, Giga, puts shipping containers full of bitcoin miners on an oil well and diverts the natural gas into generators, which convert the gas into electricity that can power the miners. The process drops c02 emissions by 63% compared to flaring, according to Crusoe Energy Systems’ research.
- Heating Homes. Miners get hot, and in Canada and Scandinavia, they’ve started repurposing heat from bitcoin mining to subsidize the cost of electricity for heating homes. There’s a piece of mining equipment called Heatbit, that costs $1,150 and can heat up to 170 square feet while simultaneously mining bitcoin at a 14-terra hash-per-second rate using 1,300 watts of electricity. Home & industrial heating is the world’s largest energy use, accounting for almost half of the global energy consumption in 2021.
Countries still ban mining. When China banned the bitcoin miners, some moved to Iran and Kazakhstan, then got banned again. India, Sweden, Norway, and the EU are all considering a ban as well, and making similar arguments as the Biden administration and the World Economic Forum, that POS accomplishes the same end with less waste. They fear if Bitcoin is “robbing” the area’s energy, there won’t be enough for the area to produce cars, steel, or light their citizens’ homes.
Texas. Bitcoin mining has taken off in Texas though, Ted Cruz has welcomed the mining industry with cheap power, abundant renewable energy, and a business-friendly regulatory environment. Texas grid, known as the ERCOT system, has been strengthened as a result. Each miner needs prior approval before connecting to the grid. Brad Jones, ERCOT’s CEO said he’s planning to make Texas the world’s largest mining center. This past summer, the Bitcoin miners got paid not to mine when power was needed elsewhere, a profitable diversification strategy.
Methane Mining. Daniel Batten makes a case that by using methane, the whole bitcoin network can become carbon negative and remove 36M tonnes of CO2 out of the atmosphere each year, the equivalent of planting 2.5 BILLION trees! It will further decentralize the bitcoin network and squash all of the fud. The (energy consumption) * (source of energy) determines whether the activity is good for the environment, neutral, or bad. When the source of energy is methane, the more it is consumed, the better for the environment.
Only Bitcoin can do this, and @Vespene_Energy has started putting the idea into practice this past year.
Renewables – mined by children & toxic in landmines. Using up excess methane is a lot better than wind or solar energy because the “green tech” is not accounting for the entire product lifecycle. The production and disposal costs are very high. It’s really hard to extract the rare earth minerals needed to power wind turbines or electric car batteries and the work is offloaded to kids in China and Africa. This is especially true for cobalt, which is used as the magnet for wind turbines and lithium-ion batteries. Gregg Braden does an amazing video explaining that 51% comes from the Democratic Republic of Congo and is then shipped to China. The landfills are getting filled with these green energy products and they are leaking toxic chemicals into the earth.
Today’s energy mix
Today, about 80% comes from fossil fuels, and 12% from renewables. Of that renewable mix,- 20% is wood, 20% is biofuel, 24% is wind, 22% hydro, and 11% is solar.
Thorium. Thorium-based nuclear power generation is fueled by nuclear fission of the isotope uranium-233, which is produced from the fertile element thorium. The Thorium fuel cycle can offer several benefits over the uranium fuel cycle, including the much greater abundance and availability of Thorium on earth, its superior fuel properties, reduced nuclear waste, and the fact it can’t be weaponized. A group of scientists from the Georgia Institute of Technology assessed that Thorium-based power is a 1000+ year solution for sustainable energy and the solution to mankind’s negative environmental impact.
Climate change is tricky, people hear what they want to hear. If you look at the ice cores from Antarctica and Greenland, there is a new layer of ice that is deposited with atmospheric information, dust particles from volcanoes, and bubbles that it captures in the ice, and those air bubbles have the carbon dioxide from that particular year trapped. We can go back in those ice cores, 420,000 years. Since humans only got here 200,000 years ago. The data shows that even before humans started to pollute, climate change moved in cycles, it would warm for a period, then cool for a period, regardless of pollution.
There is relatively small warming going on right now, and it’s just a normal cycle. So Climate change is a fact, but humans did not cause it.
Hard Money is Worth the Energy! Adam Back came out yesterday and said,
Essentially, it’s costing twenty basis points to secure the most transformative and powerful technology we’ve ever seen. Bitcoin is disruptive, decentralized, unconfiscatable, and for the people. It’s durable, portable, divisible, scarce, and uniform. The global distributed network makes it very unlikely to be hacked and it can’t be controlled by any intermediary or weaponized by the government. It is also the best-performing asset class of all time.
Bitcoin is worth the energy!
By Sasha Hodder, Crypto Attorney & Bitcoin Enthusiast