This is an opinion editorial by Mickey Koss, a West Point graduate with an economics degree. He spent four years in the infantry before transferring to the Finance Corps.
In a previous article I discussed probability-based energy systems, how they can negatively affect the grid, and how Bitcoin helps solve some of the problems associated with wind and solar energy.
In this article, I’d like to address the most frustrating criticism I hear all the time: Bitcoin is a waste of energy.
What else will you do with it?
The fact is that Bitcoin does not use that much energy. The big brains at Harvard estimate that the Bitcoin network only consumes about 0.55% of the world’s electricity production. In comparison, it is estimated that between 6 and 10% of electricity production is lost in transmission and distribution alone.
If Bitcoin used an order of magnitude more energy, it 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 the hell are you going to do with it anyway?
Real batteries? Good luck with that. California plans to achieve carbon neutral goals through extensive use of batteries on an industrial scale. This plan directly conflicts with its own goals, which require the extraction of millions of tons of raw materials to produce these batteries. Also, the target only allows them to feed one million households for four hours. To achieve his goal, a battery capacity that exceeds by five times the current global capacity would be required. 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 an expensive and complicated business. Power producers must maintain sufficient capacity to serve not only the most energy-consuming days of the year, but also sufficient capacity to allow for expected population growth over long periods of time. This means that on most days, most businesses are operating well below capacity.
Bitcoin mining allows electric utility providers to monetize all of their unused capacity, only releasing the electricity to the grid that is needed to meet demand on a given day. This allows companies to slow or stop the pace of rate increases. It helps businesses help those who can least afford a higher energy bill.
Companies don’t even have to hold bitcoins. The market is liquid; by mining and immediately selling the coins, they can meet their revenue goals, help secure the network, and help those with lower incomes cushion their monthly budgets. It even adds to a wider distribution of mined coins because the big miners will no longer be single-purpose mining companies or de facto bitcoin ETFs.
With more cash on their balance sheets, network operators can also invest more money in maintenance and development, making the network more resilient and, dare I say, sustainable, for generations to come.
So for those who say Bitcoin uses a lot of energy, who cares? It uses much less than we waste every day. I say they should stop wasting energy and money even if they leave the capacity idle. Convert energy into a different type of battery for a more sustainable future. The battery of human time, effort and 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 help a future of abundant and reliable electricity for everyone.
This is a guest post by Mickey Koss. The opinions expressed are entirely my own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.