Game, Set and Yahtzee: The BTC Energy Incentive

in LeoFinancelast year

As one of those annoying parents who wants a lot of his child's life to be filled by learning experiences, including the game she plays. A few days back we started playing the dice game Yahtzee, which she has caught onto quickly and is building her strategy around what she goes for, what she crosses out and like a gambler, it is never the Yahtzee field - she wants that 50 points. But, she has realized that a small straight is worth less than a large but have the same chance of getting, so if she has to kill one, it is the small. She will also cross out the 1s field rather than another, as the max points there is 5 and she can make more than that up later. Not all of it is clicking yet, but we have only played about 10 rounds so far and she is getting the hang of it fast.



Last night I wrote a post about the potential of volatility between BTC and ETH in regard to PoW and PoS changes, where people are constantly complaining about how much energy Bitcoin uses to mine. It is a lot of course, but there is an framing issue that a lot of people don't seem to recognize, but might be easier to think about in regards to finance.

For example, let's say a person earns 1000 dollars a month, but their expenditure is 1200 dollars a month. What should they do? Well, save more money, stop spending of course. Sure... that makes sense, however this only works if saving is possible. While it might be possible to cut back 300 and have a 100 surplus today, the inflation rate will mean that eventually, it will creep past that 1000 again and the bottom line will again be red and what needs to be purchased is all essentials. What this means is that, no more "saving" of financial energy can be made, leaving a debt cycle in play. So, what actually needs to happen is that instead of saving more, the person would have to make more money to cover living expenses and, even more to generate a surplus of financial energy.

This is essentially what is happening in the world of energy consumption too, where we are definitely using more than we should be, but saving energy is only going to be delaying the inevitable. This in my opinion is why the argument of Bitcoin energy consumption is largely invalid, as while it does use a lot and this is dictating the narrative, what actually needs to happen is not saving more energy, but finding more effective ways of producing electricity.

This doesn't mean we shouldn't find more efficient ways of using electricity too of course, but Bitcoin is actually one of the greenest industries out there, if you see mining Bitcoin as an industry. When mining was happening in China, over 40% of the electricity used for the network was renewable, and this actually dropped when it ended and moved to the US, where gas is far cheaper than green. What this indicates is how incentive matters, where the incentive of the Bitcoin network is to use the cheapest energy.

This raises the question then of who actually has the problem, Bitcoin mining, or the fact that non-renewable sources of energy are cheaper than renewable? The answer is obvious, as while the Bitcoin network might consume as much electricity in a year as Finland, the entire world is incentivized in the same way, to use the cheapest forms of energy and the entire world consumes a massive amount more than Finland, or the Bitcoin Network.

But, there is a difference that has to be considered in these industries too (if seeing Bitcoin mining as an industry) and that is, what the Bitcoin network is selling is tokenized energy, whereas all of the other businesses that are using energy to produce their product, are selling the end product. This matters, because it means that while Bitcoin is incentivized to utilize the cheapest source of energy, it is also incentivized to use excess energy produced effectively and innovate the energy industry, reducing the cost of energy to mine.

For example, a solar array in the Sahara could produce a massive amount of electricity, but the region might have no need to actually use that energy. However, it could "tokenize" the capture of energy, adding a value to it that can be converted into goods and services to be purchased from other locations. This is an effective industry, or like in El Salvador, where they are looking to monetize the energy of their volcanos by mining Bitcoin with it.

But, just like the example above where we can only "save so much" energy, we are increasingly using more energy for a range of goods and services, from electric cars, to charging our phones and the factories that make our shoes. We are a very energy intensive species, and as we continue to expand into the oceans and space, we are going to be more so. This means that "saving" is never going to save us, all it will do is delay the inevitable. This delay is useful as it gives us m
re time to find a solution, but that solution has to be incentivized and it seems that our own survival as a species is not a good enough reason.

Mining Bitcoin however is directly incentivized to increase energy production efficiency, and while it will likely always be cheaper to use non-renewables, this is where legislation comes in to drive innovation. But, it has to be uniform, across the board. For example, lets say that an industry supply chain has to be 80% renewable and clean energy by 2030, what does that mean for the car industry, the airlines, the power grids? "Saving energy" is unlikely ever to meet that level, so that means that they are going to have to innovate the energy industry to affect the supply of energy so that 80% of all energy produced is renewable and clean.

As you should be able to recognize, Bitcoinisn't the problem here and even if all PoW nining stopped today, it would only save the energy consumption of Finland, which would very quickly be eaten up by the rest of the world's energy needs anyway, putting us right back in the same position. What actually has to change is the entire world's mentality and what is interesting to note is, a lot of crypto enthusiasts are among those who are environmentally conscious and looking to reduce their own energy needs - going solar, buying Teslas and living in communes.

At this point, the problem isn't about the amount of energy being used, but what it is being used on and while Bitcoin is incentivized to innovate for cheaper and (if legislated) greener electricity, the other industries are looking to maintain their status quo. They are hoping to stay in their own swim-lanes with blinkers on, rather than be part of innovating an energy solution together, where energy is efficiently produced and effectively used to take us into the future and empower us.

It is an unconscionable position, but they are able to direct attention away from themselves and say "look at Bitcoin!" in the same way they say "look at China!" without acknowledging that China produces much of what the rest of the world demands through consumption. They supply what we are demanding and they are doing it according to the laws of economics and game theory. China is incentivized to produce as cheaply as possible too, which is part of the reason they invest so heavily into clean tech and energy innovation, as it eventually means more profit on their exports.

But, the common public narrative doesn't factor any of this into their equations, they don't shine their lights on other industries, they don't want to pay more for shoes, or their electricity bills - they want that cheap gas from Russia, so they can make more profits. Delaying the inevitable doesn't change the outcome, it just kicks the can down the road.

However, where we are going with Bitcoin, Ethereum and crypto in general is changing what it means to have value and, we are able to tokenize energy and the way it is utilized in society. We might not change the outcome at all, but at least we are rolling the dice and giving ourselves a chance at a better future, in every way that is important to us, rather than just saving our way to the bitter end.

We are not going to "energy save" our way out of this problem, just like we are not going to save our way out of the debt many find ourselves in. If we keep trying to save energy without changing the way we produce it, what will we have to cross out next?

[ Gen1: Hive ]

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All of this green focus is annoying and foolish. People are just being led to slaughter as usual by the same suspects. If people were truly cognizant of the environment and energy they wouldn’t be so focused on windmills and solar farms. Those require shit tons of natural resources that can’t be recycled and end up getting buried or in a landfill. Hydrogen, waste oil and water are completely capable of having possibilities.

I’m getting to the point that it’s just people being fooled into believing horse shit lies to push a narrative. The banking industry, as inefficient as anything can be, uses far more energy per year than bitcoin ever will. It might not have the same reach but complaining about energy consumption of an alternative currency is dumb as hell lol.

Plus most of these green shits like electric vehicles are being charged by massive coal fired power plants and the lithium mines are open air pits with slaves in them.. ah but bitcoin and energy!!!!11

Nuclear is also an option, but people are too scared about it still. We can do better.

The banking industry, as inefficient as anything can be, uses far more energy per year than bitcoin ever will.

So does delivering all the crap made in China to the door, by Amazon - but no one seems to care about this.

This is the problem with it all - we do need to change the way we use electricity, but innovation has to be made in how we produce it - but there is "not enough money" for clean tech...


Haha, this is the type of wholesome content I needed this Monday morning.

Enjoy :)

PS. I've saved the deep chat about Bitcoin's energy incentives and will come back.

Some really good concepts in here I'd like to go deeper into.

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Have a great Monday :)

PS. I've saved the deep chat about Bitcoin's energy incentives and will come back.

I am definitely not a Bitcoin person, but it is interesting from the high-level view the way people talk about it.

I think as more efficient ways and methods of storing energy is produced we will see more and more people and industries move to renewable sources. Right now batteries to store the energy produced are not very long lived, but that industry is changing and improving all the time.

Storage is a large part of it. I am guessing that the larger solid-state batteries are going to make an impact - especially if they can use less toxic materials.

Yeah, this argument is very outdated. That's one of the reasons I'm a huge advocate for energy decentralization. It would bring more efficiency and security to power grids all over the world. Bitcoin is not the problem. The energy industry itself is.

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Energy industry and "industry" in general - the narrative is highly controlled.

I read that El Salvador has started to use the energy from volcanoes to cover the energy consumption of BTC mining. It is a brillant idea. Thus, they can have an answer against the complaints that mining will lead the country to enery crisis.

Yes it makes sense. Energy is required for pretty much all business, mining just makes the energy itself the business. It might seem useless to many.

a lot of crypto enthusiasts are among those who are environmentally conscious and looking to reduce their own energy needs - going solar, buying Teslas and living in communes.

I'm looking forward to one day retiring my car and living in one of these - - with no fossil fuel usage at all; growing my own reef underneef :)

That looks like fun!

Buy 10 and run them as SeaBNB's.

Nothing wrong with filling a child's life with learning experiences. Wrong is taking that way too far and trying to make every experience a learning one and discarding/preventing any you decide doesn't meet the criteria for learning, or even worse, trying to find a life lesson in every passing moment XD

back in the early days when I was researching homeschooling methods I remember reading a blog where a parent described being at another family's house that was like that and describing the atmosphere as very stressful

our own survival as a species is not a good enough reason.

Ego again probably convinced beyond all logic and rationality that somehow it will be standing on the sidelines watching forlornly while everything else dies and refusing to accept that it will actually also be dying.

Also stop saying people need to change their mentality, that's mean and oppressive and a bunch of other stuff I will probably think about after I hit "reply" ;D

I feel at times I err on the side of too "teachy", but I might not be as extreme as some and, I do spend a lot of time just having random fun too :)

You should know by now, I am an oppressive dictator who's opinion is the only correct one!

Extremes are generally not ideal XD Random fun is good :)

Absolutely XD

There is also Iceland, famous for its underground hot springs that wanted to generate electricity by making a hole and beneficing from enormous heat of molten rock and saving more energy. This is nice natural idea

They just need some rigs set up :)

Also plenty of snow at the surface, to keep things cool.

The economic incentives of bitcoin mining allow firms to overbuild renewable energy sources. Bitcoin can complement renewable energy development, rather than solely be a drain.

Yes it can - but unfortunately, most people are too short-sighted to see how it can be its own financier for energy innovation.

mhmm! safe to say they lack foresight?

So good man, greetings

Nice Post about the dice game dice game Yahtzee and thnx for sharing about how to build up a good financial status and control of expenses... I Really learnt from it...

Sometimes mining Bitcoin use to take time and electricity,Is better we get it through micro blog

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For me, all desert lands must be used to generate and produce clean electricity, even if huge transport networks are required, as it will reduce oil exploitation expenses and store important energy resources.

We use the energy in every way can. To cook, to drink cold or hot everywhere possible. Wish people think like you. What should we do in crisis? No one think about that but we should. Good day.

We record our personality structures, experiences and knowledge in our memory, the behavior, attitudes and actions that we see from our Mother and Father before going to school. Even in the games we play, we see the effect of this.

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