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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