“Time series analysis (Stern, 1993, 2000) shows that, in addition to capital and labor, energy is needed to explain GDP growth. But mainstream economic research has tended to downplay the importance of energy in economic growth. The main models used to explain the growth process (e.g. Aghion and Howitt, 2009) do not include energy as a production factor.”
– The role of energy in the industrial revolution and modern economic growth, Stern and Kander (2012)
If energy is so important to each and every economy, why is it so aggressively avoided in research and debate? Going further, why so much politicization and division in the industry? Dismiss tribalism in energy as nothing more than noise. It’s nonsense to the core. We need as much energy as possible to be generated in a way that doesn’t break the economy and allows us to keep the wheels of society turning. How do we achieve such a lofty goal?
Direct monetization of energy generation.
One problem: energy demand is volatile. It does not remain constant throughout the day, much less throughout the year. This volatility is also reflected in the different forms of energy in economies that experience seasonal climate volatility or may have restricted access to various sources.
Is there a way to smooth out this demand volatility so that power producers can maintain a constant operating rate while still being able to provide reliable power in the face of societal fluctuations?
The future of energy
The answer is yes. This can be achieved by mining bitcoins. We can use bitcoin mining to quell fraternal disputes between all power generators. Everyone is free to compete for hashrate and look for the legendary next bitcoin subsidy distribution, as long as bitcoin-miners-went-dark-as-texas-power-grid-teetered-on-brink/”>Agree to redirect power to the grid in times of societal need (which has proven effective in multiple events and scenarios in the Texas ERCOT system).as well as in Georgia). The greater the power generation capacity of the operation, the more they can afford to give society what it needs and still be able to capture income through bitcoin mining. The best part is that bitcoin doesn’t care where it comes from or where the energy comes from; he wants it all.
We can now justify the rapid expansion of power generation and distribution infrastructure by providing perpetual and highly competitive demand for that energy. It demands that it be both a buyer of first resort and a buyer of last resort. This demand can be met through cheaper energy resources or by expanding current operations to provide greater production and maximize efficiency. All strategies are viable with this approach. Providing grid-sensitive demand that can smooth the total demand curve is revolutionary.
A well-balanced system would have overall demand as consistent and flat as the line representing the nuclear power supply above (yellow). But when natural demand ebbs and flows (as seen in Figures 7 and 9), a flexible demand source is needed that can fill the gap between the two. You need a load that can be taken offline when social demand exceeds forecasts, but that provides such benefit through operational and revenue improvements that your product is quickly sought after when situational demands are met, and can be brought back online as quickly as possible. possible.
That, ladies and gentlemen, is what the bitcoin miners in ERCOT and Georgia are doing. They are filling the gaps. What this is also doing is providing an incentive for power generators to produce as much as possible. Which means there is now a justification for developing operations that are capable of producing much more energy than is needed now (but may be useful in the future).
Slippery orange coin
What happens to demand when the supply of electrons does not facilitate the production of the good? Where such an asset only continues to devour as much energy as is thrown at it, not like gold or oil. These are two commodities that cause natural market forces to end high prices by justifying increased production during high prices and decreased production during low prices.
That’s the beauty of difficulty adjustment in bitcoin mining. When more energy is devoted to the network and blocks start completing too quickly, the network increases difficulty (and vice versa when blocks arrive too slowly). There is no overproduction or oversaturation of supply due to high prices.
Meanwhile, mining pools allow bitcoin miners to work together to earn bitcoin subsidy. When such an outcome occurs, the mining pool distributes profits to pool participants according to the effort expended as a percentage of the pool total (a fair collaboration system). Resulting in a much more consistent income stream than if these miners worked alone.
Conclusion
All power generators will benefit from the deployment of data centers full of ASIC miners to take advantage of the perpetual demand offered by the bitcoin mining network. Furthermore, the highly competitive industry is generating visceral demand for improvements in chip efficiency, as well as sourcing not only the cheapest power, but also the most abundant capacity that is not being used effectively. That’s why energy producers and utilities are doing just that; Use bitcoin mining to maximize efficiency and improve operations, while earning an additional line of income.
The very foundations of energy are being restructured. Tribalism within energy will disappear as all producers set their sights on the big orange future on the horizon. And everyone is in a position to make a lot of money from it.
This is a guest post by Mike Hobart.. The opinions expressed are entirely their own and do not necessarily reflect those of btc Inc or bitcoin Magazine.
