As an investor and board director of Bitfury, among the larger companies in the Blockchain ecosystem, and a venture capitalist who actively drives environmental conservation, I am often asked “Isn’t mining bad for the planet? Won’t mining use up all the world’s electricity and fill the world with smog from coal factories and make electricity more expensive?”
What is becoming increasingly clear is that the drive for efficiency required in mining is accelerating the scale economics (and lower price) of CLEAN energy production. Once that line is crossed, there is no longer an economic incentive to generate electricity with methods that pollute. Bitcoin may have a role in cleaning up this planet. Satoshi is smiling.
It’s been clear to me for years now, that mining of Bitcoin and other ‘proof of work’ based cryptocurrencies is driving positive change in the underlying infrastructure of energy production — at an accelerating rate. I know in my role at Bitfury as well as in my role as Chairman of the Board of Hut8 mining (where we have a policy to ‘be green’ as we build out what we intend to be North America’s largest crypto currency mining operations) — that the best and most efficient sources of electricity at scale are NOT coal based. The marginal cost of water, solar, and wind based energy are nil compared to fossil fuel.
Certainly, Satoshi likely smiles for a number of reasons, especially in recent years. Something tells me he is smiling now, knowing that the movement is driving POSITIVE consequences for our environment by catalyzing scale consumption of green electricity, because it’s THE MOST COST EFFECTIVE.
A virtuous cycle is beginning. The more electricity that is needed at scale, the clearer it is - that green is the best economic alternative. As such, the more likely it is that incremental energy production infrastructure that will be built going forward MUST be green to be competitive, and that these new sources of electricity will provide cheaper energy for all consumers across all uses.
The rise of machinery from the most recent Industrial Revolution, and the use of oil and other fossil fuels to run and lubricate it— has created innumerable NEGATIVE side effects (and IMHO a ‘temporarily’ centralized work, nation state, and set of currency structures, in the context of human civilization over 4–6 million years ). Many of the environmental and health issues that all living species (repeat: ALL of us - human, animal, plant and ocean life) on this planet face today, stem from the burning of fossil fuel or its manufactured output in the form of plastics. Specific to the production of electricity, the burning fossil fuels (coal in particular), produces toxic particulates that are difficult (and therefore costly) to remove from the air we breathe and the water we drink.
The burning of coal and other fossil fuels will become a legacy of the past if the economics are clearly better to go green; initially, fossil fuels seem an ‘easier source’ from the perspective of fixed versus variable cost to deploy to create electricity. Electricity typically comes from the boiling of water to produce steam, that in turn turns a turbine to create electricity. Certainly at small scale, it was marginally easier to dig stuff out of the ground and burn it to produce heat to boil water to turn turbines. Not a ‘costless’ process, but not huge in up front capital cost, as one only needed a shovel and possibly a truck. Setting up a small building to burn it was not an extraordinary expense. Now an easier starting point is P2P energy production with solar, facilitated by companies like Powerledger.
On the larger end of ‘scale generation’, capital expenditure required to create green energy production with hydro, wind or solar is large, and labor intensive to deploy; deep investment in capital and time is required to build a dam, or to deploy hundreds of giant windmills or to build factories to create solar panels. However, once deployed, the ‘marginal cost’ of green production is small compared to fossil fuels’ ongoing requirement to dig, transport, load, burn, and clean up, after burning coal or oil. It’s taken some time, but we are now deeply ‘on the curve’ where electricity from geothermal and hydro is ALREADY cheaper than burning coal, with wind right there as well, and solar on it’s way in a couple of years.
Digital currencies have been a fun ride since my role as “Alan Greenspan Golum” in Secondlife in the 2000’s, that led to my interest in Bitcoin after its launch in 2009. Finally there was an instrument which married my fascination for economics, P2P software, and ‘hackable at home’ technology all in one vehicle. Once convinced, I took to Twitter in 2010 to find companions but at that time it was like shouting into an empty canyon. At the time, I’d have never thought that Bitcoin could become anywhere near ‘mainstream’. Times have changed.
Now, I think there is actually a chance — IMHO the Genie escaped from the bottle irreversibly, on action from the country to which one would logically tie the name ‘Satoshi Nakamoto’ — the Government of Japan, set ironically to take effect on April Fools Day 2017. The discussion inside the BOJ must have been fascinating, and will be the subject of a later post.
My journey has led me to community, and knowledgeable companions centered around the Bitfury ecosystem, which in turn led me to fund of the team’s early silicon development. I am especially proud that the team at Bitfury is committed to driving positive societal and environmental change through the organizations, entities and work they sponsor and fund such as the Blockchain Summit on Necker Island, The Blockchain Trust Accelerator, the Global Blockchain Business Council, and more. Now that the industry is becoming more and more mainstream, I am excited to be working with people both at Bitfury and Hut8 that ‘see the future’ — and one that is significantly GREEN.