How Policy Fosters Innovation: Holistic vs. Exclusionary Approaches to Energy
In this article, we look at the policy approaches governments can take to attract or deter the future-focused industries, like Bitcoin, needed to maintain a global strategic advantage.
Authored by VP of Public Policy Kyle Schneps.
Foundry was founded on the principle of empowering decentralized networks. This is because decentralization, at its core, aims to redistribute access from the privileged few to the marginalized many. As Americans, our access to political power, wealth, information, energy, education, and property, among other things, are all the hard-won results of grassroots movements toward decentralization. Foundry believes in further integrating decentralization into an increasingly digital society — and that blockchain networks, especially Bitcoin, provide a means of doing so.
Yet, despite being a relatively new industry (or perhaps because of it), the primary infrastructure of the Bitcoin network can run the risk of geographical centralization due to various circumstances. Areas with access to cheap and abundant renewable energy, for example, may attract Bitcoin data centers to a single location. On the flip side, negative regulatory environments averse to new technologies may push Bitcoin mining companies and energy innovators away, confining them to the same safe spaces.
Internationalization of Decentralization
With this in mind, we’re seeing a new age of Bitcoin mining where infrastructure providers are seeking out new homes across the globe, perpetuating not only abstract digital decentralization but also creating geographical decentralization that can hedge against isolated government crackdowns.
At Foundry, we’ve been exploring the Bitcoin network’s geographical redistribution for some time now — and while we maintain that the United States can remain the epicenter of the Bitcoin mining industry, we applaud the many companies, entrepreneurs, and individuals who are growing the network’s infrastructure across new global jurisdictions.
By attending new conferences and connecting with colleagues operating internationally, we’ve found that the world is dividing into two distinct political environments: one in which governments take a holistic approach to energy and technology, and one in which governments take an exclusionary approach.
Exclusionary Approach
On one side of the spectrum, we see some nations in Western Europe and North America pursuing an exclusionary approach to energy policy, one which is marked by a scarcity mindset. This policy approach often views energy production through a subjective lens, disfavoring certain forms of energy for the benefit of others. This approach often culminates in a self-fulfilling prophecy of energy scarcity and, counterintuitively, an expanded reliance on the very fossil fuels they seek to eliminate.
In Germany, for example, the banning of nuclear energy (a steady base load provider) has resulted in Germany’s increasing reliance on coal and imported gas for its electricity production. Similarly, New York state — long home to some of the most progressive climate policies in the United States — has also banned nuclear energy and new natural gas development. As a result, New York City’s grid has been supplied by 85% fossil fuels for decades with no decrease in reliance.
Holistic Approach
On the other side, the holistic policy approach embraces all forms of energy, making it more conducive to attracting Bitcoin data centers and obtaining a technological strategic advantage — especially as our collective future becomes more digitized. The holistic approach is marked with optimism and a focus on energy abundance through all forms of production, and is sure to be advantageous in a world where the most advanced technologies are increasingly reliant upon high-capacity compute data centers and the electricity that powers them.
One of the best examples of a holistic policy approach to energy is the Gulf Cooperation Council (GCC) nations on the Arabian Peninsula. Countries like the United Arab Emirates, Oman, and others are seeking out energy abundance by not only taking advantage of their natural fossil fuel endowments, but also investing in a wide range of other energy resources, like solar, wind, and nuclear — many of which are strengthened by Bitcoin mining.
Grassroots Movement Toward Holistic Policy
Along with other miners in the space, Foundry is pursuing opportunities in jurisdictions that leverage the holistic approach to energy policy. The governments that oversee those regions are proving to be forward-looking in terms of energy abundance. They recognize that data centers will be integral to achieving the technological strategic advantage necessary to remain globally competitive in the future.
While we will continue to advocate at both the federal and state levels for policies that will allow the United States to lead in energy and technology, we note the US is at risk of losing its strategic advantage in these fields. It’s becoming clear that most technologically successful nations are now attracting innovators through holistic energy policies, embracing Bitcoin as a tool for reinforcing their energy systems and driving the innovations of a more efficient future.
Disclaimer
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