> Cheap yes, renewable no. Complete non sequitur there.
That's the main point. There's no inherent incentive to use clean energy for mining. There's opposite stories about obsolete aluminum plants staying alive in China by just using their energy allocations to mine Bitcoin.
We use hydropower because it is clean and cheap. Those are the incentives.
The aluminum plants shut down... not stay running. Both mining and plants use huge amounts of continuous power. Bitcoin mining is far more profitable... no need to keep the aluminum going.
I’m very interested in reading about it though
I've read it some time ago. I recalled it as less speculative than it seems now.
The premise is that energy is a large part of aluminium production cost and the plants work on small margins. An over-investment into energy production provides cheap energy and allows the aluminium plants to improve their margins via crypto mining.
These dams are built in such a way that they need to continue to provide power or the equipment starts to fail.
It is also literally too expensive to build and maintain the lines to ship the power elsewhere.
Alcoa was more than happy to lease their space to someone who was going to use the power going to their facilities. There isn't much industry at this point that would fit.
All of the successful facilities that I know of (including my own) seek out cheap power... which happens to also be clean power. Hydropower. Most use existing facilities that were otherwise going to waste.
People in 100 years will be saying this about social media, not Bitcoin
The difference that I'm keeping an interested eye on is even if gold mining ceases, the energy required to produce a new gram of gold doesn't really change so a gram of gold still proves as much as it ever did. It isn't so clear yet that Bitcoin proves anything without an active mining network.
Gold is valuable because people buy it. People don't buy it because of some hypothetical amount of energy that went into producing it, they buy it mostly because it's shiny and rare (and sometimes because it doesn't corrode much or conducts well).
The energy cost to produce is relevant to its price only in so far as it feeds into the supply / demand equation.
These things are true but not necessarily so. Things can be scarce without being difficult to refine from raw materials (a stamp). Things can be difficult to extract without being particularly scarce (aluminium). Things can be valuable without being scarce (TVs), things can be scarce and not valuable (an original artwork by my 4 year old daughter).
The only thing that makes something valuable is that it is valued by people. People are weird and have lots of different reasons for valuing things. There are lots of things I could burn an insane amount of energy and money on that would not result in anything valued by others.
The idea that something should be valued based on the work that went into creating it is interesting as a hypothetical idea but not something that is very relevant to the actual world we live in.
If anything, you've got it backwards:
> it's scarce because it requires a lot of work to extract
It requires a lot of work to extract because it was so valuable that all the easy-to-extract gold was taken and put in jewelry and vaults.
– boring grey in colour
– not a good conductor of electricity
– not particularly strong, but not ductile or easily malleable either
– not useful for any practical or ornamental purpose
and one special, magical property:
– can be transported over a communications channel
If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.
-Satoshi Nakamoto, August 2010
Prices depend on supply and demand. Gold is scarce, thus supply is low, and is useful (beautiful, can conduct electricity), thus demand is high.
Bitcoin is scarce, yeah, as it requires a lot of energy to produce it. But it's not really useful for now, people buy it only for speculation. So demand exists, but it might fluctuate a lot.
Platinum for instance was at one point considered the level "above gold", but it has since been overtaken. Gold simply is the better brand. It's the same for Bitcoin versus all other digital currencies.
> But it's not really useful for now, people buy it only for speculation.
Speculation itself is useful. Bypassing the financial system is useful.
A price of $18,000 per unit of Bitcoin might sound ridiculous, but it needs to be considered that the market cap of Bitcoin, representing most of the world's cryptocurrency market, is only $200 billion. That is comparable to the assets of a medium-sized US bank.
Uranium fuel takes a lot of effort to refine, but it's still cheaper than gold; partially because it's simply more common in the crust.
If Bitcoin mining becomes unprofitable, Bitcoin users could incentivize it through increased transaction fees.
Of course, what you say about transaction fees is true too - if miners are receiving less in 'mined' bitcoins, then they are likely to demand more in fees. You can already see this happening - when I first used bitcoin, nobody charged any fees at all, relying only on the mining rewards for covering their mining costs.
Robust because the phenomenon can begin detached from the energy grid by profit-seeking entities with capital to invest. Doesn't need permission, can be smaller, independent and eventually have something to offer back to the grid, but don't require it initially. Ability to bootstrap outside of regulation as a result. More nodes, more competition, shared excess. Fewer singular points of failure, more redundant, less fragile.
"Future," because that's a great vision for the future.
Nuclear energy has high fixed costs but then scales pretty well. As crypto currencies with PoW become a major industry, it's not difficult to imagine it might be cost-effective to build huge nuclear plants in some corrupt African country. (Africa has also huge untapped uranium ore deposits)
Nuclear works in stable, rules-following countries like France where its high energy paybacks subsidise good salaries for an army of bureaucrats enforcing the rules.
We are literally stuck with 50 year old technology in nuclear energy, as unfortunately progress has been slow.
With the fuel cost being basically free (thorium), the and the operational cost low because the system runs with little human intervention energy should actually end up incredibly cheap once we engineer these system in a better way.
Cheap yes, renewable no. Complete non sequitur there.
> The endgame is that all energy companies will primarily be Bitcoin mining companies, feeding their excess renewable energy into the grid to power homes, etc.
Absolute insanity straight out of postapocalyptic SF.
"The ancients destroyed their civilization by funelling an ever increasing share of resources towards some kind of elaborate game of numbers".