> Either way, we're going to need Fusion to run it in the future.
In my understanding, the economics of Bitcoin mean that eventually mining will be performed with predominantly waste energy, which is by definition that which has no other practical use. The existence of a practical use for the energy other than for mining will push its price higher than is economical to use for Bitcoin mining, because other miners using waste energy will be able to pay less to mine the next block. It's likely that energy for Bitcoin mining will come from sources like heat from flare gas, currently just burned at oil refineries and released as photons into the night sky, leaving Earth forever. Or energy from wind turbines or solar panels during periods of low demand. Or a hydroelectric dam 1000s of km from civilisation willing to pay the transmission costs to use it. Or, heck, even heat extracted from sewage in Vegas hotels, if it's enough to run a steam turbine. Basically anywhere where otherwise useless energy can be extracted in quantities sufficient for mining. I don't think, given the costs of the infrastructure likely required for fusion, we'll be seeing it employed for Bitcoin mining long term.
This is one of the aspects of Bitcoin I find most beautiful - it monetises waste.
Here's one key difference between many if not most large scale industrial processes and Bitcoin mining.
Admittedly I don't know much about battery efficiency, so there may be other more efficient uses. Hydroponics lighting?
Where "waste energy" is difficult to access and available only in trickles, it's surely very unsuitable for bitcoin mining, which is energy intensive.
Frankly, there are far more pressing issues than making more bitcoin.
Sure, there’s conceivably times of low demand when some energy would otherwise go unused. But a “ hydroelectric dam 1000s of km from civilisation”? Heat extractors in Vegas hotels? You’re imagining a fantasy world.
Further, what you’re ignoring is that none of this is “waste”. It’s already being stored or used. Finding new demand for it simply makes it more expensive for existing users.
Turned off wind turbines at times of surplus. They tell us that nope, it is not (yet) being used or stored.
> Finding new demand for it simply makes it more expensive for existing users.
It's not that simple. It could very well be the case that selling a portion of energy that otherwise has no demand to a buyer of last resort enables the business to be profitable. Not selling this portion of energy would mean that the operator would have to charge their other customers more in order to be profitable.
So it could in fact make things less expensive indeed.
Proof of work in Bitcoin requires computation of a thing called a Nonce. If a miner gets the right Nonce while hashing, they get that block's reward. The electricity value expended on mining that block is proportional to the total amount of hashes being performed by miners in the network at the time. There is no "design" for requiring the cost of this power be equal to anything directly related to the market capitalization of Bitcoin, which really means how much Bitcoin is worth compared to other markets, such as USD. Are they linked to each other through human action and decision processes? Certainly. Is it coded in the chain? No.
> It's really just simple arbitrage: if the value of Bitcoin goes up, but the electricity cost doesn't, then you have essentially 2 different prices for 1 good, which should attract more miners to spend more money on electricity.
If the electricity cost doesn't go up, then the number of Nonce being computed will only go up if more miners join the effort. If they don't, the network is still operational, and produces the same amount of new coin every so often. What is NOT obvious here is that the technology for increasing the mining rates is always increasing, so the clowns will continue to pay to upgrade their hardware over time to save on electrical costs and engage in competition with the technology. The exchange rate for Bitcoin may be related to the technological "power" that is required to keep the network running and producing new coins, but less directly so related to the amount of power burned.
> Furthermore, it's, again by design, a competitive system
By design, Humans compete. The Bitcoin blockchain could be mined and run by two clowns in a tent if nobody else cared. It's not coded to be competitive, it's coded to be cooperative. This means the the amount of power spent on mining and running the network is a cooperative function. The amount of money spent on developing and producing faster hardware is a competitive function. The two together produce something that is chaotic and interesting.
Bitcoin does have a downside, and that is that it is a viral thing that cannot be taken down by any one person or organization. It would take 51% of those running the network to cause it to fork into two. It would take an impossibility to halt it. Maybe this scares some people and maybe it makes some people excited about the possibilities. Either way, we're going to need Fusion to run it in the future.