I don't buy the argument in the article. The purpose of a battery is to store energy to be used later and potentially elsewhere. There is no way to regain the energy that was turned into heat while mining bitcoins, so bitcoin is not a battery.
The comparison with aluminum production is also quite weak, since aluminum has an intrinsic economic value, whereas cryptocurrencies don't. Most of the arguments given in the article boil down to a variant of the broken window fallacy, where economic value is falsely attributed to a useless waste of resources.
This reminds me of another interesting point I recently saw raised regarding WWII. WWII is often credited with ending the Great Depression, but in reality was primarily helpful insofar as it made it politically viable for the US government to inject a massive stimulus into the economy far eclipsing the New Deal (and other governments to do likewise).
Tying that to the broken window fallacy, it seems the ultimate conclusion is that wartime economic policy without the actual war would have been a better way to achieve the desired result.
Of course the reality may not be so simple from a US perspective when we consider that all the broken windows were outside our borders, the national focus and urgency imposed by the war, and that removing the war from history would have dramatic unpredictable effects on our world today. Nevertheless, the idea seems convincing enough to me in abstract that starting a new war purely for perceived economic benefits would be an inefficient alternative to simple progressive economic policy on an equivalent scale.
> made it politically viable for the US government to inject a massive stimulus into the economy
Well, Britain transferred all its money to the US for arms, so that would help the US economy. (Churchill spent the last year of the war concerned with how to pay for it.) Also, there were wage and price controls to control speculation (and inflation.)
Well said. Also purely from the point of view of physics: no energy is stored, you would simply be buying energy _produced_ elsewhere with the intrinsic value you created... in other words you are double spending energy!
It’s not double-spending energy. The chunk of energy you generate isn’t spent by you, it’s supplied to Bitcoin users to power their transactions. You only consume the second chunk of energy for yourself.
That's purely artificial, it's unnecessary, this has been discussed to death. PoW is useless work. You aren't doing useful work you are randomly double SHA2ing energy back out into space just to play the lottery... oh look I found a nonce which hashes to less than the magic number, who cares, this has no material value, it's not functionally useful, it's contrived.
PoW is not fundamental to blockchain or crypto currencies.
Well, low intensity heat. It's trivial to create a setup where you take your hot morning shower with water heated in last noon's solar surplus. Setups like that are actually not uncommon at all, but they use direct solar heat extraction instead of photovoltaics. But a "bitcoined" version would be way too small scale and idle way too much to ever make back the hardware expense, at least unless progress suddenly stops.
Granted, it could still provide value beyond hot water: if you happened to own a considerable amount of bitcoin, your net worth would benefit from a greenwashing strawman giving bitcoin some more press attention.
> The comparison with aluminum production is also quite weak
Viewing aluminum as a battery isn't even valid, unless people start oxidizing it for energy. It's more like economic value added. Bitcoin is only a "battery" in the sense that it could be turned off on-demand to free up power generation capacity.
The tangible hard money equivalent is gold. It is also a battery one can store value across time. Yes, the raw energy that went in to feed the miners was lost via heat etc but the brunt of it was stored.
The problem with analogizing Bitcoin mining to gold mining is that Bitcoin mining secures value in the past and gold mining secures value in the future. If you stopped mining Bitcoin, all previously mined Bitcoin would lose value due to the decreased security of the block chain.
It's like if gold began to sink into the ground the moment you stopped mining it, and you had to keep mining and smelting it at a ever-more furious rate to keep it above ground.
In a physics sense a processor just turns current into heat, the same way a wire does. It just does so in a way that happens to be useful to us. So in that sense they're resistive heaters, so 100% efficient.
Cooling technologies just move the heat around. A datacenter produces a lot of heat that is then subsequently moved out of the building. Capturing that heat shouldn't be too difficult because it passes through central AC or central chillers.
Capturing as in storing? Simply knowing where the heat is/goes doesn't really make it easy usable. You can heat up water for example but what if no one need warm water there?
Also often additional energy is useless just to move the heat away fast enough.
Then the argument of "we will just stick the miners in Iceland where renewable energy is cheap" falls apart. If you want to mine where humans are then you need to mine with grid electricity.
The point is that there isn't enough renewable energy for population centers right now. So every clean watt used for mining btc takes that clean watt away from somebody else. This is why reducing energy use is so powerful. Even if X% of your energy use comes from zero-emissions sources, all marginal energy use comes from carbon.
The only way that btc mining can truly claim to have no impact on global emissions is if it uses zero-emission energy that otherwise couldn't be used in some other productive way. And that, almost by definition, limits the use of the waste heat.
> The point is that there isn't enough renewable energy for population centers right now.
Even when it will be enough when renewables work at 100% it won't be enough if they give 8% of their max output because it's not that windy today.
We should have at least 10 times the capacity in renewables than we actually need to have plenty on bad days (and nights).
> The only way that btc mining can truly claim to have no impact on global emissions is if it uses zero-emission energy that otherwise couldn't be used in some other productive way.
I agree, and that won't happen until we go 100% renewables, but we can't do that without a storage, and we don't have storage, but we can go 1000% renewables instead because that's the technology we have and already it is the cheapest way of making energy. And I think next crypto boom could put us on trajectory to achieve that by utilizing every bit of energy we'll overproduce and by being a mechanism to funnel money from the pockets of Wallstreet into renewable energy production investments.
Someone else was going to use a unit of energy to mine Bitcoin, but you supplied it instead when you mined it. You don’t get “new” energy, you get “that energy”, the energy that the person somewhere else would have used to mine the Bitcoins that you mined. That’s the energy you stored.
It's not because you'll need it later. It's because you can sell it later.
If there's no way to monetize excess energy (because we lack storage), people won't invest into making excess energy. And since renewables produce a lot of excess energy it makes them less desirable than they should be.
Analogy to broken window fallacy is totally warranted. But please notice that what broken windows do is extend capacity of glaziers. And if windows are broken cyclically then at times when there's not much demand for window repair additional glazier capacity will be used in other ways like for building glass skyscrapers (I'm stretching analogy, I know).
Renewable energy is not a scarce resource, so it's unlike the glass from the fallacy. And work put into creating too much renewable energy is work well spent given horrible state of our power network and our over-reliance on polluting energy generation methods.
The fallacy in broken windows fallacy is that additional money earned by glazier will somehow benefit the economy, and that's not the case. What might possibly benefit the economy would be oversupply of glaziers, which could make some very beneficial enterprises economical.
It's like with education. We know education is of a huge value to society. But we don't have in the economy a good way to funnel more money into education, especially to the places where it's most needed.
If you figure out a way of pouring money into training new teachers and paying them, so you have oversupply of teachers on the surface of it you are wasting resources, but additional teacher capacity even if it's often underutilized or used to 'spin the wheels' will benefit society.
Economy is prone to getting stuck into local optima and sometimes you need countereconomical nudge to get out of it to be free to travel to better optimum. I hope crypto can be such nudge for renewable energy production by sort of filling the gap of lacking storage capacity technologies.
It's not because you'll need it later. It's because you can sell it later.
This gets the cause and effect completely wrong. The only reason you can sell it later is because someone will need it later. As a society you store energy precisely because you will need it later. Whether you do this by creating a market for it or not is purely an implementation detail.
Yes. But as an energy storage company you don't care whether anyone will be needing it later. Only thing what matters is if and for how much you'll be able to sell it.
If you have no way of selling it it doesn't matter how much it is needed.
So you will set up energy storage company only if you know you'll be able to sell energy you store later at high enough price.
Form the point of view of the economy it doesn't matter what will happen to energy. And economy is not just direct effect of physical causes. It's separate system that to some degree is synced with physical world. But not all that much. Much of our wealth is locked up into capital that is being gambled to get more capital without any connection to physical world. And when those connections occasionally crop up it might even be dangerous like in the case of global food prices recently when investors figured out a new game using food prices for them to gamble. You probably think that crypto is one such dangerous connection, but I believe it might be a beneficial one.
Crypto is not an electrical battery. It's economical battery. It turns energy, potentially any amount of it, into value. Even the worthless energy, that is produced when conditions are excessively good for energy production.
The beneficial effect of crypto is that it is variable load that can turn any amount of nearly worthless localized energy into globally transferable value.
You can use the value later to purchase energy (and energy generation equipment) anywhere else.
As such it incentivises building energy sources that might generate a lot of excess energy on peak production, like windmills or solar panels, or that are too remote to transfer their excess energy to places where it could be utilized.
The comparison with aluminum production is also quite weak, since aluminum has an intrinsic economic value, whereas cryptocurrencies don't. Most of the arguments given in the article boil down to a variant of the broken window fallacy, where economic value is falsely attributed to a useless waste of resources.