Bitcoin mining is mostly a subsidy to renewable energy (fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable), so although I could be wrong, I expect it to ameliorate global warming, not worsen it.
> fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable
This is incoherent. Nothing ties these prices together. If tomorrow the price of BTC goes up 1000x, the price to buy a joule of energy via burning coal doesn't change at all.
The ratio of joules of energy to bitcoin mined isn't fixed; it's varied to keep the rate of bitcoin mining constant, although not from one day to the next. If the price of bitcoin goes up 20% in the next two weeks, then bitcoin mines that would have been running at a 10% loss start running at a 10% profit instead, which increases the hash rate and then the difficulty. This increases the amount of energy (and hardware investment) needed to mine bitcoin, which reduces the miners' profits, but disproportionately the profits of fossil-fuel-driven miners.
It's true that rapid price changes can make fossil-fueled mining temporarily profitable, and things like burning off flare gas are also profitable, but bitcoin mining is already dominated by renewables and becoming progressively more so: https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall...
I'm sorry I abbreviated this whole explanation so much in my original post that you ended up so confused.
But that's true for renewable energy too. Nothing about the two energy sources are different.
Either energy prices are decoupled from mining rewards, in which case reduced prices of either fossil fuels or renewables (or increased price of BTC) means more profit for miners or energy prices are coupled to mining rewards, in which case changing prices of fossil fuels or renewables means nothing to miners.
Please tell me why mining does not incentivize cheaper fossil fuel energy technology in the same way it supposedly incentivizes cheaper renewable energy technology.
> that you ended up so confused
I am not confused. I've heard this argument 1000 times. It is bogus.
Well, read through this 1001st version of the argument, and finally you'll understand why it's not bogus! It's really terrible that you've been arguing with such stupid people, because it's not really that complicated to explain why bitcoin mining is a renewable energy subsidy. It's really very simple, although it involves a lot of facts you aren't acquainted with.
> But that's true for renewable energy too. Nothing about the two energy sources are different.
There is one crucial difference: renewable energy is much cheaper. In the quaint units used for electricity trading, solar energy is being typically sold (in PPAs) for US$20–40/MWh in China and India, and every few months there's a new record low price; the latest is US$10.40/MWh in Saudi Arabia this April, but there have been solar PPAs signed for under US$20/MWh all over the world:
By contrast, continuing to run existing coal plants costs around US$40/MWh, and US$50/MWh is a more typical wholesale price.
> Please tell me why mining does not incentivize cheaper fossil fuel energy technology in the same way it supposedly incentivizes cheaper renewable energy technology.
Oh, it totally would! If it existed.
We could imagine a disaster scenario in which someone figured out how to turn coal into electricity at US$1/MWh, and also found a hitherto unsuspected giant coal deposit that can be strip-mined, so the cost of mining is similarly low. Massive power plants would immediately be built, heedless of the vehement protests from other countries as well as the hapless villagers living atop the coal, and bitcoin miners would flock to the province just as they now flock to hydroelectric regions, and just as aluminum smelters have always clustered around hydroelectric dams and geothermal regions. The planet would warm up even more rapidly.
But that isn't the world we live in. With the exception of marginal cases like flaring of oilfield gas† and subsidized pricing, fossil fuel energy isn't cheaper. It's more expensive, and not just by a few percent—100%–400% more expensive. That's a contingent fact—it could certainly have happened differently, just as we could happen to live on a planet with abundant platinum in the crust, and fossil fuel used to be cheaper before we extracted all the easily accessible deposits like sea-coal—but it's still a fact. And it seems unlikely to change rapidly, since the bottleneck in exploiting fossil fuels is the cost of industrial-scale heat engines, which are 250 years old and consequently improving fairly slowly. The Parsons turbine, the mainstay of fossil-fuel electricity generation, hasn't changed fundamentally since 01884, although innumerable incremental improvements have raised its efficiency. By contrast, PV's getting cheaper at a double-digit percentage per year.
So, for bitcoin purposes, renewable energy is interchangeable with fossil-fuel energy, just cheaper. But from the standpoint of renewable energy, bitcoin mining has several unique factors to recommend it:
· It's perfectly portable. Portland cement kilns use a lot of energy too, but we don't see renewable-powered cement kilns in Saudi Arabia bankrupting fossil-fuel-powered cement companies in Mexico, Germany, and Akron, because cement is too heavy (per dollar of value) to be economically transported long distances, and so are the raw materials that make it up. Bitcoin, by contrast, can be sent anywhere in the world in under a second, so the new utility-scale solar plants in Chile and Huanghe are competing directly with the dirty old coal plants in Akron. Guess who wins?
· It's perfectly fungible and not subject to import tariffs. A car factory in Bangalore might survive competition from a more efficient solar-powered auto plant in Shanghai by virtue of making cars that are better adapted to local Karnatakan needs, but there's no such thing as a "bitcoin better adapted to local Karnatakan needs". The UK isn't switching to solar energy anytime soon (its average PV capacity factor is 10%, making local PV uncompetitive there) but people in the UK can easily trade using bitcoin mined in China or Portugal.
· It's very elastic: you can turn a bitcoin farm off in under a second if the price of power goes high, and turn it back on again in a few minutes when the price goes back down. (Try that with a steel mill, or even an aluminum smelting pot.) Moreover, you can load it onto the back of a truck and drive it to a different province if power is going to be expensive for a long time—an ability that has sometimes been abused by hydroelectric miners who drive their farms to regions with underutilized coal plants in the dry season, although that alternative seems to be, if you'll pardon the pun, drying up.
· It doesn't produce pollution of its own, the way cement kilns and paper mills do.
· It's very energy-intensive; the cost of energy is typically about half the total cost of bitcoin mining. An average product of the economy is about 11% energy, so a 20% increase in the cost of energy raises the price of the product by 2.2%. But a 20% increase in the cost of energy raises the price of bitcoin mining by about 10%, which is easily more than your entire profit margin. This means that bitcoin experiences much stronger pressures to seek out cheaper energy than most other industries.
Now, obviously the whole zero-sum competition aspect of bitcoin mining is bad and wasteful, benefiting nobody, and I hope we find a workable alternative soon; but it's fortunate that, at least at the moment, that wasteful competition is subsidizing renewable energy.
Does that help?
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† Mining bitcoin from oilfield gas that would have been flared anyway doesn't promote global warming, it just makes the gas less likely to accidentally get vented without burning, which has even worse global-warming effects.
BTC is not stored energy because it cannot be converted back to energy and its creation does not increase the amount of usable raw materials available to humanity. And a future where mining is constrained by geography and friendly states absolutely obliterates any decentralization - ruining the only benefit obtained by the outrageous energy cost.
Renewables are obviously not cheaper than fossil fuels in any general sense because we are still building coal and gas plants all over the world for purposes well beyond having flexible energy sources. It is abundantly clear that the problem of transitioning to a largely CO2 free energy system is not a problem of deployment. And even if it was, sucking up the fixed deployment to support ever more BTC mining is harming the transition to CO2 free energy. You've swapped now to "The UK will just not mine locally because they are never going to switch off coal" when the original argument was "BTC adoption will speed world transition away from coal".
If one converts unused 15MW hydroelectric power in Canada to bitcoin, and sends the bitcoin elsewhere, say Japan, couldn't one then buy ~ 15MW of energy? I think that's the sense people mean when they say its a store of energy.
However, I'm not sure that's any different than saying that money (in general, not just bitcoin) is a store of energy. The difference here may be that the remote hydroelectric in Canada may not have had market demand for 15MW extra, thus it would have been wasted had it not been converted into bitcoin; that's something not all traditional moneys can do.
Buying 15MW of energy does not undo the cost to the planet if that energy is produced with carbon. The entire planet needs to drop to near zero total emissions. Something resembling carbon arbitrage does not push towards this goal. Firing up the geothermal generator in Iceland to mine BTC just produces BTC. And more BTC is not a resource that changes the productive behavior of the planet.
> BTC is not stored energy because it cannot be converted back to energy
Certainly not. I never claimed it was. Neither can cement, cars, porcelain, or most other products of heavy industry. Aluminum is an exception here.
> a future where mining is constrained by geography and friendly states absolutely obliterates any decentralization
I'm not sure what kind of future you're imagining here. Are you thinking that maybe Algeria will monopolize world bitcoin mining because it has 0.1% more sunlight than Chile and Saudi Arabia, so its mining costs will be 0.05% lower? That seems unlikely to me.
> Renewables are obviously not cheaper than fossil fuels in any general sense because we are still building coal and gas plants all over the world for purposes well beyond having flexible energy sources
This is in fact not true; having flexible energy sources has been the primary reason for building gas plants for decades (gas is usually more expensive and always less portable than coal), and coal plant operation and construction is being canceled all over the place. Outside PRC, not even enough coal plants are being built to replace those that are being decommissioned, and the coal industry is suffering extreme economic hardship as renewable energy replaces it through a combination of better prices and political programs.
https://www.eiu.com/industry/article/589070442/europe-coal-u... In 02018 European coal power output was 619 TWh/year (71 GW), down 24% from the year before, which probably means European coal generation capacity was about 120 GW; "renewables have been squeezing out coal" and now account for twice as much electrical output (not capacity) as coal.
https://ieefa.org/peabody-energy-flirts-with-bankruptcy-agai... Peabody, the world's biggest coal company, went bankrupt 3½ years ago and is at risk of going bankrupt again; "Coal bankruptcies in the United States have become increasingly common. Cheap gas and renewable power have steadily replaced coal in the U.S."
https://pv-magazine-usa.com/2020/05/28/record-low-solar-ppas... the 1GW San Juan Generating Station in New Mexico is unprofitable because its US$44.90/MWh operating cost is almost twice the average energy price at the Palo Verde Trading Hub (US$26.58/MWh) and three times the price on new solar PPAs (US$15/MWh); not mentioned in the article, but this is also why the 2.2 GW coal Navajo Generating Station, the largest in the US, was just demolished.
Now, there are some places where coal power generating capacity is increasing. PRC built 38.4 GW of new coal power capacity last year. But it also built 48.2 GW of new solar capacity and 71.7 GW of new wind capacity.
Outside PRC, worldwide coal generating capacity fell by a net of 17.2 GW in 02020, while PRC's net coal power capacity increased by only 29.8 GW (so 8.6 GW were decommissioned): https://www.reuters.com/article/us-china-coal-idUSKBN2A308U
This despite the fact that 50% of PRC's coal power generation is unprofitable and there is an epidemic of bankruptcies: http://www.xinhuanet.com/power/2019-08/22/c_1210252090.htm Factors cited include "low electricity prices" and "new energy competition" ("新能源竞"), meaning wind and solar.
(For scale, worldwide bitcoin mining is estimated at 12.5 GW. China used 836 GW of electricity in 02019 and about three times that amount of energy.)
And, as explained in the articles I linked in my previous comment, solar is not cheaper everywhere yet. Polar countries like Germany, the UK, and the Netherlands have very poor capacity factors (around 10% for fixed PV). But the vast majority of the world lives in places with much more sun than that, so for them solar is cheaper. Bitcoin mining, as I explained, doesn't care where it happens.
> You've swapped now to "The UK will just not mine locally because they are never going to switch off coal" when the original argument was "BTC adoption will speed world transition away from coal".
I have not swapped, and I do not endorse your attempted restatement of my thesis. Allow me to clarify.
Today, PV in the UK is not cost-competitive with coal because even though PV modules cost 10% what they did ten years ago, they are still too expensive to be cost-effective in such a marginal region. Also, possibly the UK needs to build more energy storage—not necessary for bitcoin mining, but necessary for some other uses of grid power. What drives the price of PV modules is the learning curve: a 20% price reduction for every doubling of shipped volume. Another couple of doublings in volume, whether driven by bitcoin or (as seems overwhelmingly more likely) just general industry, and we'll get the price low enough to beat coal in the UK too. But not low enough that the UK can mine bitcoin profitably.
This learning curve for PV modules is an empirical phenomenon with vast amounts of data to attest to it, and it's so fast because PV is such a new field that's still in a rapid exponential growth phase. The absence of such a rapid improvement in costs for fossil-fuel technology, and indeed the gradual increase of its cost due to resource exhaustion, is an even better known phenomenon, one which has been central to geopolitics for half a century.
So, I do think bitcoin mining will speed the world transition away from coal, by subsidizing the development of solar panels and solar-panel factories, which drives down the price of energy, although the total effect is small. Although even in China bitcoin mining is not currently a major percentage of total electricity consumption, much less total energy use, it is a percentage with characteristics that have already driven it to be peculiarly dominated by renewable energy, and those characteristics are intensifying. I do not expect bitcoin mining to become such a large industry that its effects on the renewable transition, though positive, will be large. But bitcoin mining definitely moves the world, even if in a small way, in the direction of a world where net CO₂ emissions are not merely small but actually negative.
It is understandable that, since you were unaware of the most basic facts of the situation, you were unable to apprehend the causal relationships in play, and misinterpreted perfectly straightforward points like the ones I was making. Hopefully this quick primer will save you from making such embarrassing errors in the future!
> Neither can cement, cars, porcelain, or most other products of heavy industry.
These are resources. The more we have of them, the more we can do. BTC does not operate this way. If 100BTC exists and if 100,000,000 BTC exists the network functions in the same manner.
> I'm not sure what kind of future you're imagining here. Are you thinking that maybe Algeria will monopolize world bitcoin mining because it has 0.1% more sunlight than Chile and Saudi Arabia, so its mining costs will be 0.05% lower? That seems unlikely to me.
I'm hoping to imagine a future where no nation uses a considerable amount of carbon to generate energy. The claim is that BTC adoption moves us in this direction (though this is later dropped).
> Now, there are some places where coal power generating capacity is increasing. PRC built 38.4 GW of new coal power capacity last year. But it also built 48.2 GW of new solar capacity and 71.7 GW of new wind capacity.
Given that China is one of the regions you mention earlier where glorious cheap renewables are dominating, I think this is a pretty darn important fact. Any increase in carbon use is terrible. We need it to go to nearly zero.
There is still the undressed assumption that deploying more solar lowers the cost but that the same effect is impossible with carbon.
Possibly because they're in New England where the sun barely shines, but more likely because they're totally clueless and going to lose money; that page says they have "a power plant capable of generating over 100MW of clean energy an hour," which is incoherent; power plants don't generate more megawatts of energy if you run them for more hours. New York is not really a well-known bitcoin mining hotspot, and for good reason. Though I guess the state does have Niagara Falls.
Still, who knows? Maybe they have some kind of tricky angle on the problem, like using bitcoin mining to convert earned income into capital gains in order to evade taxes, which might make their clients money even if the actual operation is unprofitable.
Bitcoin mining is mostly a subsidy to renewable energy (fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable), so although I could be wrong, I expect it to ameliorate global warming, not worsen it.