Bitcoin is Actually Good for the Environment

You’ve probably heard that bitcoin is terrible for the environment. You’ve heard that it wastes tons of energy on a ridiculous “mining” process. You’ve been told that pretty soon, all of the world’s power will be used to mine bitcoin.  You’ve been told that, if we took all of the smoke emitted by coal power plants being built to mine bitcoins, that smoke would form a black hole that soon threatens to collapse and swallow the entire universe, leaving us with no planets, stars, or life,  with nothing left in existence except for one guy who keeps mumbling about “double spending.” Of course, some of these claims are slightly exaggerated.

I’m here to tell you that these claims are wrong, and that bitcoin is actually good for the environment. If you want to stop global warming, then buying bitcoin is a great idea. Here’s why.

Energy Usage Isn’t a Problem

Yes, bitcoin mining uses energy. That isn’t a problem, because using energy, by itself isn’t a problem. It’s carbon emissions that are a problem. We aren’t going to stop global warming by using less energy. Sure, maybe Americans and Europeans can assuage their guilt by reducing their energy usage.  It might make us feel like we’re making a difference, but it won’t matter. The reality is that cutbacks in energy usage in America and Europe won’t matter at all if India and China continue to increase their emissions

We can’t tell the developing world, “Hey, we got wealthy burning fossil fuels, but you guys can’t do the same, because it’s bad for the Earth,” and expect them to listen. They’ll say “yeah, sure, whatever” and then keep on burning fossil fuels to make their lives better.

The way to stop global warming is to pour lots of money into developing sources of energy that don’t lead to carbon emissions. If we can develop reliable, cheap, fusion power, for example, we can give this technology to the rest of the world, and they’ll say “hell yes.” Then we all win. The same is true for all forms of renewable energy: we need to invest in them.

Stopping global warming requires giving money to anyone who develops clean energy. Fortunately bitcoin miners are doing exactly this.

Bitcoin Mining Gives Money to Green Energy Suppliers

Most bitcoin mining is done with renewable energy sources. When people set up bitcoin mines, they are doing so mostly in places that are already producing lots of renewable energy, but aren’t being paid for it because it can’t all be used.  We’ve had hydroelectric dams in eastern Washington for a long time. Bitcoin mining has given these dam operators boatloads of cash.

What do you think is more likely to save the world? Appealing to people’s sense of morality and justice, and convincing them to consume less? Or investing in technology and engineering to solve problems we’ve created for ourselves?  Bitcoin miners are giving money to anyone who can produce reliable power for cheap, and the best sources of cheap, reliable power are renewable energy.

You might think this doesn’t matter at all, because bitcoin mining isn’t exactly a ton of power. It’s not enough to be the difference between profitability and failure for green energy, is it? As it turns out, excess production by renewable power is a big problem. Energy demand fluctuates wildly over the course of the day, and these fluctuations don’t always line up with the times at which renewable energy is produced. The variable output means renewable suppliers have pay or a lot of wasted capacity. Nobody wants to buy your extra gigawatts at two in the morning. Nobodoy, that is, except bitcoin miners. Bitcoin mining fixes this problem for renewables by always being willing to buy cheap power, regardless of the time of day. No other industry has this property.

The future looks like clean energy all over the world, much of it renewable, hooked up to local bitcoin mining operations that utilize slack power generation.  Bitcoin miners get cheap, emissions-free power, and renewable operators don’t require government subsidies to stay afloat. You can’t try to fix the world by rolling back time. The only way out is through. And honestly, it’s a hell of a way out.

Let’s Get to Kardashev 1

Which future would you rather inhabit? One populated by energy-obsessed neopuritans, with state-mandated austerity, and constant hand wringing about how we’ve wronged Mother earth? 

Or a future where we have repaired much of the environmental damage, we are mining asteroids, and we are living on a terraformed Mars, floating colonies on Venus, and a hundred thousand experimental environments inhabited by all kinds of people with different values, music, styles of dress, food, and homebrew beers?  Oh, yes, of course, in the second future we’ll probably also see all kinds of other nightmares that we can’t currently imagine, but that’s how life goes. We can’t cling to the past – we have to advance, bravely and boldy, in the future. 

The automobile was originally proposed as an environmental saviour, because it solved the problem of horse shit in cities.  Imagine what would have happened to the world if we’d said “The way to fix this problem is to stop living in cities.”  We’d have given up all the economic advantages that come from people living together in huge numbers. If we had listened to ludditic environmental doomsayers last century, we’d all be speaking a hybrid of German and Japanese while goose-stepping to techno-nazi anime, because there’s no way in hell that fascist states will listen to moralistic hand-wringing from wealthier, weaker civilizations. 

Yes, the world is covered in the modern equivalent of horse shit. The solution is to move forward, not backwards. 

The Kardasehv scale is a measure of civilizational development, and it’s based on energy usage. We’re still not even to level 1.  Convincing ourselves to reduce our energy usage is a way of saying, “no, let’s not develop, we think that’s bad.” The truth is, the damage from global warming is so bad, just stopping it isn’t enough. We need to grow and develop the capabilities necessary to fix the future problems we will encounter – not try to hold onto an imagined past that can’t exist again, and probably never did.

Oh, and what kind of currency is going to work in an environment like that? Would people living on Mars trust a currency run by people on Earth? Or would interplanetary trade demand a currency that’s backed by the laws of physics and mathematics?

We need to dream about the future again – now more than ever.  Buying bitcoin is a tangible way to make that dream real. People all over Earth are buying bitcoin every day using You could be one of them.

The Elsa Argument for Bitcoin

Here’s an argument for bitcoin, based upon everyone’s favorite cartoon adolescent, who has way more power than she realizes.

The Dollar is Broken

The hardest part of getting people to consider bitcoin seriously is getting them to understand how broken the dollar is.  This is not a hard thing to understand intellectually; It’s a hard thing to understand emotionally, because the implications are so big.  Once you understand that the dollar is broken, Trump, Brexit, the rise in suicide rates and increased social tensions all start to share a common root cause: The money is broken. Of course people are losing trust in society. Of course there’s more racial infighting. Everyone knows that Germany printing tons of money before World War 2 is what lead to a rise in antisemitism and violent anger. I believe – as do most Bitcoin holders – that something very similar is happening now.

Why do I think the dollar is broken?

Here is a picture of how many dollars there were, in each year, from 1955 to 2019:

In August, 2008, there were 1.4 Trillion Dollars.

In August, 2019, there were 3.8 Trillion dollars.

Which is more likely?

  1. The value of all goods and services in the Dollar economy tripled in the period August, 2008 to August 2019

  2. Large amounts of money were created from nothing and have been distorting the global economy

Ostensibly, dollars measure value. Ostensibly, something that costs three hundred thousand dollars has three hundred thousand times the value of something that costs one dollar.  This is becoming less true every day. The fiction that dollars measure value keeps going because of an increasingly fragile social consensus.

Does it sound totally insane to claim that we’ll move away from the dollar as a measure of value? Nobody thought the Soviet Union would fall, even the day before it fell. And yet once everyone realized that everyone else realized the jig was up, it was up.  Bitcoiners like myself expect that day to come – maybe not any day, but within the next decade or so.

The easiest way to understand why I think the dollar is broken is with a thought experiment I like to call “The Elsa Economy.”

Imagine the Elsa Economy

What would happen if you gave a trillion dollars to my 3 year old daughter? She’d spend it all on Elsa themed products. Disney stock would explode in value.  Disney would spend more on movies, directors, and animators. Disney might lobby congress to have laws changed just to protect their revenue streams.  They would eventually take over the entire world as it became increasingly powerful. You’d see “Elsa RV’s” (she asked for one of these), and an “Elsa House.”

Would it be obvious that the money was now broken?

It would definitely look like growth to employees and shareholders of Disney, as well as all of their upstream suppliers. They might hire journalists to write think pieces on the wonderful new Elsa Economy. The journalists would probably believe what they were writing, because it’s easy to believe what lines up with your economic interest.

A dollar would measure “human value” less and less, and begin to measure, increasingly, how close a person was to my daughter.    A dollar would become a measure of social proxy more than anything else, and an entire “meritocracy” would spring up of consultants, planners, financiers and advisers trying to help businesses produce Elsa themed products and put them in front of my daughter.

Of course, some of these planners would be better than others. Most of them would work very hard. After all, there’s a lot of money at stake! Some of these “Elsa employees” might deal with such real problems as “how do we move more goods faster”, or “how can we make our datacenters use less power.”  Most of these people wouldn’t bother realizing or considering how their jobs fit into the global economy because most people don’t think about this in general.  We do our jobs, and we get paid in dollars and usually don’t think much about what the dollars mean.

Now, these planners, consultants and advisors still need to buy clothes. They still need to live in houses and drive cars and have their oil changed and get haircuts. The owner of the barbershop still needs to buy scissors, the mechanic needs her tools, and all of these things have to be made by their own suppliers. You’d need armies of accountants and lawyers to make those systems work, and so on.

Would the Elsa Economy consist of a blackhole around my daughter, with the entire world bowing in obeisance to her?  Or would it just be an incredibly strong gravitational field that distorted and overvalued everything around her, while extracting value from places that were further away?

Money Printing Distorts Society

Eventually, as the economy became heavily distorted by this creation of money, you’d start to see social unrest. Anyone unable to find a good job in the Elsa Economy would start to get angry about economic conditions. And yet without publicizing the fact that my daughter now has a trillion dollar bank balance, it might not be obvious to people that the money was broken.

Some people would start to catch on as they saw Disneys’ stock booming, as well as manufacturers of blue and teal paint taking off like crazy.  Yet most people, just struggling to survive and take care of their families day to day, would only have the increasingly strong sense that something is seriously wrong.

How many people have looked at the M1 money supply chart, and asked themselves “What is the social impact of creating 2.4 trillion new dollars?”

“Morning Boys, How’s the water today?” the old fish asked the young fish.

“What’s water?” replied the young fish. 

Money shapes every aspect of human relationships.  If our money were broken, would this fact be obvious? Or would people with lots of it say “it works fine on my machine” and justify their fortunes to themselves, as being due to their hard work and sound judgement?

What would it look like if you created 2.4 trillion dollars and gave it to people who were already extremely wealthy, in exchange for assets which were wildly overpriced?

Would the bailout be explained as “look, if these wealthy people have to eat their losses, then the current geopolitical structures might collapse, so it’s better for the rest of us to pay for their mistakes?” Or would it be explained as “helping everyone out?”

Would the wealthy people bailed out by the banks go out and spend all of their free money on Elsa RV’s and “Elsa Stairs”? Or would it all be “invested” in buying up the supply of single family houses? Would it be spent on stock buybacks which make it look like the stock market is doing amazing?  Would that money flow into questionable business models that lose money on every sale and try to make it up on volume?

What would be the clue that something was terribly amis in the economy? If there aren’t Elsa themed RV’s roving the streets, what might a person look for to tell them something was seriously wrong?

You’d like for things like rising suicide rates, an increase in angry outbursts of violence, a drop in public trust, increased political polarization, and increases in violent racism. Those things are a lot less fun than looking for an Elsa themed RV, but they are way more real and concrete. And none of them were happening like this before 2008.

If I haven’t convinced you that the economy is severely broken by massive printing of money, check out this blog run by macroeconomists, or this post by  Ray Dalio, founder of the Bridgewater  hedge fund. None of these people have advised their clients buy bitcoin. But they both agree, as do lots of people, that you can’t create 2.4 trillion dollars, give it to wealthy people and institutions, and then expect everything to just work fine.

That’s it! You thought this was going to be an essay about bitcoin, but it turns out it’s really just an essay about how broken the dollar is.  Getting people to see this is the hardest part of selling anyone on bitcoin. Most people in America measure value in dollars. Convincing them the dollar is broken is like trying to convince someone to use the metric system instead of feet or furlongs.  If you aren’t convinced the dollar is broken, nothing about bitcoin makes any sense. Once you believe that the dollar is broken, because we created way too many of them, you’ll be open to considering Bitcoin.

In other words, what I’m trying to say is, “Let it go! Let it go! The gold never bothered me anyways.”