“Time series analysis (Stern, 1993, 2000) shows that energy is needed in addition to capital and labor to explain GDP growth. But mainstream economic research has tended to underestimate the importance of energy in economic growth. The main models used to explain the growth process ( (e.g. Aghion and Howitt, 2009) do not include energy as a factor of production.
– The role of energy in the industrial revolution and modern economic growth, Stern and Kander (2012)
If energy is so important to any economy, why is it so forcefully avoided in research and discussion? Moving forward, why is there so much politicization and division in the industry? Eliminate energy tribalism as just hype. It’s illogical to its core. We need to generate as much energy as possible in a way that does not undermine the economy, and that can allow us to keep the wheels of society turning. How do we achieve this noble goal?
Generating direct income from power generation.
One issue: Energy demand is volatile. It does not remain constant all day, let alone all year. This volatility also affects different forms of energy in economies that experience seasonal climate fluctuations or may have restricted access to diverse sources.
Is there a way we can mitigate demand fluctuations so that energy producers can maintain a consistent operating rate while still being able to provide reliable energy to societal fluctuations?
The answer is yes. This can be achieved through Bitcoin mining. We can use Bitcoin mining to crush the fraternal squabbles between all power generators. They are all free to compete for hashrate and seek the next legendary Bitcoin support distribution, as long as they Agreeing to redirect power to the grid in community moments of need (which has proven effective in multiple events and scenarios on the ERCOT system in Texas And also in Georgia). The more power a process can generate, the more it can give society what it needs and still be able to generate revenue through Bitcoin mining. The best part is that Bitcoin doesn’t care where the energy comes from or where it comes from; He wants everything.
We can now justify the rapid expansion of power generation and distribution infrastructure by supplying the ever-present and highly competitive demand for that power. Demand is a buyer of first and last resort. This demand can be met through cheaper energy resources, or by expanding existing processes to provide greater production and maximize efficiency. All strategies are viable with this approach. Providing responsive demand to the network can smooth the aggregate demand curve revolutionary.
A well-balanced system would make aggregate demand appear flat and steady like that line representing nuclear power supply above (yellow). But when you have natural demand that ebbs and flows (as shown in Figures 7 and 9), you need a flexible demand source that can bridge the gap in between. You need an upload that can be shut down when community demand exceeds expectations, but provides such an advantage through operational and revenue improvements that its products are easily looked after when situational demands are met, that they can be brought back online as soon as possible.
This, ladies and gentlemen, is what Bitcoin miners in Irkut and Georgia do. They fill in the gaps. What this also does is provide an incentive for power generators to produce as much as possible. This means that there is now justification for building processes capable of producing much more energy than is needed now (but which could be of benefit in the future).
Slippery orange coin
What happens to demand when the supply of electrons no longer makes it easier to produce the good. Such an asset continues to consume the same amount of energy that is thrown at it, not like gold, not like oil. These two goods give rise to natural market forces that put an end to rising prices by justifying increased production during high prices and decreased production during low prices.
This is the beauty of adaptive difficulty in Bitcoin mining. When more power is allocated to the network, and blocks start to be completed very quickly, the network increases difficulty (and vice versa when blocks come very slowly). There is no overproduction or saturation in supply due to high prices.
Meanwhile, mining pools allow Bitcoin miners to work together to gain Bitcoin support. When such an outcome occurs, the mining pool distributes profits to the pool participants according to the amount of effort allocated as a percentage of the total pool (a fair cooperative system). Which results in a much more consistent income stream than if these miners worked alone.
All power generators will benefit from deploying data centers full of ASIC miners to take advantage of the perpetual demand provided by the Bitcoin mining network. Moreover, the highly competitive industry provides a profound demand for improved chip efficiency as well as sourcing not only cheaper power, but also more abundant capacity that is not being used effectively. That’s why energy producers and utilities do just that; Use Bitcoin mining to maximize efficiency and improve operations, while earning an additional line of revenue.
The energy foundations themselves are being retooled. Energy tribalism will fade away, as all producers turn their sights to the great orange future on the horizon. And they’re all in a position to make a lot of money for it.
This is a guest post by Mike Hobart. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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