Good Morning Everyone,
The energy usage of the Bitcoin Network has been discussed and hotly debated for years. From an article in 2017 claiming “Bitcoin Mining on Track to Consume All of the World’s Energy By 2020“ (which was clearly nonsense and a classic example of clickbait headlines) to Elon Musk tweeting about Tesla suspending Bitcoin payments due to concerns about rapidly increasing use of fossil fuels for Bitcoin mining. It is clear that there is still a perceived issue by some, and a lack of confidence for many relating to Bitcoin and the networks energy usage.
Over the next 2 days i’m going to put your mind at ease so you clearly understand the nuance of the conversation, as I believe most that are of the opinion the networks energy usage is an issue, do not really understand the nuance and specifics, and are failing to accurately depict the entire scope of the conversation to present an accurate perspective.
Before we get into some numbers, I think it’s important to frame what we’re really talking about here.
We have a lot of things in the world that use a lot of energy, and contribute huge emissions to our environment that receive little attention and seemingly no one is complaining about.
We could debate whether the electricity used by all washing machines or clothes dryers on the planet is an acceptable allocation or the fact that the US alone uses more electricity on Christmas lights than entire countries annually!
I don’t hear anyone complaining about the resources deployed to sustain the military forces of various countries around the world. I guess it has been accepted they would rather have some defense capabilities than be helplessly dominated and slaughtered by an opposing force.
First of all to be able to pose the question of “is the expenditure of energy worth it?”, you would need to be able to answer what ‘it’ is.
In my opinion the entire conversation boils down to the following:
Do we value having an immutable monetary network completely separated from ‘the state’ and political actors? A single global monetary network with the properties that the Bitcoin network provides.. A network that is available to anyone, but is owned by no-one. And if so, how much energy as a percentage of societies resources is an acceptable allocation for the benefit this technology affords us as a global people?
To answer would require one to actually understand the impacts the technology of money actually has on society. It’s certainly also not to say the impacts are entirely negative. It’s quite a big question, and fair to say it’s something that is difficult to fully answer.
While in developed nations you could make the case for the system functioning and providing value, and perhaps the upside negates the negative externalities to the freedom, rights and sovereignty of the populous. However, many people live under oppressive tyranical regimes where the monetary system is used as a tool against the better interest of the people.
In the US for example, the wealth gap that exists has become so extreme due primarily to the monetary system and policies of the Political class resulting in major societal friction, division and severe negative higher order effects that ultimately impact everyone to some extent. This creates a level of fragility that may become catastrophic. At minimum it is a major destabilzing force within the society which seems unlikely to be the optimal implementation possible.
I’ve attached a chart below showing this, whereby the blue line which represents the top 1% and the share of total net worth held vs the bottom 50%. As you can see, the top 1% now have a greater share of the total net worth than the bottom 50% combined.
I’ll leave it there for this morning, and continue this conversation tomorrow.
Hope you have a great day, and i look forward to speaking with you tomorrow.
AK
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