The current energy system is a complex network of physical and social interdependent systems. It consists of electricity generation, transmission, distribution and consumption; it involves many different types of power plants and sources, including coal, natural gas, nuclear and renewables. The energy system has been constructed to provide reliable and affordable access to electricity for all consumers. As such, it is an important driver of human flourishing.
The energy system also plays an important role in supporting other aspects of human flourishing such as economic growth and development. The ability to produce goods at scale depends on the availability of cheap and reliable energy sources that can be used to power industrial processes. Energy costs are one of the largest expenses for any business or individual undertaking any type of production activity.
Additionally, energy is further consumed in homes to moderate the temperatures for a comfortable living. This requires further utilization of energy by different appliances.
Thus, ensuring energy access for all people is essential if we want to ensure that everyone can enjoy a high standard of living with access to modern amenities such as electricity in their homes and offices.
Thedéen’s analysis begins with the observation that Bitcoin mining is energy-intensive. This is a fact, but it’s also a feature of any information technology (IT) associated with a payment system. The reason for this is simple: IT is the most efficient way to process payments.
Thedéen rightly notes that “the energy consumption of bitcoin mining is at least comparable to other payments systems,” but this comparison misses the point. Even if we were to compare Bitcoin’s energy consumption to less energy-intensive payment systems, such as Visa or Mastercard, we still wouldn’t be able to conclude whether Bitcoin is more or less sustainable than these legacy systems.
Existing Source of Energy
The OECD Environmental Outlook to 2050 is a comprehensive assessment of the outlook for the world’s environment. It outlines the challenges we face and the policy options available to tackle them in a variety of areas, including climate change, oceans and fisheries, pollution, urbanization and biodiversity loss.
The report was launched on 26 June 2019 during the OECD Environment Forum in Paris (25–27 June).
The report was prepared by an expert team led by Dr Josep Canadell from CSIRO. The team included experts from OECD and its member countries, as well as from other international organizations.
The problem here is that renewables cannot provide enough energy at all times; therefore, companies have to use fossil fuel-powered plants instead, which can be harmful to the environment because they are still releasing carbon emissions into the atmosphere.
The Transition to Renewables is Not Straightforward.
The energy system is complex and requires a delicate balance of different power sources.
The main issue with the current state of our energy system is that it’s built around large power plants, which are designed to produce power 24 hours a day, 7 days a week. Depending on demand, they can be used for both generation and storage and as base load or peak load generators.
For a renewable energy plant to replace an existing coal or gas plant, it must be able to provide reliable power at all times, which means that it needs its own backup from another source in case it fails (or if its output varies).
This means building more new coal, gas plants, batteries, or storage capacity. This makes the cost of transitioning away from fossil fuels much higher than it needs to be.
Coming back to the question, how will energy systems benefit from Bitcoin Mining?
Renewable energy is a great thing. It’s good for the environment, it’s good for our health and it’s good for the economy. However, it has one major drawback: it can be unpredictable. The sun doesn’t shine every day, nor does the wind blow all the time. This makes them difficult to incorporate into a reliable power grid that can supply constant power to homes and businesses.
The energy system is in for some changes. The rapid growth of Bitcoin mining has led to the development of new technologies that can help increase efficiency and lower costs.
Bitcoin mining has been criticized for its high-power consumption, but that’s just part of the story. The technology behind it also has the potential to benefit society as a whole by helping us meet our energy needs more efficiently and cheaply.
Bitcoin mining is perfect for mitigating this problem by being able to absorb excess power caused whenever there’s excess renewable production. In fact, bitcoin mining incentivizes additional renewable output, thus driving down their overall cost of manufacture.
In a world where more than half of our energy will come from renewable sources by 2050 (which we’re not even close to achieving yet), it will be critical that we have an energy system that can safely incorporate them while maintaining stability at all times.
Unhelpful Narrative About Bitcoin Mining Dispelled
A lot has been written about the environmental impact of bitcoin mining, but most of these articles miss the big picture. They focus on the environmental impact of Bitcoin itself rather than on the impact of its utility as money.
The problem is that when people think about Bitcoin, particularly when they’re doing so from an environmental perspective, they are thinking about Bitcoin Inc., a for-profit company that runs on proprietary software (that’s why you can’t download your own copy of Bitcoin). That’s not what Bitcoin is at all!
Bitcoin isn’t a company; it’s a currency. And currencies are not supposed to be profitable; they’re supposed to be stable and useful. You don’t make money off currencies; you protect them and promote their stability by regulating their supply according to real-world conditions (prices).
You don’t even need to know what they’re worth; if everyone agrees that it’s useful as money, then everyone will accept it as payment regardless of their market value at any given moment.
However, this energy consumption benefits society because it protects our current energy system from attack. Essentially, mining Bitcoin goes hand-in-hand with protecting our current energy system from hackers or malicious actors who want to disrupt it.
As long as people continue mining Bitcoin, there will always be a financial incentive for people to protect our current energy system from attacks against it.
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