I. Introduction

Today, we’re going to unravel one of Bitcoin’s most prevailing myths: its energy consumption.

This exploration was sparked by an exhaustive and eloquently penned piece by Brandon Quittem.

If you find yourself captivated by this topic and wish to delve deeper into the complexities of Bitcoin’s energy dynamics, you’ll find a link to Quittem’s full article at the end of this piece.

Addressing the Myth: Bitcoin’s Energy Consumption Issue

Bitcoin’s energy consumption is often viewed with concern, but this perspective might not cover the entire picture.

Within the Bitcoin ecosystem, miners behave like pioneer species—a term borrowed from ecology—to illustrate their unique ability to colonize areas referred to as “energy deserts.”

These remote places, such as the North Pole, volcanic regions, and even outer space, may otherwise be devoid of energy utilization.

Miners harness energy in these deserts, sometimes using resources that might be otherwise wasted.

Overview of Bitcoin’s Mining Ecosystem

The mining process of Bitcoin is analogous to the role of pioneer species in ecology.

Miners forge a path in unexplored territories of energy utilization, adhering to the principle of “unforgeable costliness.”

This principle, understood by Bitcoin’s creator, Satoshi, means that creating new monetary units requires real effort and energy.

Bitcoin mining operates on Thermodynamics, consuming physical energy to generate hashes, and Evolutionary Biology, recognizing the human self-interest that fuels the process.

Mining Bitcoin requires three essential components: specialist hardware, energy, and an internet connection.

This combination enables miners to partake in a worldwide competition, using energy creatively to earn newly minted Bitcoin.

Connecting Energy Utilization with Economic Growth

The analogy of Bitcoin miners as pioneer species extends beyond mere energy consumption.

These miners, much like pioneer species in ecology, pave the way for broader growth and development.

By tapping into neglected or inaccessible energy sources, Bitcoin mining stimulates innovation and economic growth in otherwise overlooked regions.

The innovative approach to harnessing energy doesn’t just fuel the creation of Bitcoin; it’s also an engine for technological and economic progress.

The metaphor of pioneer species will be used throughout this newsletter to illustrate how Bitcoin mining is redefining our understanding of energy utilization in the modern world, transforming remote and neglected energy sources into vital components of our global economy.

II. Colonizing Energy Deserts: Bitcoin Miners as Pioneer Species

The Concept of Hash Horizon: North Pole, Volcanos, Outer Space

Bitcoin mining is like a never-ending treasure hunt, where the treasure is the cheapest and most creative ways to find energy.

Miners are always looking for new places to get energy, even in places you might never think of like the North Pole, deep inside volcanoes, or even far out in space.

North Pole

Imagine trying to find energy at the North Pole! It’s cold and remote, but those very things make it attractive to miners.

The freezing temperatures naturally cool down the computers they use, which can save a lot of money.

Volcanoes

Volcanoes are another surprising place where miners are looking for energy.

The heat inside a volcano can be turned into energy to run the mining computers.

It’s like turning a desert into a garden, using something that seemed useless and making it valuable.

Outer Space

Even outer space is not off-limits in this search for energy.

While it might sound like science fiction, some miners are thinking about how to use the endless sunshine in space to power their operations.

It’s a big dream, and it’s full of challenges, but that’s what makes it exciting.

The idea of the “Hash Horizon” is all about looking beyond the ordinary and finding new ways to do things.

It’s about being brave and creative and never stopping the search for better solutions.

From the icy North Pole to the fiery heart of volcanoes to the vastness of space, miners are showing us that with a little imagination, anything is possible.

This never-give-up attitude is not just about mining; it’s a lesson in how we can all think outside the box and see opportunities where others see obstacles.

Symbiotic Relationships with Energy Producers

Much like in nature, where various species coexist and help each other, Bitcoin miners form symbiotic relationships with energy producers.

Miners are always looking for cheap and abundant energy sources, and they often find them in places where energy might otherwise go to waste.

For example, Chinese miners have historically moved to Szechuan during the rainy season to utilize excess hydroelectricity.

This not only benefits the miners but also the energy producers, as it monetizes their otherwise wasted energy.

Ecological Transformation & Attracting Allies

The act of colonizing these energy deserts and turning them into thriving ecosystems has a ripple effect.

As miners take advantage of these untapped energy sources, they pave the way for other industries and allies to follow.

The transformation is similar to how pioneer species change a barren landscape into a rich environment that can support a variety of life.

In the Bitcoin ecosystem, miners act as these pioneers, attracting allies and changing the landscape for the better.

Volcano Mining in El Salvador

A remarkable example of this transformation is the mining initiative in El Salvador, where volcanic energy is used to mine Bitcoin.

Here, the seemingly inhospitable energy of a volcano has been harnessed to create value, showcasing the innovative and adaptive nature of Bitcoin mining.

This not only supports the local economy but also demonstrates how creative solutions can turn once-overlooked energy sources into valuable assets.

III. Unforgeable Costliness: Bitcoin vs. Fiat Money

Real Cost in Bitcoin vs. Costless Fiat Money

The process of mining Bitcoin requires real energy and effort, creating a tangible value that’s unlike fiat money, which can be printed without a corresponding cost.

This distinction illustrates the inherent value of Bitcoin and highlights the reality that it cannot be forged or artificially created.

The costs associated with mining Bitcoin ensure its integrity, making it a stable and trustworthy alternative to traditional currencies.

Implications on Politically Captured Monetary Systems

The decentralized nature of Bitcoin is a stark contrast to politically controlled fiat money systems.

While governments can manipulate traditional currencies, Bitcoin’s structure and its rooted connection to real energy costs make it resistant to such interference.

This independence offers a robust alternative to conventional monetary systems that are susceptible to political influence and manipulation.

Bitcoin’s Proof of Work & Connection to Thermodynamics

Bitcoin mining’s energy-intensive process is more than just a cost; it’s a fundamental part of the system’s design known as Proof of Work.

This method ensures the network’s security and integrity.

It is a thermodynamic process where the energy invested gives Bitcoin its value and authenticity.

In a way, Bitcoin’s mining ecosystem reflects a Darwinian competition, where efficiency and adaptation are key to survival, much like the ever-changing populations of wolves and moose on an island.

The miners who can harness energy most effectively thrive, while those who cannot adapt are left behind, without any unnatural interventions to revive them.

The system, like nature itself, rewards efficiency and innovation, and punishes stagnation.

IV. Darwinian Competition in Mining

Balance of Bitcoin’s Energy Cost and Political Stability

In the world of Bitcoin mining, there is a constant balancing act.

Miners travel to the energy source, forming partnerships with existing energy producers to use up cheap energy that might otherwise be wasted.

This is a bit like a pioneer species colonizing new, hostile environments.

But it’s not just about finding the most affordable energy; miners also have to consider political stability, as energy supply must be predictable and reliable to avoid catastrophic consequences.

Survival of the Most Efficient: SHA-256 Hashing

Efficiency is king in the mining ecosystem.

Just like in nature, where the fittest survive, only the most efficient Bitcoin miners will prevail.

With the continual adjustments in mining difficulty, only those that can efficiently perform the SHA-256 hashing stand a chance in this competitive landscape.

Those that cannot keep up are naturally weeded out, paving the way for a more resilient ecosystem.

Difficulty Adjustment and Dynamic Equilibrium

The ingenious Difficulty Adjustment mechanism in Bitcoin is a decentralized response to changes within the mining ecosystem.

When miners add more hash power, the Difficulty Adjustment increases, and vice versa.

It’s a dynamic equilibrium, ensuring that there’s continuous competition among miners, akin to a natural balance that shapes and sustains the whole system.

V. The Ecology of Bitcoin Mining

The Parallel Between Wildlife (e.g. Moose & Wolves) and Miners

Much like how wolves and moose balance each other in a natural ecosystem, miners and energy producers form a mutually beneficial relationship.

Miners buy up cheap energy that might otherwise be wasted, and in turn, they help stabilize energy markets.

It’s a symbiotic relationship that transforms the ecosystem and attracts more sophisticated partners.

Natural Balance vs. Unnatural Imbalance (e.g. Bailing Out Companies)

Unlike some economic practices, like bailing out failing companies, which can create unnatural imbalances, Bitcoin aligns with nature’s rules.

It embraces a natural balance where only the most efficient survive, creating a more stable and resilient ecosystem in the long run.

Bitcoin’s Alignment with Nature’s Rules

Bitcoin’s approach mirrors the principles found in nature.

From acting as a pioneer species that transforms energy deserts to working in symbiosis with energy producers, it adheres to the natural laws of survival, efficiency, and balance.

Long Term Stability Over Short Term Volatility

In nature, short-term volatility is often overridden by long-term stability.

Bitcoin’s mining ecosystem reflects this natural law, promoting enduring stability and sustainability over fleeting gains.

VI. The Environmental Perspective

Converting Wasted Energy into Digital Commodity

Bitcoin mining isn’t just about making money; it’s about making use of what would otherwise be wasted.

By traveling to the energy source and monetizing excess capacity, Bitcoin turns neglected energy into a valuable digital commodity.

It’s a prime example of sustainability in action.

Especially considering the fact that one of the major causes for wasted energy is transportation and storage costs.

Free-Market Energy Subsidy & Sustainable Solutions

Unlike traditional subsidies, Bitcoin provides a free-market solution to energy problems.

It seeks out neglected regions, like Virunga, turning them into hubs of economic and environmental transformation.

Even volcanic mining in El Salvador stands as a testament to Bitcoin’s innovative and sustainable approach.

Bitcoin’s Role in Enhancing Global Energy Efficiency

By aligning itself with natural laws and focusing on long-term strategies, Bitcoin plays a critical role in enhancing global energy efficiency.

Its miners operate in harmony with existing energy producers, promoting a world where energy isn’t wasted but used to fuel positive change.

VII. Mobility and Adaptability of Miners

Bitcoin miners are renowned for their adaptability and mobility, moving wherever energy is plentiful and cheap.

They operate by colocating near energy sources, allowing them to function as interruptible loads (they can have periods of downtime without it being a critical failure) and offer a high degree of flexibility.

This not only aids in the conversion of otherwise wasted energy, like methane, into valuable digital currency but also enables them to function in excess capacity and harsh environments.

We can even observe this adaptability in the historical movements of Chinese miners, who have repeatedly adapted to changes in both regulation and market conditions.

West Texas: Symbiosis in Action

In West Texas, a fascinating symbiosis has developed between Bitcoin miners and renewable energy producers.

This relationship has allowed excess energy, which would have otherwise been wasted, to be funneled into productive use.

Bitcoin miners colocate near wind farms, utilizing the surplus wind energy to power their mining operations.

This not only provides a reliable source of income for energy producers but also promotes environmental sustainability by ensuring that energy is not wasted.

Virunga: Humanitarian, Economic, and Environmental Aid

Virunga, a region that has struggled with political instability and poverty, has become a shining example of how Bitcoin mining can provide humanitarian, economic, and environmental support.

Local entrepreneurs and engineers have turned to Bitcoin mining as a means to uplift their communities, leveraging locally available energy resources.

This includes the utilization of hydroelectric power from nearby rivers, providing an eco-friendly and sustainable way to mine digital gold.

The profits from mining are then reinvested into the community, funding education, healthcare, and other essential services.

Through Bitcoin mining, Virunga has embarked on a path of economic empowerment and environmental stewardship.

Together, these case studies illustrate the transformative potential of Bitcoin mining.

By integrating innovative energy solutions and fostering community development, mining can serve as a catalyst for positive change in neglected regions.

The real-world impact goes beyond mere digital currency generation; it resonates with social upliftment, environmental sustainability, and the creation of opportunities where there were none.

It’s a compelling testament to the power of technology and human ingenuity working in harmony.

IX. Conclusion

The story of Bitcoin’s ecological succession is one of transformation and innovation.

Beginning as a pioneering force, it has grown into a system that can not only sustain itself but also contribute positively to the environment.

Arguments claiming that Bitcoin wastes energy have been debunked through careful analysis and real-world applications.

The efficiency and sustainability incentivized by Bitcoin mining are not merely theoretical but have been put into practice in various regions around the globe.

As we look forward to a future of enhanced energy utilization and more equitable wealth distribution, we can see that Bitcoin is more than a digital currency.

It’s a visionary force with the potential to change the global energy landscape for the better, contributing to solutions that might shape the world for generations to come.

Stay Curious,

Addie LaMarr

Read the piece that inspired this newsletter here.