In its 12 years of existence, Bitcoin’s mainstream reputation has ranged from quirky internet money to baseless speculative investment to — for some — the ultimate store of value. Amid the various narratives surrounding Bitcoin, one critique seems to have never left its side: Bitcoin’s energy consumption is dangerously wasteful.
Sensational headlines have convinced the unsuspecting citizen that Bitcoin is incompatible with the environmentally conscious narrative. A look beyond first-order effects, however, reveals that Bitcoin may ironically be the key to a future of abundant, clean energy because it foundationally changes the energy industry’s incentive structure by acting as a market-aligned demand response capability and de facto insurance product. By aligning the interests of the environmentally conscious with those of investors and electricity providers, bitcoin mining serves as the long-awaited intermediary between emission reduction and profitability. By embracing bitcoin mining as a natural subsidy for electricity generation, nations around the world can set in motion an unprecedented wave of innovation in the energy sector and advantageously position themselves for a future of dramatically increased demand for electricity.
Before discussing the oft-ignored merits of bitcoin mining, we must first address the common misconception that energy consumption is inherently immoral. In fact, our use of energy is fundamental to life as we know it. A future without an expansion of our energy consumption is a future devoid of continued human flourishing and technological progress. All human advancement depends on our unique ability to channel the universe’s energy for useful purposes. Humanity’s remarkable ingenuity is a direct consequence of its capacity to harness increasing amounts of energy from its environment and direct it for useful purposes. A call to limit or reduce total energy consumption is, therefore, a call to slow or reverse our long history of quality-of-life improvement.
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