Bitcoin mining wastes energy, but Bitcoin maximizes the power human civilization wields
Thermodynamics of Sound Money and Life Pt. II
I got into a bit of a disagreement with Parker Lewis on twitter the other day after he posted another article with the same tired takes most people have already provided on energy, and he was kind enough to have his tweet quote one of the weakest portions of the article. In the conversation that ensued, I realized Bitcoin mining can actually be thought of as “wasting” energy.
This article of course overstates the economic importance of mining and reflects a deep lack of understanding as to how and why bitcoin fixes everything (keep reading if you don’t know that it does, or flippantly dismiss at your own peril). Sometimes you’ll even hear bitcoiners who you thought were smart say things like “mining will grow in perpetuity to consume a majority of the world’s energy” so it is no surprise subtler inaccuracies continue to circulate.
To recap what will actually cause the “greatest revolution in energy [i.e. everything]”, let’s briefly revisit the key points of my prior post on Bitcoin being the energy minimal system.
Money is information, and information provides the bearer the capacity to work
Landaeur’s principle tells us that deletion of information increases entropy, implying that a fixed monetary supply that preserves info minimizes entropy.
Bitcoin, with energetic proof-of-work is the only way to enable this preservation, causing it to minimize the energy consumption of all things, and all things ultimately boil down to energy.
The concept of emergy captures the total energy costs of a good or service, and pricing is the mechanism by which we estimate something’s emergy.
Increasing emergy/price ratio is how technology enhances subjective value (which can really be thought of as highly illegible objective value toward executing the “purpose” of life, which is increasing negentropy).
These emergy/cost efficiency improvements, which all real technologies and businesses are/provide, lead to Jevons paradox, which is the resultant increase in the consumption of goods & service by a factor exceeding the improvement in reduced emergy, thereby increasing total base layer energy consumption. This is the fundamental and only growth mechanism in civilization. This is also validated from the Maximum power principle, which some have suggested should be included as the 4th law of thermodynamics.
So Bitcoin is the energy minimal system and we can state it at a thermodynamic level.
Sidenote 1: the way to evaluate technology businesses for sound investment (let’s say, when you’re a bitcoin trillionaire and can afford to capture the returns of things in accordance with the laws of physics rather than being subject to local variations that appear to violate the 2nd law of thermodynamics i.e. fake, unprofitable businesses — (or even merely very far from optimal businesses) that have value only as a lousy monetary asset scam) is to look at the emergy/cost ratio since this is the very definition of technology as I have shown. There are two options: either emergy goes up, or cost goes down, simple as that — this is the only sound investment strategy from what I can tell and legibilizing it in this way should help quite a bit. What I have seen is that both investors and people who operate businesses are almost entirely clueless about this, which is the fundamental reason they are so bad at what they do. You have probably heard about the saying about measures becoming targets, but that only applies once you get into the higher order effects off of the basic physics. You can’t cheat this ;)
You might be thinking that the cost will adjust over time so this doesn’t provide an objective reference and you would be correct. Time must be taken into account. In the instance in which something results in a large emergy efficiency increase, its value will not yet be priced in, so you can imagine a sort of differential that imagines what the shift would be from purely the emergy side if everything else stayed constant. In other words, a sound business or technology is one that increases emergy efficiency faster than all the other emergy efficiency increasing technologies being concurrently developed. This is what will be required to make a real return.
Sidenote 2: Perhaps some physicist can reframe my “money is information” statement since I think the degree of imprecision in that is likely the weakest part — note, price is insufficient despite being an obviously informatic thing — I suspect information around opportunity costs of actions among a plurality of choices where there are multiple options that do in fact lead to states that are strictly more advanced than others is the far more important variety. Everyone thinks they’re brilliant in a bull market, and we actually may have an “issue” of a perma-bull market of unbounded growth in the coming eons so it is not enough that a thing be inherently useful.
How quickly can we build nuclear reactors? Can we grow base layer energy at 3% or even some fraction of a percent year over year? Run the numbers on what this gives you after a century or five and then think about what the purchasing power of bitcoin will represent, and then consider that the technology/emergy multiplier is growing on top of this energy layer. Over the past decades annual energy growth has been around 1.8% per year. Bitcoin having the purchasing power of over 10 billion year 2020 US dollars is not too many generations away.
Looking at base energy, along with a handful of emergy-containing metrics (e.g. beef output per year, passenger-miles per year, concrete & steel production per year, lbs of satellites launched per year, computational capacity of all devices, etc.) along with their per capita normalization (per capita can be estimated via price in sats, which then takes into account relative value against competing goods) are how we can measure the rate of civilizational growth since. Poverty metrics tied to dollars wages are moronic. Renewables and electric cars are incredibly harmful due to their massive enviromental footprint of both energy and toxic chemicals gradually destroying the fertile soil and previously clean water. Renewables are a tiny fraction of base-layer energy, and as energy consumptions grows an order of magnitude, the risk that the ESG terrorists pose is monumental.
In the face of the physics foundations of energy, we must observe that anti-energy people are anti-human, with genocidal-lite, white-supremacist tendencies.
These ESG people are severely mentally-ill — trying to reason with them through rhetoric might be the most dangerous thing we can do since it actually emboldens them and plays a supporting role in their psychosis. In choosing to be anti-human, they are like wild animals, and wild animals should be treated with caution, and not fed. Perhaps being belligerent and calling them racist though might help them recalibrate their status. We could always use more toxicity, taunting, and memes. Next time you see someone step out of a Tesla ask them what they did in their life that is so egregious they feel the need to compensate for it be forcing children in Africa to breathe toxic cobalt dust.
Bitcoin mining wastes energy
First, let us observe the great irony in the mining subsidization of the energy industry being of any value, let alone some tremendous “revolutionary” one, from a system that tauts the incredible value of the “free” market. I thought the free market fixes everything with great efficiency — but somewhow, the energy markets, one of the industries that is by definition about as ‘close to the energy’ (low levels of layered emergy inputs that cause opacity and make it more challenging to operate with maximal efficiency), needs subsidies to flourish? 🤣
This is of course ridiculous. The idea of capturing stranded energy as valuable due to an efficiency increase is due to a foolish efficiency metric. Capturing the value of stranded energy is no more of an efficiency gain than there is an inefficiency in a field of solar panels due to the gaps between the panels. Absolutely nothing stops you from defining an efficiency-metric based on the solar irradiance across your entire farm rather than incident upon the total area of all the panels.
The “reliability” of grids is also silly since in a sound world they would be made reliable all the same because there would be real competition driving quality of service, which includes reliability. A sound world allocates time to all things perfectly so no subsidy is needed anywhere.
The problem is the localist perception and the trust that prices in all things are always a true representation of inherent value and it seems mining is a somewhat strange exception. Money itself has a terrain, but in operation, money is the map, not the terrain. The terrain is the emergy itself, and the constraints are at a system level of maximum energy production, but there can be local deviations just like in the universe the density of mass/energy in any region on average has to be zero or more, but in small pockets can occassionally have negative energy density i.e. an area that contains less than 0 energy in it, which from mass-energy equivalence also means you have negative mass.
But the easiest way to realize mining wastes energy is to consider the counter-factual, a fictitious universe ruled by an omnipotent God that secures the blockchain for us so that we do not have to expend any energy on it ourselves. Then we would find that we have strictly more energy available across all other things, and the price of bitcoin would go up (real prices are emergy based) in response to the increased resource availability. We wouldn’t get the full value proportionally to the amount of energy mining consumes since a lot of it is stranded, but we would get some fraction of it. So mining wastes energy, everything else just wastes far more energy and efficiency cannot reach 100%.
Precision and correctness matters
Truth is not subjective. Computational intractability is another matter, but many things are trivial to compute, we simply choose not to do so. Without sound money, we become untethered to the physical reality of the world and the need to increase energy to live. There is great suffering amongst those who are fighting against the nature of what it means to be human. This is why cantillionare billionaires remain feeling impoverished and seek further their billions — they know implicitly that surplus capital generation must correspond to a global increase in emergy, but they sense its absence and thus feel perpetually unfulfilled, and simply turn to degeneracy. We can see quite plainly the degeneracy in the billionaires from their grotesque physical appearance for they too have to live in the same physical world. Their counterfeit money is information that speaks lies to the masses, but the mass and energy itself cannot be lied to.
It is not philosophical jargon when someone says “bitcoin is a truth-seeking machine", rather, it is a lossy compression, which is what language allows. This entire post is like far too hand-wavy to please a mathematician, and perhaps too technical for some, but there is value in hand-waving that cannot be found from over-technical analysis: it indicates that truth exists, specifically, that there is more than philosophical jargon. The laws of themodynamics are not new, yet only a tiny fraction of physics majors grok Bitcoin today (non-engineer Elon Musk is a physics undergrad, for instance). VCs, investment bankers, economists, etc, also fail to understand these basics of reality. Why would any of them “understand better” through imprecise rhetoric meant to satisfy their emotions? That is fiat thinking. The idea that we somehow know better and ought to be trusted, but we will never win this game with one foot cemented to reality, and it is. Mentally-ill people cannot be reasoned with even when they trick you into thinking they have the capacity for reason — it exists to no greater extent than the parrot has the capacity for human speech. Truth cannot be reached, it can only be sought. As we continue seeking truth with sincerity, the physics of the universe will continue play out. There is no need to convince anyone of anything. No on can be taught what the truth is, they must choose to pursue it themselves, and as the physics of the world continues to reject fiat lies, ever more people will decide to seek the truth.
I know I do not know the truth. For if I were to understand it viscerally, I would have no concerns or anxiety around stacking more bitcoin while it is so cheap. Bitcoin fixes everything, not me, so if Bitcoin needs something of me, the bitcoins will recruit me as they will recruit any such person born after hyperbitcoinization with great efficiency.