The New York Times was out this past week with a hit piece on bitcoin mining.

When receiving propaganda, one must ask themselves: “Why am I hearing this now?”

Especially when high profile Pentagon employee and bitcoin advocate Jason Lowery was publicly predicting this smear campaign a month ago, giving us tomorrow’s news, today.

In the linked tweet above, Jason speculates this is just the beginning of a targeted bitcoin ESG FUD campaign (environmental, social, governance and fear, uncertainty, doubt for the uninitiated) and, as such, we need to be on high alert as the denial of the right to physically secure the property we value by non-lethal means would be unethical state overreach and arguably a violation of the 2nd amendment. Moreover, I don’t think it is any grand coincidence that this campaign is being waged in congruence with Operation Chokepoint 2.0.

As always, bad takes must be combatted with better takes.

I want to hit on what I think are actually the only two important points to make in response to the article — so important that they dwarf all the other good things about bitcoin and bitcoin mining in importance — up top so as to not bury the lede. But I’ll grant these two points are a bit esoteric, so I’ll respond to specific points in the Times article with tangible examples below.

The title of the piece is The Real World Costs of the Digital Race for Bitcoin. Any evaluation of the costs of anything is not complete nor useful without an evaluation of the corresponding benefits. So, in order to justify the costs of bitcoin mining one must develop an understanding and appreciation for the fundamental role of money in coordinating human activity, what happens to societies when the money they use reveals itself as bad (typically via hyperinflation), and why bitcoin is good, sound money. Otherwise, you will never get there.

A full discussion of these topics is beyond the scope of this post, but if you’ll grant me that money is the coordination function of society and is _the thing_ that allows our global population to cooperate, then you might agree that the importance of having good money cannot be overstated and almost no cost is too high to secure it, and the last step is to simply agree that bitcoin is the best money we’ve ever had.

Beyond that, suffice to say that on the premise that no accounting of costs is useful without an accounting of benefits, the NYT piece is definitively not useful in that regard.

In response to the piece, I’d offer the below quote from a post titled Bitcoin Does Not Waste Energy by Parker Lewis:

And, quickly, before you go saying “bro I’ve got electricity right now, money we got seem to be doing fine?” I’ll suggest that, like life for a Thanksgiving turkey, things appear to be just great until one day they are not.

Take Venezuela as an unfortunate, living example of what happens when money fails:

The entire piece, and narrative around climate change generally and bitcoin mining specifically, assumes that the consumption of energy is wasteful, harmful, evil even.

Consuming energy is not bad.

Say it with me.

Consuming energy is not bad. Consuming energy is not bad.

In fact, it has always been historically, and will be in the future, breakthoughs in energy technology that will allow humans to progress and flourish.

From fire. To coal and the steam engine. To fossil fuels and the internal combustion engine. To nuclear fission. To hydro, wind, solar and batteries. And perhaps in the future to nuclear fusion or some other yet unknown breakthrough, all advances in energy technology have propelled the human race above and beyond the standard of living they were at previously.

Energy scarcity is always the primary gating factor holding us back. Imagine what we could do with cheap, abundant energy. Desalinate ocean water to make it potable. Pull carbon out of the air to stop and reverse the effects of climate change.

Control the weather:

You can argue cause and effect in the below charts, but consider, for a second, that it may have been the discovery of fossil fuels as a cheap, dense energy source in the early 20th century that was the precursor to the explosion in global population and GDP per capita in the latter half of the 20th century. I don’t think it is a coincidence that world population quadrupled and GDP per capita increased 27x (1960-2021) in the fossil fuel age.

source: Our Finite World

source: Our World in Data

source: Our World in Data

Bitcoin is going to usher in an age of energy abundance, partly for the reasons described above and below.

To delve a bit more into specifics, the NYT article mentions throughout how bitcoin miners profit from selling the energy they’ve previously contracted to buy back to the grid in times of peak stress:

Think about why utilities would enter into such contracts with bitcoin miners, offering to pay them to shut down at peak times. The last sentence in the top quote above gets at why bitcoin miners are not just not a drain, but actually incredibly valuable customers for utilities — it’s precisely because they can turn off their power during times of peak demand, even as they are a guaranteed purchaser of power during times when nobody else wants to buy it. You can thus see how bitcoin miners only demand the cheapest power available. They are not using power when there is any better use for it, not out of the good of their hearts (though I’m sure they would!) but because of their economic incentives. Moreover, having bitcoin miners as an economic buyer of last resort makes it economically feasible for utilities to expand so that there is enough power to go around in times of peak demand.

Bitcoin miners aren’t a drain on the grid, they strengthen it.

And green it.

Think of a potential new wind and solar development. One of the main challenges with renewables is intermittency: the fact that the wind might not be blowing and the sun might not be shining when the local population demands power. This makes the economics of renewable plants challenging — they might not have any buyers when they are able to generate a lot of power — even as the development may not be as useful as, say, a traditional coal fired power plant that can be guaranteed to be generating power when a town needs it most.

Battery storage helps alleviate this challenge. Generate power now while the wind is blowing/sun is shining and store it for later use in a battery. Of course battery storage comes with additional costs.

But, bitcoin mining also helps alleviate this challenge by giving utilities a long-term customer who will buy as much power as they can produce at a specified price all the time. As such, bitcoin mining actually promotes the development of renewable energy by making the economics more attractive to developers.

A free market solution to combat climate change? My God.

What’s more, bitcoin miners are location agnostic. They’ll set up a server farm anywhere the power is cheap and abundant. This means, for example, that a hydroplant at a remote location in the Congo River Basin can be developed with a bitcoin mining facility as its anchor customer, paying the bills until transmission can be built to electrify the nearest towns, at which point the bitcoin miner packs up in search of the next, cheapest power supply.

This new dynamic, which didn’t exist before bitcoin, makes energy development projects and the electrification of certain regions of the world economical for the first time.

The NYT, in my opinion, displays a lack of understanding of the appropriate way to tackle the challenge of carbon emissions and climate change.

_“They’re adding hundreds of megawatts of new demand when we already face the need to rapidly cut fossil power,” said Jesse Jenkins, a Princeton professor who studies electrical grid emissions.

_

Bitcoin miners drawing energy from the grid emit no more or less pollutants than anyone else drawing energy from the grid for any other reason, including you cooking dinner and cloud hyperscaler data centers. The grid is the grid and we are generally aware of the emissions associated with it. The goal should not be to reduce demand for energy but rather to make the supply of energy sustainable.

As mentioned, bitcoin miners, being completely agnostic to time and location and unique demanding only the cheapest power which by definition is the power that nobody else wants to buy, are valuable anchor tenants for renewables projects and can by themsleves make the economics of such developments feasible. Bitcoin mining, completely by happy accident, represents an elegant free market solution to a problem that used to need to be solved by taxing and spending. We should be embracing it!

With respect to carbon emissions, the solution is not to reduce demand for energy. That is simply not going to happen, nor is it desirable (as we know energy consumption = human flourishing), and the sooner our policy makers can wrap their heads around that intractable fact the better.

The solution, rather, is to focus on supply, not demand. More and cheaper energy of sustainble origin combats climate change, not less and more expensive energy from fossil fuels.

Anyways, that’s enough for this post. At some point I’ll write up a more complete analysis of the beauty and benefits of bitcoin mining with respect to energy and climate.

Again, I encourage you read the NYT piece in full, read this, and draw your own conclusions.

Some states (Texas, North Dakota) and countries (El Salvador) will get it, bitcoin mining will usher in a renewable energy renaissance in those jurisdictions, and their economies and constituents will benefit. Others won’t, they’ll eschew the industry, and they’ll suffer.

Such is life and the game of power projection and evolution.

Bitcoin is Resilient.