Bitcoin... Destroying the planet

[Michael Nelson]

The mapping between Bitcoin and energy is missing the point, from the point of view of understanding the system. The correct mapping is between Bitcoin and the *price* of energy.
If electricity were 10 times as expensive, Bitcoin mining use of electric power would drop by a factor of 10 (for a given BTC price). The point of spending money on mining is to be competitive. The absolute amount of power is irrelevant.

This means that if governments raised the price of electricity, or resources used for generating it, then BTC would never be a problem. Not trivial to do, admittedly, but the point here is to understand the system.

With things like automobiles and air-conditioners, raising electricity prices would improve the situation (regarding what economists call "externalities"), but degrade the user experience. Well, raising prices would improve the external impact of Bitcoin, but would have no effect on the correct functioning of the Bitcoin model. Whereas an automobile still uses the same amount of fuel to get you from A to B, when you raise the price of fuel, Bitcoin instantly drops the amount of fuel it uses, but continues to function just as well.
Interestingly, environmentalists do not so much blame the automobile and the drivers as much as governments for allowing the tolerance of them, and rightly so. They say that we need fuel prices and taxes that reflect the impact on the environment, and we need support for alternative energy sources, etc. So why blame poor old Bitcoin?
Mike
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