15 Sep 2022
How bitcoin mining can transform the energy industry: Foreword by Nic CarterNic Carter has for several years been one of the most active participants in the bitcoin mining and energy debate. Learn what he thinks about bitcoin mining's energy consumption in his foreword to our recent research report.
Bitcoin mining might be the most unfairly maligned industry on earth. It straddles two bold ideas which are deeply offensive to the Davos technocrats which govern western nations: the first, that a global sound money system is possible and desirable; and the second, that energy generation and consumption is not morally reprehensible.It should come as no surprise, therefore, that the relatively small industry (Bitcoin miners worldwide can expect around $15b in revenue this year) enjoys a disproportionate amount of criticism from central bankers, policymakers, and heads of state worldwide. Miners have been slow to respond, and have largely played defense up to this point. However, as tools to better understand the mining industry have developed, transparency has improved, and miner business models have evolved, it has become clear that the facts on the ground are extremely favorable. Defending the right of Bitcoin miners to operate is not a matter of spreading fanciful stories or utopian visions of a possible future, but simply an exercise in revealing a set of truths about the industry today. In their research, the Arcane team laudably reveals these realities. They are the vanguard in this emerging field.A dangerous cult has occupied the halls of power in Washington, Brussels, and London: a doctrine known as neo-Malthusianism. Adherents believe that only degrowth – a euphemism for human immiseration, societal degradation, and collapse – is sufficient to avert resource competition and climate change. For these people, energy generation and consumption is akin to a sin. Their pathway out of scarcity is stricture and austerity. To suggest that the path instead ought to be growth and innovation is sacrilegious.Our opponents today insist that energy consumption is evil. They seek to politicize energy consumption, leaving it to state bureaucrats to determine who is permitted to use power and how. It is against this challenging backdrop that the Bitcoin community struggles. Held to an unfair standard, Bitcoiners must justify the importance of the Proof of Work mining process – especially relative to other "cheaper" fiat systems like Proof of Stake – and are tasked with quantifying Bitcoin's resource costs.In this report, the Arcane team goes beyond answering the critics and lays out a positive, honest vision of Bitcoin mining. Today, we know that Bitcoin mining is disproportionately low-carbon – far more so than virtually any other industry. Bitcoin miners are pioneering models of flexible load, the likes of which grid operators have never before seen. Far from stressing power systems, miners provide valuable insurance products to increasingly shaky renewable grids. The relentless free market of mining pushes operators to pursue some of the most creative business models in energy today, from behind-the-meter colocation with under-monetized renewables, to flare gas mitigation.The burden of evidence, carefully laid out by Arcane, suggests that miners are accelerating a renewable transition; monetizing struggling renewables; building a repurposable high-energy infrastructure; mitigating dangerous pollutants like flared gas at scale; and balancing grids stressed by an influx of wind and solar. We remain as excited as ever to witness the ongoing collision between Bitcoin mining and the energy sector.