26 Comments
Jan 18, 2021Liked by Noah Smith

I would rather see the excess energy used for direct air capture of carbon.

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Jan 18, 2021Liked by Noah Smith

One of the more imaginative uses I've heard suggested for intermittent solar power is distilling rum. Oops, can't do that in Morocco.

An obvious one is smelting aluminium, which uses huge amounts of electricity. Existing smelters, I'm told, are mostly located near big hydroelectric dams, but there are sunny countries that already mine bauxite. Oh, and: https://en.m.wikipedia.org/wiki/Aluminium%E2%80%93air_battery

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I agree that overbuilding solar is a rational strategy for most countries, and some of that power will be turned into Bitcoin. But I think that in a decade or so the biggest use of low value electricity will be conversion to green hydrogen. Currently very inefficient, but there are a bunch of startups who will make this process much more efficient if they can scale. And I think there are enough stimulus dollars/euros/renminbi earmarked for hydrogen to cause it to start to scale. Like solar and wind, once the annual growth rate hits 30-40% there’s no looking back.

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Good post. I'm somewhat bullish on BTC so use that lens for interpreting my comments.

The case you lay out here is that the value of BTC, as represented by the energy/infra costs of mining it, is what justifies the store of value. And BTC "conserves energy" by enabling you to capture the value derived from mining with excess energy, thus over time increasing its value (greater mining leads to increased scarcity of additional new coins entering the supply). I'm not an expert but these are interesting ideas to consider.

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There are so many problems with this Bitcoin idea that it is ridiculous.

First, bitcoin does NOTHING productive at a very high expense. Right now it is just another method of speculation.

Second, as a use for excess capacity of energy, it creates an excess capacity for computing: the computers bitcoin runs on will be idle for all but the peak energy production portion of the day. Which is the bigger waste?

Third, if you want to use the excess power for computation, there are lots of non-commercial alternatives that do something useful. Distributed search for solutions in proteomics and mathematics for example.

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You're being far too generous to an incredibly stupid idea. This is peak techbro nonsense.

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Yes you're right. Bitcoin is a sink of energy. The world doesn't need help searching for reasons to use electricity. You could choose any industrial process and say that it is fueling the search for cheap energy. Why not make aluminum while the sun shines? Electrolytic processes are actually a store of energy, unlike imaginary internet money. https://pv-magazine-usa.com/2020/12/08/solar-needs-aluminum-but-the-metal-has-a-carbon-problem/

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THERE IS A MISCONCEPTION OF BTC AND MONEY LAUNDERING !

Money launderers will NOT use BTC to wash their money into a bank account,as the Block chain methodology,is based on complete audit trail.

Money launderers will use BTC to store cash,but that also comes with the risk of price reduction, and so a buy back contract will have to be executed,off market,to hold the price.So long as the keys are safe,the money is safe,and beyond the reach of the law.The concept of actual,nominal and beneficiary owne, does not exist in BTC - it is only the "KEYS" - and so,there is complete legal anonymity

Next is the movement of cash.BTC will move 10 Million USD from the North to South Pole,in less than a second - which has no price risk,and this aids money launderers to move cash to safe harbours in offshore jurisdictions.

BUT STILL the sale proceeds of the BTC,cannot be banked.Once it is banked,then FATF,KYC and AML of the banks will nail the inflows.

So BTC will aid in storage and movement of cash - but the last leg of WASHING THE PROCEEDS OF THE BTC sale,will have to be done offline or in some offshore jurisdiction,where no questions are asked,about bank inflows

There are several options,to wash the money at the last leg

On the above principle,BTC can crash the costs and time in remittances,and also,force banks to be cost effective and efficient.This is a social service.

BTC can be a stepping stone for Salvador to start an e-currency.dindooohindoo

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Y not use the BTC to aid Salvadoreans,in inward and outward remittances ?

It can also be used to settle import and export payments ,especially since bulk of the imports,are from the USA,and BTC is freely used in USA.

Transfers of funds from 1 BTC to the other,is in less than 1 second,and this is a legit transfer.Even if the transfer is to a money changer in Salvador,he can sell the BTC,and pay the recipient in cash with a cash receipt.

In 1 second,the price will not vary much,and the money changer has to have standing nstructions,to sell all BTC inward remittances - in 3 second tranches. BTC or some other currency,can have an option to block the price for 3 seconds, and that quantity of BTC,will NOT BE traded for 3 seconds,and disclosed on the Crypto Exhange.Or in the alternative,some large BTC trader can offer a Put option for 3 seconds - which will be the cost for the remittance.

The savings in time and cost,will far exceed any disadvantage,and Salvadoreans will get more cash in hand,to spend and save.They could cash out in USD,or any other currency,at premium rates.

Salvadorean Money Changers and ADs,will become OBSOLETE soon. Salvadorean bankers,have to make profits from efficiencies, and NOT by gouging money from locals.

With BTC as the EXCHANGE,the nation should invite PRC and others,to tap into Peak load power plants like Hydel and Geothermal,and invite miners into Salvador,into SEZs with nil Taxes for 10 years,and guaranteed power supply. The Govtt will earn from power tarriffs,power wheeling,tax on power profits and lease charges,on the Miners

Salvador has 23 ACTIVE VOLCANOS AND SITS ON THE RING OF FIRE.THE POWER CANNOT BE USED IN SALVADOR,TO MAKE OR EXPORT ANYTHING.THE ONLY THING THAT CAN BE EXPORTED IS BTC,AND MADE BY FOREIGNERS IN SALVADOR !

IT IS A WIN-WIN !

This can be a new economic model for the nation.

ALSO SALVADOR HAS MANY PORTS WITH GOOD DRAFTS WHICH ARE VIABLE FOR RPP - ON RFO OR HSD - WHICH IS A SHIP WITH A POWER GENERATOR, WHICH WILL DROP ANCHOR AT THE PORT,AND GENERATE PEAK LOAD POWER !dindooohindoo

WITH LOW COST POWER SERVER FARMS CAN ALSO BE HOSTED IN SALVADOR!

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Um, no.

For one thing - mining requires major investment these days in custom FPGA. More

Importantly; rewards for mining are declining and will disappear in less than 20 years, possibly much less.

But the worst part is that bitcoin mining has consumed so much electricity that it has largely negated all the wind and solar electricity generated in the last decade.

This is more neoliberal nonsense where money equates to reality and everyone has perfect information and acts rationally all the time.

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It seems like there are more physically valuable things we could do with the excess energy than run a bunch of computers. There are many power-intensive activities that do not necessarily need to happen around the clock to still be useful. Like desalinization and pumping drinking water.

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So Bitcoin is more like Kaioken than a Genki-dama? 🤔🤨🧐

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I like this idea! The thing is, you can do this with any cryptocurrency - what matters is being able to mine the stuff and use the proceeds to pay down any fixed costs. Other cryptocurrencies, like Litecoin and Ether, might have better cost-benefit ratios for this purpose (despite possibly being less stable than Bitcoin). Even stablecoins pegged to the USD might work, but I'm not a crypto expert lol.

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