Arguments that bitcoin causes tons of carbon emissions and environmental degradation miss the point. There are specific technical and tactical arguments to be made here: the increasing use of renewable energy within the gridits ability to hunt unnecessary energy by targeting a fleet of mobile hardware that needs to consume energy to produce value (this helps to understand, for example, natural gas that was going to be flared due to its lack of productive economic use).
An interesting way to look at this is using the province of Sichuan to mine bitcoin – where the majority of Chinese miners who are in the People’s Republic of China are doing their mining. Sichuan suffers from overcapacity – an ambitious and centralized state-led project led to the Three Gorges Dam and an overabundance of power that cannot be used at optimal prices.
Instead of filling the gaps with decades-old plans to fill ghost towns commanded by central planners, a hyper-mobile fleet of hardware miners can move in and out and take advantage of the excess power. Within the broader confines of the energy market, bitcoin mining can serve as a run-in missile for inefficiencies, providing the imagined cities that central planners thought they could conjure up when setting up complex construction projects. , and possibly without bitcoin, which carry garbage.
And that explains exactly why these arguments against bitcoin miss the mark. “Waste” is an arbitrary term and is an economic analogue of those who, in a political sense, will define “terrorism” as some type of violence specifically defined over another. A state that kills a civilian perpetuates justice—a non-state actor commits terrorism. Similarly, if it contributes to a central planner’s ambition for GDP, it creates “value” – when it matches decentralized networks of individuals defining and processing value elsewhere, it matches “waste”.
In this kind of philosophical worldview, the main point of contention is about definitions rather than technology. We need to understand the very idea of what makes something valuable or not to create meaningful progress. Without it, even a bitcoin network that uses 100% renewable energy or absorbs all the energy waste in the world (energy that is literally being destroyed aimlessly) will never satisfy the sharp barb and outlook of its skeptics.
Value is imperfectly defined in terms of our current market economy – how does a decentralized, trustless system that stores value without top-down leadership fit into a world accustomed to bureaucracies ruling from the top down? down no questions asked?
We need to compare bitcoin to what it is trying to complement or complete. In fact, the inevitable result of the weak targeting of monetary policy and the current financial system is an incredible bubble of assets transmitted to the retail banking system through incredible promotions and offers, and incredible punishments for the idea to save (at least in standard retail banks).
As asset prices rise in everything from equities to housing, all we’ve changed is the multiple – the multiples of assets assigned to feed an arbitrary metric, to drive rampant consumerism in the hope that eventually these consumption multiples (all of which accelerate carbon emissions to some degree) will trickle down to stable wage employment.
Some economists have softened the idea of compromise – contained or mystified with a flattened Phillips curve which no longer converts employment into inflation in such a simple way as a growth rate higher than the real interest rate.
The idea now is to get an economy that comes to a complete stop because it wasn’t versatile enough to see a phenomenon that only happens once every 20 years, something that Albert Camus had described as an inevitable fact of life in his aptly named “The Plague”. (“They thought they were free, and no one ever will be as long as there are plagues.”), back to life in the most extreme way possible – with loose monetary policy and vast stimulus budgetary.
Yet what do we get for the bonuses paid to the captains of financial industry and the increase financialization (measured by the financial sector as a % of GDP)?
What do we get for the incredible asset inflation that disproportionately rewards those who are already rich and leaves the working class, students, entrepreneurs and others at best poor in reality, rich in balance sheets – or poor in the of them ?
What do we get for a class of economic elites whose expertise does not seem well suited overall to predicting blowouts in credit default swaps and other exotic derivatives, private start-up actions, or tail risk events such than the plagues that are cyclical throughout the course of human history?
What do we get for the relationship between political and economic elites, fueled by political contributions? Can democracy work well with sole-source contracts and a closed technocratic elite that rewards its members even as others sink into stagnation, shaken by promises of future checks rather than future careers or independence?
What do you get from a system that rewarded the CEO of a bank whose role in Lehman Brothers helped foster incredible financial failure and a global recession with roughly $500 million in pay?
Isn’t all this useless in one way or another?
Bitcoin is not just a deflationary “proof of work” system. It is a means of injecting liquidity and democratic, decentralized and international will to target the incredible amount of waste in the current financial system and the economic-political complex that defines the modern nation-state.
Moreover, it is a welcome that rewards those who are intellectually honest, and forgives a change of heart or those who are so hesitant that they have become self-proclaimed “latecomers” (Elon Musk). Bitcoin does not censor who joins the network, and some of its skeptics (Micheal Saylor for example) have been rewarded financially and socially for becoming some of its strongest advocates. Many financiers disappointed with the current financial system have hedged their bets – or embarked on a wholesale adoption of bitcoin.
Since the early 2000s, in advanced developed countries, labor’s share of GDP has fallen (including Canada, USA, Germany, Australia, among others). The rich have got rich in places like the United States and in the people of the republic of china— and not always by designing new solutions or creating deflationary curves. Meanwhile, those working for wages are stagnant or worse, see the potential for their savings to be eroded, whether through government restrictions on their mobility (PRC’s Hukou), or the extreme difference in asset prices in developed stock markets, fueled in part by technology. stocks that became an insider coterie before their IPO.
Bitcoin’s explosive growth hasn’t just been the story of those piling on a deflationary asset to save themselves from a forced path of debt and lower wages. It has also been, in many ways, the story of the hidden costs of asset inflation that are not captured by the consumer price index – and the very story of what a society decides value or waste. Arguments about the environmental impact of bitcoin and its “waste” miss the point without taking into account the nuances contained in the idea of economic waste.