Bitcoin and Energy Usage

Author :: Kevin Vecmanis

In this article I frame the energy problem as a technology problem and attempt to explain why Bitcoin’s energy usage is a good thing.


Bitcoin is something brand new to society and as a species we’re all grappling to wrap our heads around this highly transformative technology. One of the common criticsms we see of Bitcoin is that it uses too much energy, or that it’s somehow bad for the environment. I make the argument here that the opposite is true, and that Bitcoin is actually the catalyst for a clean and abundant energy future for humanity.

What is Energy

Energy is the foundation of our universe, and therefore our existsnce, civilization, and life itself. Scientists and engineers classify energy as the ability to do work. Modern civilization is only made possible by the myriad ways we harness, store, and convert energy from one form to another.

Energy, at its most basic level, is the same all throughout the universe. But in the human perception of reality it’s useful for the pursuits of engineering to classify energy into different types:

  • Chemical energy
  • Electrical energy
  • Hydraulic energy
  • Electromagnetic energy
  • Sound energy
  • Nuclear energy
  • Mechanical potential energy:
  • Gravitational potential energy: The energy contained in an object held at a height relative to soemthing else.
  • Kinetic energy: energy contained in motion
  • etc…

The 1st Law of Thermodynamics

Energy can be converted from one form to another, but cannot be created or destroyed

This is a paramount axiomatic principle when framing the energy “usage” of anything. When we talk about energy “consumption” (or energy “usage”), what we should be saying is energy “conversion”.

For example, “consuming fossil fuel” is the conversion of chemical energy into thermal energy. A car converts chemical energy into thermal energy (combustion), which turns it into mechanical energy (the movement of the pistons), into kinetic energy (the movement of the vehicle). When a car brakes, it converts kinetic energy into thermal energy (the friction between the brake pads and the rotors).

The sun converts nuclear energy (fusion reactions in its core), to thermal energy and electromagnetic energy. When it hits earth, the electro magnetic energy gets converted to chemical energy by plants, thermal energy when it heats the surfaces, and kinetic energy in the wind due to the presence of temperature gradients. A person then consumes the plants and their cells convert that energy into kinetic energy (motion and moving around), thermal energy (our bodies are hot), and other forms of chemical energy that we store in our bodies for later (i.e, carbohydates and fat)

Energy conversion in our universe is one giant dance. And because the amount of energy available for humans to do work is a conversion problem, our energy “supply” problems are truly technology problems. Because it’s a technology problem, it means it’s an investment problem. Because it’s an investment problem, it means it’s an incentive problem.

As a species, we rely on technology and natural processes to convert energy…


Two Paths as a Species

I don’t like the energy “conservation” mindset because it’s scarcity oriented and also implicitly genocidal. If we convert less energy as a species it means a proportionate amount of our population will perish or be impoverished. I think this is lazy and morally reprehensible thinking. We can, and should, do better for ourslves and our kids. We don’t have an energy supply problem - we’re only using a tiny fraction of the energy available to us. We have a conversion technology problem.

We should strive to convert more energy, and figure out how to do it in a way that doesn’t destroy the planet. This a technology problem.

Enter the Green Revolution - Bitcoin

Imagine, for a moment, that you own and operate an airline. An airline needs to sell seats, and they need to sell enought seats to generate enought revenue to exceed their costs. If your planes fly with empty seats, that’s a lost revenue opportunity. Predicting this load and selling the seats required business operations specialists, marketing specialists, and other staff to coordinate and optimize. This is a cost to your business.

One day, a customer knocks on your down and says, “Mister airline owners, whatever seats you don’t sell I want you to the sell them to me - and I’ll pay you your cost on the remaining seats. In addition to this, I don’t need supply guarantees from you. Whatever seats you can’t sell to higher paying customers and if there are none I’m okay with that.”

This is a dream customer, right? Overnight your airline operations have been streamlined. Because you’re recovering the cost on all your flights your profitability rises. Because your profitibility rises you offer better services to your paying customers that fly and you begin to offer more routes and nicer planes. Competitors notice your profitability and begin to enter the space as well, increasing the quality and quantity of airline travel available to customers that fly.

For energy producers, Bitcoin miners are this magic customer.

Kevin Vecmanis