[REPOST] Pragmatic impact of Bitcoin on the environment.

This is a repost of my older post that was not curated and I was adviced by my country representative to repost it since it was mistakenly unseen until the day it paid out.

The media loves to cover bitcoins negative impact on the environment, due to climate change controversy. The Bitcoin network uses large amounts of energy but not the way it is assumed by the media, for instance, let's visualize some data comparing bitcoins energy consumption, “according to the Cambridge center of alternative finance,” Bitcoin uses around 0.55% of the total world electricity production. The entire world's renewable energy production could power the Bitcoin network over 56 times. Each year, the energy consumption of permanently deactivated household appliances in the United States can power the Bitcoin network for 1.6 years.

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Systems of our society run on incentives, and people need reasons and rewards to expand their scarce time and energy. Block rewards and transaction fees, in the form of issued Bitcoin, incentivize Bitcoin miners to expend energy. In return, Bitcoin mining creates a consensus mechanism that ensures trust and security within the system. Currently, Bitcoin mining is the fairest way to distribute a monetary unit, and equitable distribution is vital to the fundamentals of a global freely available politically independent financial system. If you have an internet connection, the correct hardware, and a source of energy, you are free to collect a monetary unit without worrying about any other party's unfair privileges which were impossible, up until the creation of Bitcoin.

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Say you are a bitcoin miner, what type of energy would you want to use, cheap energy! Using expensive energy to mine Bitcoin will cut your profit margins, and reduce incentives. Since 1976, the cost of solar modules has dropped to 99.6%. Decades of compounding 10 to 20% cost reductions, present a world where renewables are cheaper to build than operating existing coal or natural gas plants. Grid congestion is a problem for the energy sector, and the energy grid has limited space, and renewable energies will have to compete with other energies for that space. Energy more than 500 miles away from a grid is stranded with no purpose, providing no benefit to society is now a benefit for mining Bitcoin. When renewable energies no longer need to compete, they can provide value through an internet connection. Bitcoin mining can accelerate innovation in a world of renewables, leading to near-zero costs and reduced emissions across the globe.

Renewables will advance with or without Bitcoin and having a vehicle to push innovation forward expedites the process. The main challenge that renewables, specifically solar, the face is availability. When electricity demand is highest, the supply of solar energy is at its lowest. The National Renewable Energy Laboratory, famously described this mismatch, as the duck curve based on its duck-like appearance. As more solar gets added to the grid every year, the supply and demand discrepancy grows and one problem that comes from this supply and demand mismatch is over a generation. Power plants, such as nuclear or coal, are only profitable if they produce energy all the time which creates an energy flow thus if solar generates too much energy during the day, and there's no use for it, grid managers will have to turn that energy off. If they didn't, there would be a risk of overloading the power grid.

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As more solar and wind power flood the grid, we will see the belly of our duck grow unless we can find some reliable productive use of this excess energy. Acting as real-time virtual batteries, miners can be turned on or off at a moment's notice to provide both conventional demand response, as well as supply response. On the demand response side, the grid can pay Bitcoin miners to shut down whenever demand spikes, thus smoothing out the ducks’ heads. In short, miners provide a price floor for electricity by eating the duck’s belly making it easier for grid operators to plan, which ultimately increases market efficiency. Energy isn't just energy, but it's the thing that drives every single industry, and the more energy in our society, the more productivity we will experience. Through Bitcoin, we take a scarce asset from the physical world and create a scarce asset in the digital world. This process was not possible until a few years ago, and the opportunities are vast.

Thanks for reading,
Keep steeming
@brayan256