Elon Musk says Tesla is no longer planning to accept payment in bitcoin citing the environmental impact of cryptocurrency mining. In todays video we look at the latest research from ARK Invest and Square titled “Bitcoin is Key to an Abundant, Clean Energy Future”. Are Cathie Wood and Jack Dorsey right about the bitcoin green revolution, or is Elon Musk right?
Audience what bitcoin is or explain much about blockchain technology. i recently posted an investing survey and more of my audience than surprising perhaps as bitcoin is rallied from around seven thousand dollars last year to around fifty thousand dollars today a seven fold increase in one year a move like that does tend
To draw some attention even if you have no interest in bitcoin you may have heard that bitcoin mining is energy intensive and therefore not good for the environment you might even have heard that bitcoin mining currently uses more energy than the entire nation of sweden at a time when we’re told that we desperately
Need to cut back carbon emissions to a new form of currency i should be clear though that not everyone agrees that bitcoin mining and blockchain technology are bad for the environment some of the people reaching for a new green future including elon musk kathy wood and jack dorsey are also cryptocurrency enthusiasts
And this has confused some of their environmentalist followers a month ago when elon musk tweeted that you can to his tweet with why not cut out the middleman and install a petrol engine in the thing well a few days ago the people at square jack dorsey’s fintech company and arc invest kathy woods techfin
Company released a paper entitled bitcoin is key to an abundant clean energy future attempting to make the green case for cryptocurrencies i’ll put a link to their paper in the description so that you can read the whole thing along with the paper archinvest published their open source model or excel spreadsheet showing
How their green case for crypto works the paper has two clearly defined sections with the two separate firms square and arc invests branding attached to each section it’s pretty clear when you read it that not only was it written by two different groups but that the two different groups didn’t necessarily
Read each other’s sections given the extent to which the two sections conflict with each other as a bit of a spoiler the arc open source model or spreadsheet is almost as good as the one that they published a month ago explaining their three thousand dollar tesla stock price target which was a great model other than
That they got the fully diluted shares outstanding number wrong by around 125 million shares which at their price estimate is only around 228 billion dollars which i get the impression they feel is just a rounding error that model also included that tesla would become the most profitable insurance company in
The world in four years time despite not being in the insurance business today or setting aside the capital required to enter the insurance business but we shouldn’t fuss over details so what is kathy and jack’s green argument for bitcoin mining well they argue in the paper that bitcoin miners are a unique energy buyer
That can choose to draw from the grid in a highly flexible manner the crypto miners are location agnostic go on to describe how solar wind and other meaning that the energy they supply is oft not aligned to grid demand they argue that bitcoin mining combined with solar and wind production and battery
Storage could be configured into a business model to deal with this inconsistent energy production they project significant further declines in solar and wind prices based on prior 20 to 40 percent cost declines for every doubling in capacity and they projected lithium-ion battery will fall an additional 80 in the next
Few years i’m not sure that these are reasonable assumptions but equally it’s not my area of expertise the authors at this point quickly flip bitcoin miners from being flexible and mobile users of power to setting them up in the solar and wind power generation businesses the miners no longer move quickly to
Where power is cheap they now build massive green power stations their argument is that bitcoin mining could eventually transition to being completely run on renewable energy in the near future while simultaneously producing the entire energy grids electricity needs through wind and solar power production and at this
Point things become more confusing the paper is packed really reflect the way things work at all today generation with battery storage and bitcoin be generated some of which will be stored in the rest will go to the grid and that only excess power will be used to mine doggy coins don’t correct me on
My pronunciation the mind doggy coins will improve the investment returns for green energy project investors it’s then might be used mostly to mine cryptocurrencies but if the price of power surges like it did in texas a few months ago they can sell power back to the grid when it’s more profitable to sell
Electricity than to use it for crypto mining so we’ve left from them using the excess for crypto mining to only selling the excess to the grid could earn through their mining activities teams of writers read each other’s work which might explain some of this arc invest argues that renewables can right now only
Satisfy 40 of grid requirements but with crypto miners running all of the grids power production they could provide very flexibly and only in off-peak times the excel model upon examination shows crypto miners becoming absolutely massive energy producers miners which the authors refer to at one point as
Having an unlimited appetite for energy can supply just under today’s energy needs by generating nearly six times the grid’s full demand level of power they showed that a system like this can meet 90 percent grid demand with only one third of the capex being spent on crypto mining so based on capex you’re mostly in
The power generation business but in order to generate enough power to supply the grid you have to generate six times the energy that’s being generated today with five sixths of that being used on mining based on use of power you’re mostly in the crypto mining business if it is profitable to produce six
Times the population’s current power needs and to use five six of that or 83 percent of the power to mine bitcoins why stop at that you have to wonder how much of the planet does arc invest built-in assumption that these greener forms of energy have zero impact on the environment that you could produce six times as
Much power as we’re using today using green technology and that there would somehow be less environmental impact than producing one-sixth the power under the current approach while these methods of generation might traditional approaches they’re not that much more environmentally friendly the model seems
To advocate a dystopian future where more and more green infrastructure is put in place with the majority of the power generated being used just for crypto mining until we reach a crescendo where if you crawl out from underneath the solar panel you risk being hit by the blade of a wind turbine this is their green cave
As we dig deeper assumptions around the profitability of the two businesses being run under this one umbrella if crypto mining is such a profit center you have to wonder why the miners would supply any of the electricity generated to the grid the public would have to rely on the miners altruism to slow down
Mining when the public needs power only resuming when the sun is shining and people aren’t yet running their dishwashers or charging their teslas kathy wood and square’s paper argues for huge increases in crypto mining they envision energy companies who deploy software that decides in real time the best use for each
Newly created electron whether to use it store it or mine it they explain that new chip foundries will be needed to meet amounts of lithium extraction would be needed water per metric ton of lithium extracted to build batteries huge numbers of solar cells and wind farms would cover the planet and rivers
Would need to be damped to generate hydroelectric power after reading the paper more than once and looking at the model it’s not really clear to me how the environment would benefit from all of this production i’d love to hear your thoughts on how this might work in the comments section as i imagine that many of you do
Know a lot more about crypto mining and green energy than i do money made from crypto mining will make more green energy projects viable speeding up the transition to a greener power grid but of course the problem is that so much of this energy will then be used for mining crypto with only the leftovers being
Available for charging teslas there’s a wonderful circularity in their forecast for an abundant that’s what the future is going to look like as mentioned earlier bitcoin mining operations worldwide are reported to consume energy at around the annual domestic electricity consumption level of the entire nation of
Sweden a single bitcoin transaction uses the same amount of power that the average american household consumes in a month which is around a million times more energy than a single visa transaction consumes kathy and jack are correct though in their description that they are an energy buyer of last resort
For the cheapest electricity that they can find mining happening today takes place in china also a major bitcoin mining center as is iran where electricity is subsidized by the government are these countries at the cutting edge of green power generation not exactly around 80 percent of china’s electricity comes
From coal burning power plants as you can imagine the power grids in russia and iran are not a whole lot greener some mining operations have as mentioned in the paper moved to mining behind the meter which means generating their own power rather than plugging into the grid and paying retail power prices green
Ridge holdings is a good example a bitcoin mining company in upstate new york who bought up output of the station this year and double it again next year drawing anger from locals and environmental protesters andrew yang the former presidential candidate now running for mayor of new york said that he plans to turn the
City into a cryptocurrency mining hub on the other hand my favorite candidate for the mayor of london count binface has said nothing on this topic his much more sensible political platform is largely based on moving the location of the hand dryer in the men’s room at his favorite pub in uxbridge to a more
Sensible location and additionally he’s campaigning that no shop in london should be one pound vote bin face see you later bye
Transcribed from video
The Bitcoin Green Revolution – Is Cathie Wood Right About The Environmental Impact of Bitcoin? By Patrick BoyleliveBroadcastDetails{isLiveNowfalsestartTimestamp2021-04-25T130013+0000endTimestamp2021-04-25T131538+0000}
