The Unfolding of The 2nd Renaissance Part III
by Mike Hobart
The Pending Energy Revolution
I ended the last session with a comment on time. Time is the one thing that is truly finite. No going backwards, no leaping forward (without the use of a coma that is). A revolution in thought such as a renaissance — involving rapid, radical shifts in thinking by the populace, the culture, the arts, the sciences, the technology, and ways in which business is conducted — takes time to reach a critical mass. At which point the recipe is merely set, a powder keg that is ripe for a spark, waiting for ignition. I believe that this is where we sit today. A society that is at a crossroads. Something is going to carry things forward. Whether that’s a positive or negative is impossible to know, but one thing is for certain; change is coming. There will be an event, or a technology, that provides that spark. I believe in the first renaissance that event or technology was the printing press.
Winds of Change
Today I believe it is bitcoin. But not for the popular reasons. I believe it is the relationship between bitcoin and the energy industries that will produce an explosion of activity that our world has never seen the likes of. Take a look at the landscape today: communication (as discussed in Part II) is nearly instant and capable of reaching virtually anywhere on the planet, meaning that money can also move with relative ease. Technologies like 3D printing allow for anybody with the materials and means of communication to build a wide assortment of goods. This provides a powder keg of potential that is unfathomable. Ideas can be exchanged relatively freely, rapidly, can be funded at commensurate rates, and can be built faster than at any time ever in history. There’s a linchpin here that is providing the limiting factor.
Energy is at the heart of everything. It is the literal stuff of life. Water is great, but even water wouldn’t exist without energy (you need energy to hold the molecular bonds together after all). It’s vital to the health of a city, or nation, and it’s vital to the health of an individual. It’s also a vital piece in the puzzle of technological innovation. What makes the process of experimenting and inventing cumbersome? Besides the difficulties of testing new theories and dealing with the unavoidable failure after failure that comes hand-in-hand with invention. The costs of raw materials and services that enable the iterative process of inventing new solutions provides a significant friction point. The solution? Cheap energy production.
How do we produce energy for cheap? Well, one problem we have is that as we consume resources that allow us to produce energy (like natural gas), so that we can produce useful products like electricity; we have to expend more effort in order to yield the materials that enable that energy generation. For example, as we have consumed oil over the past century we have used up the readily accessible sources, forcing us to look deeper for reserves of black gold. Requiring greater efforts in every regard in order to locate, prepare, and produce such a valuable resource. Meanwhile we have the means to produce greater sources of energy density and in radically improved fashions, but not without the continued use of prior forms of energy generation.
We use the oil to produce the infrastructure to take advantage of the natural gas that often comes along with oil yield. We use the oil to produce fuels like gasoline and diesel (which allow for greater levels of work to be accomplished) and to produce polymers that allow for engineering of technologies and mechanisms that allow for further levels of work to be accomplished. While we use the natural gas to produce reliable electricity to support both the production of those polymers and technologies, to do more work, but also to produce environments that are more comfortable for day-to-day life, as well as providing those environments to produce ever-improving products.
A positive feedback loop.
So why aren’t we just producing energy unceasingly??? Economics. Supply and demand.
You and I and every business and individual in every city and every nation across the planet provides demand for electricity and energy. Energy producers are a business just like any other producer or service provider. They can’t afford to just produce forever without paying attention to the laws of supply and demand. If they did then the market would get all caddywampus and they would run themselves out of business, who’s going to produce our cherished electricity then?
Static Supply + Static Demand = Price Stability
Increase Supply + Static Demand = Price Decrease
Static Supply + Increase Demand = Price Increase
Decrease Supply + Static Demand = Price Increase
Static Supply + Decrease Demand = Price Decrease
Don’t you dare come in with that “well someone else willing to perform the service, Mike, duh” nonsense. Because it is just that, it’s nonsense. When you go to your doctor do you want to deal with some fresh college graduate every time because your last doctor put themselves out of business? No. You want the expert to remain in business so that you can get the most pertinent information and save yourself massive amounts of time, effort and hardship.
Energy producers need to abide by supply & demand, just like the rest of us. Meaning that they are limited to adhering to the slow & steady chug of demand increasing, but not expanding generation too fast. Which I discussed in a previous series over this very topic, you can find Part 2 of that series above. Leaving both our producers and our society stuck in this delicate dance of wanting to explode in growth but being limited by the relationship itself.
Enter bitcoin miners; stage left.
Bitcoin miners provide a demand that can run 24/7, is capable of shutting down operations (without damaging equipment) at the drop of a hat, and produces consistent income that is tertiary to energy producers’ primary and secondary forms of income. These miners give energy producers justification to expand energy generation beyond that of the “normal” demand. Meaning that generation no longer needs to wait for society in order to justify expanding, we can expand the energy generation facilities and let society catch up. Letting us expand supply while also supplementing with demand at the source of supply generation.
Increase Supply* + Static Demand = Decrease Prices
*supply increase enabled by bitcoin miners that can reduce operations in accordance with societal demands
This can allow for the price per kWh to slowly come down for the average consumer; the producers are getting their income, they’re happy. The regions that enable such a dynamic to develop can attract residents and businesses to their jurisdictions with cheap energy prices. Allowing states/countries the possibility to generate future tax revenue, while also incentivizing land value appreciation.
When cost of energy comes down, cost of the means of production can also come down. Not immediately, mind you. Again, these dynamics take time. These costs come down as a consequence of supply & demand and with the pressure of competitors. If another is capable of producing products of comparable value at a cheaper price point, then the rest of the market is forced to also reduce prices and seek efficiencies of equal measure or risk going out of business.
The Future
How many ideas and dreams are on the cusp of actualization today? How many are on the tips of tongues across the world, but are being suppressed due to costs of energy, of resources, of inability to collaborate? Our world is primed for an explosion of powerful proportions.
While everyone is afraid of World War 3, the future we have dreamt of is on the other side of our fear. While war is never guaranteed, change is the one thing that is a guarantee. It is not a requirement to be afraid of change. And “change is a comin’ “ whether you want it to or not.
On Thursday, April 20th, 2023 history was made. TeraWulf a bitcoin miner that aims to specialize in nonhydrocarbon energy generation announced their deployment of 50 MW of power to bitcoin mining operations via a 2.5 GW nuclear reactor in Pennsylvania. The pairing of bitcoin mining power demand, and the reflexivity of such a load, with the consistent uptime of a nuclear reactor provides the case study that bitcoin has been in search of. Miners have provided very effective arguments for the deployment of bitcoin mining and flare mitigation and incorporation into hydro, wind, and solar efforts… now nuclear finally gets its chance.
The pairing of bitcoin mining with the consuming of excess energy, waste energy, and providing load balancing to power grids will change the very fabric of modern society.
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Keep an eye out for Part IV
Totally agree with this thesis. Bitcoin mining and energy production will merge over time. It’s a big deal.