To investors,
One of the biggest misconceptions I hear repeated about Bitcoin is regarding the energy consumption needed to run the decentralized computing network. The theory goes like this — Bitcoin consumes a lot of energy, so Bitcoin is bad for the environment.
In reality, this couldn’t be further from the truth. Bitcoin is actually one of the greatest financial incentives to transition the world to clean energy. There are two components to this analysis:
Bitcoin miners are seeking out clean energy as their core power source
Bitcoin miners are helping to divert the environmental impact of non-clean energy
Let’s start with the first component. Bitcoin miners have a very simple business model. They consume power, run a specialized computer, and earn Bitcoin in exchange for running the computer/software. This is obviously generalized, but you get the point.
The mining business model has two variables — the cost of power that the miner consumes and the price of the Bitcoin that is earned. The miner can not control the price of the Bitcoin that is earned, so they must solely focus on reducing the cost of the power they consume in order to become more profitable. Due to this constraint, Bitcoin miners are financially incentivized to find the cheapest power available to them.
James Ellsmoor wrote in Forbes in 2019 that “according to a new report by the International Renewable Energy Agency (IRENA), unsubsidized renewable energy is now most frequently the cheapest source of energy generation.” So now that unsubsidized renewable energy is the cheapest form of electricity to consume, Bitcoin miners have been racing to set up operations that can benefit from this cost arbitrage.
Remember, the miner doesn’t care where the power comes from. They simply want the cheapest power available. So what was I talking about when I said the second component was that Bitcoin miners are helping to divert the environmental impact of non-clean energy?
Methane.
The International Energy Agency is reporting that methane emissions are down 10% for last year, but Fatih Birol had a great summary of why this is not as encouraging as it seems:
The reason why everyone is focused on methane is because it is really nasty stuff. Birol goes on to explain:
He finishes his analysis by saying that responsible operators should address these methane emissions immediately.
The good news? Bitcoin mining companies like Great American Mining are stepping in with a win-win solution for these responsible operators. According to their website, “Great American Mining monetizes wasted, stranded and undervalued gas throughout the oil and gas industry by using it as a power generation source for bitcoin mining. We bring the market and our expertise to the molecule. Our solutions make producers more efficient and profitable while helping to reduce flaring and venting throughout the oil and gas value chain.”
Want to see what that looks like in practice? Behold this beauty.
Great American Mining, and many other companies around the world, are racing to help the greatest methane emitters to capture the negative side effects of their work and turn it into the soundest money the world has ever seen.
Bitcoin isn’t bad for the environment. In fact, Bitcoin is very, very good for the environment. The University of Cambridge reported at over 75% of miners use renewable energy and now there are solutions to turn methane emissions into mining as well.
It is important to think for yourself during a paradigm shift. Many people from the legacy world will constantly share information that is built on outdated mental frameworks. They can’t fathom the future. Always do your own research. Question everything, including what is written in this letter each morning. You are responsible for educating yourself and forming your own opinion.
I’ve done the work on Bitcoin mining and the energy sources used. My conclusion has me more excited about the future of the Bitcoin network. More miners. More hash rate. More decentralization. And ultimately, more value.
Have a great start to your week. I’ll talk to everyone tomorrow.
-Pomp
THE RUNDOWN:
Goldman Sachs to Enter Crypto Market ‘Soon’ With Custody Play: U.S. banking powerhouse Goldman Sachs has issued a request for information to explore digital asset custody, according to a source inside the bank. When asked about timing, the Goldman source said the bank’s custody plans would be “evident soon.” Goldman’s digital asset custody RFI was circulated to at least one well-known crypto custody player toward the end of 2020. Read more.
CoinLab Cuts Deal With Mt. Gox Trustee Over Bitcoin Claims: Creditors seeking to regain Bitcoin lost on the Japanese exchange Mt. Gox in 2014 have a chance to get their digital assets back before legal claims are settled. CoinLab Inc. said an agreement with Nobuaki Kobayashi, the trustee to the Mt. Gox bankruptcy, and MGIFLP, a unit of Fortress Investment Group LLC, will allow creditors to consider an offer of as much as 90% of the remaining Bitcoin tied up in the bankruptcy. Read more.
Bitcoin Worth $1.2M Seized From India Hacker: Indian police have seized bitcoin worth around 90 million rupees ($1.2 million) from a Bengaluru, Karnataka-based hacker who managed to breach governmental and other websites. Bengaluru Joint Commissioner of Police Sandeep Patil confirmed the bitcoin was seized from a hacker with the surname Srikrishna who used the alias "Shreeki," according to India Today. Read more.
How Miami Mayor Francis Suarez Is Luring Tech Players From Silicon Valley and New York: Miami Mayor Francis Suarez has been working on fomenting a tech boom in Miami for more than a decade, reasoning that it could bring higher-paying jobs for Miami residents, while also positioning the city at the forefront of innovation and the tech industry for years to come. Here’s his playbook. Read more.
Russian Opposition Leader Alexei Navalny Detained at Moscow Airport: Russian opposition leader Alexei Navalny was detained at a Moscow airport after returning from Germany on Sunday, the prison service said. The prison service said he was detained for multiple violations of parole and terms of a suspended prison sentence and would be held in custody until a court makes a decision in his case. Read more.
LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE
Isaiah Jackson is the author of the best selling book “Bitcoin and Black America.” He is one of the most underrated people in the Bitcoin ecosystem and is constantly educating one of the most important communities for mainstream adoption.
In this conversation, Isaiah and I discuss:
Bitcoin
The plight of black Americans in the legacy financial system
Why decentralization and pseudonymity are advantageous
Why Isaiah is writing a second book
I really enjoyed this conversation with Isaiah. Hopefully you enjoy it too.
LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE
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Bitcoin Mining Is Good For The Environment