In this article, we’ll explore what energy is, why Bitcoin is positive for human flourishing, time preference and how Bitcoin propels humanity onto the Kardashev Scale.
Energy. Everything we see in our world today requires energy. The car you drive, the cup of coffee you have in the morning, the phone you scroll Twitter on. It all wouldn’t exist without energy.
Energy, in physics, the capacity for doing work. It may exist in potential, kinetic, thermal, electrical, chemical, nuclear, or other various forms — Britannica
Energy is the capacity for doing work. Work, as the name implies, is how much energy is transferred when an object is moved over a distance by a force.
In physics, the equation is written simply as:
W = fd.
Work = force x distance.
A simple example would be lifting a box — you exert an upwards force on the box using your muscles, applying force over a given distance greater than gravity. People inherently understand work because generally speaking, most people would prefer to be relaxing or doing the activities we enjoy instead of the activities we must do to stay alive — such as working a job or cleaning our home.
Human flourishing is directly connected to energy use per capita.
Both direct economic measures (GDP per capita) and indirect social progress measures (health, shelter, sanitation, personal freedom etc.) show a strong positive correlation (R²) with per capita energy usage.
Our existence is directly connected to the amount of energy — potential, kinetic, thermal, electrical, chemical, nuclear, or other forms — that we use. Specifically, energy must be able to be generated cost-efficiently, transmitted through space and stored through time to then be used to achieve our goals.
If we look back through human history, we see all technological revolutions are radical ways in how we utilize energy, ultimately enabling us to do more with less.
The Agricultural Revolution enabled humans to transition from a hunting and gathering subsistence to one of agriculture and animal domestication.
The Industrial Revolution enabled humans to transition from creating items by hand to machine mass manufacturing at scale and steam engines.
The Digital Revolution enabled humans to transition from slow, manual and expensive communication to instant, automatic and free communication.
Each technological revolution ultimately enabled humans to better use energy.
These technological revolutions will continue.
We will continue to invent new technologies to change the way we generate, transmit, store and use energy. We will continue to utilize resources more effectively and make “less go further”. We will continue to invest in radically lowering society’s carbon footprint over the coming years.
However, at the end of the day, we must not forget what got humanity to where it is today.
Energy usage is pro-human.
Being anti-energy usage is being anti-human.
Climate activists protest on reducing our energy usage to net-zero 2050. However, we must do this through innovation, not through resource scarcity and restriction.
Otherwise, it’s like climbing up a ladder, reaching the top and then pulling up the ladder behind you. If anti-human, scarcity and restrictive policies are put in place, like always, the most negatively impacted will be poor people.
Generating more energy has unlocked an economic miracle.
For two thousand years, the majority of the human race has lived in extreme poverty, measured as people living on $1.90 a day or less. This was barely a subsistence. Life was hard. Pleasures were few. People died young.
Yet, we’ve managed to completely flip extreme poverty from the vast majority, 95%+, to the vast minority, <10%, in less than two centuries. This is primarily due to our increasing ability to generate, manipulate and store energy more efficiently and effectively.
It is a societal imperative we continue to foster the human species with pro-energy policies that foster human flourishing.
We must not forget what got us to where we are today.
To explain Bitcoin, we first must discuss Money. Money is what ties humanity together. It enables us to exchange value without bartering. It enables us to store value over time and space. It enables us to measure goods and services, created using our own time and energy, to provide to others. Just like a ruler defines centimetres, money defines a record of economic value, by being a useful unit of account.
Functions of Money:
However, money is not explicitly time, nor is it explicitly energy. It is merely information, a record or measuring tool society can leverage.
Although money is universal in measurement, an individual’s point of view and perspective of value is subjective as everyone is different, prioritizing different attributes during economic transactions.
Attributes of Money:
Traditionally, people used physical commodities as money, such as gold, as it best met the attributes of money. Eventually, to better facilitate trade and barter at scale, money changers would exchange different currencies and store money for easier regular trade between merchants. Money changers acted as the trusted third party providing a centralized general ledger with a double-entry system of tracking debits and credits or deposits and withdrawals.
“banker”, late 15 century, originally “money-dealer’s counter or shop,” from either Old Italian “banca”, meaning “table,” — etymonline.com
These coins and double-accounting ledger innovations transitioned into what we have today; fiat money. Fiat money always starts as a “promise” to convert into a hard asset, such as gold. Gold fails at being sound money due to its tendency to centralize over time; it’s costly to move, store and transact with. In time, fiat money’s sound asset backing (gold convertibility) is always removed by people in power due to war, economic crisis or corruption. The currency becomes worth “what the government says it is worth”.
Fiat Money is inconvertible paper money made legal tender by a government decree — Google
The challenge with both coins and a ledger is they both require trust in a central authority. Trust the coins won’t be debased or clipped. Trust a ledger tracking assets, held by a third party, won’t be tampered with, fractionalized or rehypothecated.
Money rules everything around us, thus the ability to print money out of thin air is the ultimate power.
This power is always abused. It only takes time and human nature. We always think we are above the natural rules of the world, printing money for a “free lunch today”, without thinking about the consequences of tomorrow.
Sound money is worth the cost, as it’s ultimately more energy-efficient money. Sound money enables humanity to freely transact between individuals, store value across time and space and provides a stable unit of account for high-fidelity price signals to market actors. Any other form of money is a roundabout way to represent energy in another form, but the ultimate costs are higher in a Fiat, Proof-of-Stake (fiat rebranded) or Commodity Money. These costs are endured by the inevitable failure of unsound money through corruption, unsound economic policy and inflation.
Humanity is built on sound money, fiat money is a recent distortion of the narrative.
“Fiat currency always eventually returns to its intrinsic value — zero”
Let’s take a break from history and think about the future. Let’s imagine what perfect money would look, feel and function like.
It would be Money that can store society’s collective time and energy over both space and time. It would be tied to the natural limitations of physics, so as not to be corrupted. It would be instantly transferrable, with a low cost verifiable final settlement. It would be accessible to anyone and everyone, resistant to seizure and censorship. It would be sound money, with a fixed supply and zero terminal inflation.
A ledger of pure information, that is immutable, neutral, incorruptible, divisible, ticks all these boxes.
Bitcoin is ultimately just information. 0’s and 1’s. A peer-to-peer cryptographic network, a ledger, for us to interact with each other in a decentralized, trustless and censorship-resistant way.
Bitcoin is perfect money.
Bitcoin is information, tied to reality through energy, enabling us to transact value over space and time.
The key point here is Bitcoin is information, tied to reality through energy, specifically Proof-of-Work.
Proof-of-Work is the terminology used for the consensus mechanism to secure Bitcoin. Simply, it is a probabilistic guessing game, constantly adjusted to be difficult enough so blocks are produced roughly every 10 minutes, regardless of the amount of energy used.
Why would people use energy for a mindless guessing game you may ask? Because the Bitcoin network provides the miner who successfully “mined”, guessed correctly, with a reward.
This reward is in the form of a Fee from all transactions included and a Block Reward of currently 6.25 BTC per block as of 2022, which is declining according to a set supply schedule.
Thus, miners who can find the cheapest source of energy are rewarded with the most profit.
The unique requirements of the Bitcoin Network mean it is a buyer of last resort in any market in the world with an internet connection and can buy energy 24/7/365. Bitcoin will buy energy regardless of its location, time, interval or load factor. There is no other energy buyer like this in the world.
Thus, any unused or wasted energy is the equivalent of throwing away money, as there is now a way to profitably convert wasted energy into money.
For the foreseeable future, Bitcoin Mining will remain profitable with a low cost of energy while the Block Reward remains high.
Furthermore, the waste byproducts of Bitcoin mining are a lot of Heat and Noise, thus in the future, Bitcoin mining will drive the marginal cost of energy close to zero or even negative.
Energy will become, at the margins, literally free and limitless.
For example, think about a space heater for your home — you pay to heat your home, however, in the future, this could be a net-zero cost as Bitcoin Mining’s waste energy can be used as heating.
Price is set at the margins, thus if there is a way to profitably mine Bitcoin with a net-zero or negative cost, then it will be done.
Projecting this idea to the global energy network, Bitcoin will both increase the efficiency of how we use energy, but also radically increase the total amount of energy humanity uses. Bitcoin will singlehandedly bend both per capita energy usage and total energy usage upwards, continuing the economic miracle as we enter a new technological revolution.
The Bitcoin Revolution.
While altcoins are playing the status Environment — Social — Governance (ESG) game, Bitcoin is intertwining itself into global energy markets.
Technological revolutions change the way we use energy. They drive human progress forward. We haven’t had a revolution in how we use energy since the Digital Revolution. It is also no coincidence peak energy usage occurred when the US officially went off the gold standard after the Nixon Shock: WTF Happened In 1971?.
A Bitcoin Revolution will drive humanity to radically use more energy and use it more efficiently. Bitcoin will simultaneously settle the world back to a sound money standard, restoring the natural world order, human cooperation and prosperity.
“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.”
— Thomas Jefferson
Generally speaking, our thinking, day-to-day interactions and society take place on Earth in the pursuit of earthly goals. Unless of course, you are a rocket scientist or Elon Musk, who is trying to make humanity multi-planetary. People usually don’t think on a scale outside of their city, let alone planet, and place in the galaxy.
The Kardashev Scale is a method of measuring a civilization’s level of technological advancement based on the amount of energy a civilization is able to use. — Wikipedia
Before we talk about where we are at on this scale in terms of energy usage, it’s useful to talk about some of the other Type I Civilization tools and paradigms that have developed.
Humanity has developed significantly in many areas, outside of money and energy.
In 2019, Earth’s global energy consumption was 18.44 TW, a Type 0.73 civilization. This sounds close, however, it is a log scale which can be deceptive.
To reach Type I, we would need to use ~1⁰¹⁶ Watts or 10,000 TW. Roughly two and a half order of magnitudes away from where we are today.
The question is, how do we get there?
In fact, taking the average annual growth rate of world power consumption over the past 165 years (2.6%) and projecting it into the future, we would reach a Kardashev Type 1 civilization in around 2370.
That’s a lot of new energy infrastructure that needs to come online. The only way to drive so much capital investment is through market forces. There is only one way to align every individuals’ incentive to peacefully cooperate towards shared prosperity.
Align every single human on Earths individual monetary energy with energy production.
This would mean every ounce of effort an individual expense in the pursuit of money, would be paid in money backed by energy generation. A closed-loop system, free from human ego and corruption. Humans could choose to spend their money on goods and services with others or save money which would appreciate over time due to its fixed supply while also incentivizing cheaper energy production by holding money itself.
In quantum mechanics, energy is a base quantity measured as 𝑒𝑉, it is a fundamental building block in physics and reality. Cheaper energy means cheaper everything.
A fixed-cap supply ledger, that is provably scarce, anchored to the real world via Proof-of-Work makes Bitcoin money the world has never seen before but so desperately needs.
It is no coincidence Henry Ford was seeking to replace the Gold Standard with an Energy Standard. Gold is not a productive asset. Energy is a productive asset.
Human energy and ingenuity are productive assets which should be stored by another productive asset; Energy. Bitcoin is pure information, a ledger, backed by Proof-of-Work, that creates “Energy Money” enabling us to do exactly that. It is the incarnation of the currency Ford theorized about.
Bitcoin and Proof-of-Work create “Energy Money”, a technological revolution, that is the flywheel that will propel humanity to a Type I Civilization.
Like all markets, the energy market is driven by supply and demand. More energy production means lower energy prices all things being equal.
Of course, as Bitcoin monetizes, producing Bitcoin could compete with other energy uses. However, Bitcoin energy usage is fundamentally a non-rivalrous, non-excludable public good — its load factor is flexible (can be turned on/off in an instant), location independent, time-independent and with 99.9873% availability.
As discussed previously, it’s likely that once the Block Subsidy is much smaller, the marginal cost of Bitcoin mining energy will go negative, meaning only use cases that use the waste heat for other purposes or have another unique way to monetize, will likely operate profitably long term.
The current Bitcoin Mining phenomenon of making cash hand over first at grid-scale is due to being in the early stages of the industry. Bitcoin mining will eventually commoditize. Energy markets are the most capitalistic industries in the world and will drive the profitable cost of production towards the marginal cost. Zero.
As Bitcoin continues to consume a greater and greater share of the global energy grid, it is also using more and more sustainable sources of energy and is estimated at 58.5% in Q4 2021, making it one of the most sustainable heavy industries globally today. Bitcoin mining is stopping flared gas, sustainably powering whisky production in Canada and providing hot water to households.
We need more Bitcoin energy usage, not less.
Bitcoin is perfect to take us to a Type I and Type II civilization today, and further advancements in science could even take us to Type III and beyond.
Bitcoin will take us to the Moon, and beyond. Literally.
“If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry.“
— Satoshi Nakamoto
Energy usage is pro-human. Increasing both per-capita energy usage and total energy usage directly increases human flourishing and prosperity.
Money is a measure of credit and debits in society, enabling us to transact, store, and measure economic value. Bitcoin is information, backed by Proof-of-Work, which creates “energy money”, a technological revolution. This revolution changes the way we interact with energy, while simultaneously bringing the world back to a sound money standard.