Reading Material #2
Ever since the Chinese government banned their citizens from transacting with and mining bitcoin, the United States has absorbed a major portion of global bitcoin mining. In a nutshell, bitcoin mining operations were shut down in China last year, and some (or most) of the mining equipment has since been exported from China, and imported to the United States. Ironic, right? China typically exports consumer goods to the United States, not lucrative operations such as Bitcoin mining. Their loss is our gain. Enjoy the following reading material and brief comments from yours truly.
Although we tend to complain about things we don’t understand, local residents should be skeptical of bitcoin mining, especially because the initiative appears to be pushed from the top-down. As more politicians begin pushing for Bitcoin adoption, some early adopters might begin falling back and separating ourselves from the hype, because mainstream narratives surrounding Bitcoin will become political. Fun fact — I’m a client of Blockware Solutions, and will be mining bitcoin around August.
Bitcoin mining is energy extensive, everybody should know by now. Rather than share my worthless opinion on the energy industry, here’s an under-reported fact — the type of energy (“dirty” or “clean”) doesn’t matter to a bitcoin mining operation. We can build the infrastructure to power bitcoin mining with 100 percent clean energy, and maybe we’re already headed in the right direction.
Not only is bitcoin mining possible with clean energy, but also capable of eliminating pre-existing wasted energy, which harms the environment. Gas flaring is popular on oil fields, because burning excess gas is better for the environment than pumping pure methane into the air. Bitcoin mining can be deployed to every gas flaring location in the United States, killing two birds with one stone — making profitable use of otherwise wasted energy, and decreasing environmental damage.
Bitcoin is deeply misunderstood. As mentioned in the article, “bitcoin's relative lack of liquidity,” makes zero sense. Relative to what, the U.S. dollar? Fractional reserve banking implies the dollar is lacking liquidity. Trillions upon trillions of dollars exist in centralized computer databases, but only a small fraction of the total dollars are able to be spent. Dollars are created through debt, which means most dollars don’t truly exist, and certainly cannot settle debts — the sole purpose of money. In other words, only a small fraction of dollars are liquid. Every bitcoin, no — every satoshi on Bitcoin’s blockchain can be spent, because bitcoin is created through proof of work, which means every bitcoin provably exists. The dollar, not bitcoin, is the asset with questionable liquidity. Wake up, people.
Again, Bitcoin is deeply misunderstood. The concept of Proof-of-Work (PoW) mining can be compared to actually working AKA manual labor. Imagine going to the gym, but instead of working harder to reach our fitness goals, we try to exert less energy, and pretend the results will be favorable or even better. Or imagine hiring a crew to build our house, but instead of working, they stand around talking and planning all day — our house would never be built. Work is required to accomplish goals. The goal of Bitcoin’s PoW is to secure the network and maintain the monetary policy. I hate shortcuts, and Proof-of-Stake (PoS) blockchains are taking major shortcuts, which doesn’t work (no pun intended).
UNTIL NEXT TIME,
P.S. — Bitcoin bulls are back in town, hopefully for the rest of the year.