Thoughts on Bitcoin economics:
- Bitcoin as a battery: Makes energy portable, storable and transferable by turning it into a currency that can be used to pay for energy later.
- Bitcoin v/s other internet-based platforms like Twitter and Netflix: They also draw on the power-grid offering a different form of usability/ offering. That being said, Bitcoin’s market cap has been more than that of Netflix and Twitter – combined.
- The original whitepaper compares bitcoin with gold: Gold miners employ (human) resources to add gold to circulation. In bitcoin’s case, the resources include CPU time and electricity.
- Fundamental of Bitcoin, acc. the original Whitepaper by Satoshi Nakamoto: Once a CPU finishes its work (of solving artificially created mathematical puzzles – Hash) and furnishes a proof-of-work, a new transaction block is added to the ledger (chain) and the CPD is rewarded with a coin.
- The stated proof-of-work may have no real meaning or benefit – questioning the sustainability of bitcoin.
Environmental impacts:
- Bitcoin usage produce enough CO2 emissions to push warming above 2°C within less than 3 decades [Source: Nature]
- Bitcoin network wastes 110 TWh annually (≈ 1.6 × energy yield of the Tsar Bomba nuclear device ≈ more than the energy used by Ireland or Denmark) [Source: CBECI]
