This is a response to Coin Bureau’s new video. If you haven’t seen it already here it is: https://www.youtube.com/watch?v=rex-h4vkELs
While the maxi in me doesn’t like the fact that he gives other coins attention, Guy makes great videos on Bitcoin and the downfalls of the current system. I highly recommend his channel.
In the video Guy covers the possible attack vector governments could use on Bitcoin. Its similar to the energy FUD we saw earlier this year. They will focus more on the “waste” aspect of the FUD rather than the environmental aspect. Energy prices are rising around the world, especially in the northern hemisphere. If the winter is particularly bad, it could lead to energy rationing. Miners could be kicked off the grid in this scenario to prioritize energy to homes, hospitals, etc.. If miners are kicked off the grid, the hashrate could fall and drag the price down with it. If governments keep miners off the grid, Transactions could slow and fees could skyrocket. The network will also be more vulnerable to a 51% attack.
**SIDENOTE**: This is for the people who want to say that I care more about Bitcoin and gains than human lives. Please note that I’m actually okay with miners moving off the grid as I will explain later. I just don’t like the way that it is likely to happen. I don’t believe government intervention is necessary or helpful in this situation. Ulterior motives are likely to push governments to overshoot and put in more “temporary” policy than necessary. I think the free market would end up with a result that’s better than what the government could muster without any party having to be coerced. Either way, I’m fine with grid energy being prioritized to the people rather than miners in times of emergency.
Guy does cover a way the price could survive this. If you want to see his take, watch the video. I’m going to cover an important factor Guy forgot to mention. Miners kicked off the grid could move stranded energy sources.
Bitcoin mining is already taking advantage of flared natural gas from oil extraction. As a matter of fact, there’s enough wasted natural gas in the US alone to power the entire Bitcoin network. So if miners are kicked off the main grid, they can make deals with oil and gas companies to get cheap energy from an otherwise wasted source.
For those of you not in the know: It is not profitable to collect this gas and transport it for use, so its simply released into the atmosphere or burned away. Miners could pay for that natural gas to power their machines. Its a win/win/win scenario. The natural gas is a more potent greenhouse gas than CO2. The CO2 resulting from the gas being burned for power can be captured. Miners get a very cheap source of energy. Finally, oil and gas companies can make profit from an otherwise wasted resource and reduce their carbon footprint.
Renewables can play a big role in saving the hashrate from energy rationing as well. Renewable energy projects can be expensive and the power can’t be turned off when its being produced at times of low demand. These projects can also be located far from their customers due to the nature of the energy resource being used. The Orkney Islands are a prime example of all these issues in one area: https://www.youtube.com/watch?v=8UmsfXWzvEA
Bitcoin miners can tap into the energy being wasted by renewable projects. In return for saving the hashrate, these projects get a nice little subsidy. Miners could even set up mining farms powered by renewable power in remote areas too far away to be used by anyone else.
All of this to say that the Bitcoin network is remarkably anti-fragile. The government can throw all it wants at it. If the government fails to completely obliterate the network outright, Bitcoin will simply adapt and overcome. So I wouldn’t worry about the upcoming energy rationing FUD, or any other FUD really. Sure it could hurt the price and/or hashrate in the short term. In the long term however, it will simply make the network stronger.