A dark cloud hangs over bitcoin and Proof of Work cryptocurrencies in general. This concerns how much energy is being used to create new coins and keep the blockchain updated and secured.
You hear the following statement all the time: “Bitcoin uses too much electricity.” What is meant is that mining crypto generates huge electricity bills.
But this is wrong. Bitcoin consumes no energy. None.
Energy cannot be created or destroyed, which is the Law of Conservation of Energy. Bitcoin does not consume energy, it turns electricity into heat.
Just because people are used to being charged for their energy consumption, they associate energy with one-time usage, as if energy is consumed and lost, like any other good.
Crypto turns electricity very efficiently into lots of heat.
So this winter my crypto mining was free because my electric heating bill was the same but some of its heating duties came via my red hot GPU. Then I got a 50c a day rebate paid in crypto.
It has to be viewed as primitive that crypto miners currently generate vast amounts of heat and then throw it away when many industries, for example, agriculture, burns copious fossil fuels to generate heat for things like market gardening. Crypto mining can, and I suspect already is, and will certainly be partnered up with such businesses.
Blockchain will also allow for the distribution of many database operations from expensive locations to remote locations, bringing not just energy benefits at the same time.
AI will create exactly the same problems as cryptocurrencies with energy use but more so. Artificial Intelligence uses the same or similar chip technologies and consequently produces similar amounts of heat per device. Simply flushing the heat produced or worse using air conditioning to cancel it out is a horribly primitive solution. This current approach for negating free but unwanted energy will go away after the first generation of these technologies roll out. Energy is money.
Both AI and crypto/blockchain will have two revenue streams, computing and heat/recycled energy, with heat being potentially the primary product in many applications.
Crypto and AI, which are not going away, will revolutionize cold places. It will make heating them free and in cases of isolated but energy-rich areas, like Iceland, enable the monetization of their sustainable energy by using it twice for recycled energy and computation.
Moore’s Law will create efficiencies but both AI and crypto are built on the foundation of a “greedy algorithm” and drive their development and energy use to the max but in the future this heat will not be wasted and what are now cold barren energy rich lands will be opened up in the same way as hot barren energy rich places have been opened up by air conditioning.
Bitcoin and blockchain will be only a small part of this as AI will be the “ocean boiling” technology of this technological advance. There is a natural limit on the demand and need for currency and accounting but no natural limit on the need or more importantly desire and demand for more intelligence.
As such, the future belongs to the cold north but perhaps not parts near sea level.
Meanwhile, AI is the next, “next big thing” coming to a stock market near you. It might be a few years yet before it hits the markets because all the denizens of Silicon Valley will be snapping up all fledgling players for a long time, holding back public market opportunities or at least minimizing the good ones. It will happen though, just like fully autonomous cars are just a matter of time. Or at least that’s what Siri and Alexa keep telling me.
In 2018, Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards.