"Mr. Pasteur, you claim that by injecting me with a virus you will cure me?

Yes, I'm starting with a controversial subject that has nothing to do with vaccination.

In reality, it's not really "nothing to do".

What Bitcoin and vaccination have in common is that they both solve problems in counterintuitive ways.

Medical history is replete with examples of this nature, which seem funny to us today but were not at all funny when they occurred. The Hungarian physician Ignatius Semmelweis, for example, was committed to an asylum where he died for suggesting... that hand washing by doctors could reduce infections in mothers during childbirth.

Pasteur, better known in France, fortunately did not have the same fate, and was honored with many national distinctions. But the process of vaccination remains counter-intuitive when one is not educated to it: how could the injection of a disease prevent it?

Similarly, Bitcoin is counterintuitive: it consumes a lot of electricity... which allows it to help fight climate change.

The assertion may seem disturbing, even shocking, and may even sound like greenwashing, but the purpose of this article is to try to present as honestly as possible why Bitcoin is not the ecological disaster it is presented to be, but rather an unexpected solution.

To do this, I will deploy my argument in two parts. The first will not deal with the "operational" functioning of Bitcoin, i.e. its energy consumption in particular, but with its systemic implications for human behavior compared to the current monetary system, and how Bitcoin promotes sobriety. The second will address two broad, more operational categories: the deployment of renewable energy (RE) on power grids, and the use of Bitcoin as a catalyst to combat methane.

Part 1: The current monetary system is the greatest environmental destruction machine humanity has ever invented

"Argentine inflation pros give their advice to confused Americans."

These were the words that Bloomberg used in December 2021 on its article dedicated to the "sudden" rise in inflation in the United States.

It must be said that all those who had listened to the central banks and other specialists could not but be surprised. First, inflation did not exist. Secondly, it was supposed to be temporary ("I see an inflation profile which looks like a hump" said Mrs Lagarde, President of the European Central Bank (ECB) in early December 2021. To understand: it is a temporary hump)[1]. And we had to wait until November 2022 (!!) for this same Christine Lagarde to admit for the first time that we had probably not reached the peak. And of course, she denied her responsibility, since this inflation "appeared out of nowhere".

But my aim here is not to cast stones. It is rather to draw attention to the famous advice given by Argentines, who are used to terrible inflation, to Americans, whose daily monetary and financial life is the opposite, thanks to their position as the world's leading economic power, based on the international reference currency.

What are these tips?

"Spend your paycheck right away," the article says. In French, spend your paycheck as soon as you receive it.

To fight against rising prices, we should spend faster? This may seem counter-intuitive when you are used to being careful with your wallet. It is counter-intuitive because inflation refers to two different things. In the "common" sense, inflation refers to the general and sustainable increase in prices. Initially, however, inflation is the phenomenon of an increase in the money supply, i.e. the quantity of money in circulation in the economy. When this increase is too rapid, for example faster than productivity gains, inflation results in the loss of purchasing power of money, which ultimately leads to a general increase in prices, referred to by the "common" meaning of the word inflation[3]. What is counter-intuitive is actually quite obvious and revealing: one does not spend one's money because prices are rising. One gets rid of it because its value decreases day by day.

To realize this, it is necessary to perform a thought experiment, to put oneself in the shoes of a large part of the world's population, and to consider one's daily life in an economic zone whose currency is collapsing. Some countries, because of the seriousness of their situation, allow us to see these effects before our eyes, without even needing to open a history book and review the period of Weimar Germany[4].

In Venezuela in particular, over the past ten years (2013, ironically the date of Jean-Luc Mélenchon's famous tweet calling Maduro's model an "inspiration"), the value of the currency has been divided by 400,000. In other words, on average, Venezuelans have been losing two-thirds of their savings every year for the past ten years. If you could buy a nice house in Caracas in 2013, you can only afford a piece of bread in 2023. In 2019, inflation reached an unimaginable 2,000,000%.

Of course Venezuela is an extreme case, but in 2022, almost half of humanity was living with an "official" double digit inflation rate[5], losing at least half of their savings every 5 years. In this context, it becomes "rational" to spend our money at any cost and buy anything. Because anything will always be better than losing the fruit of our labor. Indeed, if the money you receive loses its value in a time frame that is no longer measured in years, but in months, weeks, even days or hours, then every minute counts.

"Consume, you fools!"

This situation of hyperinflation, which we may hope never to see in our country - although its probability of occurrence is increasing - has at least one merit. It opens our eyes, through an extreme situation, to a more insidious daily reality: the system of incentives and economic behavior induced by traditional fiat currencies.

Indeed, whether inflation is at 1%, 2%, 10% or 100%, only the intensity changes, but hardly the general mechanism: the incentive to get rid of one's money. In other words, after the satisfaction of essential needs, the incentive to invest it in the hope of beating inflation (shares, real estate, works of art, etc.), or to spend it on short-term, non-essential goods or services, and often to feed over-consumption.

This second option is generally preferred because it is less risky and requires less time and expertise. Indeed, how can we reasonably ask an average person to become a seasoned investor and beat inflation (while keeping his job of course!), when almost all (80%) of the asset management professionals struggle to beat the major indices? Investing is a full time job, and it is far from easy.

Money is the lifeblood of the economy, and the monetary system as it is currently constructed influences all of our behaviors, all of our purchasing decisions, forcing us to favor the short term and spending, rather than sobriety and the long term, without even being conscious of it.

In other words, we will not have sobriety in the current monetary system[6]. It is impossible. And this while this sobriety is necessary in all the scenarios envisaged by the IPCC to keep our planet livable.

Throughout human history, saving has been a wise decision, allowing to insure oneself against the perils of an uncertain future, or to guarantee a future for one's children. One sacrifices one's short-term well-being and comfort to improve one's long-term prospects. In short, one behaves in a far-sighted way, and in the only way that allows humanity to progress.

Today, in an insidious way, this sober and far-sighted behavior is punished, in favor of waste, comfort, and short-termism. The paroxysm having been reached at the time of the arrival of the covid pandemic, when the interest rates of the central banks went negative. In economics, the interest rate representing the price of future risk, a negative rate means for all economic actors (including households, you!) that the future is more certain than the present, which by definition is impossible. Why save if tomorrow is hyper-certain? How can we make any long-term decision when the rules of the game are so absurd?

The direct and terrible consequence is that any attempt to reduce greenhouse gas emissions, or to preserve biodiversity, through sobriety, is doomed to fail in a system where your every move is directed against the consumption of natural resources. In a flawed system, a flawed behavior is a rational behavior.

To explain this in a more practical way, I will use Endorsen/Baseload's pictorial explanation of his medium, itself borrowed from economist Saifedean Ammous in his excellent and lengthy interview with Lex Fridman, although I am not aligned with all of his analysis.

In order to exchange goods and services, we need a medium of exchange. If Farmer A produces oranges and wants apples, and Farmer B produces apples but doesn't want oranges, Farmer A will have to find something that Farmer B wants in order to get his apples, for example bananas. The banana becomes the medium of exchange.

Assuming that bananas were used by a society as a medium of exchange, a problem would quickly arise: bananas rot within days. The incentive here is to get rid of the bananas as quickly as possible to obtain something more durable. A rational behavior is therefore either to eat the bananas (immediate consumption), which is not necessarily the best thing when you are not hungry, or for example to pay someone who is indeed hungry by giving him some bananas, and ask him in exchange to cut down a tree for you so that you can store more durable wood. You hope that this wood will allow you to buy more bananas tomorrow, when you are really hungry. In this case we hope of course that you have done your analysis of the wood market, of supply and demand, of the dynamics of use of this resource etc., at the risk of having to sell your wood for fewer bananas in a few years. This is the investment alternative. The result of all this is that a tree that had not asked for anything from anyone has been cut down.

This metaphor allows us to illustrate quite simply what we saw earlier, i.e. the drama of a medium of exchange that cannot preserve purchasing power: it forces people to spend or invest, i.e. to consume natural resources.

Inflation is the name given to how quickly the banana rots. In February 2023, inflation in the Eurozone was 8.5%. This simply means that your euro does not rot in a few days like a banana, but in a few years. At this rate, in about 5-6 years, any euro held will have lost half its value. Yes, half.

What is the incentive for all participants in such a system? "Spend your paycheck right away" as the Argentines would say.

You are driven out of savings, forced to find projects to finance to beat inflation. The result is often the financing of activities that would not have been sustainable in a normal context, again fuelling the unnecessary extraction of natural resources[7].

To this flawed incentive system, we must add a dubious construction that amplifies the ecological absurdity of the current monetary system.

We all pay in oil.

At the end of the Second World War, the international monetary system, which had previously been based on gold as a standard and the British pound as a reference currency and the main pivot to gold, changed drastically with the Bretton-Woods Agreement (1944). According to these agreements, gold retained its role as the world standard, but the US dollar became the sole, rather than the main, pivot. In other words, all the world's currencies are expressed and converted into US dollars, and only the latter is convertible into gold at a fixed price: $35 per ounce (today, nearly $2,000 per ounce. Did you say inflation?).

For the United States, the temptation was strong to give in to the easy way out, by creating dollars ex-nihilo, without backing them up with gold. This was done in the 1960s, in particular to finance the Vietnam War and its intensification from 1965 onwards, as well as the social programs of President Johnson's "Great Society". In 1965, it was General de Gaulle's France that began to blow the house of cards by calling for a return to the gold standard and, above all, by beginning to sell its dollars on a sustained basis to recover gold.

In 1970, there was only the equivalent of $11 billion of gold to support... $24 billion of reserves held by foreign countries.

In 1971, the United States defaulted. They will not pay back the gold they owe. Gold is no longer convertible at the agreed price. It should be noted that, as is often the case, this major, unilateral, unjust and spoliating political decision was presented as "temporary" in order to make it easier to digest. Nothing is more durable than a temporary measure, said Friedman...

Money, for the first time in history, is not backed by anything. No goods. This was the birth of purely "fiat" ("So be it") currencies. As everyone knows, a complicated decade followed: oil shocks, inflation, growth at half-mast...

Gold, which had been the very definition of stability for centuries, adjusted to the amount of money available, and its price exploded.

Consider this: in 1792, the price of an ounce of gold was set at $19.75 in the United States, a young country emerging from a war of independence against the first world power, the British Empire. In 1932, this price was $20.67! In a century and a half, the price has not even fluctuated by 5%! On the other hand, since 1971, i.e. in half a century, the price has risen from $35 to $2,000, i.e. an increase of 5,600%[8].

In the first months and years following this monetary cataclysm, the influence of the United States was clearly questioned. The emergence of a multipolar world, in a context of the Cold War that did not help matters, was a possibility. The Americans had to find a substitute for gold that would allow them to continue to dominate the international financial and monetary scene.

This substitute was oil. And in particular Saudi oil, in the framework of a historic agreement, signed in 1974 by Kissinger, the American Secretary of State, and the Saudi Crown Prince Fahd, which led Saudi Arabia to sell its oil exclusively in American dollars, and to recycle these dollars into the American debt. Black gold replaces gold.

As Alex Gladstein, director of strategy at the NGO Human Rights Watch, reports in his article " The hidden cost of Petrodollar ", citing a Bloomberg article, the deal is surprisingly simple: the Americans "buy oil from Saudi Arabia, and provide the kingdom with military assistance and equipment. In return, the Saudis sink billions from their oil revenues into U.S. Treasury bonds, and finance the U.S. government's deficit.

OPEC followed in 1975, and soon the whole world was pricing its oil... in dollars. If you want to feed your machines, to speak in Jancovici's words, you need dollars.

Since that day, we all pay in oil. And in weapons, too, since that is the counterpart of the agreement. Saudi imports of US military equipment rose from $300 million to over $5 billion between 1972 and 1975.[9]

The current world monetary machine, launched in 1971, is an incongruous parenthesis in the history of mankind, unfortunately still open, and which, by habit, is now taught as normality or even progress.

The legacy of this "progress" in the space of barely 50 years is quite impressive: devaluation of work in favor of assets, feeding inequalities ever more, rampant deindustrialization, incentives to short-termism and consumption, etc. The "narrative" that has been imposed, in order to avoid talking about oil or armaments, is that fiat currencies derive their value from "the wealth produced by a country or an economic zone", which is completely false. How can we explain, if this were true, that we could double the monetary base during the pandemic, for example, when the world economy is at a standstill and in decline?

The illusion created by an artificial demand and a military-industrial agreement with a Gulf monarchy was enough to preserve the status of reference of the American currency, and more generally to protect the concept of fiat money, which had always seemed to be an absurdity to our forefathers, and of which every experiment was a disaster. Voltaire already said in the 18th century that "a paper currency, based only on confidence in the government that prints it, always ends up returning to its intrinsic value, which is zero". The episode of Law's system, then that of the assignats during the French Revolution, marked his century by their resounding failure.

Past or future energy? Money, the great absentee in the climate and energy debate

The fundamental difference between a currency such as gold, which has been the reference for humanity for several millennia,[10] and paper money is the relationship to time and energy spent to create value.

In a system where gold is the currency, any monetary unit represents past energy. Despite the attempts of alchemists to create this precious metal ex-nihilo, gold cannot be "invented", it must be found. It is a system of money-commodity. Indeed, the gold nugget paid to a merchant has first to be extracted, by someone or something. This represents an expenditure of energy already made. And when you pay with it, you are simply transferring a representation of that energy to another person.

In a system like this, the economy is constrained by the physical world, and therefore compatible with a finite world, since money (here, gold) is itself a natural resource, available in limited quantities. It takes work to extract gold, and then, and only then, is this gold available in the economy, portable in time and space, and used for consumption, investment or saving. Saving is a perfectly viable alternative because in a world constrained by physics, any allocation of resources is made at the expense of another allocation. So, if at a given moment, no investment seems interesting, it is perfectly logical to save, while waiting for a better opportunity.

This does not mean that the system cannot grow or prosper, of course. Both the first and the second industrial revolutions greatly increased the world's wealth, all under a gold standard system[11]. This was due to the discovery of new sources of energy (respectively coal and oil, for simplicity's sake), and above all new ways of releasing it productively into the economy (steam engine, internal combustion engine, etc.). However, the physical constraint remains.

Conversely, in a system of pure fiat money, as is currently the case, any monetary unit represents not an expenditure of past energy, but a promise of future energy. For in a fiat money system, money is created by credit. When you borrow money to buy a house, you go to your banker, and he will create money ex-nihilo to help you buy a house when you cannot afford it.

The "underlying" of the money it has just created is your future ability to repay the loan. No energy was expended, other than the muscle tension required to click the button on the banking software, and create hundreds of thousands of euros. This is not a commodity money system. It is a system of money-debt.

In such a system, money is not constrained by the physical world. It is constrained by the expectations of economic actors about the future. A perfectly subjective data, and above all... manipulable, in particular through the interest rates of central banks. The lower they are, the more economic actors are encouraged to think of the future as being low-risk, and therefore to create money through credit.

Some economists argue that limiting inflation would kill the economy by creating deflation, which slows down the incentives to consume. But firstly, from an environmental protection point of view, this is indeed what we want (to limit over-consumption or at least waste) and secondly, the idea that deflation would necessarily be harmful is a shortcut. The prices of electronics and computers, for example, have been falling steadily for decades, and this has not prevented consumers from buying when they thought it was necessary, nor has it prevented the sector from developing and hiring. The effect of deflation, compared to inflation, is indeed to postpone non-essential purchases, because savings are encouraged. Or rather, saving is not penalized, it is simply possible as a viable alternative. Which is precisely what should be the case. It is quite convenient to have created artificial needs and overconsumption during decades of fiat currencies, and to come and accuse sobriety of destroying this superfluous consumption! Know that any economist or politician in favor of a fiat currency system is de facto in favor of a system that pushes consumption. And this is not something "hidden" by the way, since "consumption" is one of the variables of the GDP, this magic quantity that we absolutely have to make grow...

Money is therefore energy that crosses time and space. And, for the anecdote, it is what had in fact pushed the industrialist Henry Ford, at the beginning of the last century, to propose the creation of an international monetary unit based on energy. A sort of standard-joule.

The current monetary system, promoting inflation and thus perpetual devaluation of money, is an organized theft of our most precious resource: time. And this is not a bug, but a desired feature. The statutory mission of central banks is to target 2% inflation. Beyond being perfectly arbitrary, it is a level that is sufficiently insidious that it is not noticed on a daily basis, and that is the goal. Because noticing it would make the saver panic, and turn the world economy into a giant Venezuela. But it is enough to take a step back to realize this: the Dollar has lost 97% of its value in a century, since the creation of the Federal Reserve in 1913, the Euro has lost a third of its value in 20 years. Let's give it more time, and it will catch up with the dollar without any doubt!

It is absolutely clear that the model of commodity money, limited in quantity, constrained by physics, requiring real work before circulating in the economy, is much more compatible, if not necessary, to the environmental and climatic goals of our time. One could also argue that by limiting the effects of financial bubbles on assets, it favors labor over capital, something that should please both the traditional left and liberals in their fight against rents. But that is a debate for another article![12]

It is a pity that this aspect is so often neglected in climate and environmental analyses and recommendations. It is however the elephant in the room, the main data of the system that conditions everything else. The infinite fiat currency is taken as an invariable input, an unquestionable hypothesis, even though it is one of the most polluting and destructive machines that humanity has invented. By its historical construction, at the crossroads between oil and armaments, but also and more seriously, by the vitiated economic incentives that it conveys to all economic actors.

At this point, two questions remain:

• What alternative monetary system can change incentives in an environmentally virtuous way?
• What is the environmental impact of this alternative system?

What substitute system?

The most immediate hypothesis seems to be a return to the gold standard. Gold is rare, difficult to extract, divisible, transportable. It is a good currency, at least enough to have international consensus and a thousand-year history.

If its failure in the twentieth century can make us doubtful, attempts do exist. Recently, a proposal was even made to the US Congress by three Republican representatives, in order to allow a return to the gold standard. Among the reasons given by these representatives are some of those mentioned above: "The dollar has lost more than 40% of its purchasing power since 2000, and 97% since the passage of the Federal Reserve Act in 1913", or "[...] The Federal Reserve's actions have created inflation rates of 8% or more, raising the cost of living for many Americans to unsustainable levels, enriching holders of financial assets, while threatening jobs, wages, and blue-collar savings".

In the 1990s, at the end of the Cold War, some economists were already calling for a return to the gold standard, and warning us of the drifts of the fiat system in a prose that may seem prophetic in retrospect. This is the case of Bettina Bien Greaves, collaborator of Nobel Prize winner Milton Friedman, in a 1995 article outlining the modalities of a return to the monetary standard that was gold. According to this economist, "again and again, throughout history, paper currencies have generated waste and high costs; they have distorted economic calculations, destroyed people's savings, and wiped out their investments. She also quotes her distant colleague, 19th century economist William Graham Sumner: "Our attempts to gain by easy money have all failed, and have cost us, in every generation, far more than a commodity currency would have cost even if every generation had had to buy it again.

The first problem with gold, however, is that it is not at all suited to the digital age. Gold does not exist on the Internet, and does not allow for fast and cheap international transactions.

Gold has a second problem, of an environmental nature, which is that it is extremely dirty to extract: cyanide, mercury, arsenic... so many substances that are not recommended to humans and to life in general, which are necessary, and in large quantities, for its extraction. The largest mine in the world, Grafsberg in Indonesia, for example, is a real environmental disaster in the heart of the third largest tropical forest on the planet after the Amazon and the Congo Basin. More than 250km² are contaminated: water tables, rivers, soils etc. Waste is estimated at more than 87 million tons per year.

In France, the subject of gold also makes people cringe. The "Montagne d'Or" project in French Guiana has received a lot of media attention in recent years, with the same problems that can be summarized in a somewhat caricatural way: should we go and dump tons of cyanide in the virgin jungle to collect nuggets whose probable future is to sleep in a safe? Indeed, central banks are among the world's largest holders of gold[13], despite the fact that gold is no longer the standard of the monetary system! Habits die hard...

In mainland France, the debate is just as lively. It's simple: the most polluted site in France is... a former gold mine, the Salsigne mine, in a site infamously known as "the arsenic valley". In 2018, during floods that came to carry the waste of the old mine, the problem was remembered to the inhabitants of the region, and we find extremely high levels of arsenic in school children in the vicinity. The state seems to be burying its head in the sand on this problem.

Part 2: Bitcoin: an ecological disaster, really?

Bitcoin: digital gold

In 2008, an anonymous man calling himself Satoshi Nakamoto invented a UFO, a "peer-to-peer electronic cash", which he named Bitcoin, "digital coin" in English.

Bitcoin mimics the characteristics of gold: scarce, divisible, transferable, etc. But it does so in the digital world. A bitcoin can be held on a mobile app and sent anywhere on the planet in minutes.

In order to guarantee the security of the system, Nakamoto proposes the system of the "proof of work". The concept consists in providing an irrefutable proof of work (energy expenditure) in order to guarantee the inalterability of the system. Systemic inalterability (the rules of the game must not change: number of units in circulation, transaction process, etc.), but also practical inalterability (it must not be possible to appropriate someone else's bitcoins!). This energy expenditure is provided by voluntary third parties, usually companies, who are called "miners" in reference to gold mining[14].

Bitcoin thus becomes the first digital private property. Because unlike everything else in the digital world, you can own it yourself. Bitcoin is not someone else's counterparty. It is an asset, a digital commodity, and you can own it directly, by yourself, without a bank or other trusted third party. So Bitcoin makes it possible for the first time to try to rebuild a monetary system of digital commodity money, not debt money.

Like gold, Bitcoin used as a currency is a representation of the transfer of a past expenditure of energy, not a future promise. This proof of work, the expenditure of energy, is also a necessity of the system. It is not a bug, it is literally the solution to a computer problem that no one had ever solved before.

Instinctively, what is going on in your head is like the famous "Ah shit... here we go again" inspired by the video game GTA. "It's just another unnecessary expenditure of energy. This is not the way to solve our problems..."

I understand this reasoning. The effort I am asking is to try not to stop there. Because in reality, and even if it seems counter-intuitive, the positive externalities of this system, beyond the general and economic aspects that we have studied above, are numerous. Including from an operational point of view.

Indeed, the great machine that started in 2008 has created, unwittingly or willingly, the only economic incentive system for the energy transition. With Bitcoin, the energy transition is no longer a cost but an income. The power of this assertion is unimaginable, and a real hope for the future.

Everyone in the energy business who has had the humility to get past the instinctive stage of blockchain rejection, and has dedicated time to studying Bitcoin, has had that "Eureka" moment. That moment when you finally understand something, and you berate yourself for not having seen it before. That's the case with Norwegian giant Aker, which recently announced it was opening a new business on mining, calling it a "grid balancing battery" "essential to the energy transition required to meet our Paris Agreement goals." This is also the case for Japan's leading energy company, Tepco, which has launched the same strategy of using surplus electricity. We could multiply the examples: the Texan network operator (ERCOT), the oil companies ConocoPhillips or Exxon, but also independent investors or actors, including Daniel Batten[15], whose testimony, which I am transcribing here, may sound familiar to your ears.

"As a climate activist since the 1990s, when I first heard about Bitcoin's energy use, I thought, 'This must be a bad thing. When I heard someone say it was 'net positive,' I thought 'that sounds like greenwashing.

[...]. No one was more surprised than I was to discover that the best way to do it (reduce our GHG emissions) was to mine Bitcoin. [...] "

Are you lost? That's normal. I'm going to try to explain how Bitcoin, beyond the economic aspects, is an exceptional opportunity, a great lever, even the missing brick we were waiting for for the energy transition.

There are two main lines of thought. First, Bitcoin is helping the transition to an electricity mix with a higher share of renewable energy. Second, Bitcoin acts as one of the most important vectors for reducing methane emissions into the atmosphere, a gas whose environmental impact is significantly higher than the better-known CO2 (80x higher over a 20-year period), and one of our main levers for action against climate change in the short term according to the IPCC.

Bitcoin & electricity networks: a smart marriage to accelerate electrification and the development of renewable energy

It's not me saying it, but the acting president of the Texas grid operator (the equivalent of RTE in Texas), Brad Jones: "Bitcoin mining helps new ENRs find a home on the grid, and then balances their intermittency." Brad Jones is not an internet troll looking to speculate on cryptocurrencies. It's 20 years of experience in energy, including 3 as president of the New York grid operator, and 4 as vice president and then president of the Texan equivalent. So how can he come to say such a counterintuitive thing?

To understand this assertion, it is necessary to take a step back and understand the major problems that the necessary transition to renewable energies entails. These issues can be summarized around intermittency. Renewable energies, and in particular solar and wind energy, are not controllable, and their capacity to generate electricity does not necessarily correspond to the place or time when most consumers need it.

This leads to a host of related problems: load shedding, load and voltage balancing of the grid, energy "stranded" or lost in transmission, or ability to ramp up. All of these problems make it impossible to build a power grid that runs solely on solar or wind power, even with the help of batteries.

Let's first talk about the spatial and geographical problems. Unlike thermal power plants, solar and wind power need a lot of space to be built, which often leads them to be developed in remote locations, isolated from the consumption basins. Consequently, two usual problems in electrical networks are exacerbated: losses during the transport of electricity by Joule effect, but also congestion, i.e. the incapacity of the network to transmit this electricity to the places of consumption.

Two examples can be cited to illustrate the latter problem. The first is American, the second New Zealand.

In the United States, the electrical network is not unified at the national level, and several networks coexist: the Texan network, the Californian network, the New York network etc.

Over the period March 15, 2023-April 15, 2023, the average price of electricity in California was USD 60/MWh. In Texas, it was 22 USD/MWh. How can we explain this threefold difference within the same country?

The Texas grid is much better supplied with electricity generation than the Californian grid, considering its consumption. On ENR alone, the Texan grid has an average active power almost twice as high as the Californian grid (18 vs 10 GW), even though Texas is significantly less populated (30 M inhabitants vs 40 M) and California has a GDP almost 50% higher ($3598 billion vs $2355 billion). But unfortunately, grid congestion does the rest: electricity cannot physically flow on a large scale from Texas to California. In other words, using a car metaphor, it is as if there were a shortage of cars in California, but the highway from Texas was not wide enough, generating traffic jams. Which is a shame, since Texas is large and rather flat, and allows for a significant amount of RE to be installed, which California can less easily do, being squeezed between the Rocky Mountains and the ocean.

In New Zealand, the localization of RE generates another problem that is reported by Daniel Batten. Almost all the electricity produced nationally is already renewable (mostly hydro). But this electricity is produced on the South Island, because that is where the mountains and rivers are that allow hydro to be deployed, while three quarters of the population live on the North Island. As a result, it becomes difficult to regulate the voltage of the grid. The solution that the country seems to be moving towards is intriguing: a regulating station, estimated to cost $100 million, that is useless 99% of the time, does not generate electricity, but can regulate the voltage of the grid when necessary.

A solution that does not seem very satisfactory, if more electricity could be generated on the North Island and the flows balanced. But to do that, we'd have to be able to bring a consumer to the middle of the island, where there's room but few people, who can operate from a remote and underserved location. That leaves us with the option of Bitcoin mining and batteries, which can be installed and operated in such places.

This brings us to the second problem with RE, which is its inability to produce electricity when it is needed.

Solar produces during the day, not at night. Wind can produce all the time, but it is highly unpredictable. Empirically, electricity consumption has two peaks in the morning and late afternoon, and is not at all stable during the day, nor does it correspond to the times of production of these ENR.

Nature is so badly made that the peak production of solar energy, for example, corresponds almost to the millimeter to the hole of consumption... We produce the most when we consume the least.

Batteries have long been touted as the solution to this problem, but they are not enough. Although their cost has been decreasing rapidly for years, they generate their own problems.

First, their capacity is finite, which means that they cannot absorb a surplus beyond a certain quantity. Beyond this "physical" finiteness, this also generates a problem of profitability, i.e. they must unload as soon as they have the possibility of doing so in order to remain "available" for future surpluses. This injunction does not necessarily correspond to times when market prices are attractive. This is an economic risk that has a cost.

Secondly, batteries are competing for scarce resources (lithium, cobalt, nickel), which should direct their use towards sectors where they are irreplaceable, typically electric cars. The use of batteries for balancing networks, to meet absolutely huge needs, might have to be phased out if an alternative solution is found for this use case, and which cannot be deployed on others[16].

On the other hand, mining can be complementary with batteries to offer flexibility to the operator as well as to the grid operator, by constituting a second outlet to choose when wholesale prices on the main grid are not sufficient, or when batteries are full.

This flexibility remains the main advantage of mining: it can be installed anywhere, turned on and off instantly, on command, and for as long as desired. This is literally the perfect specification for a demand-response program, which networks will need more and more as intermittent energy sources develop.

According to a definition by the International Energy Agency, a shaving program involves shifting or reducing (erasing) electricity demand to provide flexibility in energy markets, thus helping to balance the grid. There are two different mechanisms: first, implicit demand-response programs, i.e. the use of price signals to induce consumers to shift their consumption[17]. Second, there are explicit demand-response programs, which monetize flexibility directly through direct payments to the consumer who voluntarily gives up when asked. We will focus on incentive-based programs.

These programs may seem counterintuitive because they require the installation of new flexible consumers, thus increasing electricity consumption. However, they are necessary for the electricity transition. According to the International Energy Agency, in its "Net Zero" scenario, it is necessary to add 500 GW to these shaving programs by 2030 (about 50 GW in 2020).

I repeat, because this point is often counter-intuitive and mentally blocking when talking about the virtuous nature of adding power consumption to a network by Bitcoin mining: yes, it is not only accepted, but more importantly desired and recommended by international organizations to INCREASE power consumption on these programs in order to foster the power transition. Because we will not change the electricity mix towards non-pilotable, and therefore unpredictable supply, without changing the nature of demand towards flexible.

However, the sectors that usually fill these programs have many constraints. In fact, we had to have these debates in France last winter. Do you remember, when nuclear power plants were facing the problem of stress corrosion, and electricity prices seemed never to stop rising, the question of rationing and load shedding was raised? With questions such as: should households or companies be deprived of electricity first? Which businesses? Can we cut off some regions before others?

In this context, and while the issue of industrial sovereignty resurfaced, the case of aluminum plants was quite representative, because very large consumers of electricity. Indeed, Cyrille Mounier, CEO of Aluminium France, declared on September 9, 2022 that a single primary aluminium plant consumed as much electricity as the city of Marseille.

The question then arises: wouldn't this be a great candidate for an erasure program?

Yes... and no. According to the same Cyrille Mounier, the maximum shutdown time for an aluminum plant is two hours. Beyond that, the aluminum freezes, and the plant has to be razed, at a cost of around 2 billion euros. So it is better to be careful not to exceed the threshold...

This case is emblematic of the problems encountered by these necessary load shedding programs: finding a client willing to turn off its industrial equipment (and able to do so!) for an indefinite period of time, with the threat of extreme climatic or geopolitical risks that may lead to having to execute the program in a few hours or minutes, is a Gordian knot.

This brings us to several graphs that the company Lancium(relayed here by Shaun Connell) was able to make on the case of Texas and its network ERCOT (Electric Reliability Council of Texas, the network manager), and that allow us to better appreciate these advantages during a more important use of mining, on a real network and in real conditions.

The first is a summary of what we just saw above, which is a visual version of the benefits of mining over the usual customers of load shedding programs. A steel plant can reduce its electricity consumption by up to 96%, but not more than two hours. A cement plant can achieve 70%, but no more than three hours. A bitcoin miner can achieve 97% efficiency, instantly, for an unlimited time. There is a simple reason for this: there is no industrial device or supply chain that could suffer as a result of the mining stopping. That's the beauty of the Bitcoin network: it operates in a decentralized way through mining around the world. Unplug Texas, Bitcoin continues to function normally.

Next, we have the historical MWh price curve in Texas.

It is clear from this curve that the price fluctuates between $0 and $130/MWh almost all the time, but that, as is often the case, it is the extremes that cause problems: on the one hand, the periods during which the price is negative[18] (the beginning of the curve) and we do not know what to do with the electricity generated, because demand is not strong enough, and on the other hand, the periods during which the price suddenly climbs exponentially, during peaks of demand, significantly affecting the wallets of consumers, both households and companies.

I focus here on negative prices and surplus electricity because I have seen that this is also a mental block, with some people even denying this reality, that yes, surpluses, or overcapacities, are real problems for a power grid to manage[19]. Even in Europe, where the grid is very well meshed and interconnected, these problems exist: during Easter week for example, the Czech Republic literally disconnected hundreds of solar panels because the grid could not handle this excess electricity, Spain did the same thing, as shown in the curve below, which you now know how it looks in normal time (see above RTE solar curve), and even the Netherlands, a great country of the sun (no), is also starting to sweat heavily with "forward" prices reaching up to -200€ MWh (!!).

In the US, some places have negative prices more than 25% of the time, and the average frequency of occurrence of these negative prices is increasing (oh surprise) with the deployment of RE, quadrupling in just 15 years.

These negative prices, which largely affect the profitability of renewable energies, and therefore their deployment, are not a marginal problem, but rather a central one.

The Bitcoin mining facility has an effect on prices that can be summarized in the following graph as "valley filling. That is, mining increases the price of electricity during periods when it is particularly low, while helping to lower it permanently during peaks. In other words, it eliminates the risks to the profitability of renewable energy producers, while reducing the cost to consumers on a sustainable basis.

How does this materialize in Texas?

The following graph shows us the example of the summer of 2022, which saw extreme heat in Texas, with miners scheduled to shut down their machines when the price of electricity exceeds their break-even point (i.e. when prices rise sufficiently. Here, in this case, $125/MWh. The S19 being a model mining machine).

We obtain a double mirror curve, the green and the purple. When the price (purple) exceeds the miners' break-even point (orange), then the machines stop instantly (green) and "give back" the capacity to the grid to produce for other customers. They don't do this out of altruism, they do it because they would lose money if they didn't, which is generally a reason for the reliability of this mechanism: everyone has an interest in working in the same direction.

When they shut down their machine, like any participant in an incentive-based curtailment program (discussed above), the miners are compensated by the grid operator for the service they provide. The miner has a stable business model (either he mines, he is profitable, or he doesn't mine, he is compensated), the operator has a flexible consumer at his disposal, generators can come and develop the electrical capacity of the grid, and the consumer sees his bill decrease in the medium term. Everybody wins.

It is worth noting that the Texan network operator, ERCOT, in a recent report, praised Bitcoin mining following the historic blizzard that the United States experienced this winter. A difference that materialized in the stark contrast in adaptability between Texas and Pennsylvania. Where Texas was able to mobilize nearly 1.7 GW of emergency power by relying on the cessation of Bitcoin mining, i.e. more than the flexibility offered by battery storage (0.9 GW), wind power (1.5 GW) or hydroelectricity (0.4 GW), the Pennsylvania operator PJM Interconnection had to send a letter to the 65 million Americans it serves asking them to turn off, among other things, the Christmas lights on December 24 and 25. Which allows me to sarcastically remind you that Christmas decorations in the US alone consume more electricity per month than Bitcoin (worldwide, not just in the US) during the holiday season, and that for some reason, there is no article on the environmental cataclysm they would represent.

The long-term effect for the grid is to send a price signal favorable to the installation of more RES, as the risk of having to assume losses with negative prices becomes almost zero. And with the installation of more generation capacity, average prices decrease in the medium term for all end consumers.

We often see at this point a defensive reaction from Bitcoin's detractors, who would prefer to see other methods of accelerating the deployment of renewables, rather than resorting to these erasure programs. Let's do the reasoning quietly: when these erasure programs fail, there are two alternatives. Either they simply run the risk of blackouts, or the electricity producers have to resort to so-called "peaker plants", i.e. controllable thermal power plants whose sole purpose is to be mobilized quickly if demand suddenly increases. And in order to be quickly mobilized, the turbines must remain hot, which leads to running these plants in a vacuum 24/7, wasting fossil fuel and emitting CO2. No alternative is really exceptional.

If the use of batteries reduces the need for these power plants, mining amplifies the interest by doubling the "supply increase" effect of batteries with a much more reactive "demand reduction" effect of mining. Indeed, a battery cannot "instantly" return all its energy to the grid, whereas a miner can stop instantly, offering much more flexibility when managing a peak demand.

To conclude on this aspect, I would take word for word the conclusion of the above-mentioned article by Daniel Batten, from which I was largely inspired:

• Solar and wind do not fit the "when" or "where" of consumers.
• Bitcoin mining doesn't care about "when" and "where" the energy is produced.
• This makes Bitcoin the catalytic customer that solar and wind have been waiting for to make renewable power grids a reality.
• When batteries and bitcoin mining are used in conjunction with wind and solar, they can solve almost all of the "when" and "where" problems that threaten to limit the amount of renewable power a power grid can afford.

Today, Bitcoin's electricity mix is obviously not perfect. The study used as a reference in most media is the one from Cambridge, which estimates the share of renewables in Bitcoin's mix at 37.5%. No surprise, really, since when you connect to an electricity grid, you are simply consuming the electricity mix of that grid. There are no green electrons and gray electrons, but electrons. But already, this figure tells us something: mining tends to favor the implementation on networks where renewable energy is over-represented. Indeed, at the global level, the share of renewable energy (including hydro) in the electricity mix is 28% in 2020, i.e. 25% lower than the mix announced by Cambridge for Bitcoin.

Above all, however, this study has a major limitation (acknowledged by the authors themselves), namely that it only takes into account mining connected to the various national networks. However, as we have just seen (and will continue to see in the next section), the incentives to place oneself outside of national networks, in poorly served or even isolated locations, are strong for miners. So strong, in fact, that more than half of all mining takes place outside these networks! The Cambridge study is therefore "relatively" reliable (at least for the order of magnitude), but for less than half of the electricity used! If we include off-grid mining, which is usually located directly on isolated production sites, we get a proportion of renewable energy in the Bitcoin mix of more than 50%. That's more than any industrial sector. More importantly, the greening trend is growing every year. So to say that Bitcoin is dirty today and that the whole argument I just made above is wrong because there is still coal in the electricity mix used by Bitcoin is fallacious, and as silly as saying in the 1990s that solar or wind power should be thrown away because it is not profitable. What we are interested in are the orders of magnitude, the comparison with other mixes, and especially the trend in just ten years.

But that still leaves us with a small half of non-renewables. However, this figure should also be put into perspective, because part of the use of this "non-renewable" is a positive-sum game for the climate, and one of our best levers of action, as we shall see.

Reducing methane emissions: finally a solution to a known and major problem

We have seen at length how bitcoin mining can make a significant contribution to the balancing of electricity grids, and promote the deployment of renewable energy by improving their profitability and reducing their risks.

There is another use of mining that is already helping to reduce greenhouse gas (GHG) emissions: methane hunting.

Methane is indeed a much more dangerous GHG than CO2, 80 times more so in the short term (20 years). Each molecule of methane released into the atmosphere is equivalent to 80 molecules of CO2 over this period. According to the Climate Policy Initiative, "while methane is responsible for nearly half of the net global warming to date, [...] funding for methane emission reduction measures accounted for less than 2% of financial flows related to climate efforts, just over $11 billion, in 2019/2020."

So using methane that has already been produced and previously released as an energy source is actually "carbon negative", unlike RE, which is "carbon neutral" (I'm not talking about manufacturing here), because it reduces the overall impact on the climate. Again, the conclusion is counter-intuitive, but there are therefore contexts in which paradoxically CO2 is emitted to mitigate climate change.

According to Inger Andersen, Executive Director of the United Nations Environment Programme (UNEP), "reducing methane is the most powerful lever we have to reduce climate change over the next 25 years, in addition to the efforts needed to reduce carbon dioxide.

Once this is said, it is necessary to identify where the anthropogenic methane emissions come from. According to the above-mentioned UNEP report, "more than half of global emissions come from human activities in three sectors: fossil fuels (35%, of which 23% from oil & gas and 12% from coal), waste treatment (landfills, sewage, etc.) (20%), and agriculture (40%, of which 32% from livestock farming through manure and enteric fermentation (the famous "burps" of cows), and 8% from rice cultivation). This is one of the reasons why reducing meat consumption and in particular beef consumption can drastically reduce our GHG emissions.

But if this last idea seems to be globally accepted, little progress has been made for years on the first two levers, fossil fuels and waste.

The case of gas flaring is emblematic. Flaring" is a practice that consists very simply of burning methane to prevent it from being released into the atmosphere. This burning transforms methane into CO2, which is a net gain for the atmosphere, since as we have seen, methane is much worse than CO2. However, this flaring is not 100% efficient(92% on average according to the International Energy Agency), and it represents a cost for the companies that have to do it, which does not really encourage them...

In most cases this concerns landfills (waste emits methane) and oil companies, which are confronted with this problem when exploiting oil deposits, which contain gas in quantities too small to be exploited in an economically productive manner, and which must therefore be flared for lack of an outlet.

In the case of landfills, for example, in the United States, only 30% of the methane emitted by this means is flared, the rest is simply untreated, vented as it is into the atmosphere[20].

In the case of hydrocarbon operations, the International Energy Agency tells us that "natural gas flaring has been a long-standing problem for the oil industry. The most recent data indicates that about 150 billion cubic meters (bcm) of natural gas was flared in 2019 globally, as much as Japan and Korea imported that same year. Despite growing awareness of the problem, and a number of initiatives to reduce flaring, the amount of gas flared each year has increased slightly in recent years, and the world is flaring as much today as it was a decade ago." An opportunity to appreciate (sic...) this satellite map of places engaging in this kind of practice.

And this is only the "least worst" side of the problem. Because as with landfills, since flaring is a net cost to operators, again according to the IEA, about a quarter (!!) of the gas that is not usefully utilized (i.e., used on site, re-injected into the well, or passed on to consuming areas) is released into the atmosphere without combustion. This represents 55 bcm per year, of which 19 bcm comes from the Middle East and 13 bcm from Africa.

Since Bitcoin's detractors like to make comparisons, here's one: if we had turned all that waste gas into electricity, we could have obtained the equivalent of three quarters of the annual electricity production of the entire European Union. 21] This brings some orders of magnitude to mind.

Thanks to the same characteristics that make Bitcoin a boon for RE development and grid balancing, i.e. very high flexibility and the ability to settle anywhere, without impacting other supply chains, Bitcoin has the potential to simply contribute to half (!!) of the UNEP's 2045 methane emission reduction targets[22] (!!)[23].

There are other technologies for storing or capturing methane. In a discussion I had with an oil operator recently, one of the things I was told about was efforts to reinject methane into wells, for example, so that it is not flared or released into the atmosphere.

But where Bitcoin changes the game is that hunting methane becomes an income, not a cost! A true "game changer" to speak French.

The lack of economic interest in treating this methane is the main explanation that leads to the dramatic findings of the IEA mentioned above, i.e., the immense quantity of untreated methane, and the stagnation of efforts and results for at least the last ten years.

Bitcoin offers a rapidly deployable alternative with proven effectiveness (see Crusoe Energy)[24], which alone can achieve half of the UN target. And it does so without political intervention, which is often a source of friction, inertia or inefficiency, by using a carrot rather than a stick, i.e. by directly remunerating each ton of methane avoided. The cat-and-mouse game between slow regulators who lack the means to implement sufficient controls and an industry that does the bare minimum, when it is not simply trying to hide or circumvent regulations, will be over. The holdouts will simply be less profitable than their competitors.

Bitcoin is setting up a true global incentive program to work for the climate, a global methane hunt funded privately, voluntarily, and not with your money. The dream.

The IPCC blind spot: we are not in a collaborative world

This last point is particularly important because, in my opinion, it is one of the blind spots in the IPCC recommendations. This is perhaps a more personal part of the analysis, I do not claim to have the truth revealed.

In its latest report, the sixth, the IPCC establishes what it calls Shared Socio-economic Pathways (SSP), which are scenarios of global socio-economic evolution projected to 2100. These scenarios make it possible to model and anticipate various consequences on the climate and on the adaptation of human societies across the planet according to our current behaviors.

These SSPs are numbered from 1 to 5, and are defined by a paragraph of text that you can find quite easily, on Wikipedia for example.

In summary, the PHCs can be represented on a matrix according to the challenges they represent on two variables: adaptation to climate change on the one hand, and reduction of this climate change on the other.

SSP1 for example is the "best" scenario. Everyone cooperates effectively, we manage to reduce and adapt to climate change. It describes "more inclusive development", "respect for perceived environmental limits". "The management of the commons is slowly improving, investments in education and health are accelerating the demographic transition, and inequalities are narrowing both between and within countries.

In contrast, SSP3 is the most pessimistic. Entitled "Regional Rivalries", this scenario is set in a context of "resurgence of nationalism", evokes the return of "competitiveness and security concerns", "regional conflicts that push countries to focus on national or at most regional issues", policies are oriented towards security, military, energy, food, and the "low priority given by the international community to environmental issues leads to a strong degradation of the environment in some regions".

In short, the outlook is not very exciting.

The problem is that the description of the SSP3 sounds like the world today and likely in the future. War in Ukraine, tensions in Taiwan, industrial sovereignty, energy security, "resurgent nationalism" are all topics that are much higher on the political agenda today and in the coming years than inclusive development and management of the global commons. The likelihood of a sudden shift to a collaborative world is extremely low, which is annoying given the time frame we have...

However, the IPCC does not identify any possibility in SSP3 to reach the objective of limiting the global temperature increase to +1.5°C or, failing that, 2°C compared to the pre-industrial period. The reference conclusion in SSP3 (SSP3-7.0 for the purists) is simply a cataclysmic warming of 4°C.

Implicit conclusion from reading the IPCC report: more collaboration is needed to avoid SSP3.

But unfortunately, SSP3 seems to be more of a baseline assumption and the world we're heading towards.

The interest of Bitcoin is that it is one of the few solutions that works without political coordination, i.e. that is compatible with the probable SSP3. This does not mean that we should stop our efforts, that we should stop fighting for more international coordination, but it is crucial to have a lever that can be activated even in the worst circumstances of fierce competition and refusal of global cooperation.

Synthesis

In summary, to digest, or to go to the essential for those of you who would have had the perfectly understandable weakness to skip a few lines or to read diagonally:

• The current monetary system is built to favor growth and consumption and to punish savings, i.e. sobriety and long time, the main vectors of resource preservation and their best marginal allocation.
• This system is based on an opportunistic alliance between the world's largest army and a Gulf oil monarchy. This alliance allows the first party to establish geopolitical, financial, monetary and legal domination, as well as an unlimited deficit and a perpetual flight to safety, and provides the second party with military protection. All payment in traditional fiat currency is based on this agreement. We all pay in arms and oil.
• This system, despite the prevailing discourse, is not "normality" or "what has always been". It is the exact opposite: a parenthesis opened barely half a century ago, initially presented as temporary, and which has imposed itself by habit as the new, practically unquestionable normality. Humanity has functioned differently for 99% of its history, it is not an unsurpassable reality that would naturally impose itself, but a collective illusion generating its share of winners (people close to the money tap) and especially losers (all the others + the planet through predation on resources).
• This illusion can completely end. But like a drug addict, withdrawal will be difficult. We have so accustomed our societies to infinite money and the illusion of debt that the return to reality will not be easy or smooth.
• The energy transition requires the electrification of needs as much as possible, and the increase of renewable energies in the global energy mix. This leads to a drastic increase in production capacity and, above all, the need for network flexibility. The latter is today one of the main weaknesses slowing down the transition, leading to physical (electrical voltage, transmission etc.) and economic (negative prices) problems.
• It is not possible to build a "renewable" network without flexibility in demand, i.e. without a functional and reliable erasure program. Bitcoin miners are, by far, the best candidates for such programs.
• One of the least discussed aspects of climate change, and yet one of the most important, is methane emissions. The fight against these emissions, although designated as a priority by various international agencies and organizations, has been stagnant for years. Bitcoin offers an opportunity to address the most harmful greenhouse gas in the short term, and now, without requiring political coordination, because it turns the hunt for methane into a profitable treasure hunt for those who engage in it.
• All this reasoning is independent of your moral, philosophical judgment about the "social utility" of Bitcoin. At this point, even if you consider that Bitcoin has zero economic and social utility, or that it is only a ponzi scheme for gogos, it is still one of our main levers of action on the climate. And what's more, in this hypothesis, a lever financed directly by gogos, thus preserving your purchasing power![25]

The final barrier to the development of Bitcoin mining to help us achieve our environmental goals is its image.

This, by the way, leads to ubiquitous situations. In 2017, the World Economic Forum headlined " By 2020, Bitcoin will consume more energy than the entire world does today". This is an obviously ridiculous assertion, based on the calculations of a central bank employee (did you say conflict of interest?), which only served to fuel the criticism against Bitcoin. In 2023, Bitcoin's energy consumption is in the order of magnitude of around 0.01% to 0.1% of global consumption. An error of at least a factor of 1000, followed by no mea culpa. And of course, the myth continues, maintained by the media who never verify the original source of the assertion (I should point out that this same central bank employee continues to be cited today as the main reference source).

The same World Economic Forum however, publishes a video in April 2023 highlighting the success of "a start-up that catches wasted methane to power data centers". This start-up is Crusoe Energy, mentioned earlier. And the "data centers" in question are Bitcoin miners.

How do you go from denouncing an environmental cataclysm to highlighting a Bitcoin start-up in 5 years? Thanks to the genius of Crusoe and the cynicism of the WEF. It's simple, Crusoe isn't talking about Bitcoin, but about "mobile and modular data centers" "capable of being installed on site, close to wasted energy sources." In short, Bitcoin miners, but without saying "the forbidden word. Hide the Bitcoin I can't see. How sad to have to come up with politically correct convolutions to avoid being accused of destroying the planet when we are precisely trying to help it?[26]

Bitcoin is a counterintuitive solution to climate change that requires some intellectual effort and honesty. Bitcoin is the best carbon credit there is, available to all, with no strings attached, and with concrete and immediate results. The alternatives for your savings punished by the current monetary system are not satisfactory: ESG labels and other "green" financing, beyond a certain opacity, often prove disappointing in terms of the direction of funding.

Buying Bitcoin today is an incentive for someone, somewhere, to balance a power grid, to develop renewable energy, or to get methane out of the atmosphere. While peacefully advocating for an end to the petrodollar system that encourages every person on earth to destroy natural resources.

Disclaimer: I am neither an energy scientist nor an electrical engineer. I am someone who tries to be intellectually curious and honest, and who thinks that energy and Bitcoin have at least in common that they are eminently complex and exciting subjects, today too siloed. I have obviously sourced the assertions and hypotheses I have used in this text, and tried to be as rigorous as possible. I am of course open to debate, corrections, remarks and comments. I may have forgotten some elements in the reflection, and I always learn with great pleasure. However, comments such as "Bitcoin pollutes", "it's whataboutism!!!", "evil bitcoin lobby speculating on the backs of the poor!" or other non-argumentative invectives will be deleted.

Footnotes

[1] And Mrs. Lagarde added: "Inflation will decline in the course of 2022. We now know that it has approximately doubled in the Eurozone over the period, from 5% to over 9%.

[2] The US dollar is itself subject to inflation(between 1.2% and 4.7% between 2018 and 2021)

[3] The aim is not to launch an economic debate on the causes of price increases. The latter is not necessarily and solely due to the increase in the money supply. Other factors can play a role and/or postpone the appearance of price increases over time. For example, the increase in the quantity of money following the 2008 crisis did not generate a massive increase in prices in the sense in which it is usually calculated (Consumer Price Index). But for some, if the average increase has not been observed, it is because it has been offset by productivity gains that have pulled prices down, for others it has simply been transferred to financial assets, real estate and technology stocks in particular, etc. In any case, there is a very broad consensus to argue that, especially when it is faster than productivity gains, the increase in the quantity of money is a principal factor in the lasting and generalized increase in prices, and for some, like the economists of the Austrian school, effectively the only one. In this respect, the 1976 Nobel Prize winner Milton Friedman said the famous formula "inflation is everywhere and always of monetary origin?

[4] Between 1921 and 1924, Germany experienced an extraordinary hyperinflation, with the value of the paper mark divided by (brace yourself) 100,000,000,000 compared to the gold mark. This is one of the best known and most studied periods of hyperinflation.

[5] I write "official" because these figures are often contested in their method of calculation, and are accused of watering down reality. For example, the website truflation.com proposes a different methodology than the official one, and if the calculation leads to roughly the same result for the United States over the last few years, it gives a figure oscillating between 15 and 20% for the United Kingdom for almost a year, while the official figure is barely 10%. I do not wish to debate here which figure is the "right" one, but to draw attention to the fact that these figures are regularly contested, and that it is likely that in reality more than half of humanity is concerned.

[6] I am talking here about systemic sobriety. Of course, individually, one can be very strong and resist incentives and injunctions. But this is condemned to remain at the stage of marginal and individual contributions that require strong personal sacrifices, of people who are capable of making these sacrifices (psychologically, but also materially because their needs are already assured in general).

[7] One could also argue that it is often these same activities that create "bullshit jobs", meaningless jobs, in "zombie companies", which are not profitable and survive by rolling over their debt to repay the interest on it, and which then hold governments hostage by blackmailing them to preserve jobs in exchange for subsidies.

[8] This gold curve may look familiar. It looks like the one for... bitcoin! This raises the question: is it the numerator (gold or bitcoin) that is a speculative bubble that is rising unreasonably? Or is it the denominator (the dollar) that is losing its value?

[9] A brief detour into current affairs: this is why the recent cuts in oil production, including by the Saudis, as well as their desire to sell their oil against other currencies, in particular the yuan and the rouble, could be the beginnings of a major geopolitical reversal in progress.

[10] For those who are interested, we explain in our book with Claire Balva the beginnings of the use of gold as a standardized currency in the 5th century BC, and the legacy of the goods used as currencies in our vocabulary: the words "salary" and "balance" come from salt, "species" comes from spices, "money" obviously comes from silver, etc.

[11] Nor does the gold standard system prevent the development of credit or banks.

[12] I invite you to listen to Jacques de Larosière, whose CV is far from classifying him as an anti-system conspiracy theorist (former DG of the IMF (1978-1987) and Governor of the Bank of France (1987-1993)), and who is extremely critical of the actions of central banks and of recent monetary expansionism

[13] Out of a total of 171,300 tons of gold held in the world, 84,000 tons are in the form of jewelry, but their holders are dispersed over a number of holders that is difficult to know. Conversely, 6 countries (USA, Germany, Italy, France, China, Russia) alone hold more than 20,000 tons of gold. If we add private investment, there are more than 60,000 tons of gold in vaults.

[14] This expenditure of energy is consented to because it is remunerated in Bitcoins via the transparent and predictable mechanism of Bitcoin's money creation, namely: 50 Bitcoins issued every ten minutes (in 2009), a sum that is divided by two every four years or so, leading to a maximum money supply of 21 million units reached around the year 2140. Like gold, Bitcoin is scarce and finite, and Bitcoins are increasingly difficult to "find.

[15] Daniel Batten is a decades-long investor, author, analyst and environmental activist, and founder of CH4 Capital, an investment fund dedicated to projects that reduce methane emissions. He is the author of batcoinz.com, a website that offers many thoughts, calculations and estimates about the environmental impact of Bitcoin.

[16] And for the moment, bitcoin mining does not seem to allow vehicles to move for example!

[17] Think of EDF's "off-peak" rate, for example. In Paris, for example, electricity prices are drastically reduced between 1 p.m. and 3 p.m., as well as between 1 a.m. and 7 a.m., in order to encourage the use of electro-intensive appliances such as washing machines during these time slots when consumption on the grid is low. This can also lead to arguments in households, when one has missed these slots and is looking for someone to blame. And no, this is definitely not a personal experience!

[18] When a price is negative, it means in practice that the seller is willing to pay to find a buyer, often because of the inability to manage externalities such as storage. Obviously, a negative price greatly affects the profitability of the seller, which in the case of electricity is often the producer.

[19] Electricity cannot be stored, or only very poorly. Unlike other industrial sectors, supply and demand must therefore be constantly balanced, since a surplus cannot be shifted over time. Networks therefore set power frequency targets, which are monitored to ensure that supply and demand are always equivalent. In Europe, the target is 50 Hertz, with a tolerance of plus or minus 0.05. Failure to do so can lead to major problems for the network: load shedding, overheating, damage to infrastructure or production facilities, etc. A surplus of electricity is therefore not at all a blessing.

[20] D. Batten mentions this figure and the US Environmental Protection Agency as a reference, but I do not have the link to the primary source

[21] At a ratio of 10 TWh per bcm of gas, this gives 2050 TWh for the 150 + 55 bcm of flaring + venting, compared to an annual EU production of 2664 TWh in 2020.

[22] The source of this assertion is also Daniel Batten, in a peer-reviewed analysis by Ruben Mendoza, consultant, Margot Paez and Sergio Sejas, climate scientists: "Using Bitcoin mining to burn previously released methane can eliminate 5.32% of all global GHG emissions by 2045. This represents 23% of global methane emissions: more than half of UNEP's 45% reduction target by 2045."

[23] United Nations Environment Program, whose objective is to reduce methane emissions by 40 to 45% by 2030.

[24] The existing pilots have been successful. See for example the case of Exxon, or Crusoe in the United States with a combustion efficiency of 99.9%.

[25] If you're wondering about this social utility part, I'd like to refer you to my previous article, the survival manual in the jungle of anti-Bitcoin clichés(available in video/podcast format, thanks to Grand Angle Crypto!), or my column on BFM Business in December 2022.

[26] The same unfortunate cynicism exists in France, where some companies avoid using the word "Bitcoin" (or "crypto") in their articles of incorporation so as not to trigger a vendetta from the banking industry, which closes companies' accounts unilaterally.