First Post - Energy, some bitcoin thoughts

June 12, 2023 [Denver, Colorado]

This is my first-ever blog post. I write down so many thoughts and notes every day that I decided maybe I should make a substack. Perhaps it will be interesting to some people and it doesn’t cost me anything, so I might as well. Thank you for reading if you are, seriously. 

This summer, I’m focused on learning as much as I can about energy production and sourcing. Specifically, how to best address the urgent challenges humanity faces with energy. The energy crisis we are undergoing currently affects 1/3 of humanity. Over two billion people still cook their meals and heat their homes with wood, dung, or charcoal and lack access to basic modern electricity. On top of this, the human population continues to grow exponentially. How are we supposed to feed, house, and provide energy for 10 billion people in 2050 if we can’t right now? 

As I have begun going down the energy production rabbit hole, I find myself with more questions than answers. Some alternative energy sources seem like painfully obvious bad ideas. As I research different biofuels such as corn ethanol, biodiesel, and biogas, it’s appalling how inefficient and unsustainable these means of energy production are. The amount of corn that it takes to produce enough corn ethanol to fill an SUV one time could feed the average human for a year. Our precious farmland is clearly much more efficient at producing food than producing energy. Using valuable farmland to grow fuel inherently cuts food generation—at a time when the world is experiencing “unprecedented catastrophic levels” (United Nations) of food insecurity. The production of corn ethanol and other biofuels is nearly energy neutral—the amount of energy required to create 1 unit is essentially the 1 unit input. How could anyone rationally see that and think “We need to start using valuable farmland to grow biofuels, that will be beneficial to humanity.” So why are policymakers accelerating and funding biofuel production? In April of 2022, President Biden approved a plan to allow E15 gasoline (gasoline that uses a 15 percent biofuel ethanol blend) to be sold—with the goal of reducing gasoline prices for Americans. The administration announced over 900 million dollars in funding for biofuel producers and biofuel infrastructure. Since this, the United States is using more than 31 million acres of U.S. cornfields to grow exceedingly ineffective biofuels. This amount of remarkably efficient land could be instead used to feed over 100 million people every year. 

On a global scale, the European Union aims to increase the share of renewable energy in transport to a 14% minimum, including a 3.5% minimum share of biofuels. EU nations are obligated to implement a mandate on fuel suppliers so that this target is met. Now, let’s be rational humans and break this down so we can better understand how ludicrous it is. In 2021, the 27 countries within the EU consumed 11,488,061 TERAJOULES of energy for transportation alone (1 terajoule=1 trillion joules). One acre of corn can produce 550 gallons of corn ethanol in a year. This amount of ethanol can be used to generate exactly 0.0464 terajoules of energy. Now, since the EU minimum share of energy production for transportation is 3.5%, we don’t need to generate all 11.5 million terajoules. Only 400 thousand terajoules need to be generated (at minimum) to fulfill the EU’s baseline share of biofuel energy. By doing some simple math (400,000 terajoule requirement/0.0464 terajoules per acre of corn), we can determine that it takes 8,620,690 acres of corn to generate sufficient ethanol. This is more land than the entire nation of Belgium just to generate the 3.5% minimum energy threshold just for transportation. What if we continue to see policymaking like this and the minimum share gets raised to, say, 10% by 2035? Well, we would need roughly 25 million acres of corn for that—an amount of land roughly equivalent to the Netherlands, Switzerland, and Slovenia combined. If we converted every single acre of land in those three countries to farmland growing corn exclusively for the production of corn ethanol biofuel, it would still only generate 10% of the EU’s transportation energy demand. That’s not even accounting for the exponential growth of energy demand, population, and food prices that are inevitable. On top of this, the amount of water consumption, deforestation, energy intensity, and soil degradation that would result from such a decision would have catastrophic negative impacts on humanity. Are you starting to see what I mean when I call these policies ludicrous—especially in such an unparalleled time of human food and energy poverty? I’m not saying I’m an energy expert by any means; this is just the veryyyyy tip of the iceberg. Some incredibly smart people I’ve met have preached to me the wonders and benefits of nuclear energy production, and I’m aiming to better understand that this summer as well. Hopefully, I’ll make a post in the future solely on nuclear energy production.

This next part is unrelated to biofuels but I’m trying to understand how bitcoin mining and energy production can form a symbiotic relationship. Oftentimes, when I mention Bitcoin to people in my life that haven’t been orange-pilled, they’re quick to criticize the massive amount of energy that bitcoin mining uses. In the context of global energy consumption, however, bitcoin’s energy use is tiny (electric clothes dryers use more energy). I think that everyone needs to understand that the ultimate resource of developed civilizations is energy—and it is ALWAYS beneficial for humans to improve energy usage. As previously noted (in the case of the EU and Biden's plan), oftentimes the allocation of capital for a specific energy use case is the responsibility of government/policymakers. The interesting thing about bitcoin mining is there aren’t truly enforceable regulations on how miners source their energy. You could purchase an ASIC (bitcoin miner device) today and provide it energy however you see fit. Essentially, there is a free market for bitcoin mining energy sources. If a new bitcoin miner joins the network with more affordable energy than current miners, it becomes harder and uneconomic for the less efficient miners to mine. Do you see what I’m getting at? This incentivizes a cycle of miners scrambling for the cheapest and most efficient possible energy source—since more expensive energy isn’t as profitable. 

I read an article the other day that basically said this: Bitcoin mining will generate cash flow to the absolute most efficient energy production and remove cash flow from any less efficient means of production. Whichever energy source proves to become the cheapest and most efficient energy available, bitcoin miners will inevitably adapt to this. This is an incredibly significant concept in my opinion since it basically means that bitcoin mining will always fund the best energy long term.

As for the actual benefit of bitcoin in general (for someone that doesn’t know much or is unsure of how to approach bitcoin), this article is a really great place to start in my opinion: 

HERE

I apologize if this first post is overly technical, I’m just incredibly fascinated by this type of stuff right now. I think that my posts on here will vary from food to travel to energy to sports to bitcoin so hopefully, it should be interesting. I think I'll learn from my posts and each one will improve over time. If you actually read this far I appreciate it lol

If you have any thoughts I would love to hear them 

Email - will.b.owens@vanderbilt.edu

Have a great day <3

Will