Bitcoin, Kardashev Hinge, Gateway of Money-as-Sunlight
2nd Edition 15/05/2021
Above is an illustration of our journey as it might have appeared to Kardashev, if he had still been around now.
He is known for his characterisation of stages of civilisation.
Currently, we are somewhere between Kardashev 0.5, and Kardashev 1.0, in the age of Bitcoin creation.
Bitcoin appears to fit into this scenario of transition in a very surprising way.
When first introduced, Bitcoin was produced entirely from conventional secondhand power.
By that is meant power produced by energy extracted from Earth, which was put there in the first place by the sun, thus is secondhand, compared with energy harnessed firsthand from the sun.
In the diagram above, firsthand energy paths are shown in blue, secondhand in red.
Red is to indicate danger.
The head of the stick man representing pre-Kardashev humanity is red, to show consumption in that time being almost exclusively of secondhand energy.
In the time of transition from pre to post Kardashev humanity, the head of humanity is amber, to show a mix of consumption, of both first and secondhand energy.
Post Kardashev, its head is green, to show consumption entirely of firsthand energy, thus complete independence from the stored energy of Earth.
Red-amber-green, like traffic lights.
It is important to be clear in this distinction, since “standard” terminology used by “Green” and “Renewable energy” industries only muddy the waters.
The Untruth of Renewable Energy.
“Renewable” terminology applied to energy and ecology is motivated by a seemingly subconscious motivation to perpetuate the Grand Energy Ponzi (GEP), which is enabled entirely by a very simple but incredibly powerful economic mechanism; Profit.
There are many profit-making business cases to be made in the ideas of energy being somehow renewable, all of which contribute ultimately to perpetuating the GEP:
The Great Energy Ponzi
The greatest Ponzi of all time is bigger than most of us can imagine, and involves more than just money.
All associated businesses work to perpetuate the GEP, by generating untruths of all kinds, especially where truth exists, to mask the truth, it seems.
The Truth of Bitcoin
Bitcoin since introduction, partly due to its ever increasing difficulty of production by design, has gone through a steady expansion, entirely profit driven, to now being a massive global industry, consuming several countries-worth of energy, with the load being distributed around the world, across many thousands of miner installations.
Bitcoin does consume a lot of energy - but here's why it's worth it | MoneyWeek
Just before we get started - make sure you register for Merryn's interview with Baillie Gifford's Charles Plowden. It's…
Getting figures for the actual size of the industry is difficult, as it need not conform with the taxation laws of any country or government, much of it is undeclared, carried out in clandestine.
But we can get an idea of its scale by noting more and more GPU processor technology and resources becoming focussed on something other than its traditional market; Gaming.
Try and buy the latest Nvidia GPU chips as an ordinary consumer, for example, and we find that lately they are almost always sold out.
We might think that such consumption of resources and energy has to be harmful, until we realise that the force driving the demand for it has to be mostly solar powered, since that is the only form that can be used by miners to remain competitive, in a highly competitive industry.
After all, solar energy costs nothing after establishment of the required solar power infrastructure.
There is no more competitive industry than the minting of Bitcoin. Maximum computer hashing power translates directly to winning the game of minting. Winner takes all.
Firsthand energy is exclusively free, after installation of the means to receive it, and since we are able to generate money with it, including even the money needed to maintain it, and expand it further, its entire existence is free.
Not just “Cheap”, but free.
Consider, with free money, expanding the solar infrastructure capacity to print yet more free money, and we start to see a further definition of free.
It is freely scaleable.
Therefore no other form of energy can compete with free energy, because with that, we can create free money.
Stories of coal-fuelled Bitcoin minting make no sense at all when we consider that simple piece of logic.
Winning the game by coal-fuel, or any other form of secondhand energy is simply not possible.
To know why some parties might claim otherwise, we only need to follow the traditional money logic.
Profit driven businesses do not like to use the word free, since free means zero, and many economists sums blow up when we try to put zero into the calculations of profit.
Dividing by zero implies infinite profit, in terms of percentage.
Subsequently there is an overwhelming desire to continually increase the solar infrastructure powering Bitcoin, by each mining entity, in pursuit of always more revenue.
By design, Bitcoin is limited to 21 million tokens.
If we accept that Bitcoin has indeed resulted already in a massive increase in solar energy use, and that it will continue to do so until the last coin is minted, it follows that each Bitcoin has contributed to adding a certain amount of solar energy capacity.
Energy is matter, is money, is information, all are interchangeable via the markets.
So for the first time in the history of our species, a significant amount of wealth is being added to our economy in the form of free energy from the sun.
Now we have the physics to show that the world economy is no longer a closed box.
That is a physical explanation of why free money can, and is issued with no noticable negative effects on its value. In fact if anything, we see an increase in the value of freely issued money.
Global wealth can obviously no longer be quantified as a fixed amount of energy, oil, gold, information or whatever, confirming further that a gold standard can no longer be a true reflection of a share of value.
Now there is an ever increasing amount of wealth, donated from the sun, a source which is absolutely extraterrestrial.
Closed box world resource accounts can no longer balance.
Logically following on, we see that the value of each Bitcoin has two components. One representing the market value of the capital sum of fiat paid to purchase it, and another representing the amount of solar power infrastructure which it “Pushed up”.
The second term is time dependent; a quantity of Joules per second (“Watts”), per Bitcoin, forever.
We notice its value increases to infinity with time, compared with the capital part which decreases to zero in comparison.
There, maybe we see technically the end of capitalism, independent of any government.
The appropriate units for Bitcoin in terms of energy, are actually a rate of change of energy, rather than just a fixed amount of energy, which is assumed in conventional currency.
It is not clear yet how much more solar infrastructure computation of the remaining Bitcoins might deliver to our world, but it seems feasible, even reasonable, to expect it will be enough to transition the entire power consumption requirements of humanity over to, thus finally putting us into Kardashev 1.0.
In consequence, the capital value of Bitcoin will no longer be important.
All advantage of having capital, in the presence of abundant free wealth as solar energy, will be superseded.
What will be the point of saving, if there is abundant free money for all people?
Further, what will be the point of retiring, if productive life is no longer really “Work”, which we wouldn’t choose to do anyway?
Each Bitcoin will always represent a constant share of solar power energy capacity; a fixed rate of firsthand energy flow.
The Solar Energy POW standard.
Currently, the total rate of energy consumption of humanity is around 17 Terra-Joules per second (17 Terra-Watts, or TW).
Ideally we would like to have more than is needed, in order to remove the need for batteries, in presence of a worldwide power grid.
A convenient target, with maybe enough headroom of surplus energy, could be 21 Terra-Joules per second (21 TW)
Taking that to be our ideal solar capacity requirement enables convenient division by 21 million Bitcoin, to define a solar energy capacity standard, of 1MJ/sec (One Mega-Watt) per Bitcoin.
There, we see a solar energy supply standard for Bitcoin, one that is defined by physics and undeniable, due to the traceable history and physics of Bitcoin.
So each Satoshi, as a 1/100 millionth part of a Bitcoin, can be considered as worth 0.01 Watts (10mW) of solar energy, just enough to power a small LED.
To understand how that then translates to free money for all people, we look at another piece of the jigsaw puzzle; the limited transactions frequency characteristic of Bitcoin, and the power consumption of that transactional non-minting aspect of Bitcoin.
Transaction Frequency Limitations
This characteristic has been a known problem since the introduction of Bitcoin, constantly researched for means of expansion, with aspirations of perhaps rivalling things like the VISA financial transactions volume.
That was thought to be something needed in order for Bitcoin to directly replace conventional fiat money.
But, if we consider Bitcoin for what it actually is; a measurement of, and a proof, of actual Solar Energy capacity existing on Earth, it is in fact a kind of authorisation, a guarantee of an amount of solar energy available to issue proof-of-work currency, forever.
It follows logically that if we use less solar energy to generate less than that actual capacity of POW tokens, the actual value of the corresponding tokens is higher per token, since then we are leaving more of the energy capacity pool to be used by others. Likewise, if more energy is converted to tokens, each token is actually worth less, since by that, less energy capacity is left in the pool.
So the distribution of Bitcoin is actually the distribution of authorised capability to generate proof-of-work tokens, where the authorisation is underwritten by something with far greater authority than any Bank; the sun.
As such, Bitcoin transactions are actually only needed to redistribute authorisation, so need only occur relatively occasionally, removing the bulk of transactional power consumption load from the infrastructure, forming the POW token generation density at any point in the network.
Any individual or organisation generating POW tokens need only compare the work used to generate tokens, with the amount of Bitcoins held, to know the intrinsic, physical value of their tokens, since each one generated corresponds to a fixed number of Joules, Calories, Ergs, KWh, or whatever, assuming their contribution to the solar energy capacity of Earth, compared with that of Bitcoin, is negligible.
Bitcoin becomes a kind of authorisation Gateway, a configurable network financial interface between solar energy, and our economy, the point at which solar energy is directly converted to money which is free to give away, indefinitely, yet still has the intrinsic value of the energy encoded within it.
This analysis naturally follows on to a further story, on the kinds of mechanisms all people and all organisations can use to generate POW tokens representing their interests, and ultimately forming their income, and fortune, rest assured of fine grained democracy, by trading their tokens in markets no longer influenced by the destructive forces of profit.
There, we see how all energy streams might be allocated.
As always, all thoughts and all comments are most welcome, as long as we stick to the subject.
I am always eager to discuss, to get to the truth, to see the final destination of our species.
Consider this final thought:
It is only possible to sustain a Ponzi by untruths. Unravelling every Ponzi, even the GEP (Grand Energy Ponzi), requires that we just see the truth.
One thing is for sure, it looks incredibly bright.
Let’s hope not too much more suffering before we get to it.
The ICO of all ICOs
The ICO (Initial Coin Offering) could turn out to be a bootstrap mechanism which catapults us into a new era, with one…
Thanks: Nick Nielsen, for your fitting article upon the passing of Kardashev, here in Medium.