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Energy is not fungible. Just because you have electricity in place A doesn't mean you can get it to place B in a cost-effective way, so mining next to, say, a h

Energy is not fungible. Just because you have electricity in place A doesn't mean you can get it to place B in a cost-effective way, so mining next to, say, a hydro station with spare capacity (where electricity is cheap) doesn't necessarily have any impact at all elsewhere.

bryanlarsen 5y ago
What an odd take, given that electricity is almost the poster definition of fungible. Sure there are transmission losses, but they are very minor. It's not perfectly fungible, but nothing in the real world is, everything has some sort of shipping costs. I can't think of anything more fungible than electricity except for virtual items like dollars.
- SAWZALL 5y ago
  THANK YOU! Finally, someone with a fully functioning brain cell.
eldaisfish 5y ago
What you must also mention is that electricity is a finite resource. Consuming electrical energy - even at a hydro power station - means the energy you used isn't delivered to somewhere else.
- mr_spothawk 5y ago
  is electricity finite? i don't think so. you might say that the grid can only support a certain load at a some given time, but obviously more energy could be provided. in any case, i think it's silly to concern ourselves with (specifically Bitcoin's) energy consumption, as it's tiny compared to the efficiency gains that are realized elsewhere as a result of bitcoin's adoption.
  - quickthrowman 5y ago
    Yes, electricity is finite. Just because you could add more power generation doesn’t mean it’s infinite, c’mon now.
paganel 5y ago
I disagree, the hydro stations that we have in place were in fact meant to transport electricity from place A (a mountain area, in most of the cases) to place B (where people actually live) in cost-effective ways, that was their purpose from the very beginning. Using that energy up increases the price people from place B have to pay. You could say that one could build a new hydro station just for delivering energy to crypto miners but that would open another can of worms as we're slowly starting to realise that hydro stations are not the most environment-friendly things imaginable (especially when it comes to habitat loss and disruption).
acdha 5y ago
It's not that simple because these imbalances won't last forever. If the cost of renewable power remains low, it will encourage people in those regions to buy EVs, electrify their homes and businesses, relocate industrial usage to that area, etc. If crypto-miners jump in to soak up that excess capacity, that cycle doesn't happen and there's very little positive outcome to show compared to all of those uses. 50 years from now, people are going to wish electrifying normal life had happened quickly but they're not going to be using a blockchain or glad that some speculators were able to make large returns for a few years.
latchkey 5y ago
Specific example: Coinmint in upstate new york is located in an old Alcoa aluminum smelter plant that has long shut down. It gets power from Moses Saunders dam a few miles away. The factory was originally placed near the dam so that it could provide massive amounts of power to keep the pot lines hot 24/7. The whole place is super remote. I've seen the costs for carrying hundreds of MW just a few miles and they are massive at this scale. You can't just economically build more lines to send the power elsewhere. Short of firing up the superfund site again and smelting aluminum, a bitcoin mine is literally the most profitable thing you could use this power for. The dam needs maintenance and a constant draw of power to keep it operational, and this pays for it. Since the power lines are direct from the dam to the plant and the contracts were all drawn up decades ago, this has zero impact on the local community prices. Never mind that the local community doesn't draw anywhere near enough power compared with what the dam produces.
- jamincan 5y ago
  There's on the order of 7+ million people within 150km of the dam. I don't think I would call that remote.
  - dpierce9 5y ago
    Not to mention that all New York power plants, including Moses Saunders, are connected to a massive electrical highway that runs straight to New York City.
    - latchkey 5y ago
      The lines from Moses Saunders to the plant are direct. You can even see them on google maps if you zoom in and follow them. You can't just suddenly push more power through the same lines.
      - dpierce9 5y ago
        The Moses Saunders dam is connected to the NYISO transmission network. The power system in New York is designed to move power north to south, west to east (lines tend to be symmetric in theory but a good model is that the city is the load). You can look at a price map of New York State and see that. Power from the dam can go from it to anywhere else in New York (or the eastern interconnect) at the cost of transmission losses and tolling. Drawing power directly from a hydro plant doesn’t make that power green because, insofar as the plant could supply electricity to the rest of the grid, it means your power usage has the same environmental impact as the average unit of electricity on the grid at that time. The only thing it does is reduce your cost.
jcranmer 5y ago
People don't build hydroelectric plants in, say, northern Quebec and suddenly discover that there's all this free energy and no one around to use it. The build those hydroelectric plants and the transmission lines to places (say, Montreal) where people need that energy, even if those lines are 1000s of km long. The electricity may be cheaper next to that hydro station because you're not also paying for the 1000km transmission line. But your use of that electricity would preclude the people 1000km away from using it.

bryanlarsen 5y ago

What an odd take, given that electricity is almost the poster definition of fungible. Sure there are transmission losses, but they are very minor. It's not perfectly fungible, but nothing in the real world is, everything has some sort of shipping costs. I can't think of anything more fungible than electricity except for virtual items like dollars.

SAWZALL 5y ago
THANK YOU! Finally, someone with a fully functioning brain cell.

eldaisfish 5y ago

What you must also mention is that electricity is a finite resource. Consuming electrical energy - even at a hydro power station - means the energy you used isn't delivered to somewhere else.

mr_spothawk 5y ago
is electricity finite? i don't think so. you might say that the grid can only support a certain load at a some given time, but obviously more energy could be provided. in any case, i think it's silly to concern ourselves with (specifically Bitcoin's) energy consumption, as it's tiny compared to the efficiency gains that are realized elsewhere as a result of bitcoin's adoption.
- quickthrowman 5y ago
  Yes, electricity is finite. Just because you could add more power generation doesn’t mean it’s infinite, c’mon now.

paganel 5y ago

I disagree, the hydro stations that we have in place were in fact meant to transport electricity from place A (a mountain area, in most of the cases) to place B (where people actually live) in cost-effective ways, that was their purpose from the very beginning. Using that energy up increases the price people from place B have to pay. You could say that one could build a new hydro station just for delivering energy to crypto miners but that would open another can of worms as we're slowly starting to realise that hydro stations are not the most environment-friendly things imaginable (especially when it comes to habitat loss and disruption).

acdha 5y ago

It's not that simple because these imbalances won't last forever. If the cost of renewable power remains low, it will encourage people in those regions to buy EVs, electrify their homes and businesses, relocate industrial usage to that area, etc. If crypto-miners jump in to soak up that excess capacity, that cycle doesn't happen and there's very little positive outcome to show compared to all of those uses. 50 years from now, people are going to wish electrifying normal life had happened quickly but they're not going to be using a blockchain or glad that some speculators were able to make large returns for a few years.

latchkey 5y ago

Specific example: Coinmint in upstate new york is located in an old Alcoa aluminum smelter plant that has long shut down. It gets power from Moses Saunders dam a few miles away. The factory was originally placed near the dam so that it could provide massive amounts of power to keep the pot lines hot 24/7. The whole place is super remote. I've seen the costs for carrying hundreds of MW just a few miles and they are massive at this scale. You can't just economically build more lines to send the power elsewhere. Short of firing up the superfund site again and smelting aluminum, a bitcoin mine is literally the most profitable thing you could use this power for. The dam needs maintenance and a constant draw of power to keep it operational, and this pays for it. Since the power lines are direct from the dam to the plant and the contracts were all drawn up decades ago, this has zero impact on the local community prices. Never mind that the local community doesn't draw anywhere near enough power compared with what the dam produces.

jamincan 5y ago
There's on the order of 7+ million people within 150km of the dam. I don't think I would call that remote.
- dpierce9 5y ago
  Not to mention that all New York power plants, including Moses Saunders, are connected to a massive electrical highway that runs straight to New York City.
  - latchkey 5y ago
    The lines from Moses Saunders to the plant are direct. You can even see them on google maps if you zoom in and follow them. You can't just suddenly push more power through the same lines.
    - dpierce9 5y ago
      The Moses Saunders dam is connected to the NYISO transmission network. The power system in New York is designed to move power north to south, west to east (lines tend to be symmetric in theory but a good model is that the city is the load). You can look at a price map of New York State and see that. Power from the dam can go from it to anywhere else in New York (or the eastern interconnect) at the cost of transmission losses and tolling. Drawing power directly from a hydro plant doesn’t make that power green because, insofar as the plant could supply electricity to the rest of the grid, it means your power usage has the same environmental impact as the average unit of electricity on the grid at that time. The only thing it does is reduce your cost.

jcranmer 5y ago

People don't build hydroelectric plants in, say, northern Quebec and suddenly discover that there's all this free energy and no one around to use it. The build those hydroelectric plants and the transmission lines to places (say, Montreal) where people need that energy, even if those lines are 1000s of km long. The electricity may be cheaper next to that hydro station because you're not also paying for the 1000km transmission line. But your use of that electricity would preclude the people 1000km away from using it.