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Hmm. By this logic, aren't power-efficient appliances a bad thing because they reduce demand for energy and thus reduce incentives to generate greener power? I

by md_ 5y ago

Hmm. By this logic, aren't power-efficient appliances a bad thing because they reduce demand for energy and thus reduce incentives to generate greener power? It's not clear to me that this is how supply and demand work. While increasing demand may increase investment in new capacity, it also should drive up the price of electricity. And since in some markets renewables are cheaper than carbon sources, one would expect that increasing the price per KWH will increase the production of the costlier, more polluting carbon sources. More speculatively, due to the high volatility of cryptocurrency, I'm skeptical that major power infrastructure investments would be driven by the (presumably) extremely elastic demand of cryptocurrency mining. If I'm investing in energy infra, I'm going to invest in markets of increased consumer and industrial demand, which have fairly inelastic demand curves. Investing more to supply electricity to Bitcoin miners requires me to effectively take a bet on the future price of Bitcoin. I think there is a solid argument that cryptocurrency mining provides high demand for excess capacity, and thus might provide a sort of credible floor for infrastructure investment returns, but that only makes sense if traditional demand are unreliable.

motohagiography 5y ago
I'm saying that power-efficient appliances were an innovation that responded to high energy prices, and with the reduced rate of growth in energy demand has come reduced innovation, which has had the effect of enabling the economics of dirty and inefficient energy generation. Energy production plants aren't public infrastructure, they're productive capital that has been mismanaged as infrastructure for the last 100 years. When you build a geothermal plant to mine coins, you are making it economically viable at every price, and you can collect or divert surplus electricity to use it to power a city. Governments could even compel power generators mining coins to send a percentage of their electricity usage into the grid as a "tax." I'm suddenly optimistic about this.
- md_ 5y ago
  Right. I get what you're saying, and I think there's probably some validity to the idea that increasing demand drives innovation and (eventually) a reduced unit cost. Ultimately, though, the goal from a climate change perspective isn't "lower unit cost" or "energy innovation" per se; it's "reduced GHG emissions." If Bitcoin mining were, say, +50% net demand, I could buy the argument that it will lead to innovations in supply. But it's more like +0.5% demand, so it seems much more likely that it's just driving up prices a small amount, keeping some production sources alive which would otherwise not be. And in at least some cases, those sources are going to be high carbon impact.

by md_ 5y ago

motohagiography 5y ago

I'm saying that power-efficient appliances were an innovation that responded to high energy prices, and with the reduced rate of growth in energy demand has come reduced innovation, which has had the effect of enabling the economics of dirty and inefficient energy generation. Energy production plants aren't public infrastructure, they're productive capital that has been mismanaged as infrastructure for the last 100 years. When you build a geothermal plant to mine coins, you are making it economically viable at every price, and you can collect or divert surplus electricity to use it to power a city. Governments could even compel power generators mining coins to send a percentage of their electricity usage into the grid as a "tax." I'm suddenly optimistic about this.

md_ 5y ago
Right. I get what you're saying, and I think there's probably some validity to the idea that increasing demand drives innovation and (eventually) a reduced unit cost. Ultimately, though, the goal from a climate change perspective isn't "lower unit cost" or "energy innovation" per se; it's "reduced GHG emissions." If Bitcoin mining were, say, +50% net demand, I could buy the argument that it will lead to innovations in supply. But it's more like +0.5% demand, so it seems much more likely that it's just driving up prices a small amount, keeping some production sources alive which would otherwise not be. And in at least some cases, those sources are going to be high carbon impact.