All week, the crypto world has been alight with the news that the Central American country of El Salvador will become the first nation to treat bitcoin as legal tender.
The bitcoin community is not only celebrating a new Central American haven but pointing to El Salvador as a proving ground for “green” bitcoin.
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Elizabeth Warren – that bitcoin will destroy the planet if we don’t curtail it is to demonstrate the opposite: that miners prefer low-cost green sources of power and that they can be a force multiplier for green energy infrastructure at large.
In a recent episode of our “Money Reimagined” podcast, Harry Sudock, vice president of strategy at mining infrastructure provider GRIID, told us his company is seeing relentless demand from wind, hydro and solar developers for bitcoin mining; co-locating facilities offers revenue guarantees that allow communities to expand renewables to serve local people.
In other words, bitcoin mining can serve as that missing piece of risk capital needed to kick-start infrastructure projects, not only to shift the world toward renewable energy but also to foster economic development.
With those funds in hand and new, more widely distributed, reliable, low-cost sources of electricity available, local entrepreneurs could, for example, build out a network of charging stations, creating the foundation for local businessmen to spin up electric vehicle transport services.
Or, in a direct application of the so-called “money battery” concept, energy tariff payments to the government by bitcoin miners could fund the development and maintenance of the microgrids in other places.
And excessive consumption is only a problem if the resource is finite, which is not the case with solar, wind or geothermal energy.
And the reality, one that too many crypto advocates ignore, is that bitcoin does access a massive amount of fossil fuel energy.
Still, to ensure the spoils of development are spread among host communities and to keep miners and grid operators in a symbiotic contractual relationship that serves the interests of both, regulation is needed.
sees the big picture here, it should take a more positive stance towards El Salvador’s Bitcoin policy than we’re currently hearing from Washington – the U.S.-dominated International Monetary Fund expressed concerns Thursday about it.
In the first Money Reimagined newsletter of 2021, we looked at how so-called “whale” bitcoin addresses with more than 1,000 BTC had grown significantly before and during the price rally that started in mid-2020 and accelerated into the end of the year.
As the chart above shows, addresses with more than 1,000 BTC increased sharply during the first two months of the year while the price of bitcoin also soared.
Unlike the 2017 rally/bubble, the price response came only a couple of months after the whale drawback began, whereas there was a delay of six months in 2017.
They were the reason for it – the founding narrative being that “the suits” are coming – even if in the latter stages it was fueled by a small investor influx.
Just as importantly, as CoinDesk’s Omkar Godbole reported this week, even if whale addresses haven’t increased, existing addresses have been accumulating coins, adding a total of 80,000 BTC since the price crashed to $30,000 on May 19.
It’s now all about “us” versus “them,” they say, where ”they” are the centralized establishment, Democrat or Republican, that the peer-to-peer technology of Bitcoin is intended to bypass.
Next, a former Democratic presidential candidate who is now running for mayor of New York City.
But with the price well off its highs and concerns abounding over China’s regulatory crackdown and a backlash from environmentalists, bitcoiners had even more reason to cheer this development than ever.
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