Austrian Economics dominates bitcoin discourse, but isn’t the only non-orthodox economic theory to describe the value of a money type that sounds remarkably like bitcoin. Degrowth and eco-economics are two aspects that promote the end of fiat currencies and inflationary currency. Bitcoin mining is often emphasized for its role in the energy transition from fossil fuels to renewable sources. However, it has a much more significant impact on our society’s transition to a more sustainable and equitable future.
Bitcoin’s electricity consumption is neither trivial nor not trivial. This network uses less than 0.5 percent of all electricity consumed in the world. Many have referred to this as nothing more than an “rounding error”. This sliver in energy usage is equivalent to the entire energy consumption of an average country. Many global technologies use more energy than Bitcoin. Data centers, air conditioners and the banking sector all come to my mind.
Energy consumption is a valid concern, and the possibility of it increasing even more so. The internet is full of peer-reviewed articles that show a clear link between the energy use and environmental degrading. This is a common result, from an eco-economy and degrowth point of view. It’s largely due to the drive towards never-ending growth that neoclassical economists have.
It is obvious that environmental degradation has been caused by unending economic development. Scientists believe that we are in the middle of a six-mass extinction, and humans are the primary cause. In a recent German study, 80% of insect biomass was found to have declined in the last twenty years. Brazilian tropical forest, which was once a carbon emission sink, is now a carbon emission source due to rising temperatures in the world and agricultural deforestation. There is chemical pollution everywhere. Recent tests have found microplastics in blood and urine samples. This is all evidence of how the economic system we have today, with its bad incentives, has pushed the world far from being habitable for us and for other species.
Bitcoin’s consumption of energy will grow in the future, as more people use bitcoin. Bitcoin’s energy usage is scary if you are concerned about climate change, know that energy consumption and economic growth lead to environmental degradation and worry about the effects of global warming. Bitcoin’s limited energy consumption is the most crucial detail. It is also necessary for a monetary system which will support a global degrowth economy.
Degrowth is an economic, social and political movement. This is a wide movement that advocates for wealthy nations to lower their total energy consumption, while developing countries can increase theirs. Climate activists are increasingly demanding that the world move from economic growth toward degrowth. Ecological economics can provide a solid foundation to explain how degrowth and growth could be combined into a stable economy.
Our economy will be in line with the limits of our planet when we reach a steady state economy. There are not many species that could outgrow and then survive their environment. Brian Czech, an eco-economist, calls steady-state economics “economics for a full-world”One where the economic growth has been so rapid that the environmental limits are being pushed to their limit.
But degrowth goes beyond energy consumption and economics at a steady state. Degrowth also advocates an end to debt, fiat and inflationary currencies. Degrowth is a way to live in harmony with the natural world, encouraging localism and thrifty living. Degrowth could be compared to the Bitcoiner’s low-time preferences when they are applied in all areas of economy. Degrowth is the elimination of wasteful consumption, rent-seeking, and bullshit job. Permaculture and indigenous management techniques are also promoted.
In fact, we must build a new infrastructure if we wish to decelerate. We will have to create a decentralized and robust monetary system to maintain our economic degrowth system.
The following are some of the ways to get in touch with us The Crossroads of Economic Growth: Supply ShockCzechs explain inflation “when a monetary authority (such as the Federal Reserve in the United States) increases the money supply faster than the real economy can grow”. Czech is a degrowther, not an Austrian. He continued, “recent periods of rapid, real economic growth… have tended to result in inflation, because the monetary authorities are too removed from the realities of economic life to understand ecological limits to growth”.
According to ecological economics, money’s origin is largely due to agricultural surplus, and not state debt. The state and debt are certainly important, but without the agricultural surplus there wouldn’t be a division of labour, and there wouldn’t be a need for money. To put it in the most extreme terms, our food systems would collapse this year and everything else with them. Each of us would have to spend our lives finding food.
The first and second thermodynamic laws tell us that energy does not exist in a state of creation or destruction, that the conversion of energy to another form is imperfect and that some of the energy converted dissipates. These laws of physics impose a limit ecologically on the planet. This limits agricultural surplus. According to ecological economics, money also has a maximum.
Bitcoin has limits, just like money. In 2140 the final 21 million Bitcoin will be created. Early in the 2030s, over 98% of bitcoin will already have been produced. Bitcoin energy consumption increases as long the bitcoin value continues to grow. If bitcoin is the standard for money in the entire world, then all of the value on earth will eventually be stored within the network. The network hash rate will slow and energy consumption may even reach a plateau. It will be due to diminishing return as network mining becomes more difficult and there is a tighter competition.
If the ecological economic theory holds true, the value of Bitcoin will reflect all the resources on earth that are available to produce an agricultural surplus. It follows then that since we can’t create any more energy we also cannot create bitcoin. It is important that our socio-economic systems accept the idea of limitations. The bitcoin community has a phrase that goes: “you don’t change bitcoin, bitcoin changes you.” Adopting bitcoin could turn away people from the instant-gratification consumerism that Bitcoiners refer to colloquially as “high-time preference”.
As mining occurs globally, it is expected that the energy demand will increase in a period of convergence. Degrowthers, eco-economists, climate activists, and environmentalists can all help to shape where and how energy consumption will develop in the future, so that the energy is distributed evenly across regions that suffer from energy poverty. It will also ensure that the growing network benefits the developing world the most, and therefore facilitate a part of degrowth-growth convergence.
This is already happening. The adoption of bitcoin is highest in countries with less development, especially those where there are hyperinflations and unstable currencies. The governments of some developing nations, such as the Central African Republic, are also studying ways to utilize bitcoin mining in order to increase their renewable energy sources. Gustavo Petro, newly elected Colombian president and a political figure with a progressive bent, is also interested in using bitcoins for this purpose.
Bitcoin has been criticized by critics for favoring early adopters. They also claim this creates a class of crypto-oligarchs who will rule the world. According to a Bitcoin Policy Institute report entitled, “Is Bitcoin Fairly Distributed?”. The authors pointed out a CoinMetrics recent study which showed that even though “large institutions entering the space, bitcoin is still very much a grassroots movement,” It is the currency with the highest distribution of value compared to other cryptocurrencies.
If we combine money, like bitcoin, with an economic system that lowers economic inequality (the Book), then the problem of unequal resource distribution can be resolved. Radical Markets If we can design some market mechanisms that are reasonable, then the wealth is eventually distributed fairly amongst all of us. In order to maintain a sustainable society under steady state economic conditions, we must reduce any form of inequality.
Adopting this perspective does not require that you believe climate change to be real. Oil is limited by the natural limits of natural resources. In the 1970s, the United States had reached its peak in oil production. The recent U.S. boom on shale gas will not last forever. Energy independence, as we have seen, is crucial for boosting supply chains in order to promote localism and strengthen our socio-economic system. Adopting Bitcoin and ecological economics perspectives and degrowth is essential if we wish to extend the benefits of today’s society into the future. Bitcoin plays a vital role in the future of our society, regardless of what some critics might say. This is a huge burden but it is our job to make this known to everyone else. Time is running out.
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Source: bitcoinmagazine.com
