A misdirection of resources and an obstruction of progress, wind and solar energy reflect the same distracting qualities of altcoins.
Wind and solar are altcoins.
They are unreliable, costly and make as much sense as LUNA. “Green” energy takes up too much real estate for the energy they provide but they grow through propaganda and subsidization like preferred pronouns on Facebook. Despite claims of being renewable, they require resources from the earth like everything else and have a finite lifespan. They are ridiculously inefficient and if governments stopped subsidizing them, they would not survive. But through fiat money, these boondoggles continue their rent-seeking existence like a gender studies professor at a mid-tier university.
If you’re reading this column, you already know where I’m coming from and my opinion is probably not surprising. But like the degeneracy of Hollywood, wind and solar are much worse than you think.
Few People Understand Energy
Energy is like money, which people think they understand, but really don’t. The average person uses a lot of energy day to day, whether it’s the electricity to power their computers, gasoline to power their cars or natural gas to heat their homes. Like money, usage gives people the illusion that they understand it. But this is like thinking you can run a semiconductor manufacturer because you use a phone.
Furthermore, the government is actively deceiving the public about how both money and energy work. They assert the U.S. dollar is the same now, in the past and forever more, just like they assert that solar and wind are the same as coal and oil but cleaner. There’s little to no discussion of the downsides of the schemes they favor, like inflation from rampant money printing or the unreliability of “green” energy. They’re like altcoiners who change topics when you point out that the founder of their altcoin is a serial scammer or that the incentives of their system will result in a death spiral. Like a procrastinating teenager, they believe that not thinking about something will make it go away.
The downsides of green energy are enormous. Wind and solar are unreliable, take up too much real estate and are only good for electricity. They ignore the role of fossil fuels for heating and transportation, which are much less efficient using electricity. The upside is relatively modest: lower emissions of CO2. The public perception is that green energy is good and more expensive on the front end but pays off over time. This is far from the truth and the perception speaks to the effective propaganda that comes from the government. The nightly news plays like an infomercial. Think of all the benefits! Buy now! Similarly, we’ll regret paying for these wastes of money years later when it doesn’t save us money and takes up a lot of space.
Similarly, the downsides of fossil fuels are exaggerated and the upsides completely ignored. The environmentalist claims are not lies, per se, but omission of key facts. After decades of fiat subsidization, wind and solar supplies a scant 3% of the world’s energy, all in electricity. They cause more power outages because they only generate electricity when it’s sunny or windy. In addition, removing petroleum would remove lots of other goods and services in the economy. They ignore possible downsides more than an altcoin founder.
Energy From First Principles
To really understand energy, we need to go back to first principles. What is energy? What is it used for?
You might remember the definition from physics: energy is the capacity to do work. Work is what builds and maintains the things we use and work requires energy. Work is what builds everything. Without work, we wouldn’t have civilization. Without energy, we wouldn’t have work. Therefore, civilization needs lots of energy.
As humans, we get our energy through food and we are able to do work like walking, or digging or typing on a keyboard. For most of human history, we mostly harnessed energy from food, either through manual labor or using the labor of domesticated animals.
We discovered that we could use fire for energy, particularly for heat and cooking. We also captured energy from wind and water, with windmills and dams. Capturing energy is a productivity multiplier. Tilling soil with picks and shovels is much more difficult than using a horse to plow a field. Using farm equipment to do the same is even more efficient. Energy is the input that makes this efficiency gain possible. Food is not very efficient energy for the task of tilling soil, but gasoline is.
The productivity gains from energy abundance are dramatic. A hundred years ago, 26% of the US labor force was involved in farming. Now, it’s 1.5%. The productivity gains come from new technology, which requires energy. In every aspect of life, technology multiplies the effectiveness of labor through energy use. In a sense, we’ve all become Iron Man, able to work way more than one person could a hundred years ago.
Energy, in other words, is a way to multiply the effectiveness of our time. As we use more energy, fewer people are needed for what was once a labor-intensive task. The freed up people can then do other work, bringing in more goods and services to the market. Civilization grows when more work is done and new sources of energy have been how that work has been done the last 200 years. Each person has been given the tools to do as much work as hundreds of people from a hundred years ago. Energy has made us all 100x laborers.
Fossil Fuels
Energy abundance has primarily come through the harvesting of coal, oil and natural gas. These so-called fossil fuels are incredibly energy-dense and we can capture the energy for tremendous productivity gains. They are abundant, easily portable and incredibly efficient. Fossil fuels have contributed greatly to things we take for granted, like air travel and heating. They are demonized, however, because of carbon dioxide emissions.
I get it. CO2 is bad. It causes the atmosphere to warm. I’m not denying that. But how bad is the warming compared to all the other things that fossil fuels enable us to do?
That’s the topic of the book I read recently, Fossil Future. The book takes a balanced look at fossil fuels and the benefits it provides versus the drawbacks. Instead of only looking at the negatives, mostly the CO2 emissions, the book looks at the whole of what fossil fuels enable civilization to do, like the labor productivity multiplier I mentioned earlier. The book is a total red pill for thinking about energy and it woke me up to the reality of energy much in the same way Bitcoin woke me up to the reality of money.
The two uses of fossil fuels which were really compelling are the role of fossil fuels in transportation and everyday products. Neither cheap transportation or petroleum-based products are possible with wind or solar.
Airplanes, for example, are too heavy to fly using just electrical energy. An electrical plane is currently impossible because the batteries that are required would be too heavy to lift. It’d be like making a 400 pound person to run a 4 minute mile. The physics doesn’t work. You need a much lighter energy source such as jet fuel to make airplanes fly.
There are also all manner of petroleum based products that few people realize are made with oil. Nearly everything you own has petroleum products in it. Your clothes, your house, and your computer all have components that require oil as an input. Thus, the goal of net zero emissions, or canceling use of fossil fuels is sheer lunacy. Ending fossil fuel use would cause the collapse of civilization as we know it by making labor less efficient, energy more expensive and goods we use every day much more expensive.
The World Post-1971
This points to something that’s been prevalent in the world since getting off the gold standard in 1971. There’s been a persistent push to devalue human labor. The monetary case, we know; debasing money through inflation devalues our work. Monetary expansion is an implicit tax, time-theft and a form of economic slavery.
Similarly, fossil fuel reduction devalues our labor. Our time is enormously valuable because our labor is multiplied through energy. Taking that multiplier away or even curtailing that multiplier effect significantly shrinks our labor output. We won’t be forcing farmers to use horses again to till their land, but we will need a lot more farmers and many other manual laborers if we take away fossil fuels. By taking away cheap energy, we are being taxed on our labor.
Yet despite all that, labor productivity in the US has grown over 10% in the last 10 years. How is that possible? Even with all the regulation, fossil fuel providers have gotten better at producing cheap energy. Our productivity increased because cheaper energy further multiplied the output of our labor. If you think about it, productivity gains are ways of measuring this multiplier effect. Energy gains result in productivity gains, which builds civilization.
Yet since 1971, both monetary policy and energy restrictions have persistently debased human labor. What is going on?
A Drag On Growth
Our productivity increases when energy gets cheaper and more abundant. The energy sources that have proven to be the most reliable and abundant over the past 200 years are fossil fuels. Regulations on fossil fuels, and the clear bias against them in favor of solar and wind have come at the cost of civilization. Like the dollar hegemony, fossil fuel monopolization has oppressed developing countries.
Developing countries are prevented from multiplying their labor through the use of fossil fuel energy because the developed countries won’t let them. Instead of giving them reliable electricity through coal power plants or transportation fuel through oil refineries, they’ve essentially imposed on developing countries the use of solar and wind, the least reliable, most expensive and most limited sources of energy. It’s like they’re being forced to buy outdated Windows phones at full price.
Instead of building infrastructure and developing, these countries are saddled with worse tools and prevented from growing through western countries’ energy imperialism. Neo-environmentalism is similar to the IMF, which is viewed as benevolent, but is, in reality, a form of control and exploitation over developing countries. Like any rent seeker, they tell you that their restrictions are for your own good, when it’s for their own good.
It’s no wonder the best and the brightest in developing countries immigrate. They’re multiple times more productive in developed countries because they have access to abundant energy!
Bitcoin Fixes This
As usual, we can trace this hysteria around fossil fuels back to fiat money. The ending of the Bretton Woods system in 1971 meant that the US needed a new system to perpetuate the dollar. The dollarization of oil created an oil crisis in the 70’s that turned public sentiment against fossil fuels. The propaganda at the time blamed greedy Middle Easterners as the reason why gas was so expensive, when in fact it was the creation of the petrodollar standard. Fossil fuels became the scapegoat and renewables became salvation.
The resulting demonization of oil, gas and coal has been nothing less than disastrous for the developing world. Though we do get power outages once in a while, it’s been less devastating for developed countries. The subsidization of solar and wind have directed a lot of resources toward these boondoggles rather than making fossil fuels a lot more efficient and available. The blue haired environmentalist has gotten favorable treatment at the expense of the blue collar worker. Is it any wonder we’ve gotten more of the former and less of the latter?
As we go toward a Bitcoin standard, we get better incentives with respect to energy. First, more energy is explored and made viable through proof-of-work. Because bitcoin mining is a portable customer, energy development is more economical everywhere in the world. Traditionally, energy producers had to make sure there were enough customers first before building out energy facilities. Now, they don’t because Bitcoin mining will be a customer, provided the energy is cheap enough. Economic incentives get realigned around energy production, not what the government deems acceptable.
Second, bad ideas like solar and wind are no longer subsidized through money printing theft. The market chooses what it wants rather than the government. This means that the best fuels will win and more development of sources like nuclear will commence. We developed nuclear submarines in the 1950s which never needed refueling! Nuclear has stalled due to environmental concerns. Much like their restrictions on developing countries, their restrictions even on developed countries have been a significant drag on progress. Blame squarely goes to them for the fact that we don’t have nuclear cars or airplanes that don’t need refueling.
Bitcoin will remove the bad incentives and create good incentives for energy. That means a more productive work force through the multiplicative effects of energy use. I reject the charlatanism of wind and solar. I am an efficient energy maximalist.
Fossil fuels are sound energy.
This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
