Conference: Bitcoin Atlantis | Day 2 | Satoshi Stage
Presentation Date: March 02, 2024 Click to watch original presentation.
So I’ve got a question for you to start off with. Pick a number, call it “a”. Add 160,000 to it. The resulting number is greater than “a”. Who believes that’s true? Raise your hand. Who believes that’s false? Raise your hand. Okay the people who said it’s true, you are correct!
Second question, multiplication. Pick a number call, it “a”. Multiply it by 160,000. The resulting number is greater than “a”. Who believes that’s true? Raise your hand. Who believes that’s false? Raise your hand. Well, it depends. See, if “a” is greater than zero it’s true; but if “a” is less than or equal to zero it’s false.
And in this equation lies the secret of how we can change the story about the ESG profile of Bitcoin – here’s how. 160,000 – that is what the number of megawatt-hours of energy that bitcoin mining uses in a year. “a” is its emission intensity. That’s the amount of emissions per unit of energy. When you multiply the two, that’s the emissions of the Bitcoin network.
Now you might be thinking, well hang on a minute Bitcoin mining that doesn’t have any direct emissions, I’ve heard from Pierre Rochard authoritatively on the subject. Well you’d be correct, it doesn’t like EVs have any primary emissions. But like EVs, it does have secondary emissions that come from the underlying generation source.
Statistically, 70% of the people that I’m looking at here care about that and 30% of you, just don’t care. But here’s why 100% of the people in front of me should care deeply about this if you care about Bitcoin. That’s because environmental FUD against Bitcoin prematurely ends bull runs.
Remember 2021? This event here was a one-two punch from Elon Musk. The first tweet was about emissions and the second was about energy consumption. That was enough to wipe $17,000 of value off bitcoin’s price. After that, when bitcoin was already on the canvas, we had the China mining ban that was like the kick in the guts to finish it off, which was also officially about emissions.
Now whilst at the moment bitcoin price is partying like it’s Q1 2021, it’s still just as vulnerable to the same one-two punch. But here’s the thing. This is all predicated on the idea that “a” times 160,000 must be greater than zero or greater than “a” or whatever. It’s not. We’ve just discovered that “a” can be negative, and when “a” is negative, then the entire answer is negative.
In other words, Bitcoin can become the world’s first emission negative network. Now how do you do that? Well you do that when emission intensity is less than zero. Here’s a chart that I put together with Willy Woo recently.
Gray is hash rate, and as you can see that’s going up at a rate of knots. Pink, that’s emission intensity, and that’s falling off a cliff. In fact, in the last four years, it’s fallen by 348g/KWh.
Now to give that some context, that’s 29 times faster than the banking sector is greening its emission intensity. There’s not an industry on the planet that is dropping its emission intensity so fast, and it’s doing that because it’s using more sustainable energy.
Like fiscal budgets, emission intensity does not stop at zero. It can go shooting on right past zero and go negative. If we follow this current trend line, we can get an idea of when in theory Bitcoin could go emission negative – and the answer is the 28th of October 2026, which should be kind of a nice Halloween birthday present for Elizabeth Warren don’t you think? So I think we should give her this little Halloween gift. Maybe one to ECB, BIS, DNB, Environmental Working Group, Greenpeace USA, Sierra Club, and some of our other friends on Twitter which we like to have polite dialogue with from time to time on the subject as we bond.
Like a lot of things of course, whilst it’s theoretically possible, it doesn’t mean it’s easy. This is like Moore’s Law. It will only happen not because it’s an immutable law of nature that it’ll go negative just because it’s trended that way in the past, but only if a critical mass of people 1) one decide that it’s a worthy goal, and 2) put in the proof of work to do it. Firstly, how do we do that, how do we make emission intensity and therefore emissions negative?
There’s only one way to do that, and that’s you have to use emissions as your fuel source. That sounds unlikely, you can’t burn carbon dioxide. Well no you can’t, but you can burn another emission, and that’s methane. When you burn methane that would have gone into the atmosphere as an emission, you divert it into a generator and use that to power the future of sound money. That’s what we’re talking about.
Not a lot of people know this, but right now, any idea how many bitcoin mining companies are currently doing emission negative mining? In other words, taking methane that would have gone into the air and diverting it to generators mining bitcoin. Any ideas how many companies? Have a guess. Six, three, four? Twenty-two. There are currently 22 bitcoin mining companies using vented methane. It might be on farms, might be on landfills there’s four of them, most of them in oil and gas, and the combined impact of these 22 companies is that we’re currently mitigating 7.5% of Bitcoin’s entire network emissions. That’s one in every 13 parts of emissions.
Aren’t bitcoin miners incredible? And they’re doing it without government subsidies! That’s amazing. There’s not an industry on the planet that has come anywhere close to that without having to buy offsets.
Now, how much more would it take to start to turn around regulatory hostility? It’s my belief that if we were to raise this by 10% in one year, that would be enough to be our insurance policy against environmental FUD ever ending another bull run, and it would make Bitcoin mining regulation proof.
Before we get on to how we do that – oh by the way there’s one other compelling reason to do this. Right now, asset managers on average are looking to allocate 2.5% of AUM into Bitcoin via ETFs. However, there’s one group of asset managers, fund managers, investment committees that cannot allocate a single satoshi into Bitcoin, and that is the world’s $23 trillion of ESG funds. If they were able to allocate into Bitcoin what would happen? Well today’s ratio of dollar invested to market cap, if they put in 2.5% it would elevate Bitcoin’s market cap to over $3 trillion. So there’s an NGU reason to do this too.
Before we go into how we do this, Troy mentioned before that I worked with entrepreneurs, I was a technology entrepreneur. How did I get to be doing this? Where I’m now at the point where I’m about to fly my family to Costa Rica to live, not for the beaches, but for the smelly dirty landfills?
The answer to that was that a number of years ago I wrote this book. And that was about my experiences in the technology ecosystem and particularly with the difficulties you face getting people to understand the value and the utility and not be scared by novel disruptive technologies. The book covers two things: one which is about how you tell the compelling story, and the second thing is about how you identify what is the urgent action that you take that, when you take it, helps turn skeptics into evangelists.
When I started to go down the Bitcoin mining Rabbit Hole, I asked myself the question: what’s the compelling story about Bitcoin mining? Now this is subjective. There are so many compelling stories, but for me personally the most compelling story is Africa.
And particularly, Bitcoin mining’s possibility to create energy abundance for an entire continent and over 1 billion people within one decade. That’s extraordinary. That’s the compelling story for me.
We also have an urgent action. The urgent action isn’t so sexy, but it is necessary. That urgent action is not to try to defend ourselves against environmental FUD. In martial arts the way you defeat an opponent’s strength is you don’t try and neutralize your attack but you weaponize their strength against them in order to win. The way we do that is we take that very strong argument against Bitcoin, which is it uses a lot of energy, and we turn that into a virtue based on the belief systems of the attacker, which is it mitigates more emissions. The way we do that is we drive “a” to less than zero.
So that’s the urgent action. The good news here is that even our detractors of Bitcoin mining agree with us. They agree that if we could take the Bitcoin network emission negative it would be a no-brainer.
We know because people like Troy Cross, Dennis Porter, and myself regularly talk to these people and we understand that whilst they have anti-Bitcoin views or anti-Bitcoin mining views, they’re not strongly held and it would take very little to turn them in favor of Bitcoin. These are the ESG investment committees, even the White House, even the World Economic Forum. They have all said that if you could take Bitcoin emissions negative it would be a no-brainer; that that would be helpful to the climate objectives of the government, and it would be a no-brainer that it would be a powerful ESG investment.
Why are they so bullish on this particular form of Bitcoin mining? For a very simple reason. Cutting methane is our strongest lever to reduce climate change. Methane is 84 times more warming to the in atmosphere than carbon dioxide over a 20-year period and it’s growing at a parabolic rate.
By 2032, our largest source of anthropogenic methane could be landfills. Like a lot of things, unless you can mitigate that methane profitably, it won’t happen – which is why it hasn’t happened.
The best way to mitigate landfill methane, where possible, is to collect that methane, purify it, send it to a generator, and then use that to power up the grid. The problem is sometimes you can’t do that for regulatory reasons or it costs too much to upgrade the grid.
I asked Nuno Barbosa, who you’re going to see after me, landfill gas power generation expert for over 20 years: how many of the world’s landfills have no option to sell to the grid? He said 50% – that’s a lot. I said, what if those landfills had an onsite customer? He said, that would change everything. If only we had such a customer. If only. Well we do – and they’re called Bitcoin miners.
Our detractors say. well couldn’t you do something else. anything but Bitcoin mining? And the answer is no, you can’t, because no one else is going to set up their business on a landfill. Traditional data centers, they’re not location agnostic to the same extent. Even the ones that are, it doesn’t make economic sense because really you need 80% of your operational budget being electricity in order for the extra investment in the CapEx, the generators and the gas capture, actually being worthwhile, and that’s Bitcoin mining.
Bitcoin mining companies love the idea of mining on landfills. One of the big reasons is cheap power.
Landfill owners love the idea too because they get to monetize a stranded asset which currently they have no option of monetizing.
Bitcoin mining companies love it, landfill owners want it, they’ve just been lacking the marriage celebrant in the middle to make this all happen – the infrastructure financing. Which is why we decided to solve that problem and set up an infrastructure financing fund that was specialized in only financing Bitcoin mining companies that want to do landfill gas-based power generation.
Right now this is the only profitable way to mitigate half the world’s methane emissions from landfills.
How fast could we actually turn things around? Remember: we’re at 7.5% right now. If we added to that just four venting landfills here’s what would happen.
We would raise it 10%! We would hit that bar, we would make it regulation proof, and we would gain an insurance policy against an environmental FUD ending future bull runs. Four midsized venting landfills is all it takes and that’s because that’s enough to mitigate 4 million tons of emissions. That’s the emissions of Geneva. That’s a thousand times more than the world’s largest direct air capture program ever run.
If we do this with 35 venting landfills we can take the entire Bitcoin network carbon negative; 320 megawatts is all it takes. No other industry in the world can do this.
How quickly can we do this? Well there’s two ways to do it. The first is you use flare gas emissions. That’s when it’s already got a big candlestick that’s burning most of the methane and the Bitcoin mining is just mitigating the 9% that isn’t mitigated by flaring. That would take a long time, it would take $4.2 million, and it would take 40 years at the current rate.
If we use vented methane though, which is going directly into the air from landfills, farms, and other places, we could do it 10 times as fast, in one four-year hodl period with only $420 million. And that’s not a cost, that’s an investment that you get a return on.
Our vision is that we see that we will not only be tackling landfills, but other sources of vented methane, including some of the saddest most desolate places on Earth, and that includes open dumps in developing nations. Methane isn’t just an emission, it’s also responsible for over 1 million premature deaths every year. That’s more than the number of people who died last year from suicide and COVID combined.
When “a” is less than zero we can solve these problems. I see a world where Bitcoin mining is solving some of the world’s toughest environmental challenges, where Bitcoin mining companies do not face existential threat on a daily basis, and where if you’re the fund manager of an ESG fund and you’re not investing in Bitcoin someone is going to ask you why.
So LFG! Equals landfill gas, what do you think it meant?
To do this we’re going to need help. We’re going to need other people doing Bitcoin mining who choose the smelly, messy, but exciting area of landfill gas mitigation. Who can fund themselves, but also if they cannot fund themselves, to talk to us to see if we can and the project make sense.
To do this fast, and I believe we need to do this pretty urgently because there’s a lot of regulatory hostility right now, to do this first we need to put the afterburners on. That means we need introductions to people who are nations leaders, heads of waste management companies, and also potentially the World Bank. That’s going to put the afterburners on.
Methane mitigation is our strongest lever to slow climate change. Bitcoin mining with vented methane could be our strongest lever to speed up Bitcoin adoption, by making it appealing across the political spectrum.
That way LFG could also equal NGU. Thank you.
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