Explained: Bitcoins Fundamental Circular-Economy | Hashpower Academy

Video Transcript:

hello there and welcome to the Hash Power Academy your place to learn just about everything to do with Bitcoin and when I mean everything I mean everything because this represents the entirety of Bitcoin’s economic energy ecosystem now that’s a quite a few mouthful of words so let me just break it down a little bit so you’ve got these three key directions on the top side which is energy production and energy consumption and they represent the physical world of Bitcoin and maybe I should put it the other way round so the the digital side is on top but maybe for another video now on the bottom half you’ve got well Bitcoin mining producing hash rates which produces Bitcoin blocks which is where Bitcoin comes from and so in its entirety we’ve got solar which is a producer of electricity bitcoin mining which is a consumer and stabilizer across such a grid system and then you’ve also got Bitcoin mining which bridges the digital phys physical gap that the only thing that could update Bitcoin’s blockchain and allow Bitcoin to move is people out there in the world consuming excess cheap electricity to produce Bitcoin which moves it between the wallets and the only way Bitcoin moves between wallets is an update to the chain the mempool this market here the amount of Bitcoin you’re paying per virtual bite to pay your Bitcoin to store information and the miners are the ones producing the block space and getting paid said Bitcoin that you’re paying them so you’ve got these three core markets interconnecting these worlds as well and oh where am I and these core markets are going to be the energy market Bitcoin per kilowatt hour or megawatt hour for industrial scale that’s Bitcoin miners saying “Why would I sell you my electricity when I can globally turn it into a thousand sats whatever the number is I’ll sell you the power at thousand sats because that’s what the network is paying me.” So miners have this global comparison as the bridge between the two physical digital worlds and they have a choice sell you the power locally or monetize it globally and if both paths reach the same destination on the other side of the equation well that is the new establishment of the energy markets and that goes into the conversation of Bitcoin as a unit of account and the pricing of things and the emphasis of miners consuming electricity and their efficiency aspect and that creates the dollar per terash pricing of that market obviously we’re at dollar per kilowatt here for now and obviously people thinking of what fee they’re paying why this is particularly important is because today’s state of Bitcoin where 99% of block rewards the the income that miners get is subsidy it’s that fresh supply of Bitcoin to distribute the full 21 million and once that full 21 million is distributed uh essentially subsidy represents the training wheels of a hundred years so you’ve really got to think of Bitcoin in a multi-generational way that in a 100 plus years time that all of the Bitcoin will have been mined so to speak but what do the miners earn they earn the fees of those holding all of that 21 million Bitcoin with half of it lost to wallets and thefts and whatever else and the other half circulating and that circulating Bitcoin is paying fees based on those using Bitcoin as a settlement layer for trade and transaction not your coffee purchase but maybe the purchase of your house and land and all those sorts of things but interestingly enough when it’s just fees pricing all of this energy and the income aspect of of having your own compute this market the the block space market becomes the fundamental market for settlement you got the fundamental market for compute which is dollarized for now my business that I haven’t truly delved into detail which is the democratization of Bitcoin mining in simple language allowing everyone to access mining in a financial sense so they can learn about it knowing oh I paid this amount of energy got paid out this amount of Bitcoin and you take the math layers and build a financial layer on top which I’ve been doing and it gets very interesting and boils down to this miners produce a hash rate and they consume it in the effort mining pools the collection of loads of Bitcoin miners hash rate to produce Bitcoin blocks and get paid Bitcoin so you see that there’s this interconnectivity Bitcoin blocks being produced and those paying fees to consume it and that is the circular economic energy ecosystem of Bitcoin you can use all different ways to observe this the the body mind and soul the holy trinity it’s a it’s a rabbit hole to to offer different perspectives to view this in different ways and yeah that’s uh one interesting way to see Bitcoin not just for today but that multigenerational future where once all of the subsidy once all the 21 million is distributed Bitcoin uses this state this setup this is inevitably how Bitcoin stays alive this is its bloodstream um you could consider the the the blockchain its its heart every pump coming every 10 minutes of time approximately and as as there’s more pressure in the system maybe it it constrains it to to add more value to the units because that’s exactly what happens the the value of Bitcoin beyond the debt money system of today you really have to strip down your idea of dollars in your mind and pounds because um they’ve become just as normal for us to understand the measurable value of things in the shop the price of the house food going into the pub like it’s it’s it’s become debt money has become as fundamental as length width and weight and all these sorts of um raw measurements SI units and you have it’s really tough for a lot of people to to change the perception of those units in their mind because just look at the world today uh the units a dollar buys you less over time the the dollar stores I think don’t sell anything for a dollar anymore because the costs the energy aspect to produce said items keeps increasing and fiat money tries to price energy it tries the pro dollar system it such uh large superpowers have invaded countries and they typically are countries with a lot of energy based resources or partnerships with energy- based nations and the other thing I’d like to offer is the the interplay of wealth in our world that what’s the superpower going to be in 10 years 50 years 100 years on a Bitcoin standard it truly is those in terms of a national scale that build out electrical grids allow miners to stabilize them it’s a it’s a it’s a consumer of energy that is strictly economic they strictly want to accumulate as much SAT for the energy they have available and if that requires selling it because they can earn more that’s that grid stability aspect or turn it into global money it again it doesn’t matter in this system because you could sell the energy and reach Bitcoin or consume and produce Bitcoin and so that circular interplay of the maths and the finance on the outer layer it it just builds a system that that works that the the chaos of grid uh grid instability wherever it may may be in the world the financial markets compute in of itself is this crazy phenomena of one specific chain with the majority of compute but these uh alternative proofof work chains um on an arbitrage sense sometimes miners will switch the hash rate to a smaller chain because they see lots of fees or a price increase they capture that premium from that small proofof work chain and flip it into Bitcoin people do it with crypto miners as well but you’re you’re at risk of uh trying to buy a computer to capture the fees of some other alternative chain that by the time you get the computer it’s it’s just not going to pay you back so it’s a it’s a it’s a true zero to one phenomena uh if you look at the stock markets of the past and even to today it was the energy companies that were the most powerful and like think of standard oil it split into multiple different companies because the energy sector in financial terms is the most powerful it gives out oil to the world and receives money in return just just look at the Middle East the the abundant amount of wealth that they have is strictly because they export commodity value and import money same with California with the gold rush gold left California and goods and services value businesses and people flooded in now we’ve got a system where you in the middle of nowhere can issue money and spend it locally because of of an energy based system uh it it’s like um it’s like California on I don’t want to say steroids but everywhere imagine if energy abundance is monetized and stabilized everywhere that’s what’s happening now underneath the hood you’ve got the financial world trying to gobble up as much of this money as possible but underneath the system that sustains the value of Bitcoin if it shoots up to a million and production is still pushing 50 60 to 100K there’s too much premium the price in dollar terms can drop but on that in that future state it’s an energy based system where the the price of everything else in society will drop to its utility value because no one wants to hold assets such as property for financial uh goals that right now a lot of people escape the dollar the pound the euro the yen they escape inflation by holding assets because the assets keep raising in price because there’s the the money’s dropping so you you escape the melting fiat iceberg by holding assets but right now all these assets are financialized 2008 is a key example of this um people selling mortgages in a high-risk way and packaging and selling them on and it’s the financialization of property and the financialization of dot dot dot insert just about any sector any word is the everyone’s trying to understand where they can preserve their time and energy their work in something that sustains value over time um so I think I will leave it there that’s just a lot of information but yeah you got the physical side these three com components commodities the digital side of supply and demand of data settlement supply and demand of energy in the energy market supply and demand of compute and uh what I’m building myself is what if all of this was one unified liquidity infrastructure setup uh with a financial layer on top that’s where it gets very interesting but that’ll be a topic for another day and another time thank you for listening i hope you enjoy and I will see you in the next video to