Bitcoin mining #trilemma ⛏   Bitcoin mining is known to be one of the most competitive industries on the planet, as working at the intersection between energy and money, two key items for the development of society, is a compelling task requiring being very strategic on the operational strategy to foster business sustainability 💹 over the long term.   Similar to blockchain’s trilemma ♻ which is based on #decentralization, #security and #scalability, where two conditions of the three can be fulfilled together but the last one ultimately resolves in not being optimised, bitcoin mining has its own trilemma.   Mining’s trilemma is based on availability of (i)          capital to deploy , (ii)         mining machines, and (iii)        cheap source of energy. These three conditions are key for strategic decision-making that miners need to navigate so to mine profitably and sustainably. Due to market dynamics, one condition of the three can never be optimised.   In mining, access to capital💲is a strong barrier to entry in the industry. Significant upfront costs need to be incurred by miners to get the necessary hardware, secure suitable sources of energy and cover the initial operational expenses. Once a site has been setup, capital is also required to remain competitive and being able to upgrade machines with more efficient ones, scale operations or weather market fluctuations due to changing bitcoin price or fees, the two revenue outputs from mining.   Once capital is secured, being able to acquire the right mining equipment does not come without issues. Mining machines 🖥 have complex manufacturing processes, require very specific microchips and their demand is tightly linked to bitcoin’s price – creating bottlenecks during bull runs and not finding many buyers during bear phases. Also, the obsolescence rate of mining equipment is very high and miners need to choose a balance between having more efficient machines and investing significant CapEx into them, or optimise their production by running older, less efficient machines, but at very low energy costs.   Energy is the main source of OpEx of miners🔌. Due to bitcoin fixed monetary policy and difficulty adjustment, access to the cheapest sources of energy can determine whether a miner is able to remain profitable after halving and other volatility events, or whether their OpEx are too high and lead to an unprofitable business. Finding cheap energy come with regulatory and geopolitical risks, as each country has its own specific environment concerning mining regulation, public perception of the activity and other social frictions.   Mining conditions are constantly changing within the trilemma due to market dynamics, investors’ sentiment, supply chain functioning, macroeconomics, and other factors. Bitcoin miners need to be dynamically adapting to different scenarios while growing their business, so to keep the Bitcoin network as safe and decentralized as possible. H/t @Bob Burnett

The vanishing of low time preference. In a world where instant gratification and short-term thinking are the basis of society, the concept of low time preference is fading away and leaves many lives without hopes. Delaying gratification and prioritize long-term goals over immediate desires has always been considered as the cornerstone for the development of society, but such values have melted away.   In such a hyperconnected world we live in, we have never felt so lonely. We are driven by #consumerism and by the willingness to show who we are (not) in exchange for a few likes and some acknowledgment that we look cool. We always strive to have more: travel more, dress more, dine more and show more!   #Patience, prudence, and foresight are being overthrown by impulsivity and instant satisfaction. People don’t invest time in meaningful relationships. The concept of family has faded away: parents don’t try to fix things in their relationship but take the easier route of finding a new partner, leaving the education of existing kids to single parents and their new couple.   The erosion of low time preference has profound implications for economic stability and prosperity. If consumption is always prioritized over savings and investment, individuals become trapped in a cycle of debt and insecurity that does not allow to build wealth. Without sacrificing present #consumption for future prosperity, innovation disappears and economies stagnate.    As a #Bitcoiner and supporter of #Austrian economics, I am a believer that the fading of low time preference is due to the lack of a #hard #money standard. Having a finite, scarce asset as the basis of how and when currency is produced, changes everything regarding long term planning, financial stability and the empowerment of individuals.   As hard money requires a certain investment of time and resources to procure such asset, it removes incentives for governments to create currency due to the need of backing it with real world resources.   Hard money leaves a certain degree of predictability and stability in societal activities. If individuals know that their money will buy them more over time, they’ll be less incentivised to consume and they’d be more focused on saving for the future. #Saving should be the basis of capital accumulation and creation, as savers can allocate their unspent resources into productive activities. A supportive and stable economic environment would encourage entrepreneurship, foster job creation, and favour technological advancement. #Debt accumulation would be disincentivised and people would live within their means. Natural #deflationary forces brought by #technology could finally play out and let everything become cheaper over time.   As purchasing power increases over time, people would have more time to dedicate to eat healthy food and practice sport, cultivate meaningful relationships, educate kids and think about the future.   Is it such an utopic world the one based on hard money?

More than 600 million Africans don’t have access to reliable electricity. 🔌 Blackouts are very frequent, even in more developed central cities, and don’t allow the creation of a developed society. Hospitals, schools, and other industries cannot run their businesses with such frequent electricity interruptions.   The problem with Africa, however, is not that they don’t have electricity generation capacity. They have it, and it is abundant. 💧 Hydro, dams and geothermal sources are quite spread across the continent, but they create energy not available where and when it’s needed, resulting in huge amounts of waste #energy that cannot be used nor monetized. 💸 The lack of infrastructure does not allow the creation of an energy market and not mining bitcoin would effectively be a waste of energy.   The Green Africa Mining Alliance 🤝 has been created by different pioneers such as Gridless and @Trojanmining with the goal to bring mining companies in Africa and support the electrification and advancement of rural communities via the #monetization of the #stranded energy available.   Bondo, a small cluster of villages in Malawi, underwent the installation of a mini grid composed of three turbines propelled by a small hydro scheme to exploit the significant region’s rainfall. The integration of bitcoin #miners brought direct monetization of any unused energy, and its revenues allowed the creation of infrastructure to power 1,800 homes ⚡now connected to the mini grid.   Virunga National Park, in Congo, abundant in hydro power but lacking basic monetary resources to cover its operating budget, has been saved thanks to a mini grid mining bitcoin. 🏞 The park was at risk of deforestation and loss of biodiversity due to sale of the land to oil companies, but proceeds from the sale of Bitcoin stopped sale activities and are helping to pay for park salaries and for infrastructure projects like roads and water pumping stations.   Other similar initiatives are ongoing in Ethiopia, Nigeria, Kenya, Ghana and will allow the creation of off grid #electricity sources, able to power little communities and effectively turn free, otherwise wasted electricity into global incorruptible capital.   Energy sites in Africa are normally built via #donation programs 💰, which take long time, leave total dependence of the community on the donor and do not make economic sense for communities nor grid operators. If governments need money to fund a project, they could ask for #IMF support, sell bonds in their local #currency, reduce fiscal expenditures or raise taxes – all of which are unpopular methods. Investing in Bitcoin miners could be the last request for funding to unlock energy abundance and access to free capital.     In addition, African countries would normally have to sell goods to USA or Europe to earn $ or € and spend them on the international markets💲. #Bitcoin removes such friction and allows them to have direct access to international money. @gladstein