Bitcoin Mining and Fossil Fuel Mining

There are two reasons that most of the fossil fuel needs to stay in the ground.

One of them is obvious. There is no way to dispute it:

Once you burn fossil fuel, it’s gone. Since it took 5.3 millions of years to build up the fossil fuel humanity is burning in one year now, burning it without limits is not a sustainable process. Future generations will be left without fossil fuel if there is no limit on burning it now.

The other one is obvious as well. Global warming. There are some people disputing this, though.

If the majority of fossil fuel needs to stay in the ground, the only way to have that happen is to reduce the speed of mining it.

As explained elsewhere, having that happen would be in the interest of fossil fuel companies and owners of fossil fuel reserves (Phaseout Profit Theory).

If that is true, we should see a powerful coalition of fossil fuel companies and climate activists calling for some schedule or other to reduce fossil fuel production.

If so, one possible way to do that would be to take bitcoin mining as a model.

There is a limited number of bitcoins to be mined in the Bitcoin network. The way this works is that every couple of years the number of bitcoins issued is reduced by half. We are right now in “reward era 2”, where 25 bitcoins are issued about every ten minutes. That will go down to 12.5 around 2017 and to 6.25 around 2021, at which point around 90 percent of all bitcoins ever will have been issued.

Obviously, the transition for fossil fuel can’t take exactly the same model. For one, that would lead to only 10 percent of fossil fuel left in the ground after only one decade, so the fossil fuel case needs to have much stronger restrictions. And on the other hand, there needs to be a much more gradual transition. Instead of halving fossil fuel production every decade or so, it would need to be reduced in a more continuous fashion.

I have no idea which exact formula would be best. But one thing is clear.

If the majority of the fossil fuel needs to stay in the ground, there must be some way to gradually reduce production. Just as there is with bitcoins on the Bitcoin network.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: