[stale2002]

No, mining does not become more efficient. It make it unprofitable for people to mine bitcoin, because they are competing with people who are using free electricity.

The only people who would be mining are the ones who are spending 0$ on electricity, because the electricity would otherwise be wasted.

By heater, I meant literally a heater in someone's house.

The idea is that the only electricity that would be spent on the blockchain is electricity that was going to be sent down the drain anyway.

[jstanley]

I meant "mining becomes more efficient" in the sense that using it as a heater is an efficiency gain over not using it as a heater. I didn't mean to imply that legacy non-heater miners also become more efficient.

Intuitively, you're right. However, I read an article (can't find it now, still looking) that presented a convincing case that if there is $X up for grabs for doing a certain amount of work (mining), then the amount of work that is done increases until $X is being spent on the work. So if you're getting heating out of it as well, X increases, but that just means more mining is done until it's no longer marginally profitable.

But intuitively you're right. So I don't quite know where the mistake lies.