[another-one-off]

There is something interesting to be said about Bitcoin's ability to expose and correct market distortions so neatly.

I personally quite like the idea of a quota system for access to cheap, local power. It is interesting however to imagine what might happen if the power was sold into the market at market rate and the profits divided up amongst local businesses and residents instead of giving them cheap power.

That way, they in theory would be no worse off (they can buy power and the dividend cancels the loss of the subsidy), but they can also directly buy things that have higher utility than the direct energy would provide them.

That would also stamp out local bitcoin mining operations and divert the cheap energy to uses more productive than burning it for crypto creation.

[ballenf]

If the local systems sold the electricity on the open market and used the funds to subsidize public services or just keep taxes lower, the locals would still benefit and there'd be no bitcoin mining incentive.

The market distortion here means that the overall % of green energy in the country is lower than it otherwise would be.

[s73v3r_]

Are you sure that your approach would cancel out the higher costs of electricity on the people living there?

[merpnderp]

Why would anyone mine bitcoins there if the profits would be taken and distributed to the locals? Or does your proposal include the local government managing the bitcoin operation?

[jakemoshenko]

I don't think you understand. Theoretically with an efficient grid there should only be one "market rate" for power. Bitcoin miners would pay market rate regardless of where they are geographically. Certain places pay a vastly reduced marginal rate to generate power, and there are a number of ways to handle the delta between the generation cost and the market rate. One way is to give those who paid for the generation infrastructure (locals in this case) cheap power. That results in bitcoin miners becoming locals. Another way is to just sell it on the open market at market rate, and give the money back to locals. In this latter scenario, the market rate would likely drop a small amount due to the increased supply, and the locals who are now being compensated in dollars rather than an energy surplus, could use those dollars for more productive things like food, or startup capital.

There are actually (at least) two distortions being exposed here:

1. Power being sold for below market rate

2. Someone being able to join the original investor pool (i.e. become a local) and reap the benefits of an earlier investment by the municipality

[gnode]

The geography of power generation is important. The losses for a 345kV 1GW transmission line are about 4% over 100Mi. As I understand it, they also increase in a compound manner, so over ten times that distance would be 48%. Higher voltage / superconducting lines would reduce this, but they're expensive. The difficulty of transmission losses, combined with geographically specific power sources (hydro, geothermal, wind, solar, etc.) means that power costs legitimately vary throughout the world, and within countries the size of the United States.

[ISL]

Upvoted, but wanted to point out that transmission losses do mean that power should be cheaper closer to the point of generation.

[merpnderp]

How would this keep bitcoin miners from becoming locals? I assume locals would receive rebates in direct ratio to the amount of electricity used, thus local miners would still win the exact same amount. If locals don't receive rebates in proportion to usage, there will be a lot of people "living" there who don't actually live there for the free money.