[barnbuilder]

There is no reason PoW-incentivized energy development would have to be only used for PoW.

PoW means there can now be a buyer of last resort no matter when and where you are generating power. Newly developed renewable based electricity can be sold at "x" price when there is residential or commercial demand, and at "y" price (y < x) to a PoW miner otherwise.

In this scenario there may not have been enough demand at price "x" to finance the renewable development, but the PoW buyer of last resort makes it feasible.

[automatic6131]

In fact, it is precisely the reverse of that: it's not a buyer of last resort, it's an energy price FLOOR. Any energy that you could sell to a customer, must be sold above "y". And so it is with computer hardware - any top or near top wafer capacity item you may want to buy must be above "Y" (what a crypto miner would pay for it). And this is why we saw massive price hikes for consumer computer tech in the last two years.

And is this way - a price floor - and not the way you describe it, because of the economic incentives of miners. They have already paid for these captial intensive mining rigs, and to best turn a profit they must be running at all times. The marginal cost of mining is important, but given the capital costs (incl depreciation of hardware!) you cannot ignore it.

Basically, your explaination is a failure of first order thinking. To a first order approximation, only the marignal cost of mining matters and thus the scenario you describe is true. However, you must include the second and nth order effects of capex to truly match reality.

[barnbuilder]

The miners don't need to be running at all times. If the cost of power exceeds mining returns then they definitely should not be running -- they'd be losing money AND wearing out their equipment. There is a middle ground where mining returns exceed power costs but don't fully cover capital expenditures, but the miner doesn't have to operate during that time if they think they are better off making no revenue but avoiding the wear on their machines. The question is whether you think you will have a period of cheap power in the near future, and in this case miners can benefit from the cyclical and predictable nature of power demand in answering that for themselves.

One can easily imagine a scenario where miners run overnight when power is cheap, turn their machines off during the day when power is in high demand and expensive (and you'd either lose money by having them on, or you would make less than you would by conserving your hardware and optimizing its usage), and earn a profit overall (while leaving the power producer better off too by letting them sell power that would otherwise be wasted).

[automatic6131]

>wear on mining machines There is virtually no wear on mining machines from actual use. There is, but it's negligible compared the main cause of depreciation of mining machines: better hardware coming out every 2-4 years AND the reduction in mining reward rate[1]. A bitcoin mining rig is worth essentially 0 after 2 years due to this depreciation. Not failure from wear. This is also true for GPU miners.

Second, there are many better uses for cheap power - one could use it to store energy in a hypothetical future where we use lots of intermittent renewables. You could use it to produce highly energy intensive physical goods - aluminum, hydrogen gas, fertilizer. You could use it for intensive climate engineering with carbon capture.

Almost anything else you can think of would be better than running a proof-of-waste cryptocurrency network.

[1] https://paulbutler.org/2022/the-problem-with-bitcoin-miners/

[danw1979]

The free market hasn’t been operating and never will operate with the restrained controls on energy usage that you outline though.

Besides, there’s so many more useful things to do with that cheap renewable energy at times of low demand - synfuels, desalination, etc - that we should definitely see what else the free market can come up with given negative energy prices, rather than propping prices up by running pointless hash-computers for some speculative investment scam.

[barnbuilder]

It's one thing to have excess power, and another to have excess power in the time and place that you want to do these things. For example excess solar energy in the middle of the country is never going to be able to be deployed to desalinate water in the ocean because you will lose it all in transmission and storage (or you will spend more than you would just generating new power near the desalinization plant).

This is what makes bitcoin mining so unique as a way to make use of excess energy. First of all, securing a censorship-resistant digital monetary system is not pointless nor a scam. Second of all, energy from anyplace on earth, at any time, can be deployed for this purpose -- all you need is a mining machine and an internet connection.