More Bitcoin Means less Punk

Yes, there is a hard cap on the amount of bitcoins that will be produced, which makes it a deflationary currency. Yes, this will result in more saving (“hoarding”) and less borrowing when compared with the inflationary currencies that we use now. Yes, that means there will be less investment due to the lack of cheap credit. However the “spiral” part is nonsensical on its face. Bitcoin is not some economic black hole that we’ll throw all of our economic resources into until we starve to death. Besides, from an environmental perspective, less investment should be a good thing.

Less investment should be a good thing when it comes to oil development, but when money is not re-invested in a capitalist society, the result is increased scarcity. In the absence of bitcoin, a middle-class person might chose to spend their surplus money on a bicycle, building a chicken coup, or learning a new skill. Bitcoin hucksters would prefer they spend it on Bitcoin, with the promise that it might make them more money for less effort by sitting in the blockchain doing nothing.

Society advances through infrastructure, and while the Solarpunk project requires different infrastructure than what is currently planned, it still requires resources. If we are going to create a society of abundance, building it on a currency that thrives on scarcity is a non-starter.

Popularity -> Energy -> Scarcity

Without the “line goes up forever” aspect of the deflationary spiral, the argument for runaway energy usage falls apart as well. Bitcoin will use an (eventually) stable, likely small percentage of our global electricity output. If we’re generating that electricity from sustainable sources, we’ll be fine. If we remain stuck on fossil fuels, we’ll choke to death on carbon even without Bitcoin in the mix.

If the Bitcoin system survives until 2040, it will reach a maximum of 21 million coins. Once minting new blocks is no longer rewarded with new coins, continued minting is expected to be funded by transaction fees. That does not mean the energy usage will stop, or even plateau. The energy use of bitcoin is related to the demand for Bitcoin. The more demand, the higher the value in dollars. The higher the dollar value, the greater dollar value return for mining it. The more value for mining, the more mining rigs will come online. The more rigs, the more energy is used.

Currently bitcoin is used for niche markets, and is not widely adopted. If the crypto-bro dreams of mass adoption were realized, like the primary currency of a world-wide solarpunk society, demand would skyrocket and energy use would spiral out of control. Using 1% of the world's energy is a huge number, but is minuscule when compared to the amount needed in that scenario.