Energy Production, Cryptocurrencies & Hidden Agendas

How many times have you read something like this, “Bitcoin uses as much electricity as Malaysia or Sweden or Denmark or Chile….”. What a bore. Have you ever wondered, however, why the comparison is to countries? Why don’t they ever tell you what would seem to be a more natural comparison which is how much “Bitcoin” spends on electricity?

The reason is that electricity is incredibly cheap so Bitcoin electricity expenditures priced in dollars don’t look very large. Bitcoin uses something like 100 terawatt hours (TWH) of electricity annually (depending on the price of Bitcoin) but a TWH costs less than $100 million (10 cents per KWH times 1000000000). Thus, Bitcoin spends say $10 billion on electricity annually. (In fact, it’s less than this since bitcoin miners can be located in places where electricity prices are especially cheap.)

$10 billion in spending isn’t a lot. It’s less than the world spends on toothpaste ($30b), much less than the US spends on cigarettes ($80b), and considerably less than the US Federal government spends in one day ($18.65 billion).”

Alex Tabarrok. “Bitcoin and Electricity.” Marginal Revolution. November 29, 2021

One argument, one that you see everywhere in popular media, is that cryptocurrencies use a lot of electricity, and it’s not a productive use of resources. Rarely, you’ll see apple-to-apple comparisons, such as this response to trying to make a comparison to the electricity use of the VISA network, which is a strange comparison considering all the payment terminals, ATMs, bank mainframes, and many other things are treated as externalities.

“While no one can argue that Bitcoin (and other altcoins) mining consumes a lot of electricity (in absolute numbers) given that you need to run a network of few hundreds or thousands of very powerful computers all the time, the right way to look at this problem is not about the total consumption but to compare how efficient is Bitcoin relative to the alternative traditional centralized systems that we are predominantly using today and that one day crypto might replace.

However, the only comparison that seems to always pop up everywhere is against VISA transaction costs which was included in the article that trigger the above tweet and in other articles as well. As expected, VISA looks way more efficient which adds to the rhetoric that Bitcoin is a very inefficient system and it is just a Ponzi scheme that is polluting the world. In my view, this comparison is flawed and it is not comparing apples to apples. Besides the fact that Bitcoin is not simply a piece of a payment network like VISA but a full currency system, VISA itself requires the banking system for its payment system to work so you need to actually include some of those costs there to make a meaningful comparison. So let’s look first at how VISA works…

…”According to the article that trigger this discussion, Bitcoin annual Twh consumption is 28.67 , so currently more than 3 times more efficient than a very conservative calculation of the cost of the global banking system. Of course you will argue that the banking systems does more than handling a currency which is true but the difference is large enough that I do not think is that relevant. Even if only 30% of banks electricity consumption was the comparable part to Bitcoin, that will still make Bitcoin more efficient.”

-Carlos Domingo, “The Bitcoin vs Visa Electricity Consumption Fallacy.Hackernoon. November 29, 2021

And, the simple fact is that it is very difficult to price in externalities to determine the real price of any energy production.

“All energy production has environmental and societal effects. But calculating them — and pricing energy accordingly — is no easy task.”

-Erica Gies, “The real cost of energy.” Nature. November 29, 2017.

And, this is true when assessing energy use as well. It’s difficult to measure the benefits of energy expenditure. What is the value of street lights relative to the energy and infrastructure required to have them on? This is true of practically everything. What is the true cost and benefit of international shipping and transportation? Of the cement poured for a playground? The establishment of a new church or temple? You could continue this line of questioning down any avenue you like, and the answer is it is impossible to make this kind of calculation beyond the costs and perceived benefits.

Enter cryptocurrencies. The problem with the arguments against cryptocurrencies is that they generally take this form.

1. If an activity provides no benefit and uses resources, it is a wasteful activity.
2. People should not do wasteful activities.
3. Mining Bitcoin provides no benefit and uses resources.
C. People should not mine Bitcoin.

This is the extreme argument. The less extreme argument makes some kind of comparison between the benefit relative to use of resources. But, as we know from the above it is difficult to take into consideration the externalities involved. On the face of it, the argument that mining cryptocurrencies have no benefit is belied by the fact that every day billions of dollars worth of transactions are conducted using cryptocurrencies. None of that has any value? How do we evaluate the benefit relative to resource use or other ways this energy might be used? But, we really cannot make that kind of comparison. What is the relative value of Bitcoin mining versus the amount of power used in casinos on an annual basis? Online gaming? How does one make those kinds of comparisons? Is it even right to make them?

The reality is people don’t even try to make that sophisticated of an argument. Instead, it is something simplistic like: Bitcoin uses as much electricity as a country, the implication is that people would otherwise use this electricity, or the electricity they do use would be less expensive.

We also don’t make these kinds of calculations for other activities. The reason there’s the difference hinges on a value judgment that the activity, same as the implicit argument above mentioning casinos implies they have no value. But, even casinos have plausible arguments supporting their value.

The interesting thing, for me, in looking at these arguments closely is ho political arguments. The reason that the environmental argument is used is because it can plug into concerns that people have about climate change, and short circuit a reasonable assessment of the claims being made.

Same is true of claims that cryptocurrencies are used only for crime. Criminals may be an innovator in the space, but it isn’t only good for crime, just as it is not true that VHS and internet streaming is only good for porn. Porn pioneered the technology, but it didn’t stop with porn. YouTube isn’t porn.

There’s also a deeper agenda. It’s a simple fact that the more money that makes its way into cryptocurrencies, the less money that will be available to buy stocks, bonds, U.S. Treasury instruments, and so forth. Less money in traditional financial vehicles means lower prices for them.

The Bitcoin “debate”, if we can call it that, really helped me to understand how much of our dialogue is shaped using concepts from our political orthodoxies. A claim like, Bitcoin mining hurts the environment, is an emotional appeal, not a reasoned argument. The anti-Bitcoin argument is above, and it is problematic both because it has benefits and it is difficult to assess the costs and benefits without engaging in motivated reasoning.

Another point worth making here is that it wasn’t until this year that cryptocurrencies emerged that created a marketplace of cryptocurrencies, where they will compete. Network efficiency and cost will be one dimension of this competition, and it will drive both electricity use down and provide for many more benefits. And, where something like Bitcoin’s energy-intensive proof-of-work algorithm is used, it will be because it provides a capability that isn’t available in other approaches that justifies the cost.

When all of that happens, what will be the new reasons people will be against cryptocurrencies? It’ll be the need for regulation, to provide customer guarantees, or something else. But, the one thing that I am certain of is that there will be other reasons, other agendas that these kinds of arguments will be serving to obscure. And, this is how everything is, there’s always another or series of issues hiding behind the one that’s used as justification.

Why Ergo?

Ergo is different from other blockchains. It is focused on providing a decentralized, open, permissionless, and secure platform for contractual money that is usable by ordinary people to pursue their common good over the long term. It is designed to be resilient in the face of different economic environments and competing interests, allows individuals to choose how much privacy is right for them, and offers economic opportunity to the people using the blockchain.

Ergo has the technical capability to provide a wide variety of services to the decentralized financial cryptocurrency ecosystem and to enjoy comparative advantages, whether that comes from oracle pools, logarithmic mining, profit sharing protocols or other innovations. However, while Ergo offers a lot of technical capability not available on other chains, the real value of Ergo is its focus on providing the tools for the financial success of ordinary people, like you and me.


“The real problem of humanity is the following: we have Paleolithic emotions, medieval institutions and god-like technology.”

–E.O. Wilson

We are witnessing the birth of a new era, one where well-established elements of computer science, such as cryptography and distributed systems, are combining with fields of finance and game theory to bring a new economic and social order. Who will reap the benefits of this new era?

Shifts of this kind tend to create new social classes. For example, the Industrial Revolution and the emergence of capitalism made being royalty and a feudal landlord less important.

With change, there is opportunity. But, frequently, the opportunity is limited.

What is new is that blockchains make it possible to facilitate transactions between businesses of any size, between people in any geographic location and that can work in any economic, social or political environment. Blockchains can unlock synergies and new ways of exchange and interacting.

Blockchains are a new method of accounting. Just as double entry accounting introduced a formal and methodological rigor to bookkeeping that transformed medieval businesses into capitalist enterprises, blockchains have the potential to upgrade our medieval institutions into something that serves the common interest more than elite interests by providing mechanisms for financial exchange, decision-making, arbitration, and so forth that were not possible before.

The Challenge

People don’t like change. Medieval institutions who serve entrenched corporate, state and other interests will want to limit the opportunities of blockchains to enrich themselves. Even with the best of intentions, it is a challenge to broaden access to opportunity. Everyone wants to help the hungry, but few people want to give up their lunch in order to do it.

So, the question is how do you grow the pie? Do you grow the pie by focusing on large economic actors, such as governments or businesses in the Fortune 500, who then, presumably, pass along portions of the pie in the form of more goods and services at less expensive prices? Or, do you grow the pie by focusing on the needs of ordinary people and creating new opportunities with this technology that didn’t exist before?

And while it is necessary for a blockchain to have multiple constituencies with different interests, such as miners, liquidity providers, developers, entrepreneurs, users and so forth, some groups are in opposition. If you are focused on cross-border payments for large businesses, it’s not the same as being focused on cross-border remittances of people without access to traditional financial services. The software for these two use cases will be very different. While it is possible the same blockchain can serve both groups, it’s going to serve one of them better.

When using, or investing, in a blockchain, one of the key questions is: Whose interests does the blockchain serve? Who is threatened by it? And how can it be attacked?

The Power of Ergo’s Proof of Work

Ergo’s proof of work provides a powerful example of seriously considering the problems that come from various attacks, whether they be 51% attacks via centralized pools or regulatory attacks on infrastructure, such as China’s displacement of blockchain miners.

Ergo addresses this issue by implementing an algorithm designed to be mined on commodity hardware by users of the blockchain. Right now, there are smart contract pools that allow people with a single GPU graphics card to mine Ergo and verify the blockchain in return for some cryptocurrency. And with Moore’s Law, this commodity hardware becomes more accessible over time, as graphic cards with the same capability become less expensive.

It provides more opportunity, for more people and results in a more secure blockchain. What’s not to like?

Capabilities & Environments

Almost every blockchain claims to value decentralization. But, if you need people with specialized hardware to maintain your consensus, then you are beholden to people with that specialized hardware, or to the governments that can ban them.

People talk about the number of transactions per second, the market capitalization, the price, the size and productivity of the applications on the chain. But, there is much that is not discussed.

For example, people rarely think about longer term issues, such as the fact that blockchains have lifecycles. Blockchains will have to operate during times when a significant portion of the local, regional and global environment is experiencing a pandemic, a war, or some other factor that threaten their ability to function. How prepared are they to meet that challenge?

It is not hard to imagine that various blockchain ecosystems becomes important to our daily lives, such as when there is a digital national currency, and a failure could lead to catastrophic outcomes, such as famine. How many people in the cryptocurrency space have given that possibility consideration? Your lambo is useless in an environment where you don’t have enough food to eat.

At this time, most blockchains are building their infrastructure. They aim to increase their market share and capability of their dApps. But, if you don’t have your eye on the potential problems that will manifest over time, you’ll make design decisions that will be difficult to fix later, e.g., Ethereum’s move toward Proof of Stake in an effort to resolve their problems with fees. And every design decision has positives and negatives.

Ergo’s Positives & Negatives

  • Financial capital: A fair launch means you don’t have a lot of money sitting around to fund development. There are ways this problem can be solved, such as establishing funds that people that are interested in certain kinds of development or a particular dApp could contribute to that would help make them a reality. This also has the advantage that it establishes that there is interest and perhaps even a market for the software being developed.
  • Human capital: There are many excellent developers already working on Ergo. With financial constraints, it isn’t possible to bring on as many developers as some other blockchains, but this fact also leaves more room for organic growth. If adoption were only about market share, then Ergo is at a disadvantage. However, there are many niches that Ergo’s technology can fill. Some niches may not have many options and developers will be enticed to the platform because it can solve problems other blockchains cannot.
  • Infrastructure: You need wallets, dApps, APIs and so forth. The software that faces the user of the chain needs a lot of work. However, the underlying chain technology is great, or has great potential, and the dApps and consumer facing technology will only improve from this point.
  • Open source: It’s important to recognize that open source does have drawbacks. Many open source projects are a labor of love that don’t have good incentives, which can negatively impact projects by making it difficult to keep developers, create schisms that undermine the project or lead to other problems . But, there is also real value in not having to reinvent the wheel when building an application. It’s easier to leverage an existing code base, modify, and iterate than it is to write code from scratch. However, open source requires evolution, which takes time and implies some tolerance for error.
  • Synergy: The ecosystem is young. But, there is evidence of clustering of services, such as the development of a profit sharing contact that can be used by any dApp, the building of cross-chain functionality, the launch of a variety of stablecoins, etc. These kind of interactions implies both competition and an attempt to accommodate a variety of use cases.


Who is using the blockchain? Without many dApps, it is primarily people investing in the chain and transferring Ergo to and from exchanges and wallets. So, Ergo is a promise. It’s an idea that blockchains can be a vehicle for the economic good of ordinary people. But, there needs to be a lot of development before Ergo can fully deliver on that promise. Investing in that promise before it is fulfilled will both help make it reality, and it has the potential, if the promise is fulfilled, to benefit those willing to make that investment.

Acknowledgements: Many of the ideas in this essay came from Joe Armeanio’s response to a reddit post outlining Tascha’s A Checklist for Layer 1 Blockchain Investment.

Mining the Ergo Cryptocurrency in the Pool

Mining Ergo as part of the mining pool is easy, particularly on Windows. If you already have a Ergo wallet, it can be set-up on a computer with a GPU video card compatible with mining Ergo in less than 5 minutes.

For Ergo, you need a card with a minimum of 4GB of RAM, ideally more. Create a Ergo wallet using Yoroi, if you don’t have one already. Download mining software compatible with your card, i.e., T-Rex (Nvidia) or RedTeamMiner (AMD). Extract the mining software file in your Download directory. Open a text editor, and type in (or copy & paste) the following, assuming in this example you are on Windows:


C:\Users\your_username\path\to\mining\file\t-rex.exe -a autolykos2 -o stratum+ssl:// -u <YourErgoAddress>.<AnyNameYouWantToIdentifyTheComputer>

For clarity, <YourErgoAddress>.<AnyNameYouWantToIdentifyTheComputer> should look something like:

C:\Users\cafebedouin\Downloads\t-rex-0.24.7-win\t-rex.exe -a autolykos2 -o stratum+ssl:// -u 9g1p6UU8XoAeU4yGPLpbTHYiG8aBHwfCFzQqJZrfzuLnmF3zb7P.covertmixeraddress

You can find your address by going to the Receive tab in Yoroi, you can then go to the website and put in the information this page asks for and it will provide the information above for you. Save the file as ERGO_mining.bat. To start mining, simply click on the file.

Note: If you have a virus protection program like McAfee, you’ll need to restore the t-rex.exe file after extraction and exclude it from Real-Time Scanning in order to run it.

If you want the mining software to start when you reboot your computer, then, save ERGO_mining.bat in C:\Users\Username\AppData\Roaming\Microsoft\Windows\Start Menu\Programs\Startup. If you have trouble finding the Startup folder, you can always save ERGO_mining.bat somewhere, type the Windows key + R to get the shell prompt, then type:


This will bring up the Startup folder, and you can drag and drop the Ergo_mining.bat file into it.


This is harder for me to comment on since I am using a AMD card on my Linux machine, which can be a bit of a PITA to configure correctly. These instructions will get you in the ballpark with an AMD card, but be prepared to do some troubleshooting.

Let’s assume that you somehow managed to get your graphics card working on Linux. Then, the process is very similar to Windows above. Open a text editor and type the following:


export GPU_MAX_HEAP_SIZE=100

/home/cafebedouin/Downloads/teamredminer-v0.8.6.3-linux/teamredminer -a autolykos2 -o stratum+ssl:// -u  9g1p6UU8XoAeU4yGPLpbTHYiG8aBHwfCFzQqJZrfzuLnmF3zb7P.covertmixeraddress

Then, save the file as At the command prompt: chmod 744 and then just run it as usual, by typing: ./ at the prompt. If you want it to automatically run whenever you restart your machine, this image from tells you everything you need to do to set it as a systemd service.

A Crash Course on Crypto Economics in 1 Hour by Natasha Che

A newer one with a focus on stablecoins and fiat.

The whole series is worth a read if you have any interest in cryptocurrencies. Tascha also has a newsletter.

How NFTs Create Value

“[Non-fungible Tokens (NFTs)] enable new markets by allowing people to create and build upon new forms of ownership. These projects succeed by leveraging a core dynamic of crypto: A token’s worth comes from users’ shared agreement — and this means that the community one builds around NFTs quite literally creates those NFTs’ underlying value. And the more these communities increase engagement and become part of people’s personal identities, the more that value is reinforced.

Newer applications will take greater advantage of online-offline connections, and introduce increasingly complex token designs. But even today, it’s less surprising than you might think that people are making money selling pictures on the internet.”

Steve Kaczynski and Scott Duke Kominers, “How NFTs Create Value.” Harvard Business Review. November 10, 2021

I was of the mindset that NFTs are a scam. But, then again, people think the same thing about cryptocurrencies, which I think is a new computing paradigm. This overview and explainer convinced me that perhaps there is more going on in this space than I realized. If you want to go deeper down this hole, you could do worse than Rolling Stone’s coverage of the Bored Ape Yacht Club.

Is/Ought Fallacy: Exhibit A

“Crypto is gambling, and you should never gamble more than you can afford to lose, right? So the only people who held onto their bitcoin when it was worth $100,000 dollars were:

* People who could afford to lose $100,000

* People who couldn’t afford to lose it and were therefore making a very, very stupid gamble

And that’s the same at every dollar amount. Some people can’t afford to lose $1000, some people $100, but whatever level you’re at, you would have and should have sold when it hit that figure.

That means it’s literally not possible for a sensible person to make life-changing amounts of money from cryptocurrency, because the only way to do it is to bet more than you can afford to lose.”

McKinley Valentine, “No FOMO: If you’d bought bitcoin 10 years ago, you wouldn’t be rich today.” The Whippet. September 15, 2021.-

The way logic works is if you argue something is not possible, then pointing to one (or dozens of) counter-example(s) refutes your argument. You’ll notice the chart after the table of names that indicate that “investors” make up the majority of Bitcoin billionaires. So, it is literally possible. If you had limited resources, it could have been as simple as putting together a mining rig, well within the capabilities and budgets of most technical people back then.

If you want to feel good about not investing in Bitcoin back in its infancy, consider what sudden wealth tends to do to people talked about in this classic Reddit post on the lottery. It’s enough to make you never want to be rich, ever.

bash: Cryptocurrency Prices From the Linux Terminal

printf -v coin '%s' -1   # bitcoin

price() {
  # A function that pulls cryptocurrency price data from coingecko
  curl -X 'GET' ''"$1"'&amp;vs_currencies=usd' \
     -H 'accept: application/json' 2> /dev/null | # sends download data to /dev/null
  sed  's/.*usd"://' |   # Removes everything before the price
  sed 's/..$//' |        # Removes back two }}
  sed 's/^/\$/'          # Adds dollar sign to the front, returns

bitcoin=$(price bitcoin)
ethereum=$(price ethereum)

# Checks to see if there is a command line variable and prints to console
if [[ -z $1 ]]; then
    echo "bitcoin: ${bitcoin} | ethereum: ${ethereum}"
    price=$(price $1) # calls function with command line variable
    echo "${1}: ${price} | bitcoin: ${bitcoin} | ethereum: ${ethereum}"

h/t Techstructive for the basic idea. I simplified their code by cutting out the I/O and putting the coin as a variable when calling the script, e.g. bitcoin, and formatting it by piping it through sed. Have I mentioned how much I love sed?

Edit: Modified this on August 12, 2021 so it is now a function and prints a portfolio of coins. I track two or three, and it was getting annoying to have to do them each individually. All you need to do to modify it for the coins you are interested in is create a new function call:

cardano=$(price cardano)

Then add that to both the if and else print results.

    echo "${1}: ${price} | bitcoin: ${bitcoin} | ethereum: ${ethereum} | cardano: ${cardano}"

Cryptocurrency Platform Cardano & Ada Coin

Disclosure: I own Ada. This is a condensed summary of what convinced me to start buying cryptocurrency, specifically Ada. I’m happy to share what I learned, but this is not investment advice. I don’t know you. I don’t know your situation. Cryptocurrencies are a speculative investment, and you could lose all your money. If that’s not something you can live with, then do something relatively safe, like invest in an index fund, a certificate of deposit at a major bank or U.S. Treasuries. Also, if you are making investment choices based solely on the suggestions of some random blog on WordPress, written by The Deity knows who, without engaging your own mind and taking responsibility for your own choices, then you deserve to lose all your money. Caveat emptor!

Cardano is an open source crypto platform that runs a decentralized public blockchain for the implementation of smart contracts. The native cryptocurrency, or coin, of Cardano is Ada. There are 45 billion Ada coins, something like 32 billion are in circulation at the moment. It is currently capable of 1,000 transactions per second, and with a future upgrade, it will be capable of millions, on the level of global payment systems like Visa.

As a point of comparison, Ethereum and Bitcoin are both less than 20 transactions per second. It is also able to complete these transactions at a fraction of the cost of Ethereum and Bitcoin. But, the killer app for the Cardano platform is the Plutus integrated development environment (IDE) for smart contracts, which allows for programmers to write and “run end-to-end tests on their program without leaving the integrated development environment or deploying their [Haskell] code.”

All of these features will be available as of August 2021. Right now, the Plutus IDE is being tested for the August 2021 deployment. Once the new upgrades launch in August, smart contracts, and the applications that use them, will be possible.

Cardano has a staking system that will allow holders of Ada coins to stake their coin in a pool that verifies the distributed ledger – a function that earns returns, a bit like interest or dividends. Further, it has the capability of hosting other coins or minting new ones, which will enable other chains to use their smart contract functionality.

Right before Cardano launches, Ethereum will launch Eth2, which will move Ethereum to a proof of stake model like Cardano’s and introduce many of the same features. However, it won’t have is the integrated development environment Plutus. Ethereum also uses Solidity and Vyper programming languages to program their smart contracts. The criticism section from the Solidity Wikipedia page basically says that Solidity is a hot mess. [Edit on December 30, 2021: Eth2 looks like it won’t be launched until at least summer of 2022.]

Compare Solidity to Cardona’s Haskell language, which is an industrial strength language used in cryptography algorithms, semiconducter design, and was used to formally verify an OS microkernel. As a functional language, it doesn’t have side effects. It has type-safe operators and type inference. Basically, it is powerful and has many features designed to cut down on bugs in the code.

Of course, Haskell has drawbacks. It’s hard to learn, and the universe of people that can code in it is relatively small to other programming languages. Depending on your use case, there are other problems as well. But, every choice implies trade-offs, and Haskell is a good language for the implementation of smart contracts.

If you wanted to implement smart contracts into your business workflows. The more money, the higher the stakes, the more likely you’ll be to want to make sure you are not going to have problems later. You’re going to choose the best option available among top tier chains, Cardano.

Ethereum will have more name recognition, as the second highest capitalized cryptocurrency. It’s smart programs will be easier to implement, and they’ll, more often than not, be good enough for a given purpose, probably one that isn’t mission critical.

The good news is that these two systems, and others that rise to the top market capitalization tier, will likely all work together and have different niches. To illustrate, announced a liquidity bridge between Ethereum and Cardano, designed to encourage fund transfer between the two systems, which suggests there could be a symbiotic relationship between them in the future.

Anyway, I think this is going to change the world. These are the two choices in smart contracts in top tier chains, at the moment. And, one has clear advantages.

The current price of Ada on Sunday night, April 11, 2021 was $1.28. You can buy Ada coin through and most other cryptocurrency exchanges.

This is the video that sold me on Cardano, Plutus and Ada.

For a slightly longer discussion, see this recent Reddit thread.