When The Dollar DIES! What Next?!? | Bitcoin Education

Video Transcript:

if the dollar were to disappear what would replace our currency system how would we coordinate Goods services and resources in a world that still needs more energy and more technology to continue and prosper our society well if you remove the dollar-based aspects of Bitcoin none of this changes so the topic of today’s video is to learn about Bitcoin per megawatt hour this is the pricing system between all of the energy being consumed in real time on the network converted through Bitcoin mining Hardware into hash power compute power a parallel to AI as well and all this hash power is seeking to find the next block in the chain and capture some of this daily Bitcoin that is being offered by the network it’s local energy connected to Global finance and if the dollar were to disappear none of this changes so the video today is going to take you through how you can understand the energy economics of Bitcoin and how if the price on the local grid and demand for the local grid energy is needed what price will a miner be willing to sell the energy locally for because he has a local buyer of energy the grid local grid micro grid Village whatever the size is and he has a global buyer of energy so he has a constant decision to make us to sell my energy locally or consume that energy and turn it into Global money that duopoly is what’s going to introduce a pricing system on a well energy based unit of account economics of Bitcoin per kilowatt hour that’s the smaller denomination but we’re going to use megawatt hours today so let’s begin if 452 Bitcoin is about what 144 blocks which is one day’s worth of bitcoin being distributed to the entire network is the value of consuming energy to that’s that’s the reward for consuming energy shall we say well this divides down to about if we divide it by 24 this divides down to if I remember correctly 18. 83 Bitcoin per hour that the entire network is earning approximately it’s distributed in blocks at that point maybe mining pools and distributed to those miners underneath that are connected to those pools but that 18.8 three Bitcoin per hour you could divide it by six and that’s the amount of Bitcoin per block as well and if this minor represents one megawatt of the entire mining Network at the same efficiency average of the network well we can just divide this well we can divide this figure by this so let’s do that now divide by 17600 which gives us a figure of not 107 Bitcoin per megawatt so all I’ve done is broken down the time aspect of how much Bitcoin is being distributed over time to 1 hour and looking at okay the entire Network’s earning 18.83% Bitcoin per megawatt now for easy numbers we’re going to put it in dollars just so you can understand a reference so if the has purchased his megawatt hour for $50 he’s that’s that’s 5 Cent per kilowatt $50 per megawatt so he spent $50 per megawatt of buying the energy so that is a cost and he’s earning 0.107 which is about $85 of Bitcoin per megawatt now interestingly enough we can divide these two as well We Do 50 ided by 85 oh 50 divided 85 equals 58% so if the Bitcoin price is 80,000 this Bitcoin miner is producing at a production cost of 48 oh 47,000 58% and so there’s all this into Play Between the amount of Bitcoin being distributed per day the amount of energy chasing that Bitcoin and the minor has the cost input of energy and the output revenue of this Bitcoin and when you divide the two you can understand their production cost if he had cheaper if he had cheaper electricity his production cost would drop if he had more efficient mining machines which means this figure was lower the amount of energy cost for the output hash rate which produces Bitcoin and in a dollarized sense yes it’s a bit more understandable at about $85 he’s earning $85 he’s spending $50 right now here’s the interesting thing let’s say this side of the network hasn’t changed it’s just everyone’s operationally producing the amount of compute they can with the energy they have and what if loads of transaction fees race into the network and double this amount the amount 452 if we double it well then it will double the amount of Bitcoin per hour and it will double the amount of Bitcoin per megawatt which means that Miner would want to sell his electricity at Double the price so what I’m trying to say is in a future in which Bitcoin miners are the energy producers and infrastructure Builders of society which is what I believe they are going to to have a dual comparison sell their energy in a quantity of Bitcoin locally or consume that energy and turn it into Global money and that Global money would be the very same currency used to buy energy locally and he would want to to sell it to you at the same rate he can produce or even higher and why would he do that well interestingly enough if a bit coin Miner were to scale down the amount of energy he used uh to convert into compute power it increases the efficiency so it actually adjusts the amount of Bitcoin per megawatt to the upside so the SL the more energy he sells at the same rate he can produce at this particular moment he sells that fraction of energy at the amount of Bitcoin per kilowatt he’s earning in the digital side and under clocks the machine which means it raises the efficiency of the machine and so he’s sold some energy at the normal rate of efficiency underclocked the machines are now earning slightly more so the miners are incentivized to sell as much power as they can because they have a real-time pricing system against a global monetary asset and their local efficiency level with the amount of electricity that they have to supply and so Bitcoin mining offers a dynamic price Energy System where it’s not just some fixed amount but it reaches a steady state equilibrium between what’s locally available and what’s globally priced and the computer in the middle can dynamically change how much energy it uses and provide that capacity that’s always available so in a world that we introduce volatile Renewables where in the middle of the day everyone’s producing power in their solar but maybe not so much people are consuming it or the middle of the night and it’s really windy and the wind Farms are going full volume but no one’s consuming that power they have the ability to monetize it into a global monetary asset but when trade transaction is in high demand this energy price in a Bitcoin unit of account will increase if there’s low transaction Demand on the blockchain like really low fees really low fees low activity subsidy drops it reprices all of this energy to be cheaper which means that that Bitcoin as a network reprices our debt-based interest money type system into an energy price based system where if there’s too much consumption in society the cost of producing increases and when there’s not enough consumption in society if the amount of Bitcoin available to be mined the the energy pricing system in this example when there’s not enough consumption in society the cost of producing things drops so it creates this new pricing equilibrium to price all energy Commodities and resources so if you can convert oil into electricity for example and the electricity is priced against the global money that mathematical chain of pricing systems extends to all the different energy Commodities that build everything in society and I’ve also got another one to do with Logistics that if a computer actively plugged in in the USA is deployed racked and hashing it has a different value to the computer sat in a warehouse in China and so you can actually price time and Logistics in a Bitcoin unit of account too but that’s a topic for another day I hope this wasn’t too crazy and complicated if you’ve got any questions throw them in the comments I will break it down in much more simplified terms there’ll be more course material coming out as well so it sort of breaks down these really interesting examples and the bit I didn’t mention is when more energy and compute is joining the network and the difficulty adjustment increases the Bitcoin per megawatt drops now think of it the other way around if you are holding Bitcoin and you’re trying to buy energy the more compute power that joins the network your the amount of energy you can buy with your Bitcoin increases because this this is your this is your purchase cost so if more compute joins the amount of Bitcoin per megawatt drops so the the amount of Bitcoin you need to to spend to buy one megawatt drops and it drops forever over time because it’s Infinity over 21 million units priced at the amount of Bitcoin blocks being distributed per day a pricing system of Global Production and monetary consumption I hope this was an interesting video I hope you enjoy it and I’ll see you in the next one goodbye