Bitcoin, Degrowth, and the Quest for a Sustainable Future
The cryptocurrency world is often dominated by Austrian economics, focusing on the principles of sound money and free markets. However, a less explored intersection lies between bitcoin and the heterodox economic theories of degrowth and ecological economics. These approaches, advocating for a shift away from perpetual economic growth and towards a more sustainable and equitable world, find intriguing parallels with bitcoin’s inherent properties.
While bitcoin’s energy consumption is often a subject of debate, it’s crucial to understand its context. Bitcoin’s energy use, although substantial, represents less than half a percent of global electricity consumption. Though it’s a "rounding error" in the grand scheme of global energy use, it’s also comparable to the energy consumption of a small country. This energy use, however, is not inherently harmful, for it serves a vital role in securing a sound monetary system, a cornerstone of degrowth.
The relationship between energy consumption and environmental degradation is well documented. The ever-increasing demands of a growth-obsessed economy have pushed our planet to its limits, leading to mass extinction, insect decline, and environmental pollution. The inherent design of our current economic system incentivizes wasteful consumerism, bullshit jobs, and rent-seeking, pushing us further away from a sustainable future.
Degrowth proposes a radical shift in thinking. It advocates for a reduction in overall energy consumption in wealthy countries, allowing developing nations to raise their levels to meet basic needs. Ultimately, the goal is to transition to a steady-state economy, where economic activity aligns with the Earth’s ecological limits. This vision resonates with the principles of ecological economics, which emphasizes the interconnectedness of the economy and the environment.
Brian Czech, a prominent figure in ecological economics, describes the steady-state economy as "economics for a full-world", acknowledging that we’ve reached a point where our economic activities are straining the planet’s carrying capacity. This framework challenges the traditional growth-centric mindset, highlighting the need for a more balanced approach.
Degrowth goes beyond energy consumption, advocating for a shift away from fiat currencies, characterized by inflation and debt-based systems. It promotes localism, frugal living, and a mindset of low-time preference, which aligns with the principles of Bitcoin. Bitcoin, with its finite supply and decentralized nature, provides a robust and secure alternative to these flawed systems.
Austrian economist Carl Menger identified the origin of money as arising from agricultural surplus, a finding echoed by ecological economics. This notion suggests that money’s existence is rooted in the ability to produce more than what is required for basic survival, giving rise to division of labor and trade.
The laws of thermodynamics, which state that energy cannot be created or destroyed and that energy conversions are always imperfect, impose ecological limits on our planet. These limitations also impact the amount of agricultural surplus that can be created, ultimately setting a boundary on the creation and use of money.
Bitcoin, with its finite supply, mirrors this concept of ecological limits. By 2140, the final bitcoin will be mined, with 98% of the total supply already created by the early 2030s. The network’s energy consumption, while currently rising, is expected to slow down and reach a steady-state, driven by factors like miners’ competition and increasing difficulty in mining new bitcoins.
Ecological economics suggests that the total value of the Bitcoin network should ultimately reflect the entire planet’s resource capacity to produce an agricultural surplus. This inherent limit on Bitcoin’s supply aligns with the degrowth principle of a steady-state economy.
The adoption of Bitcoin can potentially reshape societal priorities, moving individuals away from immediate gratification and towards a more sustainable consumption pattern. The Bitcoin community often emphasizes this shift, referring to it as a transition to a low-time preference mindset.
Bitcoin’s global nature, with miners spread across the world, presents an opportunity for positive energy development. Degrowth proponents, ecological economists, and environmental activists can work together to ensure that Bitcoin’s energy consumption is distributed responsibly, especially in regions facing energy poverty. This approach can not only promote sustainable energy practices but also empower developing countries, facilitating a more equitable distribution of benefits.
The adoption of Bitcoin is already gaining momentum in developing countries where hyperinflation and unstable monetary systems prevail. Governments in some developing nations, like the Central African Republic, are exploring the use of Bitcoin mining to harness their natural renewable energy resources, providing them with an alternative development path.
Critics often argue that Bitcoin’s limited supply unfairly rewards early adopters, potentially creating a new class of crypto-oligarchs. However, studies show that despite the entry of institutional players, Bitcoin remains largely a grassroots movement, with its distribution more equitable compared to other cryptocurrencies.
While money alone cannot address economic inequality, pairing it with mechanisms designed to reduce inequality, such as those proposed in Radical Markets, could facilitate a more equitable distribution of wealth over time.
Furthermore, a sustainable steady-state economy requires tackling all forms of inequality, not just economic disparity.
Adopting a degrowth perspective, alongside embracing Bitcoin’s potential, is crucial for achieving a sustainable future. This approach involves addressing energy consumption, shifting away from inflationary currencies, and building a more equitable and robust economic system.
While the current system may seem insurmountable, Bitcoin and the principles of degrowth and ecological economics offer a unique roadmap for a more sustainable and equitable future. It’s a challenging path, but one that we must embrace to safeguard the planet and its resources for future generations. The clock is ticking, and the time for action is now.
