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Comment by lucb1e | Hacker News Reader

Almost half the electricity produced in El Salvador is from fossil sources (they don't have nuclear power): https://data.worldbank.org/indicator/EG.ELC.PETR.ZS?location...

Option A: invest in that volcano and reduce greenhouse gas emissions.

Option B: invest in that volcano and mine bitcoin.

B makes them richer so long as other people keep expecting Bitcoin prices to rise (increasing demand), so I can see why they do this, but I'm not sure I like it. Even if the equipment, installation, and operation are all compensated for, it's wasting renewable energy on making heat and some money by gambling on future demand of a PoW-based system. But for a poor country, making money to get up to rich country living standards makes sense so... I can't even fault them.

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The economics of geothermal are often unfavorable for consumer/industrial electricity production. Bitcoin mining is unique in that provides a consistent consumer for electricity at a reliable price 24/7.

The long-term effect of Bitcoin mining will probably be to subsidize the creation of reliable constant-output power sources like geothermal and nuclear, with some of that capacity being used for consumer/industrial usage during peak hours.

"a reliable price" until the bubble pops?

If the price of Bitcoin goes down, it will reduce demand starting at the most expensive power sources used to mine Bitcoin. There is a lot of “buffer” for something like geothermal before Bitcoin falls enough for it to get axed.

I imagine what happens is a small circle of people makes a whole lot of money this way.

They are already doing Option A.

El Salvador is the largest producer of geothermal energy in Central America.

https://en.wikipedia.org/wiki/Electricity_sector_in_El_Salva...

Or option A + B: Invest in more geothermal - they already have a lot -, and use bitcoin mining when demand is low to help offset the cost. If mining makes it cost-effective to increase sources like geothermal past the point where it covers the base load so it reduces the need for peaker plants, that might be worthwhile (though of course the other option is to invest in storage)

But the potential geothermal output for El Salvador is huge.

> use bitcoin mining when demand is low to help offset the cost

I've looked at income statements of a bunch of public companies that mine Bitcoin, and one of the most striking things is how much of the cost is actually depreciation of hardware. Granted, part of this is that they are running the hardware to its limits, but another aspect is that new improved mining hardware comes out frequently and pushes the old hardware over the profitability edge.

Basically, I'm skeptical that anyone can mine Bitcoin profitably without running the hardware 24/7. Other coins that use commodity hardware, maybe.

But aggressive depreciation of hardware is in part a function of how much the electricity costs. If you're running off what is in effect "waste", then that would change the amortisation significantly.

May well be that it won't change the cost structure enough - I treat this as the president deciding an announcement like this, which amounts to little more than "I've asked them to look into it", as a way to get some publicity. It could very well end up being silently put aside if the costs don't stack up.

Okay but that's not what they're saying, is it? If that was the plan, surely there would be a mention of said plan while they're announcing plans. Would be a bit weird to only announce "we're gonna turn heat into heat+money" but not "and also reduce our climate impact whenever possible".

Some context to this plan:

This idea was presented to President Bukele during a Twitter Spaces[1] session where he discussed the bill with the Bitcoin community whilst it was going through voting. Mining Bitcoin was not something he has previously considered and openly ideated on the call with the community. It seems like a fully proposed plan for how Bitcoin mining will play a part in the country's overall energy policy has likely not yet been fully formed.

[1]: https://www.youtube.com/watch?v=IRnygiyuG0k&t=4s

You're assuming there is a plan, rather than just the president using it to get attention. All that seems to have really happened is that he's asked someone at the majority government owned geothermal power company to look into doing it.

Not exactly. I'm wondering whether the person who says they're going to do something better than what they're currently saying is correct.

Who is saying they are going to do something better? You gave a couple of options, and I pointed out there was an additional option. They are still just options absent a commitment to a plan, and there's no indication anyone has set out any actual plans.

> B makes them richer

B makes the colonizing foreign investors richer. It won't do shit for the poor country.

When a government...

1) owns a profitable state company

2) that does not require the cooperation of the population in order to be profitable

...the result is a dictatorship.

https://www.youtube.com/watch?v=rStL7niR7gs

That sounds a lot like Norway though, didn't they have this massive amount of money from some natural resource (oil I think) and made a big pension fund for the population?

There are obviously also counter-examples, but a currently-democratic country finding a new way to make money from natural resources, I wouldn't expect we have a large enough sample size to really say anything about that with certainty.

Edit: The Norway thing being (for those interested):

> [The oil fund] was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. It has over US$1.3 trillion in assets, including 1.4% of global stocks and shares, making it the world’s largest sovereign wealth fund. In May 2021, it was worth about $248,000 per Norwegian citizen.

https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...

Because oil was discovered in modern times when Norway was already a developed society with strong institutions and an educated populace.

In contrast, El Salvador right now is still fighting barbarism and anarchy.

How did you reach that conclusion? Wouldn't this be a way to export power without the lines.

No, because Bitcoin doesn't turn back into energy. The energy is just gone.

Are you referring to the fact that their currency is USD which they don't control therefore can be pushed around by the USG?

"To prevent colonizing foreign investors from controlling your country, you just have to run your country how I, an educated wealthy westerner, think you should."

This is a false dichotomy.

They can subsidize the startup costs for harvesting geothermal energy from Bitcoin mining and then use the geothermal infrastructure to produce electricity for the country.

It's not a false dichotomy. The infrastructure does not exist and they can't do both things at once

A false dichotomy is when one argues that only option A or option B are available when in fact options C, D, and E also exist.

https://en.wikipedia.org/wiki/False_dilemma

I know what a false dichotomy is. I'm rejecting the claim that we're dealing with one.

They can put the Bitcoin mine out in the middle of nowhere next to the volcano. Building a transmission and distribution infrastructure to the rest of the country can be funded by the Bitcoin mine.

They tried this in Italy 2000+ years ago. A wealthy city will spawn from the mine, but since bitcoin doesn't appease the gods like physical gold does, the city will be buried in ash.

How does the infrastructure not exist given geothermal currently provides a quarter of their electricity?

The parent said with profits they can fund plus some work will need to be made to mine bitcoin possible and those road/building can be repurposed.

That sounds great. Let's hope that actually happens and hope that the geothermal equipment lasts longer than Bitcoin demand lasts. Perhaps, though, if that is actually the plan, they could say as much?

Option A requires building out power transmission and storage.

Option B does not as the mining is always running and near the source.

Its telling of the quality if HN, if the top comment is a false dichotomy... I have noticed a steep decline of thoughtful comments over the last year.

And of course: why not do both, and more?

Edit: lots of downvotes, but at least a higher quality comment is on top now.

Yeah, it's hard to imagine an implementation where the geothermal can only be used for bitcoin mining.

I'm not a fan of crypto or bitcoin, but if it funds their roll out of geothermal power, then that seems like a net-positive.

> why not do both, and more

Presumably because they have limited capital and can't solve all problems at once?

> why not do both, and more?

We'd all love if they did that instead of what was announced, but that's not the announcement.

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