Siemens to put more into Chinese wind market

Manitoba Hydro Allegations Investigation reveals RCMP and OPP probes into 1960s abuses in northern Manitoba, affecting Fox Lake Cree Nation, citing racism, discrimination, sexual assault, and oversight by the IIU and Clean Environment Commission.

Key Points

A coordinated probe into historic abuses tied to Manitoba Hydro projects, led by OPP and IIU after RCMP referral.

✅ OPP to investigate historical cases involving Hydro staff and contractors.

✅ IIU to examine any allegations implicating Manitoba RCMP officers.

✅ Findings follow CEC report on racism and abuse near Fox Lake.

Manitoba RCMP have called in outside investigators to probe alleged assaults linked to hydro projects in the province’s north during the 1960s.

RCMP say any historical criminal investigations involving Manitoba Hydro employees or contractors will be handled by the Ontario Provincial Police.

The Independent Investigation Unit of Manitoba, the province’s police watchdog, will investigate any allegations involving RCMP officers.

A report released last month by an arm’s-length review agency outlined racism, discrimination and sexual abuse at the Crown-owned utility’s work sites dating back decades, while projects like Site C COVID-19 updates provide contemporary examples of reporting.

Much of the development at that time was centered around the community of Gillam and the nearby Fox Lake Cree Nation.

The report said the presence of a largely male construction workforce led to the sexual abuse of Indigenous women, some of whom said their complaints were ignored by the RCMP, and in a different context, Hydro One worker injury highlights safety risks in the sector.

Premier Brian Pallister says his government is taking the right approach to addressing alleged sexual assaults and racism by Manitoba Hydro workers against members of a remote northern First Nation, while pandemic cost-cutting at Manitoba Hydro has shaped recent operations.

Pallister made his first public comments about the allegations after a private meeting with Prime Minister Justin Trudeau on Tuesday evening, as COVID-19 reshaped Saskatchewan and other Prairie priorities were in focus.

The allegations, made by members of Fox Lake Cree Nation, were revealed in a report produced by the Clean Environment Commission. The report was released by the provincial government in August, although it was completed in May.

Allegations against Manitoba Hydro workers: What you need to know

"My reaction would be that's deplorable behaviour, and I have to admit, my puzzlement is why this wasn't investigated sooner or didn't come to light sooner," Pallister said, adding that he believes his government has taken the right approach by referring the information to the RCMP.

Some members of Fox Lake Cree Nation say the government didn't give them any advance notice of the release of the report, so the community was traumatized when it hit the news.

Pallister said his government didn't want to delay the release of the report.

'Pure trauma': Fox Lake members stricken after hasty release of troubling report

"I think the right thing to do is release the report. A lot of this information was in the public domain over the last number of weeks and months anyway. It wasn't the case of it being new in that respect," he said.

However, he accepted criticism of the timeline of the report's release.

"I would rather accept those criticisms, than accept the argument that we were in any way covering up information that is important to be released," he said.

Fox Lake Chief Walter Spence has said he expects Pallister to visit the community.

The premier said Tuesday he was not sure of the effectiveness of such a trip.

"I think most of the communities would prefer that there be electricity jobs for young Canadians created in their communities, that there be better water, many other tangible things rather than symbolism," he said.

"That's what I'm hearing and I've been in dozens of First Nations communities in the last two years."

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Kentucky Tornado Recovery details Mayfield damage, death toll, power outages, boil-water advisories, shelter operations, and emergency response across five states, as crews restore infrastructure, locate missing persons, and support displaced families in frigid temperatures.

Key Points

Overview of restoring utilities, repairing infrastructure, and sheltering survivors after Kentucky's tornado disaster.

✅ Power, water, and gas outages persist; boil-water advisories in effect.

✅ Mayfield hardest hit; factory casualties lower than first feared.

✅ Shelter provided in state park lodges; long-term recovery expected.

Residents of Kentucky counties where tornadoes killed several dozen people could be without heat, water or electricity in frigid temperatures for weeks or longer, state officials warned Monday, and experiences abroad like Kyiv's difficult winter underscore the risks as the toll of damage and deaths came into clearer focus in five states slammed by the swarm of twisters.

Authorities are still tallying the devastation from Friday's storms, though they believe the death toll will be lower than initially feared since it appeared many more people escaped a candle factory in Mayfield, Ky., than first thought.

At least 88 people — including 74 in Kentucky — were killed by the tornados which also destroyed a nursing home in Arkansas, heavily damaged an Amazon distribution centre in Illinois and spread their deadly effects into Tennessee and Missouri, while ongoing nuclear worker safety concerns highlighted vulnerabilities across critical facilities. Another 105 people were still unaccounted for in Kentucky as of Monday afternoon, Gov. Andy Beshear said.

As searches continued for those still missing, efforts also turned to repairing the power grid, downed line safety education, sheltering those whose homes were destroyed and delivering drinking water and other supplies.

"We're not going to let any of our families go homeless," Beshear said in announcing that lodges in state parks were being used to provide shelter.

In Bowling Green, Ky., 11 people died on the same street, including two infants found among the bodies of five relatives near a residence, Warren County coroner Kevin Kirby said. 

In Mayfield, one of the hardest hit towns, those who survived faced a high around 10 C and a low below freezing Monday without any utilities, and awareness of power strip fire risks is critical as residents turn to makeshift heating and power.

"Our infrastructure is so damaged. We have no running water. Our water tower was lost. Our waste water management was lost, and there's no natural gas to the city. So we have nothing to rely on there," Mayfield Mayor Kathy Stewart O'Nan said on CBS Mornings. "So that is purely survival at this point for so many of our people."

Across the state, about 26,000 homes and businesses were without electricity, according to poweroutage.us, including nearly all of those in Mayfield, and the U.S. grid warning during the pandemic underscored vulnerabilities in critical infrastructure.

More than 10,000 homes and businesses have no water, and another 17,000 are under boil-water advisories, Kentucky Emergency Management Director Michael Dossett told reporters.

Dossett warned that full recovery in the hardest-hit places could take not just months, but years, noting that utilities have at times contemplated on-site staffing to maintain operations during crises.

At least 74 people have been confirmed dead across Kentucky after tornadoes tore through the state, leaving some communities nearly totally destroyed and many residents wondering if they can afford to rebuild. 2:22
"This will go on for years to come," he said. 

Amid broader economic strain, recent debates over Kentucky miners' pay highlight ongoing financial vulnerabilities for workers affected by disasters as well.

Authorities are still trying to determine the total number of dead, and the storms made door-to-door searches impossible in some places. "There are no doors," said Beshear.

"We're going to have over 1,000 homes that are gone, just gone," he said.

Beshear had said Sunday morning that the state's toll could exceed 100. But he later said it might be as low as 50.

'Then he was gone'
Initially as many as 70 people were feared dead in the candle factory in Mayfield, but the company said Sunday that eight were confirmed dead and eight remained missing, while more than 90 others had been located.

"Many of the employees were gathered in the tornado shelter and after the storm was over they left the plant and went to their homes," said Bob Ferguson, a spokesman for the company. "With the power out and no landline they were hard to reach initially. We're hoping to find more of those eight unaccounted as we try their home residences."

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U.S. Hybrid Vehicle Sales Outlook highlights rising hybrid demand as an EV bridge, driven by emissions rules, range anxiety, charging infrastructure gaps, and automaker strategies from Ford, Toyota, and Stellantis across U.S. markets.

Key Points

Forecast of U.S. hybrid sales shaped by EV adoption, emissions rules, charging access, and automaker strategies.

✅ S&P sees hybrids at 24% of U.S. sales by 2028

✅ Bridges ICE to EV amid range and charging concerns

✅ Ford, Toyota, Stellantis expand U.S. hybrid lineups

Hybrid gasoline-electric vehicles may not be dying as fast as some predicted in the auto sector’s rush to develop all-electric models.

Ford Motor is the latest of several top automakers, including Toyota and Stellantis, planning to build and sell hundreds of thousands of hybrid vehicles in the U.S. over the next five years, industry forecasters told Reuters.

The companies are pitching hybrids as an alternative for retail and commercial customers who are seeking more sustainable transportation, but may not be ready to make the leap to a full electric vehicle.

"Hybrids really serve a lot of America," said Tim Ghriskey, senior portfolio strategist at New York-based investment manager Ingalls & Snyder. "Hybrid is a great alternative to a pure electric vehicle (and) it's an easier sell to a lot of customers."

Interest in hybrids is rebounding as consumer demand for pure electrics has not accelerated as quickly as expected, with EV market share dipping in Q1 2024 according to some analyses. Surveys cite a variety of reasons for tepid EV demand, from high initial cost and concerns about range to lengthy charging times and a shortage of public charging infrastructure in many regions.

“With the tightening of emissions requirements, hybrids provide a cleaner fleet without requiring buyers to take the leap into pure electrics,” said Sam Fiorani, vice president at AutoForecast Solutions.

S&P Global Mobility estimates hybrids will more than triple over the next five years, accounting for 24% of U.S. new vehicle sales in 2028. Sales of pure electrics will claim about 37%, supported by strong U.S. EV sales into 2024 momentum, leaving combustion vehicles — including so-called “mild” hybrids — with a nearly 40% share.

S&P estimates hybrids will account for just 7% of U.S. sales this year, and pure electrics 9%, underscoring that EV sales still lag gas cars as internal combustion engine (ICE) vehicles take more than 80%.

Historically, hybrids have accounted for less than 10% of total U.S. sales, with Toyota’s long-running Prius among the most popular models. The Japanese automaker has consistently said hybrids will play a key role in the company's long-range electrification plans as it slowly ramps up investment in pure EVs.

Ford is the latest to roll out more aggressive hybrid plans. On its second-quarter earnings call in late July, Chief Executive Jim Farley surprised analysts, saying Ford expects to quadruple its hybrid sales over the next five years after earlier promising an aggressive push into all-electric vehicles.

“This transition to EVs will be dynamic,” Farley told analysts. “We expect the EV market to remain volatile until the winners and losers shake out.”

Among Ford’s competitors, General Motors appears to have little interest in hybrids in the U.S., while Stellantis will follow Toyota and Ford’s hedge by offering U.S. buyers a choice of different powertrains, including hybrids, until sales of pure electric vehicles start to take off after mid-decade, a potential EV inflection point according to forecaster GlobalData.

In a statement, GM said it, echoing leadership's view that EVs won't go mainstream until key issues are addressed, "continues to be committed to its all-electric future ... While we will have hybrid vehicles in our global fleet, our focus remains on transitioning our portfolio to electric by 2030.”

Stellantis said hybrids now account for 36% of Jeep Wrangler sales and 19% of Chrysler Pacifica sales. In addition to new pure electric models coming soon, "we are very bullish on hybrids going forward," a spokesperson said.

This year, manufacturers are marketing more than 60 hybrids in the U.S. Toyota and its premium Lexus brand are selling at least 18 different hybrid models, enabling the Japanese automaker to maintain its stranglehold on the sector.

Hyundai and sister brand Kia offer seven hybrid models, with Ford and Lincoln six. Stellantis offers just three, and GM’s sole entry, due out later this year, is a hybrid version of the Chevrolet Corvette sports car.

But hybrids remain in short supply at many U.S. dealerships.

Andrew DiFeo, dealer principal at Hyundai of St. Augustine, south of Jacksonville, FL, doesn't see EV adoption hitting the levels the Biden administration wants until EV charging networks are as ubiquitous as gas stations.

"Hybrids are a great bridge to whatever the future holds,” said DiFeo, adding, “I've got zero in stock (and) I've got customers that want all of them."

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Methane Hydrate CO2 Sequestration uses carbon capture and nitrogen injection to swap gases in seafloor hydrates along the Gulf of Mexico, releasing methane for electricity while storing CO2, according to new simulation research.

Key Points

A method injecting CO2 and nitrogen into hydrates to store CO2 while releasing methane for power.

✅ Nitrogen aids CO2-methane swap in hydrate cages, speeding sequestration

✅ Gulf Coast proximity to emitters lowers transport and power costs

✅ Revenue from methane electricity could offset carbon capture

The world is quickly realizing it may need to actively pull carbon dioxide out of the atmosphere to stave off the ill effects of climate change. Scientists and engineers have proposed various carbon capture techniques, but most would be extremely expensive—without generating any revenue. No one wants to foot the bill.

One method explored in the past decade might now be a step closer to becoming practical, as a result of a new computer simulation study. The process would involve pumping airborne CO2 down into methane hydrates—large deposits of icy water and methane right under the seafloor, beneath water 500 to 1,000 feet deep—where the gas would be permanently stored, or sequestered. The incoming CO2 would push out the methane, which would be piped to the surface and burned to generate electricity, whether sold locally or via exporters like Hydro-Que9bec to help defray costs, to power the sequestration operation or to bring in revenue to pay for it.

Many methane hydrate deposits exist along the Gulf of Mexico shore and other coastlines. Large power plants and industrial facilities that emit CO2 also line the Gulf Coast, where EPA power plant rules could shape deployment, so one option would be to capture the gas directly from nearby smokestacks, keeping it out of the atmosphere to begin with. And the plants and industries themselves could provide a ready market for the electricity generated.

A methane hydrate is a deposit of frozen, latticelike water molecules. The loose network has many empty, molecular-size pores, or “cages,” that can trap methane molecules rising through cracks in the rock below. The computer simulation shows that pushing out the methane with CO2 is greatly enhanced if a high concentration of nitrogen is also injected, and that the gas swap is a two-step process. (Nitrogen is readily available anywhere, because it makes up 78 percent of the earth’s atmosphere.) In one step the nitrogen enters the cages; this destabilizes the trapped methane, which escapes the cages. In a separate step, the nitrogen helps CO2 crystallize in the emptied cages. The disturbed system “tries to reach a new equilibrium; the balance goes to more CO2 and less methane,” says Kris Darnell, who led the study, published June 27 in the journal Water Resources Research. Darnell recently joined the petroleum engineering software company Novi Labs as a data scientist, after receiving his Ph.D. in geoscience from the University of Texas, where the study was done.

A group of labs, universities and companies had tested the technique in a limited feasibility trial in 2012 on Alaska’s North Slope, where methane hydrates form in sandstone under deep permafrost. They sent CO2 and nitrogen down a pipe into the hydrate. Some CO2 ended up being stored, and some methane was released up the same pipe. That is as far as the experiment was intended to go. “It’s good that Kris [Darnell] could make headway” from that experience, says Ray Boswell at the U.S. Department of Energy’s National Energy Technology Laboratory, who was one of the Alaska experiment leaders but was not involved in the new study. The new simulation also showed that the swap of CO2 for methane is likely to be much more extensive—and to happen quicker—if CO2 enters at one end of a hydrate deposit and methane is collected at a distant end.

The technique is somewhat similar in concept to one investigated in the early 2010s by Steven Bryant and others at the University of Texas. In addition to numerous methane hydrate deposits, the Gulf Coast has large pools of hot, salty brine in sedimentary rock under the coastline. In this system, pumps would send CO2 down into one end of a deposit, which would force brine into a pipe that is placed at the other end and leads back to the surface. There the hot brine would flow through a heat exchanger, where heat could be extracted and used for industrial processes or to generate electricity, supporting projects such as electrified LNG in some markets. The upwelling brine also contains some methane that could be siphoned off and burned. The CO2 dissolves into the underground brine, becomes dense and sinks further belowground, where it theoretically remains.

Either system faces big practical challenges, and building shared CO2 storage hubs to aggregate captured gas is still evolving. One is creating a concentrated flow of CO2; the gas makes up only .04 percent of air, and roughly 10 percent of the smokestack emission from a typical power plant or industrial facility. If an efficient methane hydrate or brine system requires an input that is 90 percent CO2, for example, concentrating the gas will require an enormous amount of energy—making the process very expensive. “But if you only need a 50 percent concentration, that could be more attractive,” says Bryant, who is now a professor of chemical and petroleum engineering at the University of Calgary. “You have to reduce the [CO2] capture cost.”

Another major challenge for the methane hydrate approach is how to collect the freed methane, which could simply seep out of the deposit through numerous cracks and in all directions. “What kind of well [and pipe] structure would you use to grab it?” Bryant asks.

Given these realities, there is little economic incentive today to use methane hydrates for sequestering CO2. But as concentrations rise in the atmosphere and the planet warms further, and as calls for an electric planet intensify, systems that could capture the gas and also provide energy or revenue to run the process might become more viable than techniques that simply pull CO2 from the air and lock it away, offering nothing in return.

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Ontario EV Battery Separator Plant anchors Canada's EV supply chain, with Asahi Kasei producing lithium-ion battery separators in Niagara Region to support Honda's Alliston assembly, clean transportation growth, and sustainable manufacturing jobs.

Key Points

Asahi Kasei's Niagara Region plant makes lithium-ion battery separators supplying Honda's EV factory in Ontario.

✅ Starts up by 2027 to align with Honda EV output timeline.

✅ Backed by clean tech tax credits and public investment.

✅ Boosts local jobs, R&D, and clean transportation leadership.

The automotive industry is undergoing a seismic shift, and Canada is firmly planting its flag in the electric vehicle (EV) revolution, propelled by recent EV assembly deals across the country. A new $1.6 billion battery component plant in Ontario's Niagara Region signifies a significant step towards a cleaner, more sustainable transportation future. This Asahi Kasei facility, a key player in Honda's $15 billion electric vehicle supply chain investment, promises to create jobs, boost the local economy, and solidify Ontario's position as a leader in clean transportation technology.

Honda's ambitious project forms part of Honda's Ontario EV investment that involves constructing a dedicated battery plant adjacent to their existing Alliston, Ontario assembly facility. This new plant will focus on producing fully electric vehicles, requiring a robust supply chain for critical components. Asahi Kasei's Niagara Region plant enters the picture here, specializing in the production of battery separators – a thin film crucial for separating the positive and negative electrodes within a lithium-ion battery. These separators play a vital role in ensuring the battery functions safely and efficiently.

The Niagara Region plant is expected to be operational by 2 027, perfectly aligning with Honda's EV production timeline. This strategic partnership benefits both companies: Honda secures a reliable source for a vital component, while Asahi Kasei capitalizes on the burgeoning demand for EV parts. The project is a catalyst for economic growth in Ontario, creating jobs in construction and manufacturing, supporting an EV jobs boom province-wide, and potentially future research and development sectors. Additionally, it positions the province as a hub for clean transportation technology, attracting further investment and fostering innovation.

This announcement isn't an isolated event. News of Volkswagen constructing a separate EV battery plant in St. Thomas, Ontario, and the continuation of a major EV battery project near Montreal further underscore Canada's commitment to electric vehicles. These developments signify a clear shift in the country's automotive landscape, with a focus on sustainable solutions.

Government support has undoubtedly played a crucial role in attracting these investments. The Honda deal involves up to $5 billion in public funds. Asahi Kasei's Niagara Region plant is also expected to benefit from federal and provincial clean technology tax credits. This demonstrates a collaborative effort between government and industry, including investments by Canada and Quebec in battery assembly, to foster a thriving EV ecosystem in Canada.

The economic and environmental benefits of this project are undeniable. Battery production is expected to create thousands of jobs, while the shift towards electric vehicles will lead to reduced emissions and a cleaner environment. Ontario stands to gain significantly from this transition, becoming a leader in clean energy technology and attracting skilled workers and businesses catering to the EV sector, especially as the U.S. auto pivot to EVs accelerates across the border.

However, challenges remain. Concerns about the environmental impact of battery production, particularly the sourcing of raw materials and the potential for hazardous waste, need to be addressed. Additionally, ensuring a skilled workforce capable of handling the complexities of EV technology is paramount.

Despite these challenges, the future of electric vehicles in Canada appears bright. Major automakers are making significant investments, government support is growing, and consumer interest in EVs is on the rise. The Niagara Region plant serves as a tangible symbol of Canada's commitment to a cleaner and more sustainable transportation future. With careful planning and continued Canada-U.S. collaboration across the sector, this project has the potential to revolutionize the Canadian automotive industry and pave the way for a greener tomorrow.

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Bitcoin Energy Debate examines electricity usage, mining costs, environmental impact, and blockchain efficiency, weighing renewable power, carbon footprint, scalability, and transaction throughput to clarify stakeholder claims from Tesla, Square, academics, and policymakers.

Key Points

Debate on Bitcoin mining's power use, environmental impact, efficiency, and scalability versus alternative blockchains.

✅ Compares energy intensity with transaction throughput and system outputs.

✅ Weighs renewables, stranded power, and carbon footprint in mining.

✅ Assesses PoS blockchains, stablecoins, and scalability tradeoffs.

There is a great debate underway about the electricity required to process Bitcoin transactions. The debate is significant, the stakes are high, the views are diverse, and there are smart people on both sides. Bitcoin generates a lot of emotion, thereby producing too much heat and not enough light. In this post, I explain the importance of identifying the key issues in the debate, and of understanding the nature and extent of disagreement about how much electrical energy Bitcoin consumes.

Consider the background against which the debate is taking place. Because of its unstable price, Bitcoin cannot serve as a global mainstream medium of exchange. The instability is apparent. On January 1, 2021, Bitcoin’s dollar price was just over $29,000. Its price rose above $63,000 in mid-April, and then fell below $35,000, where it has traded recently. Now the financial media is asking whether we are about to experience another “cyber winter” as the prices of cryptocurrencies continue their dramatic declines.

Central banks warns of bubble on bitcoins as it skyrockets
As bitcoins skyrocket to more than $12 000 for one BTC, many central banks as ECB or US Federal ... [+] NURPHOTO VIA GETTY IMAGES
Bitcoin is a high sentiment beta asset, and unless that changes, Bitcoin cannot serve as a global mainstream medium of exchange. Being a high sentiment beta asset means that Bitcoin’s market price is driven much more by investor psychology than by underlying fundamentals.

As a general matter, high sentiment beta assets are difficult to value and difficult to arbitrage. Bitcoin qualifies in this regard. As a general matter, there is great disagreement among investors about the fair values of high sentiment beta assets. Bitcoin qualifies in this regard.

One major disagreement about Bitcoin involves the very high demand for electrical power associated with Bitcoin transaction processing, an issue that came to light several years ago. In recent months, the issue has surfaced again, in a drama featuring disagreement between two prominent industry leaders, Elon Musk (from Tesla and SpaceX) and Jack Dorsey (from Square).

On one side of the argument, Musk contends that Bitcoin’s great need for electrical power is detrimental to the environment, especially amid disruptions in U.S. coal and nuclear power that increase supply strain.  On the other side, Dorsey argues that Bitcoin’s electricity profile is a benefit to the environment, in part because it provides a reliable customer base for clean electric power. This might make sense, in the absence of other motives for generating clean power; however, it seems to me that there has been a surge in investment in alternative technologies for producing electricity that has nothing to do with cryptocurrency. So I am not sure that the argument is especially strong, but will leave it there. In any event, this is a demand side argument.

A supply side argument favoring Bitcoin is that the processing of Bitcoin transactions, known as “Bitcoin mining,” already uses clean electrical power, power which has already been produced, as in hydroelectric plants at night, but not otherwise consumed in an era of flat electricity demand across mature markets.

Both Musk and Dorsey are serious Bitcoin investors. Earlier this year, Tesla purchased $1.5 billion of Bitcoin, agreed to accept Bitcoin as payment for automobile sales, and then reversed itself. This reversal appears to have pricked an expanding Bitcoin bubble. Square is a digital transaction processing firm, and Bitcoin is part of its long-term strategy.

Consider two big questions at the heart of the digital revolution in finance. First, to what degree will blockchain replace conventional transaction technologies? Second, to what degree will competing blockchain based digital assets, which are more efficient than Bitcoin, overcome Bitcoin’s first mover advantage as the first cryptocurrency?

To gain some insight about possible answers to these questions, and the nature of the issues related to the disagreement between Dorsey and Musk, I emailed a series of academics and/or authors who have expertise in blockchain technology.

David Yermack, a financial economist at New York University, has written and lectured extensively on blockchains. In 2019, Yermack wrote the following: “While Bitcoin and successor cryptocurrencies have grown remarkably, data indicates that many of their users have not tried to participate in the mainstream financial system. Instead they have deliberately avoided it in order to transact in black markets for drugs and other contraband … or evade capital controls in countries such as China.” In this regard, cyber-criminals demanding ransom for locking up their targets information systems often require payment in Bitcoin. Recent examples of cyber-criminal activity are not difficult to find, such as incidents involving Kaseya and Colonial Pipeline.

David Yermack continues: “However, the potential benefits of blockchain for improving data security and solving moral hazard problems throughout the financial system have become widely apparent as cryptocurrencies have grown.” In his recent correspondence with me, he argues that the electrical power issue associated with Bitcoin “mining,” is relatively minor because Bitcoin miners are incentivized to seek out cheap electric power, and patterns shifted as COVID-19 changed U.S. electricity consumption across sectors.

Thomas Philippon, also a financial economist at NYU, has done important work characterizing the impact of technology on the resource requirements of the financial sector. He has argued that historically, the financial sector has comprised about 6-to-7% of the economy on average, with variability over time. Unit costs, as a percentage of assets, have consistently been about 2%, even with technological advances. In respect to Bitcoin, he writes in his correspondence with me that Bitcoin is too energy inefficient to generate net positive social benefits, and that energy crisis pressures on U.S. electricity and fuels complicate the picture, but acknowledges that over time positive benefits might be possible.

Emin Gün Sirer is a computer scientist at Cornell University, whose venture AVA Labs has been developing alternative blockchain technology for the financial sector. In his correspondence with me, he writes that he rejects the argument that Bitcoin will spur investment in renewable energy relative to other stimuli. He also questions the social value of maintaining a fairly centralized ledger largely created by miners that had been in China and are now migrating to other locations such as El Salvador.

Bob Seeman is an engineer, lawyer, and businessman, who has written a book entitled Bitcoin: The Mother of All Scams. In his correspondence with me, he writes that his professional experience with Bitcoin led him to conclude that Bitcoin is nothing more than unlicensed gambling, a point he makes in his book.

David Gautschi is an academic at Fordham University with expertise in global energy. I asked him about studies that compare Bitcoin’s use of energy with that of the U.S. financial sector. In correspondence with me, he cautioned that the issues are complex, and noted that online technology generally consumes a lot of power, with electricity demand during COVID-19 highlighting shifting load profiles.

My question to David Gautschi was prompted by a study undertaken by the cryptocurrency firm Galaxy Digital. This study found that the financial sector together with the gold industry consumes twice as much electrical power as Bitcoin transaction processing. The claim by Galaxy is that Bitcoin’s electrical power needs are “at least two times lower than the total energy consumed by the banking system as well as the gold industry on an annual basis.”

Galaxy’s analysis is detailed and bottom up based. In order to assess the plausibility of its claims, I did a rough top down analysis whose results were roughly consistent with the claims in the Galaxy study. For sake of disclosure, I placed the heuristic calculations I ran in a footnote.1 If we accept the Galaxy numbers, there remains the question of understanding the outputs produced by the electrical consumption associated with both Bitcoin mining and U.S. banks’ production of financial services. I did not see that the Galaxy study addresses the output issue, and it is important.

Consider some quick statistics which relate to the issue of outputs. The total market for global financial services was about $20 trillion in 2020. The number of Bitcoin transactions processed per day was about 330,000 in December 2020, and about 400,000 in January 2021. The corresponding number for Bitcoin’s digital rival Ethereum during this time was about 1.1 million transactions per day. In contrast, the global number of credit card transactions per day in 2018 was about 1 billion.2

Bitcoin Value Falls
LONDON, ENGLAND - NOVEMBER 20: A visual representation of the cryptocurrencies Bitcoin and Ethereum ... [+] GETTY IMAGES
These numbers tell us that Bitcoin transactions comprise a small share, on the order of 0.04%, of global transactions, but use something like a third of the electricity needed for these transactions. That said, the associated costs of processing Bitcoin transactions relate to tying blocks of transactions together in a blockchain, not to the number of transactions. Nevertheless, even if the financial sector does indeed consume twice as much electrical power as Bitcoin, the disparity between Bitcoin and traditional financial technology is striking, and the experience of Texas grid reliability underscores system constraints when it comes to output relative to input.  This, I suggest, weakens the argument that Bitcoin’s electricity demand profile is inconsequential because Bitcoin mining uses slack electricity.

A big question is how much electrical power Bitcoin mining would require, if Bitcoin were to capture a major share of the transactions involved in world commerce. Certainly much more than it does today; but how much more?

Given that Bitcoin is a high sentiment beta asset, there will be a lot of disagreement about the answers to these two questions. Eventually we might get answers.

At the same time, a high sentiment beta asset is ill suited to being a medium of exchange and a store of value. This is why stablecoins have emerged, such as Diem, Tether, USD Coin, and Dai. Increased use of these stable alternatives might prevent Bitcoin from ever achieving a major share of the transactions involved in world commerce.

We shall see what the future brings. Certainly El Salvador’s recent decision to make Bitcoin its legal tender, and to become a leader in Bitcoin mining, is something to watch carefully. Just keep in mind that there is significant downside to experiencing foreign exchange rate volatility. This is why global financial institutions such as the World Bank and IMF do not support El Salvador’s decision; and as I keep saying, Bitcoin is a very high sentiment beta asset.

In the past I suggested that Bitcoin bubble would burst when Bitcoin investors conclude that its associated processing is too energy inefficient. Of course, many Bitcoin investors are passionate devotees, who are vulnerable to the psychological bias known as motivated reasoning. Motivated reasoning-based sentiment, featuring denial,3 can keep a bubble from bursting, or generate a series of bubbles, a pattern we can see from Bitcoin’s history.

I find the argument that Bitcoin is necessary to provide the right incentives for the development of clean alternatives for generating electricity to be interesting, but less than compelling. Are there no other incentives, such as evolving utility trends, or more efficient blockchain technologies? Bitcoin does have a first mover advantage relative to other cryptocurrencies. I just think we need to be concerned about getting locked into an technologically inferior solution because of switching costs.

There is an argument to made that decisions, such as how to use electric power, are made in markets with self-interested agents properly evaluating the tradeoffs. That said, think about why most of the world adopted the Windows operating system in the 1980s over the superior Mac operating system offered by Apple. Yes, we left it to markets to determine the outcome. People did make choices; and it took years for Windows to catch up with the Mac’s operating system.

My experience as a behavioral economist has taught me that the world is far from perfect, to expect to be surprised, and to expect people to make mistakes. We shall see what happens with Bitcoin going forward.

As things stand now, Bitcoin is well suited as an asset for fulfilling some people’s urge to engage in high stakes gambling. Indeed, many people have a strong need to engage in gambling. Last year, per capita expenditure on lottery tickets in Massachusetts was the highest in the U.S. at over $930.

High sentiment beta assets offer lottery-like payoffs. While Bitcoin certainly does a good job of that, it cannot simultaneously serve as an effective medium of exchange and reliable store of value, even setting aside the issue at the heart of the electricity debate.

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