It has the advantage of being unconstrained by geography — and is expected to serve as a catalyst that brings space-based solar power forward

Jeffrey Sachs, the economist revered for "The End of Poverty," has argued forcefully that bitcoin is not merely harmful but criminal. Yet his reason for calling bitcoin harmful to the planet was not an economic one. It was that mining consumes enormous amounts of electricity and therefore deepens global warming along with the energy crisis. One of the reasons Microsoft founder Bill Gates — who recognized bitcoin's potential earlier than anyone — has been voicing concerns for several years is likewise said to be the burden that bitcoin mining places on the global environment.

Mining is the core of the bitcoin system, but its very name invites misunderstanding. For the miner it is work to obtain coins, but for the whole it is a mechanism that protects the system. If bitcoin is the treasure, mining is the vault that stores it. Because it is a system with no central command post, it uses a carrot to attract vault keepers. The miner's aim is the carrot called coin, but the more of them participate, the thicker the vault becomes. It is precisely this design — making the vault's outer wall grow thicker in proportion to the value of its contents — that is the heart of bitcoin's design.Does mining rationalize the management of power plants?Saying that the vault's outer wall grows thicker as the bitcoin price rises means that the number of miners increases and the electricity they use increases as well. There are various statistics, but recently there was a report that the electricity used for bitcoin mining exceeds the electricity used by the people of Argentina. The fact that this ranking will keep climbing is nothing but frightening.

Those who condemn the electricity consumption never question the premise that bitcoin is useless. However persuasive the bitcoiners' rebuttals on this issue may be, they will refuse to accept them unless that premise — that bitcoin itself is useless — is revised. So, to follow the bitcoiners' logic below, you must first set aside for a moment the preconception that bitcoin is useless. Otherwise you fall into a circular argument and cannot move a single step.

Bitcoin mining is possible anywhere on earth. What this simple fact implies is enormous. Even if, in physical terms, it consumes as much electricity as the people of Argentina, because of this simple fact the meaning of the two figures is completely different, both economically and environmentally.

The people of Argentina consume electricity in similar seasons and at similar times of day. Argentina's electricity consumption figure therefore misleads. Nationally, the country must secure generating facilities and supply capacity four to five times its consumption. This is the same in every country. It is because you have to size for the maximum rather than the average that you can avoid a blackout. Since bitcoin mining is possible anywhere on earth, it can be done using wasted electricity resources or facilities, without adding any burden to the total electricity used by the people of Argentina.

To explain why the two electricity consumption figures are different, let us simplify the premises a little further. Suppose only power plants can mine bitcoin. This is not an absurd assumption. For reasons of competitiveness it will gradually become reality. Argentina's power plants mine bitcoin with their spare capacity, avoiding peak times and high-demand seasons. With the profits from selling the bitcoin they can improve their facilities or lower electricity rates for the public. When Argentina's plants are not mining, hydroelectric plants in Canada — in the northern hemisphere, where the season is the opposite — can mine instead, so the bitcoin system runs without a problem. Canada and Argentina have opposite seasons, but their time zones overlap. That is, their daily peak times coincide. So during the hours when the people of Argentina consume the most electricity, power plants in Australia or Europe mine bitcoin. Bitcoin mining is aggressive in its use of renewable energy Although it is a theoretical and simplified assumption, according to this model bitcoin mining rationalizes the management of power plants without increasing global electricity consumption in the slightest. You may think no power plant would step forward to mine a reviled bitcoin, but even signing off-peak special contracts with private miners brings you close to this model. Not because it is desirable but because using idle capacity is the most competitive option, this will quickly become reality. In fact, there was a survey showing that bitcoin mining conducted outside China generally uses renewable energy. In Canada and the United States they use hydroelectric power, and in Norway, geothermal power.

Bitcoin mining companies such as Bitmain and Riot Blockchain Inc. have moved into the vacuum left behind when factories withdrew from places like Massena, New York, where aluminum smelting plants had originally located because hydroelectric plants made electricity abundant. Riot Blockchain, listed on the Nasdaq, became especially well known when its share price rose more than tenfold while bitcoin rose sixfold.

As the price rises, the number of miners increases and competition intensifies, so miners are bound to become desperate to use electricity that would otherwise be wasted. Given that mining is unconstrained by geography, technological leaps to exploit resources that have been discarded until now will happen rapidly.

Burning off gas in order to drill for oil is called a gas flare, and the flame suspended from a tall derrick is a symbol of the oil industry. Recently, however, it has also been a target of environmentalists who oppose oil drilling — because it wastes energy resources and emits greenhouse gases on top of that. You may think it would be better to collect the gas and sell it on the market rather than burn it off, but in general the cost of transporting a gas to the point of consumption is higher, so if someone offers to take it away, drillers would gladly hand it over even at a premium. In other words, to use a gas flare as a resource, you have to be able to consume it right there on the spot. That is why the fact that mining is unconstrained by location shines.

MintGreen, which completed its first round of funding from CoinShares this past March, is a technology company that maximizes mining efficiency. It uses the heat given off during mining to age whisky or to evaporate the water in salt farms.

As the bitcoin price rises, creative ideas and technologies for unearthing discarded electricity resources will develop by leaps and bounds, but the most interesting of them is the claim that bitcoin mining will bring forward space-based solar power, which is still only at the idea stage. Space-Based Solar Power (SBSP) is a field of strategic development for the major nations. Solar generation carried out in space, where there are no clouds, no atmosphere, and no night, is 40 times more efficient than generation on a suitably situated patch of the earth's surface. The problem is the laser-beam technology for sending the generated electricity down to the ground, and there is a long way to go before it becomes economical. But if bitcoin is expensive enough, SBSP's hard problem is solved economically at a stroke. Bitcoin mining, unconstrained by geography, is possible in space as well, and no special technology is needed to send bitcoin down to the ground. Mining using SBSP would promote the development of the SBSP industry — the dream form of power generation — without imposing any additional burden on the earth's environment and energy resources.

The most urgent condition for bitcoin mining to make an eco-friendly and technology-friendly leap is China's response. China has a great deal of coal-fired thermal power generation, and on top of that its miners are stealing electricity. Because of this corrupt structure, mining conducted in China is neither eco-friendly nor technology-friendly. The bigger problem is that, since costs are all but nonexistent, the higher the share of Chinese mining, the more the market price is distorted. It also means that the bitcoin price to date has embedded within it the distortion and pressure applied by Chinese miners, who dump at every decisive moment. The more actively the Chinese government roots out its miners, the more solidly bitcoin and bitcoin mining will develop in a direction that benefits humankind.

Oh Tae-min, author of "Bitcoin Was Strong" and "The Genealogy of Bitcoin Wisdom"