Bitcoin = World power exchange?

Can we say that bitcoin is electricity power trading? It certainly has some ingredients and similarities of it. And what this means, is it a good or a bad thing?

Electricity trading

Electricity is traded at stock exchanges but with pretty stable price and just one future ... electricity. Electricity price like everything else trading on open market and exchanges is determined from the demand and supply. The price wary in correlation with weather and it is more expensive in winter due to heating season and usually it is cheapest in spring time when there is no need for heating or cooling and the hydro dams are producing the most. Aldo each country and region have their own specifics, this is short overall view of things.

On stock exchanges the price wary constantly on daily level. Companies buys electricity and sell it to the consumers usually in some form of package and with stable price. The stability that they offer to the consumer comes with margin, since they are taking the risk if price goes up.

Bitcoin as medium for electricity trading

Now how bitcoin comes in this picture. Well the biggest market for cryptocurrencies are Japan, South Korea and USA. Japan and South Korea are energy poor countries. It means that they don’t have oil, coal or natural gas. The price of energy in these countries is the most expensive in the world. USA have mix of energy and exchanges, so the price varies, and it depends from state to state and time of the year.

Now where is bitcoin mined? Well certainly not in Japan or South Korea. It is mined in countries with cheap electricity. China as a big world manufacturer of electronics and with cheap electricity, is number one for bitcoin mining. Then countries like Georgia, Uzbekistan and others with cheep electricity. USA also is making some mining.

When someone in those countries is mining bitcoin and a buyer form South Korea buys it, you can say that this is a form of electricity trading. Someone from Uzbekistan sold electricity to someone in South Korea, but in form of this virtual asset that is bitcoin. This is electricity trading. Then the buyer can continue exchanging and converting the bitcoin in whatever that he wants, buy other cryptocurrencies, buy things with it, etc. So bitcoin is acting as medium for transferring electricity values from different parts of the world.

Electricity trading is usually done on exchanges, but certain criteria must be met in order this to happens. It needs physical infrastructure, electrical grid, and set of rules in order the electricity to flow freely between countries. But with bitcoin it transcends physical infrastructure, borders and countries.

Saying that bitcoin is simple electricity trading is probably exaggerated, but it has forms of it. And partially it is.

Perspectives

With this bitcoin at some level is making balance in the world and electricity price. It is making the world more equal place, but in terms of energy it is still a niche.

We know what significance has energy to the world. Absolutely prior. Wars are made for energy, economy stumbles, and when price of oil goes up everything stops. Also we are fossil fuels addicts, and we are putting in danger the hole planet. In the future the trend is that electricity will replace others forms of energy. Oil, through electrification of vehicles and heating with heat pumps. If bitcoin can make even slight changes to the world of energy for better, it will be huge thing.

For the developed countries who think they are buying the world cheep electricity through bitcoin, they are actually making a good thing to themselves as well. Today all the companies are global and selling globally. In order to sell globally you need global buyers. Actually, this implies to the all sectors. You can be one or two steps in front of the others but not 10 steps. Because there will be no one to sell to. And one or two steps is actually not bad...it is good for competition. To much is bad.