I have heard bitcoin called a “digital battery” or “digital energy” by a number of different Bitcoiners. For those of us who have been in the bitcoin space for a while may already understand what this means and how it works. For those of you who don’t yet understand how or why bitcoin is a battery, hopefully this article helps you to better understand.
Here’s my argument for why bitcoin is like a digital battery and yet another reason why bitcoin is en energy solution and not an energy problem.
What Is A Battery?
When we hear the word battery, we generally think of the AA batteries that go in the back of the television remote, the batteries in our phones, or even the enormous batteries that power electric vehicles. While these are all accurate descriptions, batteries come in a variety of shapes, sizes, and forms that we often overlook.
For the sake of this article, I am going to define a battery as something that stores energy to be used at a later time or location.
While we are familiar to batteries composed of minerals such as lithium (and storing energy in the form of electricity), there are a variety of other ways to store energy for use at a later time or location.
Given that this post is about why Bitcoin is like a digital battery, I will describe bitcoin as something that stores energy for use at a later time or location.
To be clear, Bitcoin cannot be used to store energy in electrical form to power your home or charge an electric car, but it can be used to pay someone to exert energy (work) at a later time or location. It can transform a variety of different forms of energy into digits that can be utilized at a later time or location.
In this regard, bitcoin is like a digital battery.
With that out of the way, let’s have a look at some of the current methods for storing energy in various physical forms.
How Do We Currently Store Energy?
When you think about energy storage, the first thing that springs to mind is probably something like a lithium battery that powers your phone, right?
Well, there are actually a variety of various techniques for storing energy, and lithium batteries are currently one of the least efficient systems for storing energy over extended periods of time.
The following techniques capture and store excess energy in a variety of ways, including gravitational potential energy, thermal energy, rotational kinetic energy, compressed air, hydrogen gas, and of course, lithium batteries.
Now, let’s examine each one in further depth to gain a better understanding of how energy is stored via each of these methods.
Pumped Hydro Batteries
When solar and wind farms create excess electricity, it’s often used to pump water upstream to a hydroelectric dam reservoir, where it’s held until its gravitational potential energy is directed through a water turbine to generate electricity.
Pumped hydro energy storage isn’t only used to store surplus renewable energy. It is also frequently used in conjunction with existing grid electricity from coal and natural gas power plants to pump water at night when energy demand is at its lowest point of the day.
Since hydroelectric dams are not available in every country in the world, this is currently only feasible where surplus energy is produced close enough to existing hydroelectric infrastructure.
Gravity Batteries
Another gravitational potential energy storage method, similar to pumped hydro, is being tested with massive weights that are raised and lowered to generate electricity.
When there is a surplus of renewable energy or low-demand grid electricity, electric motors are used to lift large weights. When the energy is needed to power the grid, the weights are lowered to spin an induction generator and produce electricity.
One of the unique benefits of gravitational potential energy is that it does not require rare earth materials like lithium or cobalt, and there is almost no limit to the number of times that a weight can be raised and lowered.
Kinetic Batteries
Kinetic energy is another popular technique of storing excess energy, although it involves a little more science and technology.
Electricity is used to power electric motors that spin enormous flywheels magnetically levitated in low-pressure cylinders. These flywheels will theoretically spin indefinitely since there is no friction from a bearing and almost no air resistance.
When the energy from these flywheels needs to be harnessed, a magnetic induction generator is activated, causing the flywheels to slow down and generate electricity. This is the same technology that is utilized in regenerative braking in electric cars and electric trains.
Thermal Batteries
Heat is another common way to store excess energy. With more concentrated solar power (CSP) plants being built around the world, there is an increasing demand for them to be able to store the energy they generate during the day and use it after the sun has set.
The current methodology is to heat salt (and other experimental minerals) to a lava-like consistency using high intensity mid-day solar energy. After the sun goes down, this molten salt is used to boil water, produce steam, spin a turbine, and generate electricity. Molten salt is used in this way functions as a thermal battery.
Compressed Air Batteries
Compressed air is also being tested as a method of storing excess energy.
Excess electricity is utilized to power large-scale compressors that compress air in subterranean caves, enormous storage tanks, and even underwater balloons.
When this stored energy is needed, compressed air is released to push water through a turbine to generate electricity.
Hydrogen Battery
Surplus power may also be used to break water molecules (H2O) into Hydrogen (H2) and Oxygen (O2) through a process known as electrolysis.
The oxygen is either released into the atmosphere or collected and sold, while the hydrogen is collected in a specialized container and transferred to a location where it is burnt in a hydrogen fuel cell to generate electricity.
Lithium Batteries
On a small scale, lithium batteries are arguably the most popular means of storing energy. We use them to power our mobile phones, computers, watches, and even to start our gasoline powered vehicles, but they are also being tested as a large-scale method of storing electricity.
Electric vehicle storage, power walls, and battery farms are all rising in popularity as a way to store excess energy. Batteries can take advantage of reduced energy rates throughout the night, when energy demand and costs are at their lowest, to receive a cheaper charge and utilize it during the day, when demand is higher.
The main issue with lithium batteries is that they require rare earth materials, and they lose their capacity to store a charge over time. Additionally, we can also expect to see a significant increase in the demand for responsible lithium battery disposal over the next decade or two, as the batteries reach the end of their life cycles.
Physical Energy Loss Over Time
As if all of the above energy storage solutions aren’t crazy sounding enough already, they all suffer from varying levels of energy loss between when energy is initially stored and when it gets used.
For example, energy stored in kinetic flywheels, thermal storage, compressed air, and lithium battery storage all suffer from energy degradation over time. Without perfect efficiency, the amount of energy that is able to be harvested from each of these storage methods will always be less than the amount of energy that goes in. They are also only capable of charging and discharging energy so many times before their ability to store energy begins to degrade.
Lithium batteries have a life cycle of about 5-10 years if they’re constantly cycled and that gets even shorter if they’re operating in lower temperatures.
Gravitational potential energy storage like pumped hydro is one of the most energy efficient storage methods. There’s no limit to the number of times that you store gravitational potential energy in something but it requires large amounts of land, substantial capital investments, and a certain amount of vertical drop in order to be viable.
Storing Digital Energy
Until any of the above energy storage solutions are viable at scale, we need a way to capture and store surplus energy so it can be put to use at a later time and location. We are also going to need a way to pay for the energy storage solutions I have mentioned above.
Bitcoin is the solution to both problems.
The Bitcoin network converts energy (a limited resource) into bits of information known as bitcoins (a digitally limited resource) through the process of bitcoin mining.
Unlike any of the batteries mentioned above, Bitcoin doesn’t lose charge or degrade over time. A Bitcoin address with a balance holds the same amount of bitcoin indefinitely without any degradation. It stays exactly the same. Bitcoin, the digits at a bitcoin address, will not degrade or fluctuate over time but the purchasing power or purchasing “energy” of those digits will fluctuate in relation to every fiat currency in the world.
From a monetary perspective, Bitcoin also doesn’t degrade like fiat money sitting in a bank account. In fact, as I am writing this article, 100% of UTXOs that are at least 210,000 blocks old have increased in purchasing power against every fiat currency in the world.
Bitcoin Is Not An Electrical Battery
Naturally we need a method of storing surplus energy in raw electrical form so that we can use it to power our daily lives. As much as I want to believe that Bitcoin is “a digital battery”, it simply does not have the ability to directly store electrical energy. That doesn’t mean that it isn’t going to become one of the most important parts of the energy grid and building a more robust energy infrastructure.
In order to build any of the energy storage solutions mentioned above, it’s going to cost a LOT of money. Hundreds of billions of dollars worth of infrastructure needs to be built and maintained to handle rising energy demand on a global scale.
Bitcoin has the ability to eliminate energy curtailment and provides a unique incentive for renewable energy producers. Bitcoin mining provides a way to pay for growing energy grid needs by providing a buyer for 100% of wasted, surplus, stranded, curtailed energy and effectively subsidize the expansion of any of the energy storage solutions I’ve mentioned.
Bitcoin is not a literal digital battery and sats are not literal digital energy but electricity is the primary resource necessary for generating Bitcoin and sats are just as scarce as energy itself.
Since there is no other method of converting raw electrical energy into something that can be stored indefinitely without degradation, Bitcoin is like a digital battery.
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