(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) My faith in humanity’s future was restored a few weeks back after I visited a truly exceptional coffee shop in Paris. Driven by a deep passion for specialty coffee, the barista at this particular outpost offers a 2-hour coffee omakase experience. For readers who wish to visit, reservations are required. I think I’m going to send all my sales people, so they can experience first-hand what it looks like when someone channels their passion for a craft into an unbelievable customer experience that – at least for now – can only be delivered by a human.
I won’t question your genius especially when you say you won’t be in the field I just got off of the trucking plantation and decided to become DENMARK VESSY THE ONLY THING IM NOT BURNING ANYTHING OR KILLING ANYBODY IM JUST TRYING TO CATCH ON AND I WILL NEVER CATCHUP Heaven if I did I would have invested in Bitcoin in 2009 Well Catching on 2023 Have any tips for a novice that being in Catching on Layman’s street or for a ex modern day slave
It doesn't invalidate your point, but note that, per the late Julian Simon, terrestrial resources, gold included, are not finite in any meaningful sense.
Of course there is no official base price. What I'm saying is the cost of production sets the general baseline price in practice. This is how it works out in the market. The price never strays very far below the current cost of production. The last three bear bottoms for BTC are right around what the cost of production was. For example, last November the price bottomed at 15800 and stayed right around 16-17K for weeks; the cost of production at that time- 16-17K. Same scenario in 2018 and 2014. Why it works out that way- I imagine after complete seller capitulation the only sellers left are miners, and they're not going to sell for less than it costs to make a bitcoin. So the price stabilizes around the breakeven. That's just my guess, but what is a fact from the price history is that after a crash bitcoin will rebound around that cost of production. That's why I say it basically forms a baseline price more or less. And since the cost of production is essentially the cost of the electricity it takes to mine a coin, that's why I say the price is related to the cost of electricity. And since people most of the time are paying more than the cost of production in the market, that's why I say they are basically paying a premium that represents the value of the network itself.
Bitcoin NEVER strays very far below the cost of production. If that isn't forming some kind of baseline in practice, than what would you call that? After the halving next year, it will cost around 35K to mine a bitcoin, I'm guessing. Therefore we will not see the price of BTC stay under 35K for much longer. A year from now if we're still under 30K then go ahead and call me an idiot. But I'll bet I'm right. This is why the price of bitcoin continues to increase. Along with the conviction of HODLers who refuse to sell.
If we proceed from the fact that the main emission of bitcoins is controlled by US citizens, the most advanced AIs are controlled by US corporations, and bitcoin was admitted to the US exchanges, then the assumption of why the author campaigns for bitcoin in the article is understandable. It is not clear why US corporations that control AI and earn dollars that are problem-free for them will need bitcoin with its crazy and unpredictable volatility.
The price of bitcoin is expressed relative to fiat currencies and changes only due to the imbalance of supply and demand in the moment. The price of bitcoin is not related to electricity. No one can guarantee the possibility of buying electricity or anything. Any AI is a dead algorithm that can simulate signs of life, but cannot be alive.
Is Slow, Expensive, Partially Anonymous Bitcoin the Only Crypto Suitable for AI? Arthur, are you serious?
Thanks for sharing this. Not sure I agree with the argument that electricity sets the price of bitcoin though. The difficulty adjustment invalidates that I would have thought.
Lovely price estimate matrix, but you gotta juice those numbers Arthur!
Give us a "fiat money printed" multiplier so we can proselytize more people!
If Papa Powell needs to print his way into the history books, some of those freshly minted monies will find a home in Bitcoin, so give us a random multiplier for that to make us feel extra good!
But why would an AI (based by pure logic) choose a system that directly competes to their “food” (in your words)? Your explanation on “AIs Gotta Eat” is the only debunk needed for "Bitcoin being their choice."
You say that: “An AI requires two critical resources to exist and persist: data and compute power.”
While you deliberately ignore the simple true that BTC, not only requires the same two critical resources to exist, persist and become better; but that Bitcoin's game theory create predatory incentives against any other system competing for the same resources (AI).
AI's choosing Bitcoin as their currency would be a self-destructive choice.
It would be something similar to a human being lost in the forest picking the biggest predator in this forest to be their companion. While knowing that this huge predator has all the incentives (by its pure nature/instinct) to eat the human being when he is sleeping.
That said. I say that you are also deliberately ignoring other Censorship Resistant and Scarce decentralized digital money; that don't directly compete to AI, because they have a more efficient use of data + energy - by being more data/energy efficient than Bitcoin itself.
BTC doesn't exists in a vacuum. You should check on Nano (XNO), for example.
Censorship resistant + Scarce + Energy/Data efficient. The true win.
I won’t question your genius especially when you say you won’t be in the field I just got off of the trucking plantation and decided to become DENMARK VESSY THE ONLY THING IM NOT BURNING ANYTHING OR KILLING ANYBODY IM JUST TRYING TO CATCH ON AND I WILL NEVER CATCHUP Heaven if I did I would have invested in Bitcoin in 2009 Well Catching on 2023 Have any tips for a novice that being in Catching on Layman’s street or for a ex modern day slave
Insightful essay - thanks for posting.
It doesn't invalidate your point, but note that, per the late Julian Simon, terrestrial resources, gold included, are not finite in any meaningful sense.
Of course there is no official base price. What I'm saying is the cost of production sets the general baseline price in practice. This is how it works out in the market. The price never strays very far below the current cost of production. The last three bear bottoms for BTC are right around what the cost of production was. For example, last November the price bottomed at 15800 and stayed right around 16-17K for weeks; the cost of production at that time- 16-17K. Same scenario in 2018 and 2014. Why it works out that way- I imagine after complete seller capitulation the only sellers left are miners, and they're not going to sell for less than it costs to make a bitcoin. So the price stabilizes around the breakeven. That's just my guess, but what is a fact from the price history is that after a crash bitcoin will rebound around that cost of production. That's why I say it basically forms a baseline price more or less. And since the cost of production is essentially the cost of the electricity it takes to mine a coin, that's why I say the price is related to the cost of electricity. And since people most of the time are paying more than the cost of production in the market, that's why I say they are basically paying a premium that represents the value of the network itself.
Bitcoin NEVER strays very far below the cost of production. If that isn't forming some kind of baseline in practice, than what would you call that? After the halving next year, it will cost around 35K to mine a bitcoin, I'm guessing. Therefore we will not see the price of BTC stay under 35K for much longer. A year from now if we're still under 30K then go ahead and call me an idiot. But I'll bet I'm right. This is why the price of bitcoin continues to increase. Along with the conviction of HODLers who refuse to sell.
If we proceed from the fact that the main emission of bitcoins is controlled by US citizens, the most advanced AIs are controlled by US corporations, and bitcoin was admitted to the US exchanges, then the assumption of why the author campaigns for bitcoin in the article is understandable. It is not clear why US corporations that control AI and earn dollars that are problem-free for them will need bitcoin with its crazy and unpredictable volatility.
substack and really not practical to translate with the google extension I'm really fed up I don't understand why you left medium
The price of bitcoin is expressed relative to fiat currencies and changes only due to the imbalance of supply and demand in the moment. The price of bitcoin is not related to electricity. No one can guarantee the possibility of buying electricity or anything. Any AI is a dead algorithm that can simulate signs of life, but cannot be alive.
Is Slow, Expensive, Partially Anonymous Bitcoin the Only Crypto Suitable for AI? Arthur, are you serious?
Thanks for sharing this. Not sure I agree with the argument that electricity sets the price of bitcoin though. The difficulty adjustment invalidates that I would have thought.
Great exercise! Thanks!
Lovely price estimate matrix, but you gotta juice those numbers Arthur!
Give us a "fiat money printed" multiplier so we can proselytize more people!
If Papa Powell needs to print his way into the history books, some of those freshly minted monies will find a home in Bitcoin, so give us a random multiplier for that to make us feel extra good!
Very interesting narrative, I think this needs to be explored more broadly
Censorship resistance: checks!
Scarcity: checks!
But why would an AI (based by pure logic) choose a system that directly competes to their “food” (in your words)? Your explanation on “AIs Gotta Eat” is the only debunk needed for "Bitcoin being their choice."
You say that: “An AI requires two critical resources to exist and persist: data and compute power.”
While you deliberately ignore the simple true that BTC, not only requires the same two critical resources to exist, persist and become better; but that Bitcoin's game theory create predatory incentives against any other system competing for the same resources (AI).
AI's choosing Bitcoin as their currency would be a self-destructive choice.
It would be something similar to a human being lost in the forest picking the biggest predator in this forest to be their companion. While knowing that this huge predator has all the incentives (by its pure nature/instinct) to eat the human being when he is sleeping.
That said. I say that you are also deliberately ignoring other Censorship Resistant and Scarce decentralized digital money; that don't directly compete to AI, because they have a more efficient use of data + energy - by being more data/energy efficient than Bitcoin itself.
BTC doesn't exists in a vacuum. You should check on Nano (XNO), for example.
Censorship resistant + Scarce + Energy/Data efficient. The true win.
But there are others.
Substance !