Bitcoin as Battery

One of my favorite things about crypto is that, every so often, your conception of what it is changes.

Bitcoin at first was “weird internet money” and then it was “a protocol” and then it was “digital gold”. Ethereum is “ICOs”, or maybe “DeFi”, or maybe “Web3”, or maybe all three, or maybe something else. Crypto wallets are a place to hold money, or maybe they’re also your digital identity. Crypto protocols like Maker, Compound, Helium, Arweave and Uniswap are marketplaces, or maybe APIs, or maybe inverted companies, or maybe ecosystems, or all of the above. The IRS sees crypto as property, the SEC as securities, the CFTC as commodities, FinCEN as currencies. And on and on.

Point is, we are still very early in the process of learning how to think about crypto networks, let alone what we can build with them.

One area where I think we are going to see our conception of Crypto change dramatically over time is its relationship to energy.

The narrative today is, overwhelmingly: crypto mining (specifically: Proof-of-Work mining for Bitcoin and Ethereum) is a dangerously large consumer of energy. Where I expect the narrative to move to over time is: crypto mining is driving the energy transition from fossil fuels to renewables.

To explain why, let’s start with Iceland.

I’ll never forget the first time I visited Iceland in 2012 with Brad and Gudjon. We were passing one of Iceland’s many aluminum smelters and Brad said to me: “You see there? That’s Iceland exporting its electricity”.

Icelandic case studies for foreign investors
An aluminum smelter in Iceland

That was a head-scratcher for me at the time. But what he meant was: Iceland has vast amounts of accessible, inexpensive renewable energy in the form of geothermal. But you can’t build power lines in every direction under the Atlantic. So instead of selling it directly, you convert the electricity into aluminum and you ship that around the world. In other words, you convert stranded renewable energy into value.

In a sense, the aluminum coming from Iceland is like a battery. What is a battery? A way of shifting both the location and the time-of-use of energy. Whereas live electricity (whether produced by coal, gas, wind or solar) must be used right then and there, electricity converted to aluminum can be used anywhere, anytime.

Dams are batteries; gasoline is a battery. And in a way, aluminum is a battery. Of course, while traditional batteries start and end with energy directly, aluminum’s battery is economic, converting energy to value. And that value can be re-used elsewhere (even converted back into energy!)

Which brings us back to crypto mining. Crypto mining converts electricity into value, in the form of crypto assets (BTC, ETH, etc). Those assets, like the aluminum produced in Iceland, can then be moved, transferred and transformed. But unlike aluminum, which must be physically shipped to its final destination, crypto assets are programmable, and can move there instantly via an internet connection.

So, if we think of Bitcoin as a battery, what can we do with it?  The key properties of Bitcoin’s battery are: 1) always on and permissionless (no need to find customers, just plug and go) and 2) naturally seeking low-cost electricity: it will always buy when the price is right.

Given those properties, Bitcoin’s battery can assist renewable builds (and electric grids more generally) in a number of ways:

  • Interconnection queues: when you develop new energy resources, you must apply to get them connected to the grid. Texas alone has over 100 GW of renewables in its queue. These queues can take years to clear. In the meantime, these assets could be online and earning Bitcoin.
  • Project finance: Renewable developers need capital to finance build-outs before they have customers. Bitcoin’s battery is always ready to be the first customer.
  • Geographic issues: Sometimes the sunniest, windiest places are not the ones with the most customers, so it’s hard to justify the development of new renewables. Bitcoin’s battery solves this, becoming a “virtual transmission line” of sorts.
  • Timing & grid balance: Sometimes when the sun shines and when the wind blows is not when we need the most electricity. Yet, electric grids are marketplaces that must stay in perfect balance between supply and demand. Therefore, grid-connected renewables often have to “curtail” (turn off) if the are producing too much energy at the wrong time. Bitcoin’s battery is ready to buy 24/7/365 when the price is right, and turning up and down as needed, and participating via direct power purchase agreements as well as via demand response programs.
  • Underperformance: Related to the timing & balance issues above, often times, renewables produce more energy than is needed on their grid, leading to subpar financial performance. Bitcoin’s battery is ready to buy if no one else will.
  • Cleaning the grid: Even outside of renewable generation, Bitcoin’s battery can help improve both emissions and the energy mix. For example, Crusoe Energy attaches efficient turbines and mining equipment to existing gas flaring sites, both improving emissions and converting energy into Bitcoin’s battery. Taking this a step further, you could even then take those profits and reinvest them in on-grid renewables elsewhere, another twist on the idea of Bitcoin as a “virtual transmission line” (aka battery).

These are just high level ideas. There are many ways they could be implemented (power purchase agreements, feed-in tarrifs, contracts for differences, etc) — those details are way above my pay grade.

While I am certainly an optimistic tech VC and not an expert on energy infrastructure, these are not just hand-wavy rosy ideas. Just recently the energy giant Aker announced a major Bitcoin-related initiative, Seetee. The shareholder letter where they lay out the vision is worth a read — it’s broader than the ideas I’m focusing on here, but indeed they describe Bitcoin as an “economic battery”, and intend to use it to solve some of the problems I mention above, among others.

I believe the properties of Bitcoin’s battery are powerful and profound, and will lead to the kinds of solutions I point to here. And as we have learned from our experience with this technology so far, that’s certainly only the beginning of what will be possible.

Two Screens for Teachers

Sometimes, an answer to a hard problem is so simple and elegant that you’re surprised it wasn’t obvious earlier. Two Screens for Teachers is one of those answers.

Even though vaccines are on the way, many students and teachers will be interacting remotely at least through the rest of this school year.

Adding a second screen is, in fact, a game changer when you spend your life on Zoom. Makes it so you can see people and content at the same time. For teachers, this is even more important, both from a classroom management and emotional perspective.

Two Screens for Teachers is being organized by my old friend Matt Lerner, the former CTO of WalkScore.

It’s a beautiful project and I’m donating now, and I’d encourage you to do the same if you can.

Two Screens for Teachers from Matt Lerner on Vimeo.

No Wasted Footsteps

This summer, we moved into a new house. Moving is a lot of work. As part of moving out of our old house, we got rid of a lot of junk that we had accumulated over the years. We ended up working with the amazing Dave O’Rourke of Spaceback. As Dave and I were loading a huge junk pile into his truck, he said something that really stuck with me — he said: “in this business, you can’t waste any footsteps”. Meaning, there’s a lot to do, lots of things to lift and move, and you need to be smart and efficient with your energy.

As I am now moving items around our house, and carting empty moving boxes and miscellaneous trash out, Dave’s words have been sticking with me. If I’m going to the basement, grab a box to take to the trash. If I’m going up to the second floor, grab a bag or a box or an item that needs to go there. Going back to the first floor? Grab something that needs to go there. No wasted footsteps.

This is good advice for moving a bunch of stuff around, but it’s also good advice in general. And it’s been on my mind, as of course moving to a new house means that you tend to fall behind on other things (like work and email). So the same approach of no wasted foosteps could (and should) be applied to digital life. Get the thing done that you need to get done right then and there, don’t waste any footsteps walking around empty handed. The folks that I work with that seem to be most productive and efficient seem to take this approach, and I’m going to try to keep it front and center myself.

Hardware-based Identity

I’ve written before about how re-structuring identity is one of the most interesting opportunities on the web today. Today’s identity ecosystem is account-based (accounts with Google, Facebook, Apple, etc), which perpetuates data silos and prevents interoperability & innovation.

As web3 and crypto become more widespread, there’s an opportunity to shift to an identity model that’s more about cryptographic signatures, which can be done directly by an individual without an account at any one company. The problem is, the user experience around this is still rough, and worse, there are some pretty extreme risks (lose your private key, lose everything, with no recourse).

So the big question is how to address the the opportunity and also solve for these hard challenges. It feels to me like an important approach is leveraging the concepts of multi-sig and hardware-based key-signing.

On hardware-based keys: the most powerful one out there today is the iPhone. ApplePay and sign-in with Apple are all about the hardware you hold (the phone) and using it to authenticate. It’s secure and easy (amazingly so) — no need to remember passwords, limited phishing vectors, etc. Problem is, it’s totally locked up in Apple land.

Luckily there’s a lot going on in the identity hardware space.

I use a Yubikey every day. It’s still a geeky experience and not for everyone, but it’s eye opening, and it builds on open standards like FIDO.

I was intrigued today to see the launch of Ryder, a wearable hardware wallet in watch form. A problem for me, though, is that I don’t like wearing a watch. Just not comfortable and I don’t want to do it.

I think rings are a really interesting form factor here. I just ordered an Oura Ring for sleep tracking (thanks Nadia) and am excited to try it. And Joel recently pointed me to the NFC Ring which lives in the payments (and identity) space.

Cards are also a big one. We use cryptographic key signing on cards every day (smart chips), but still only connected to existing payment systems. Projects like Keycard (thx again Joel) have the potential to open that up.

For hardware identity to really work (and to be safe), it also needs to be paired with some sort of multi-sig or multi-factor process. Project like Casa and Magic have been working out a lot of the details here and I think we’re getting closer to really good user experiences.

In the end, I want to live in a world where using the web “just works” — where fundamental activities like login and payments can feel like magic, but without perpetuating proprietary and siloed models.

The Beauty of Focus

It has been a stressful year, in so many ways.

This morning, I opened up my Calm app to attempt to resurrect my meditation habit. I have had an intermittent meditation practice for years, and despite the fact that it really seems to work for me, I have never developed a rock steady daily habit. (From a tools perspective, I find that when I’m in a good routine, I either use nothing and just do breathing, or use a simple app like Insight Timer, but when I’ve lost the groove I find it helpful to use tools like Calm or Simple Habit to get back into it.)

Anyway, for me, the big benefit of meditation is helping to get perspective on the constant stream of ruminating concerns flowing through my mind — some of which are useful and necessary, but some of which are not. And the basic practice of focusing on what’s happening here and now (breath, sensations, sounds) is incredibly powerful as a way to regain clarity.

Thinking about this this morning made me realize why I enjoy certain activities so much — activities that have a natural focus to them and basically force you to detach from your running thoughts and focus on the present: listening to music, being at a baseball game, doing carpentry or other house projects, skiing, hiking, coding. Those are the ones that really do it for me, but of course you see it with gardening, drawing, reading, etc etc.

I’d like to think that this kind of focus-building isn’t about ignoring the world, but rather about getting your mind to a place where you can actually be more effective in doing the things you need to do to have an impact (whether that’s on your career, family, politics, community, etc).

It’s funny and a little backwards (though not ironic) that finding ways to focus down and think less can actually help you do more, but I think it can and does.

Second Chance Studios

Several years ago, I started volunteering at Defy Ventures, a program that helps formerly incarcerated individuals start their own businesses.

Through Defy, I met an entrepreneur named Coss Marte, who beginning to build a personal fitness business called Coss Athletics. At first, it consisted of 1:1 and group sessions with Coss in parks, and has grown steadily since then. Now called ConBody, it features both a studio on the Lower East Side and a growing online business. Importantly, ConBody exclusively employs other formerly incarcerated individuals as trainers, and in addition to being a successful and growing business, the team members have a 0% recidivism rate.

(As an aside, I can personally testify that the ConBody workout is legit. I literally threw up halfway through my first class. Though it’s debatable whether that says something about the workout or my baseline fitness going in.)

Today, Coss is launching a new initiative called Second Chance Studios. Second Chance Studios is a nonprofit video and audio production company that exclusively employs formerly incarcerated individuals in New York City. It will also serve as a job training and placement program focused on digital skills in audio and video production.

Second Chance is currently fundraising for its launch on Kickstarter and as of now is about $36k towards its $50k goal. You can back it on Kickstarter here and learn more from the video below. I’m proud to be a backer and am excited to see the project launch.

The Slow Hunch

One of my favorite ideas from the last 10 years is “The Slow Hunch” which my friend Steven Johnson popularized in his book Where Good Ideas Come From. Here is a good summary of the book, and the idea of The Slow Hunch is this:

“World-changing ideas generally evolve over time as slow hunches rather than sudden breakthroughs”

Great thinkers and inventors such as Darwin and Tim Berners-Lee used The Slow Hunch to process big ideas over long periods of time. A kernel of an idea takes root, but doesn’t mature right away — but rather, needs to bump around with other ideas and experiences over time until something profound clicks. In some ways, USV is like an ongoing Slow Hunch — Andy likes to describe USV as “a conversation that’s been going on for 15 years”.

Back when I first read Where Good Ideas Come From, this idea of The Slow Hunch really stuck with me. It’s been there with me for nearly 10 years and I keep coming back to it.

Today, I’m officially renaming this blog The Slow Hunch (www.theslowhunch.net). I’ve had these domains (and @theslowhunch) for some time, and have flirted with using them, but have never actually done it — but today I’m flipping the switch.

This blog renaming coincides with a bunch of work we’ve been doing at USV on this general topic. Albert wrote the potential for and importance of tools for networked knowledge here. And “Access to Knowledge” is a pillar of our Thesis 3.0.

For The Slow Hunch to work, information not only needs to be captured, but also revisited and reprocessed over time. In WGICF, Steven talks about the Commonplace Book as a tool used by Darwin and others for this purpose. Like a notebook and scrapbook kept over time, but with the key feature being re-reading as standard practice to help connect ideas over time.

For the most recent USV book club, we read Steven’s newest book, Enemy of All Mankind, and Steven joined us for our group discussion. During that conversation, we revisited the idea of the Slow Hunch, and in particular, how he thinks about the process of building ideas over time. He describes it in terms of turning ideas into “magnets” that can live for a long time, and “catch” other ideas, building up into snowballs over time.

For all the information we consume and produce on a daily basis, we are still lacking simple tools to assemble and package it in ways that produce real knowledge. To give idea fragments the potential to become slow hunches. It’s a huge need and also a huge opportunity.

I first wrote about the need for this kind of thing back in 2010 (Wanted: An Open Commonplace Book). What I pointed out then, and what is still true now, is that our current information universe is fragmented (google docs, email, notion, evernote, browsing history, social media, etc), and what’s really needed is a tool that can help package this all up in a way that’s useful.

Today, tools like RoamResearch and Walling are pioneering connecting old information with new information (a network “graph”). And tools like Memex are indexing your browsing history. (as an aside: all of these require an enormous amount of trust, as networked personal knowledge is both valuable and dangerous)

To me the most promising idea here is user experience and user interface innovations that make it easy, intuitive and fun to link old information to new information, and to revisit it over time in a way that makes sense. Unlocking this at scale will have massive implications not only for personal productivity (and happiness), but for networked knowledge much more broadly (research, news, corporate innovation).

With that, hitting publish on the next chapter of The Slow Hunch here on this blog.

The 1k Project

It has been a long few months, and many people’s lives have been turned upside down in untold ways.

One way to help is through the 1k Project. The 1k Project matches sponsors with individuals & families in need, using a $1k / month for 3 months model. Recipients are sourced through the Project’s trusted network, and donations are anonymous, unrestricted gifts delivered via GoFundMe. I’m sponsoring a family starting this month.

I am a big believer in unrestricted cash as the best method for channeling support to those in need. For the same reason I believe in Universal Basic Income, I believe that every person knows what they need money for and how to use it, and having any measure of cash flexibility can be a lifesaver. You can get a sense of the impact of the 1k Project from some of the stories from recipients.

I feel fortunate to be in a position to support this effort, and am proud to be involved. If you would like to join me, by nominating a family or individual in need, by becoming a sponsor yourself, or if you could use financial help from the 1k Project network, you can do any of those things here.

Listening

In the wake of the events of the past few weeks, I am trying to focus my efforts on listening. Here are some things I’m listening to:

One place I feel comfortable speaking on this is putting my money where my mouth is, and in that spirit, here is a list of where to donate to support the Black Lives Matter movement.

Nick Grossman

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