This is an editorial by Austin Mitchell, co-founder and CEO of Synota.
Energy is the lifeblood of mankind. Modern society is built on cheap and abundant energy. The current economic, political and humanitarian crises illustrate how Energy affects everything we doHow do we live and how do we envision the future. However, energy prices persisted a plusmessages of scarcity are circulating in the media and almost a One billion people around the world live without electricity. Prosperity requires access to energy and equality. We must create an energy-rich future for all.
My career spans the entire gas and electric value chain in the United States. When I consume energy in my home – to cook meals, to heat or mine bitcoins – I know where it comes from and understand how it has been priced. When I pay my utility bills, the money will flow through the many companies involved in energy production and distribution. This payment chain stabilizes after months of my energy consumption and the cost of this delay is reflected in the price. This has a negative impact on my portfolio, but the cost of this delay also symbolizes the massive inefficiencies in the energy industry that distort the value of energy and stifle innovation.
My interest in understanding the energy industry began as a student at the University of Dayton, when I participated in an applied research project analyzing home energy consumption to help homeowners reduce energy costs. She went on to do her Ph.D. studying the intersection of energy, economics, environment, and politics at Carnegie Mellon University, then led a comprehensive study of methane emissions in the natural gas industry as part of a postdoc with the Environmental Defense Fund.
I’ve spent the past eight years learning the details of the US energy industry from a producer, utility, and retailer point of view. My roles provided a unique opportunity to truly understand the energy value chain. By managing the energy business side, I’ve seen the great disconnect between the two sides of the energy deal—the physical and the financial. Physical energy systems, molecules and electrons move down the value chain to me The consumer is increasingly dynamic and rapidly decentralized. Energy finance operations, the movement of funds up the value chain From Consumer, it remains stuck in the days of analog meters and vertically integrated utilities.
For example, the United States has invested billions of dollars since 2009 in begs Nearly 125 million smart meters. These counters provide real-time consumption data to the supplier, enabling pricing and billing options that are beneficial to customers. Yet less than 3% of smart meters are being used to provide these and other benefits that utilities have promised their customers, according to an analysis in September by Mission: Data Alliance. They are simply not able to effectively process or use all that data due to outdated central systems.
In the United States, it can be about 10% of the price of energy attributed to costs other than energy production and distribution, including but not limited to brokerage fees, back office overheads and chain payments. These financial shortcomings cause energy prices to inflate without adding any value.
The impact of financial inefficiency on prices is exacerbated by monetary arrears and credit risk. Monetary lag results from reliance on credit-based transactions throughout the energy economy. Cash lag forces companies to engage in costly practices to manage cash flow imbalances and credit exposure. In a system where consumers pay for energy consumed months in advance, suppliers must borrow money to finance operations during peak usage and consumers must provide collateral to demonstrate creditworthiness. In cases where the money never comes, it turns into bad debts. today, According to McKinsey and Company“…many utilities have gotten used to 5-7% bad debts and simply price them accordingly, accepting the situation rather than trying to improve it.”
It is quite clear that the disconnect between the physical and financial aspects sucks time, money and resources out of the industry, distorts the true value of energy and stifles innovation. After an inspiring and educational week at Bitcoin Miami 2021You have seen the disruption needed to revolutionize the energy industry and create abundant energy for everyone. What Bitcoin does for financial inclusion, the Bitcoin protocol and the Lightning Network can do to equalize and access energy.
A transparent energy economy
To unlock the true value of energy, money and information must flow at the speed of energy. Bitcoin and Lightning is the only network in the world that can achieve this in an efficient and secure manner. The future energy economy will be settled on the Lightning Network. Every home, business, substation or solar farm—wherever energy is produced, distributed, or consumed—will be connected programmatically to a node on the Lightning Network. Instant settlement on the Lightning Network reduces or eliminates financial inefficiencies, cash delays, and credit risk.
Revolutionizing the energy industry by decentralizing consumption data and enabling peer-to-peer payment, it balances the financial aspect of energy transactions with today’s gas and electricity grid. This alignment solves the problem of disconnection, but also provides the flexibility needed to keep pace with changes in power production and distribution. The decentralized settlement process enables multi-party simultaneous payments, multiple integration with power hardware and software solutions, variable payment frequency and value-for-value transactions. This disruption is related to removing barriers to energy transactions and allowing parties to conclude agreements on terms that increase economic benefit and reflect the actual conditions of this complex industry.
This future is now one where we really take advantage of the real-time capabilities of smart meter hardware and the Internet of Things (IoT), because they are fully integrated as digital nodes on the Lightning Network. When money and information move synchronously with energy, accurate pricing is determined and the true value of energy is revealed. A transparent market will improve competition and stimulate dynamic pricing. Clear market signals create a smarter network and enable consumers and suppliers to make better decisions.
Using the Lightning Network to instantly settle energy transactions lowers energy costs, enables value-based investments, and distributes energy resources around the world. A smarter financial system will support smarter energy systems and markets that will ultimately improve energy equity and access for all.
Let’s get started
at the time Energy access and affordability Facing challenges around the world, it’s the perfect time to leverage Bitcoin and the Lightning Network to revolutionize the energy industry. Synchronizing energy and cash flow ultimately enables the transition to renewable energy systems and provides a future in which energy is accessible and affordable for all.
Bitcoin mining is the perfect industry to start this innovation. The industry sees value in stuck or wasted energy, when many try to cover it up. Where the old industry mentality strives for reduce demand To meet supply, miners see an innovative and inclusive future driven by increased demand. The Bitcoin mining The business model, for the sum of daily payments, is fully aligned with the future position of energy finance. Bitcoin miners can achieve optimum transaction flexibility and efficiency, using the Lightning Network and paying for energy in Bitcoin. Bitcoin miners have a remarkably clear view of the economic value of energy. This puts them in a position to gain additional value by pairing dynamically priced supply with price responsive demand.
Energy finance is an important use case for Bitcoin and the Lightning Network. It’s a huge opportunity to prove that technology will benefit everyone, while providing tremendous scope for the ecosystem. The Lightning Network will become the dominant payment network of the future and I am excited to make it the backbone of the future energy industry. I am grateful to the Bitcoin community for starting this fire. Synota now joins the fight for financial inclusion and freedom of action by advancing the future of Bitcoin and creating an abundant energy future for all.
This is a guest post by Austin Mitchell. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
#Future #Abundant #Energy #Bitcoin #Magazine