I'm teaching Coase next week and may have to add this to the assigned readings. I always liked Coase, but the more I read from Lynne about him, the more power I recognize in his ideas.
Lynne, Very useful post. Thanks. One use perhaps is to document the repetition of old errors, those of others and also of ourselves. Perhaps a way to see unassailable our brilliant new ideas are at the moment of creation?
Is the crypto industry getting a bad rap here? Or are Texas and North Dakota doing a bad job of pricing electricity, to the detriment of other ratepayers/society?
Sure, the crypto industry consumes lots of electric energy and lots of CO2 get emitted as a result. But this seems different in degree, but not in kind, from any/most other uses of electricity. Maybe we should have a Pigouvian tax on CO2 (or, given Coase's concerns, maybe we should have some different remedy)--but I don't know that we can blame crypto for our failures to manage a Tragedy of the Commons generally.
The article implies that firms anticipate the utility's peak hour/day on which demand allocations will be set, and curtail energy usages during that brief period. Is that real? And even so, does it matter? If a firm has sufficiently flexible load as to permit it to curtail consumption, maybe we should conclude that the firm does not contribute to peak demand--and therefore should not bear much of the utility's demand costs.
In short: Congrats on the Public Choice thing. Now let's get back to ENERGY!
Ok, ok--maybe regulators in TX and ND do a poor job protecting ratepayers/society because subsidizing crypto generates concentrated benefits with diffuse costs, a classic Public Choice problem. Alternatively, maybe regulators are doing an adequate job and the rate design appropriately reflects (most of) the social costs of crypto--and the article's outraged tone is mostly pandering to a widespread public distrust/bias against crypto. You make the call.
I'm teaching Coase next week and may have to add this to the assigned readings. I always liked Coase, but the more I read from Lynne about him, the more power I recognize in his ideas.
You should have them read Chapter 3 of The Essential Ronald Coase! Only 8 pages!
Lynne, Very useful post. Thanks. One use perhaps is to document the repetition of old errors, those of others and also of ourselves. Perhaps a way to see unassailable our brilliant new ideas are at the moment of creation?
Thanks Lee, lovely to hear from you! I think that's a very creative way to use these new technologies, good for cultivating our epistemic humility.
Off topic: Please see https://www.nytimes.com/2023/04/09/business/bitcoin-mining-electricity-pollution.html
Is the crypto industry getting a bad rap here? Or are Texas and North Dakota doing a bad job of pricing electricity, to the detriment of other ratepayers/society?
Sure, the crypto industry consumes lots of electric energy and lots of CO2 get emitted as a result. But this seems different in degree, but not in kind, from any/most other uses of electricity. Maybe we should have a Pigouvian tax on CO2 (or, given Coase's concerns, maybe we should have some different remedy)--but I don't know that we can blame crypto for our failures to manage a Tragedy of the Commons generally.
The article implies that firms anticipate the utility's peak hour/day on which demand allocations will be set, and curtail energy usages during that brief period. Is that real? And even so, does it matter? If a firm has sufficiently flexible load as to permit it to curtail consumption, maybe we should conclude that the firm does not contribute to peak demand--and therefore should not bear much of the utility's demand costs.
In short: Congrats on the Public Choice thing. Now let's get back to ENERGY!
Here's an ungated copy of the article: https://www.nytimes.com/2023/04/09/business/bitcoin-mining-electricity-pollution.html?unlocked_article_code=kfb6JB9WU938R3eyCENPFnyW2H-SWWZ8YoVJVZan6zTlBYuchjuB0l-rd9m5zmeo9L7On2idC9uwjdSwTJX8CifA-zkq_Qu4TcxW2agwK5hycun7t7mjPWoGas9wkt7HwunlooXafMWHQ99F4I0OFpG2Uf7FRKQ7AP0IOWSAO5cijmD3RmHIDaCCZZnbkwy2OA7u6CUXYkHCcRO6XFa1SC8MyuHH47vI3tVuPXZWGNa6ibVI66SkdzLugMthQRf_8HDFItamE3DVOLMzg6zw97KUfPNvzbmfQgQ7lZ0tlt7mEVyTmy-BNurVe91kMb9BpJITaN2NgWG42JYBSzNVDzln-ZDLfWbiaSEoFPRzAw&smid=url-share
Ok, ok--maybe regulators in TX and ND do a poor job protecting ratepayers/society because subsidizing crypto generates concentrated benefits with diffuse costs, a classic Public Choice problem. Alternatively, maybe regulators are doing an adequate job and the rate design appropriately reflects (most of) the social costs of crypto--and the article's outraged tone is mostly pandering to a widespread public distrust/bias against crypto. You make the call.