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Part Three · Why is Bitcoin valuable? · Chapter 7

Fair questions, honest answers

“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can’t stop.”Friedrich Hayek, interview with James U. Blanchard III, University of Freiburg, May 1, 1984.
This page in the book: yourbitcoinbasics.com/ch7
Bitcoin mining’s electricity use next to data centers and world electricity, on a log scale
From Chapter 7 Energy, at scale
Have the book open?Everything this chapter points to is here: the activities, a model answer for Check yourself, current numbers, and the sources with links.No book yet?
Read Chapter 1 freeBuy the book
Today’s numbers

Bitcoin, right now

Live numbers load from mempool.space.
Bitcoin that existabout 20.1 millionof 21,000,000 that will ever exist
21M
95.67% issued. The last tiny fraction arrives around the year 2140.
Block heightabout 969,000pages in the ledger since January 3, 2009 A new page about every 10 minutes.
Next halvingabout 81,000blocks to go
61% of the way through this four-year cycle. Expected around spring 2028. New bitcoin per block then drops from 3.125 to 1.5625.
One dollar buysabout 1,200sats today
$20about 24,000$100about 120,000
One bitcoin is 100,000,000 sats, so nobody has to buy a whole one.

No price chart here on purpose. Chapter 6 covers price.

What you will be able to do

By the end of Chapter 7

01Run a six-question check on your own reaction before you accept or dismiss a claim about Bitcoin.
02Answer the 13 objections people raise most often, with the evidence, and say plainly where the evidence is mixed.
03Explain what a quantum computer could and could not do to Bitcoin, and name the risks that come with software agents holding keys.
Try it

Do it on your phone or laptop

  1. Audit me. Fifteen minutes, on a phone or laptop. Pick two of the 13 answers above that you found hardest to believe. For each, find the primary source, not an article about it. Use the Chainalysis crime report for the illicit share, the UNODC page for cash laundering, the Cambridge index for energy, the Justice Department press release for the Bitfinex seizure, and the 99Bitcoins obituary list for the dead count. Write down the number you find and the date. Then write down whether it has moved since I wrote this, and in which direction.
Audit me

Pick two answers you found hardest to believe. Find the primary source, not an article about it: the sources are in the notes at the bottom of this page, and every web address in them is now a link. Record what you found here. It stays on your device; nothing is sent.

If a number of mine is wrong, send me your note at [BOOK EMAIL]. I will fix it and credit you.
Check yourself

Did it stick?

Rate yourself: yes, mostly, or not yet. Not yet means reread that section. It does not mean you failed.

  • I can name three of the six biases and say which one I am most prone to.
  • I can explain why “Bitcoin was hacked” is the wrong description of every major theft so far.
  • I can give the cash number and the crypto number for money laundering, and say where each comes from.
  • I can say what a government can and cannot do about Bitcoin, with one example of each.
  • I can say what a quantum computer could and could not do to Bitcoin, and what I can do about it today.

Scenario

At a family dinner, your brother-in-law says, “Bitcoin is for drug dealers, and it’s going to zero. Look at all the hacks.” What do you say?

Say your answer out loud first. Then open the model response.

Show the model response

Criminals use bitcoin, and far more of them use dollars. Every bitcoin transaction sits on a public ledger forever, which is how investigators catch people who thought they were hidden. The hacks you hear about were companies and exchanges, not the network, which has run since 2009 with one early bug that was fixed within hours. Could it go to zero? Yes. Nothing in the code prevents it, which is exactly why the book says to own only what you could afford to lose.

Takeaways

The Part, in five sentences

Part Three in five sentences
  1. When money fails people, it fails through inflation, freezes, and closed doors, and bitcoin answers each with a rule no one can change.
  2. The price is set by a supply that cannot grow meeting a demand that can, which is why it swings.
  3. Bitcoin has fallen more than 75% four times, and a position is the right size when a 50% drop would be a bad day, not a changed life.
  4. Every price model you see online extends the past forward, so treat it as a reason for optimism, never a promise.
  5. The hard questions about crime, energy, bubbles, and quantum computers have honest answers, and some are still open.

Test yourself on this Part with the short quiz.

A fair objection
“Governments hold it. BlackRock sells it. If the biggest institutions on earth own Bitcoin now, hasn’t it become the thing it was built to escape?”
My answer

Partly, and I will not pretend otherwise. When a large share of bitcoin sits inside funds and exchanges, most holders are back to trusting a company, which is the arrangement Bitcoin was designed to make optional. If those custodians ever became the only practical way in, the network’s rules would still hold, and the culture around it would have lost something real.

Two things keep the objection from being the whole story. The rules have not changed because the holders have. BlackRock cannot mint a bitcoin, freeze the ledger, or vote itself a larger supply, and neither can the United States government. And the exit is still open. Anyone who holds through a fund can withdraw to keys they hold themselves.

Want a second opinion with sources? The Bitcoin Evidence Base answers claims like this one.

Ask the Evidence Base tooWhat is the Evidence Base?

Don’t confuse
Bitcoin vs a bitcoin companyBitcoin is the network, and it's never been hacked, with the one early exception in 2010 that was fixed within hours. Bitcoin companies, like exchanges and apps, have been hacked many times.
a bubble vs volatilityvolatility is how far and how fast a price moves, in both directions; a bubble is a price that rises on nothing but the expectation of a higher price and then bursts and stays burst. Bitcoin’s big falls have, so far, each been followed by a recovery to a new high.
Go deeper

Watch, read, explore

Explore · 10 min

Cambridge Bitcoin Electricity Consumption Index

The most cited estimate of the network’s energy use, with its range of uncertainty.University of CambridgeRead · 15 min

Crypto crime research

The yearly figures on illicit use that the chapter cites.Chainalysis (a company that sells analysis tools)

Products and services named are examples, not recommendations. I have no financial relationship with any of them.

Words from this chapter
cognitive biasinflation hedgesmart contractsoracle
Sources
The 40 notes for Chapter 7
  1. Daniel Kahneman, Thinking, Fast and Slow, Farrar, Straus and Giroux, 2011.
  2. William Samuelson and Richard Zeckhauser, “Status Quo Bias in Decision Making,” Journal of Risk and Uncertainty, 1988.
  3. Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 1979.
  4. U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U), all items, 1971 annual average (40.5) to August 2026 (334.980, 1982 to 1984 = 100), bls.gov, retrieved September 2026.
  5. CoinMarketCap, “A Look Back in Time: Bitcoin Price History and Events Timeline,” coinmarketcap.com, retrieved September 2026 (crossed $100 on April 1, 2013 and $1,000 in November 2013; 2011 peak of $31; December 2017 peak of $19,834; November 2021 peak of $68,742); iShares, “Bitcoin Volatility Guide: Trends and Insights for Investors,” 2025 (declines of 80% from January 2014, 83% from December 2017 and 77% from November 2021), ishares.com, retrieved September 2026; forex.com, “Bitcoin Price History,” 2011 decline from $29.38 in June to $2.14 in November, 93%, retrieved September 2026.
  6. 99Bitcoins, “Bitcoin Obituaries,” 99bitcoins.com, 477 entries as of September 2026, earliest 2010; Tim Worstall, “So, That’s the End of Bitcoin Then,” Forbes, June 20, 2011, listed at a price of $15.15. Jeremy Grantham on CNBC’s “Squawk Box,” June 26, 2026, as reported by Decrypt, “Billionaire Jeremy Grantham Dismisses Bitcoin, Says Crypto Will Fade ‘With a Whimper,’” June 27, 2026, decrypt.co; Bloomberg, “Bitcoin Based on Faith Has Nil Value, Grantham Says,” January 22, 2021, bloomberg.com; both retrieved October 2026.
  7. United Nations Office on Drugs and Crime, “Money Laundering” overview, unodc.org, retrieved September 2026 (“2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars”), drawing on UNODC, “Estimating Illicit Financial Flows Resulting from Drug Trafficking and Other Transnational Organized Crimes,” 2011.
  8. U.S. Department of the Treasury, 2024 National Money Laundering Risk Assessment, February 2024 (“bulk cash smuggling and the use of cash-intensive businesses are historically favored laundering methods for many DTOs”), home.treasury.gov, retrieved September 2026.
  9. Chainalysis, The 2025 Crypto Crime Report, January 2025 (illicit addresses received 0.14% of on-chain volume in 2024; $40.9 billion identified, estimated to rise to about $51 billion; stablecoins 63% of illicit volume), chainalysis.com, retrieved September 2026.
  10. U.S. Department of Justice, “Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency,” press release, February 8, 2022.
  11. U.S. Department of Justice, “Department of Justice Seizes $2.3 Million in Cryptocurrency Paid to the Ransomware Extortionists Darkside,” press release, June 7, 2021.
  12. River, Bitcoin Adoption Report 2025, March 2025 (about 4% of the world’s population holds bitcoin), river.com.
  13. Bitnodes reachable node count, as reported by Newhedge, “Bitcoin Reachable Node Distribution,” newhedge.io, about 25,800 reachable nodes, retrieved September 2026; Bitnodes, “Global Bitcoin Nodes by Country,” bitnodes.io, 141 countries in its April 2024 snapshot.
  14. Blockstream, “Blockstream Satellite,” blockstream.com/satellite, retrieved September 2026; Lightning payment over high-frequency amateur radio by Rodolfo Novak and Elaine Ou, March 2 and 3, 2019, as reported by CoinDesk, March 4, 2019; Samourai Wallet’s TxTenna relay of signed transactions over goTenna mesh radios, 2018.
  15. Executive Order 6102, April 5, 1933; Public Law 93-373, 1974, restoring private gold ownership.
  16. Cambridge Centre for Alternative Finance, Cambridge Bitcoin Mining Map, methodology notes (Mainland China’s reported hash rate “effectively plummeted to zero” in July and August 2021), ccaf.io, retrieved September 2026; Blockchain.com, hash rate chart, 7-day average of about 186 EH/s in mid-May 2021 to about 88 EH/s in early July 2021, a fall of about 53%, with the prior peak regained later in 2021, blockchain.com, retrieved September 2026.
  17. Supreme Court of India, Internet and Mobile Association of India v. Reserve Bank of India, March 4, 2020.
  18. Central Bank of Nigeria, circular of February 5, 2021 (barring banks from serving cryptocurrency exchanges) and circular of December 22, 2023 (guidelines for banks dealing with virtual asset service providers), both widely reported at the time; see also the Chapter 5 note on the eNaira.
  19. Internal Revenue Service, Notice 2014-21.
  20. Executive Order 14233, “Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile,” March 6, 2025, whitehouse.gov, retrieved September 2026; as of October 2026 the order remained in effect, no purchases had been confirmed, and the reserve held only forfeited bitcoin (see the Chapter 2 note).
  21. iShares, “Bitcoin Volatility Guide: Trends and Insights for Investors,” 2025 (annualized volatility of about 54% as of January 31, 2025, described as having “notably declined” as the market matured), ishares.com, retrieved September 2026. Inflation: U.S. Bureau of Labor Statistics, CPI-U, annual averages of 258.8 for 2020 and 322.2 for 2025, and a 9.1% rise over the 12 months ending June 2022, bls.gov; Kitco, “JPMorgan states the obvious: demand for gold and Bitcoin is the ‘debasement trade,’” October 2, 2025, kitco.com; both retrieved October 2026.
  22. Cambridge Centre for Alternative Finance, Cambridge Digital Mining Industry Report, April 28, 2025 (138 TWh a year, about 0.5% of global electricity consumption; 52.4% of mining power from sustainable sources), jbs.cam.ac.uk, retrieved September 2026; Cambridge Bitcoin Electricity Consumption Index, ccaf.io. Data centers: International Energy Agency, “Key Questions on Energy and AI,” World Energy Outlook Special Report, iea.org, 2026: data center electricity consumption “roughly doubling from 485 TWh in 2025 to 950 TWh in 2030,” with consumption by AI-focused data centers up 50% in 2025. Texas curtailment and AI hosting: Riot Platforms, “Riot Announces August 2023 Production and Operations Updates,” Form 8-K exhibit 99.1, sec.gov, September 6, 2023: $31.7 million in power and demand response credits for curtailing more than 95% of its load during ERCOT’s August 2023 heat wave. Conversion to AI hosting: CoinShares, “Bitcoin Mining Report Q2 2026,” coinshares.com, September 15, 2026 (IREN, TeraWulf, Cipher, Core Scientific and Keel; about $1.5 million a year per megawatt for AI hosting against about $0.5 million for mining). Larry Fink, Milken Institute Global Conference, May 2026 (see the notes to Chapter 3). IREN and Microsoft, about $9.7 billion over five years, and Cipher Mining and Amazon Web Services, about $5.5 billion over 15 years, both announced November 3, 2025: Decrypt, “Bitcoin Miners IREN, Cipher Rise After Multi-Billion-Dollar Microsoft, Amazon Deals,” November 3, 2025, decrypt.co, retrieved October 2026. Proof of stake: Ethereum Foundation, “The Merge,” ethereum.org, September 2022.
  23. Alex de Vries, Digiconomist, Bitcoin Energy Consumption Index, and “Bitcoin’s Growing Energy Problem,” Joule, 2018.
  24. Chainalysis estimate of 2.78 million to 3.79 million bitcoin lost, 17 to 23% of the supply then in existence, as reported by Fortune, November 25, 2017, fortune.com, retrieved September 2026.
  25. Howells v Newport City Council [2025] EWHC 22 (Ch), judgment of His Honour Judge Keyser KC, January 9, 2025 (claim dismissed; hard drive discarded in August 2013; 8,000 bitcoin), caselaw.nationalarchives.gov.uk, retrieved September 2026.
  26. Mt. Gox Co., Ltd., announcement of its application for civil rehabilitation, February 28, 2014 (“approximately 750,000 bitcoins deposited by users and approximately 100,000 bitcoins belonging to us had disappeared”), mtgox.com, retrieved September 2026.
  27. Federal Bureau of Investigation, public service announcement attributing the Bybit theft to North Korea, February 26, 2025.
  28. Example: the October 2022 Mango Markets exploit of about $110 million, carried out by manipulating the prices the platform relied on; U.S. Department of Justice, “Man Convicted for $110M Cryptocurrency Scheme,” press release, April 18, 2024, justice.gov, retrieved September 2026.
  29. World Health Organization, Ottawa Charter for Health Promotion, 1986; Robert Cialdini, Influence: The Psychology of Persuasion, new and expanded edition, Harper Business, 2021, chapter on social proof.
  30. U.S. National Institute of Standards and Technology, “NIST Releases First 3 Finalized Post-Quantum Encryption Standards,” August 13, 2024 (FIPS 203, 204 and 205; “some experts predict” a capable machine “within a decade”), nist.gov; Global Risk Institute, Quantum Threat Timeline Report 2024, December 2024, globalriskinstitute.org, retrieved September 2026.
  31. BIP 360, “Pay-to-Merkle-Root (P2MR),” Hunter Beast, Ethan Heilman and Isabel Foxen Duke, status Draft, github.com/bitcoin/bips, retrieved September 2026.
  32. Federal Bureau of Investigation, Internet Crime Complaint Center, “Criminals Use Generative Artificial Intelligence to Facilitate Financial Fraud,” public service announcement, December 3, 2024, ic3.gov, retrieved September 2026.
  33. Lightning Labs, “AI for All: Powering APIs and Large Language Models with Lightning,” July 6, 2023 (the L402 protocol and LangChain tools for agents paying over Lightning), lightning.engineering, retrieved September 2026. Lightning Labs, “The Agents Are Here and They Want to Transact: Powering the AI Economy with Lightning,” February 11, 2026, lightning.engineering, retrieved October 2026.
  34. Project Eleven, The Quantum Threat to Blockchains: 2026 Report, May 6, 2026, projecteleven.com (about 6.9 million bitcoin, roughly one third of circulating supply, at addresses with exposed public keys, about 72% of it from address reuse; baseline estimate of a cryptographically relevant quantum computer in 2033, with a range of 2030 to 2042), retrieved September 2026. Peter Shor, “Algorithms for Quantum Computation: Discrete Logarithms and Factoring,” 1994.
  35. Sergio Demian Lerner, “The Well Deserved Fortune of Satoshi Nakamoto,” bitslog.com, April 17, 2013, and later updates to the “Patoshi” analysis, estimating roughly 1.1 million bitcoin mined by a single early miner in 2009 and 2010, most of it never moved; retrieved September 2026.
  36. Coinbase, “Introducing x402: a new standard for internet-native payments,” May 2025; Coinbase, “Coinbase and Cloudflare Will Launch the x402 Foundation,” September 23, 2025 (stablecoin-based transactions); Coinbase, “Google Agentic Payments Protocol + x402,” September 2025, all at coinbase.com, retrieved September 2026.
  37. OWASP Foundation, OWASP Top 10 for LLM Applications 2025, LLM01: Prompt Injection, genai.owasp.org, retrieved September 2026.
  38. Block joins the x402 Foundation and contributes Bitcoin Lightning payment support to the x402 standard, September 24, 2026; x402 Foundation under the Linux Foundation, retrieved September 2026.
  39. TRM Labs analysis of x402 payment volume, September 2026 (genuine agent-to-agent commerce a small fraction of headline volume; stablecoins about 99% of volume), retrieved September 2026.
  40. Federal Reserve, “About the FOMC,” federalreserve.gov: the Federal Open Market Committee has 12 voting members and holds eight scheduled meetings a year; John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936.

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