From Coal to Code: How We’re Converting Physical Energy Into Monetary Energy
We’re witnessing the ultimate conversion. What was once coal and oil is becoming electricity, and that electricity is being transformed into monetary energy (Bitcoin).
For centuries, our society ran on physical energy. We measured power in watts and horsepower, concepts built around the idea of transforming energy into motion.
1 watt represents the power needed to move 1 kg by 1 meter in 1 second. 745.7 watts equals 1 horsepower—a unit from the industrial age when powering locomotion was the ultimate goal.
But today, the game has changed. We’re no longer just moving physical objects—we’re processing information. And this shift is driving a profound transformation in how we think about energy. We’re converting physical energy into monetary energy.
The New Energy Economy
Look at the biggest players in technology. AI models like GPT-4 require immense amounts of computational power. Google DeepMind and OpenAI use thousands of megawatt-hours just to train these systems.
It doesn’t stop there. Bitcoin mining is perhaps the clearest example of physical energy being converted directly into monetary value. In Texas and China, the largest mining facilities consume more than 100 MW per hour, transforming electricity into digital gold. This is energy turned into value—raw kilowatts into currency.
From Coal to Gas: The Hidden Transition
Our cities are now data hubs, consuming energy at unprecedented rates:
Tokyo: 32.4 MW per hour
Shanghai: 18 MW
Beijing: 16 MW
New York: 5.8 MW
As we shift from an economy based on moving matter to one centered on processing information, the energy sources powering this transformation are changing. Here’s a snapshot of global electricity generation in 2023:
Coal: 1,186 GW
Natural Gas: 759 GW
Hydroelectric: 514 GW
Nuclear: 331 GW
Renewables: 411 GW
Oil: 20.5 GW
The transition isn’t what many think. It’s not about jumping directly from fossil fuels to renewables. Instead, we’re moving from coal and oil to gas, nuclear, and renewables. Gas is taking the lead, fueling the data economy while we build out renewable infrastructure.
Bitcoin: Energy as Money
If there’s one technology that embodies the concept of converting physical energy into monetary energy, it’s Bitcoin. To produce just 1 Bitcoin in 1 hour, you need 167.77 megawatt-hours of energy. In essence, Bitcoin is a battery—storing physical energy in the form of monetary value.
When people ask, “What backs Bitcoin?” the answer is simple: electricity.
Why Wall Street Should Care
The story of energy has always been the story of power—literally and figuratively. Wars were fought over coal during the Industrial Revolution and over oil throughout the 20th century. But in the 21st century, the battle is over electricity—and the most critical resources now are gas and uranium.
Understanding this shift is the key to understanding where economic power is moving. The future belongs to those who control the energy that drives the digital world. And right now, the infrastructure that powers AI, crypto, and global data centers is becoming the new oil field.
From Physical to Monetary Energy
We’re witnessing the ultimate conversion. What was once coal and oil is becoming electricity, and that electricity is being transformed into monetary energy. Whether it’s AI, Bitcoin, or the vast server farms powering our daily lives, the world’s new wealth isn’t mined—it’s processed.
Thanks for reading,
Guillermo Valencia A
Cofounder of Macrowise
September 22th , 2024
In these brief lines, there is a profound and clear vision of the times we are going through today, and the times we will have to live with this mega transformation of the energy-economic paradigm. Thank you, Guillermo, for your fundamental contributions.