In a recent social media post, gold bug Peter Schiff has rejected the narrative that Bitcoin could be viewed as a non-inflatable ledger for storing economic energy.
Bitcoin as a battery?
Schiff is responding to the specific narrative championed by MicroStrategy CEO Michael Saylor and other Bitcoin maximalists.
Saylor often argues that money is essentially “economic energy.” When you work, you expend energy.
When you are paid, you are storing that energy to use later. He argues that fiat currency “leaks” this energy, and gold is difficult to transport. Therefore, Bitcoin is “digital energy”. It is viewed as a battery that stores your economic output without loss over time and can be transmitted anywhere (almost instantly).
Uber-bull Saylor and other Bitcoin evangelists are not alone. In a recent podcast appearance, Tesla CEO Elon Musk described it as a “fundamental physics-based currency” because of its intrinsic tie to energy consumption. Interestingly enough, Musk predicted that the concept of money itself would eventually become obsolete. He envisions a post-scarcity world driven by AI and robotics.
The counter-argument
At the same time, one cannot extract electricity back out of a Bitcoin. The energy used to mine Bitcoin is consumed at the moment of creation. It is gone forever. If the power grid goes down, holding 1 BTC gives you zero watts of power, which is exactly the point that Schiff is making. Therefore, literally speaking, it “stores” no energy.
Gold mining, for comparison, also consumes massive amounts of energy (diesel, electricity). However, Schiff argues this is not waste because the end product is a physical metal that is needed for electronics, dentistry, aerospace, and jewelry. The energy was “converted” into a useful industrial commodity.