Bitcoin: The digital mining power of the future

Author: Aaron Roberts, Bitcoin Magazine; Compiled by: Deng Tong, Golden Finance

In Texas, the inheritance of mineral rights ownership is a narrative deeply embedded in the bedrock of state history. Like a treasured heirloom passed down from generation to generation, mineral rights ownership is not just a legal right but a cultural symbol, a sign of resilience and a valuable legacy. The wealth and prosperity created by mineral rights owners in Texas over time by refining and producing hydrocarbon minerals is enormous, but it also comes with heavy responsibilities. This responsibility requires a far-sighted financial perspective, as well as an ethical and environmental commitment to ensure the well-being of future generations who will inherit the mine. It's a well-known fact to Texas natives that nothing should be done that jeopardizes all of their rights. “Never sell your mineral rights” is a saying often heard by Texas natives.

The reason mineral rights are passed down from generation to generation in Texas is because the modern global economy relies almost entirely on the benefits of mining, refining and processing these underground minerals. When you own mineral rights, you own the basic raw materials for the production and distribution of nearly all the goods and services our civilization enjoys. In the future, the world’s economic production will also rely on Bitcoin to coordinate large transactions between manufacturers and industrial enterprises.

Texas Mineral Rights

Mineral rights represent ownership of material underground and the rights to market, develop and produce these substances. Texans have been fortunate to have had mining rights for more than 150 years, giving them access to valuable mineral and hydrocarbon reserves beneath their lands. Mineral rights owners can trace ownership through legal records dating back to the 1866 Texas Constitution. The constitution, created to meet the requirements for re-entry into the United States after secession five years ago, firmly establishes privately held mineral rights.

It must be understood that mineral rights in Texas can be, and largely as currently are, separated from ownership of the surface of the land. These two different property rights are often referred to as mineral rights and surface rights. In addition to being able to separate mineral rights from surface rights, mineral rights can also be divided into fractional shares of ownership. In Texas, it is common for mineral rights to be divided into tiny fractional shares. Whether mineral and surface rights are held by the same owner or they were separated at some point in the past, mineral rights reign supreme over surface rights under Texas law. This enables mineral rights owners to use the land surface to explore, develop and produce oil and gas resources underground. Mineral rights holders typically achieve this by entering into a contract (a mining lease agreement) with a specialist company to explore and extract the resource in exchange for a one-time payment and then ongoing royalties through the sale of the resource to the market.

The four pillars of modern society

In modern society, the reason why our living standards can be achieved is This is largely due to the widespread use of large-scale fossil fuels extracted from below the earth's surface. In his book How the World Works, author Vaclav Smil deftly explores our complete dependence on fossil fuels to provide the four indispensable materials on which our civilization depends . These fundamentally important materials include cement, steel, plastics, and ammonia.

The production of these four key materials requires approximately 17% of the global energy supply. Your ability to use the internet and every connected device ultimately depends on fossil fuel hydrocarbons. The modern world's infrastructure and technologies are only possible through their use, and they are the only means of providing food for 4 billion people. In his book, Smil explains the critical role these four materials play in the functioning of the global economy. Their production relies heavily on fossil fuels, with no other viable energy alternatives. Smil reported that global annual cement production is 4.5 billion tons, steel is 1.8 billion tons, plastics is nearly 400 million tons, and ammonia is 180 million tons.

Currently, there is no viable alternative to using steel or cement to build the world's infrastructure. Their combination of strength, durability and adaptability is unmatched by any other material. The production of cement and steel requires high temperatures and can currently only be achieved by burning fossil fuels. Replacing aging infrastructure in developed countries and building new infrastructure in less developed countries will require ever-increasing amounts of new cement and steel production.

Not only do ammonia and plastics require large amounts of energy to produce, but they are also formed using hydrocarbon derivatives. 50% of global food production relies on ammonia fertilizer, which is produced using hydrogen extracted from natural gas. Natural gas is also the energy source that provides the high pressure and temperature required for the process.

More than 99% of plastics are derived from hydrocarbons refined from petroleum. No other material offers the wide range of advantages of plastic such as lightness, flexibility, durability and usefulness. Countless products around the world contain plastic, such as automotive and appliance parts, consumer electronics, food packaging, furniture, and life-saving medical equipment used in hospitals. Petroleum refining also provides key elements such as adhesives, engine lubricants, detergents, coolants, inks, pharmaceuticals, coatings and textiles.

Eliminating fossil fuels from the global energy supply within the next few decades is an unrealistic goal when we realistically consider the available data. The transition to a carbon-neutral, renewable energy-driven economy is an almost insurmountable challenge due to our physical and practical constraints.

Hydrocarbon minerals played an important role in the early stages of modern mass production, with the transportation of the final commodity almost entirely dependent on hydrocarbon fuels. From the final stages of consumer goods and services back to the various stages of the production process from the original inputs of fossil fuel hydrocarbons, we find that owning mineral rights in the first stages of production means having critical influence in the economic landscape. This position gives mineral rights holders immense power to shape and determine the economic destiny of every individual, business and country. Our global economy relies on the discretion of mineral rights owners to decide to allow their properties to be exploited.

Just as owning mineral rights is owning the basic materials that support the functioning of the entire global economy, owning Bitcoin today is owning mineral rights for the future economy. The global economy will one day function through the exchange of Bitcoins between producing entities. People who own Bitcoin will have the financial collateral that enables the economy to function and transact.

Bitcoin and mining rights

Bitcoin and mining rights may look different concepts, but they have some similarities. Both are influenced by the concept of limited supply. In the case of Bitcoin, due to its programmed scarcity, its total number of existence will forever be limited to 21 million. Likewise, mineral rights involve ownership of limited mineral resources underground. Both Bitcoin and mining rights have forms of ownership, meaning both can be bought, sold, or transferred to others. The value of each asset is determined by market demand and supply dynamics, and both experience significant price fluctuations over time. Both Bitcoin and mining rights are decentralized. Bitcoin operates on a decentralized network, with no single entity controlling its issuance or transactions. Likewise, mineral rights represent ownership of an asset discovered around the world, with no central issuer. Every asset has considerable costs to extract and release into the realm of human economic activity. Extracting oil and gas from the ground requires significant investments in financial capital, labor and energy. Generating new supply in the Bitcoin network also requires considerable energy expenditure and capital investment in physical hardware and infrastructure.

Bitcoin’s scarcity results from its programmed supply cap of 21 million, but Bitcoin’s scarcity also arises from its relative relationship to all goods and services worldwide. As the nominal amount of goods and services grows at a rate higher than the rate of new Bitcoin supply, Bitcoin becomes more scarce relative to those goods and services because it grows more slowly. This relative relationship of Bitcoin to our economy creates a second layer of scarcity outside of the programmed supply limit of 21 million. As this second layer of scarcity grows over time due to the network effects of economic expansion, other forms of stores of value will never be as good as this better store of value.

The price of everything in Bitcoin is always trending downward, making it a better way to preserve value. For example, new industrial building construction costs have increased 46% over the past five years, meaning an industrial capital project that cost $100 million five years ago might cost $146 million today. However, in terms of Bitcoin denomination, the cost of this project has been reduced by almost 90%, from 26,253 BTC five years ago to 3,395 BTC today. As the world continues to become more productive, the value of these productivity gains is stored in the most dominant stores of value. This store of value is Bitcoin, and as global market participants become more aware of it, Bitcoin’s value will always trend upward.

In the current world of Bitcoin commentary, it is common to hear or read about a future scenario in which merchants will sell goods in exchange for payment in Bitcoin or other related applications running on the Bitcoin network. Adoption by retailers will undoubtedly help build demand for Bitcoin and gradually expand the value of the network. However, the biggest impact on the growth in demand for Bitcoin will occur when owners of factors of production around the world start demanding payment for their goods in Bitcoin.

Bitcoin and Production

Companies involved in every stage of the production process will begin to understand the importance of sustaining There is the economic phenomenon of cash balances, which is that these balances will increase in value when held, so they will start to demand Bitcoin. Holding a cash balance that will increase in value rather than depreciate over time can simplify financial planning for large capital expenditures. By using Bitcoin reserves held, businesses can fund capital projects more efficiently rather than relying on debt or equity financing that dilutes shareholder value. Treasurers responsible for managing a company's capital structure will usher in a new era in corporate finance when they begin calculating the present value of investments made using funds that appreciate over time rather than depreciate in value.

When a company chooses to invest in a productive endeavor, it expects to receive a greater value in return on its investment. When a company uses accumulated Bitcoin to fund capital projects, it will only accept Bitcoin in return for the investment. As manufacturing and production companies increasingly adopt Bitcoin as a medium to coordinate the exchange of value within the manufacturing process, the Bitcoin network will absorb a significant amount of value from existing monetary systems. This process will create a circular exchange that reinforces Bitcoin’s store-of-value properties and increases demand for Bitcoin from companies that supply factors of production throughout the supply chain.

When the use of Bitcoin to facilitate large value exchanges between businesses becomes common, the supply of Bitcoin in the market will become limited. At that point, the only way to obtain Bitcoin will be to offer something of equal value in return. Purchasing Bitcoin through traditional means other than currency exchanges will become rare, and those wishing to acquire Bitcoin will have to earn it. Bitcoin will become almost impossible to purchase through traditional means.

There will come a time when producers of capital-intensive goods and scarce natural resources will stop accepting constant and deliberately diluted currencies as payment for their products. In the future, when large payments between manufacturers and industrial companies are conducted through Bitcoin, the global economy will rely on Bitcoin to function. Those who have accumulated Bitcoin before then will find themselves in a dominant position. Just like owners of underground mineral rights today by allowing their property to be used to fuel the global economy, Bitcoin owners will one day profit by managing the currency that coordinates the production of the global economy.