Can Bitcoin still be a safe haven amid an energy crisis? Economists warn: the first to be sacrificed

Economist Steve Keen, who previously predicted the 2008 financial crisis, recently warned on The Diary Of A CEO that, amid the ongoing deterioration of the global energy crisis, Bitcoin’s energy-intensive nature will make it the first asset to be sacrificed. At the same time, given its price volatility, it looks more like a speculative tool than a currency, which makes it difficult to challenge the existing fiat currency system.

Fighting in the Middle East sparks a global energy crisis; those in power underestimate the impact

Keen’s core argument is based on a pessimistic view of global energy supply. He said that the geopolitical conflicts in the Middle East have caused real damage to critical energy infrastructure: Qatar’s liquefied natural gas facilities were attacked, and rebuilding these processing facilities takes as long as five years, meaning that related production capacity losses will continue for many years without being restored.

He warned that global energy supply could therefore shrink by two to three tenths, and that energy shortages cannot be solved by raising oil prices, because the root of the problem is an absolute decline in real, physical output—not just price fluctuations.

He also criticized mainstream economists for being completely oblivious to this: “They have long believed that commodities can be infinitely substituted, leading policymakers to widely underestimate the real risk of disruptions to energy supply chains.”

He used an example of a near-hurricane disaster that almost destroyed a silicon mine in North Carolina, explaining that once a key supply node for critical raw materials is damaged, the time needed to recover the entire downstream industry could be as long as four to five years—yet this kind of severe economic vulnerability is rarely mentioned.

Bitcoin’s fatal design flaws: wasted energy, unclear role

Within the framework of the energy crisis, Keen turns his focus to Bitcoin’s underlying design. He explained that the core logic of Bitcoin’s Proof of Work (PoW) mechanism is to keep mining rigs continuously consuming a large amount of computing resources to generate random numbers that meet the required conditions, because “intentional waste,” rather than a technical side effect, is used to ensure the security of the ledger.

Keen stressed that, at certain points in time, Bitcoin’s energy consumption has even exceeded the total electricity consumption of Switzerland. However, once energy rationing becomes a real option, Bitcoin will face a deadly political threat:

Society can’t sacrifice electricity for people’s living needs and for industry just to keep a blockchain running. If people have to choose between Bitcoin and food, the answer is obvious.

In addition, he pointed out that Bitcoin has an inherent contradiction in its role as money: “If the market expects Bitcoin to keep appreciating, then its holders won’t use it for transactions, which makes Bitcoin closer to a speculative instrument rather than a currency in the true sense.”

Venture capital looks at the energy “monetization” trend—will Bitcoin become the best “digital battery”?

Keen’s views clearly differ from those previously compiled from venture capital firm Hashed CEO Simon Kim. The latter believes that Bitcoin mining is a successful mechanism of “energy monetization”:

Mines are usually set up in remote areas with excess electricity and constrained transmission capacity, where they can immediately absorb surplus power that the market can’t consume, playing the role of the “last buyer” in the power grid.

Kim believes that converting energy consumption directly into a tradable digital asset is an energy pricing tool that is more transparent and more precise than gold.

(From mining controversies to energy infrastructure: Why Bitcoin in the AI era is called a “digital battery”?)

Under an energy crisis, can Bitcoin still be a safe haven?

However, Simon Kim’s assumption of a market environment with energy oversupply probably won’t exist in today’s and the future. With energy tightening now, mines may instead directly compete with electricity for residential use and industry. The “digital battery” narrative is persuasive during times of energy abundance, but its resilience has not yet been tested in a real energy crisis.

The differences between the two sides may reflect another problem in the cryptocurrency industry that few people mention: when the energy environment deteriorates, can Bitcoin still serve as an asset safe haven—or will it become the first to be abandoned as an energy-intensive burden?

This article—Can Bitcoin under an energy crisis still be a safe haven? Economist warns: the first to be sacrificed—first appeared on Chain News ABMedia.