The question of where BTC gains its value has been hotly debated, but IMHO its a product of the power that has been put into the bitcoin network. With every block, the bitcoin network grows incrementally more valuable.
That isnt always reflected in the price tho (or btc would just keep going up) however btc price in dollars does tend to track the total energy used to create the bitcoin network relatively well.
How could a synth be made from this?
There’s something to this, for sure. What comes to mind first is some sort of relationship between this and the carbon credit idea I’ve heard Clayton mention. Being able to tie energy usage to carbon credits that offset that usage would be attractive, and maybe extensible beyond BTC alone.
I wonder if there is also something to explore in terms of creating synthetics for alternative energy sources - ie, if there was a synthetic asset for an index of renewable energy providers. Making a market between production and consumption might be interesting. Thinking out loud, but this is on my mind.
Sounds interesting and very worthwhile. It wasnt quite what was on my mind tho.
There’s an interesting article from Charles Edwards which suggests that the Stock to Flow model of bitcoin valuation works because it indirectly references the amount of energy stored in the bitcoin network, which is where the real value is coming from.
So the value of energy as measured in dollars will trend towards the amount of energy in the network as a function of the price of that energy.
This would be a useful synth for miners wanting to smooth out peaks and troughs in the dollar value of bitcoin. So when bitcoin price is low, they could use their btc as collateral to mint an “btc energy value” synth, and when it is overpriced, they could sell the synth, release the BTC and sell it above “fair energy price”.