The Law of Demand Strikes Again
By David Henderson
The attraction then, as now, was the Columbia River, which we can glimpse a few blocks to our left. Bitcoin mining—the complex process in which computers solve a complicated math puzzle to win a stack of virtual currency—uses an inordinate amount of electricity, and thanks to five hydroelectric dams that straddle this stretch of the river, about three hours east of Seattle, miners could buy that power more cheaply here than anywhere else in the nation. Long before locals had even heard the words “cryptocurrency” or “blockchain,” Miehe and his peers realized that this semi-arid agricultural region known as the Mid-Columbia Basin was the best place to mine bitcoin in America—and maybe the world.
This is from Paul Roberts, “This Is What Happens When Bitcoin Miners Take Over Your Town,” Politico, March/April 2018. It’s subtitled “Eastern Washington had cheap power and tons of space. Then the suitcases of cash started to arrive.” I had missed this at the time and I thank Scott Alexander for the link.
Not only does the article nicely illustrate the law of demand, but also it illustrates Economic Pillar of Wisdom #10: Competition is a hardy weed, not a delicate flower.