Meanwhile, France is getting hot and heavy with Bitcoin mining, suggesting an evaluation by the government to see if it could strengthen the national energy grid. The concept is to capture excess electricity, largely from nuclear plants. This new initiative would have the ability to jumpstart blighted, former industrial areas. Sounds almost utopian, doesn't it? Before we all begin dreaming of a Bitcoin-based joie de vivre, hold on just a second. Let’s address the three most obvious chickens they are suddenly choosing to ignore.

Environmental Cost A Real Threat

Let's be blunt: Bitcoin mining, at its core, is an energy hog. Yes, proponents claim that miners will use energy that would otherwise go to waste, thus converting a liability into a profitable asset. What happens when excess isn't enough? What prevents these operations from asking for more authority? Or they can instead fill that gap by drawing from other, often dirtier sources. It's a classic slippery slope.

They talk about France's nuclear power. Okay, nuclear has its place. Are we seriously going to stake the future of our electricity network on an industry that uses prodigious quantities of electricity? This decision will have repercussions for generations. It’s as absurd as attempting to address obesity by building a candy factory next door to a fitness center. The goal is noble perhaps, but the execution is…suspect.

Think about it this way: if Bitcoin mining becomes truly profitable in France, more miners will flock there. More miners mean more energy demand. Preventing blackouts increased energy demand continues to put increasing strain on the grid. This can result in more unsustainable sources being used to fill that demand.

Regulatory Quagmire Is Inevitable

The proposal is calling for a socially and environmentally responsible Bitcoin mining industry. Great. Regulation is almost never a calm, orderly affair. It’s a complicated and highly political battlefield. This is where the vested interests go to war, and the rules are made up as you go along.

What happens when, inevitably, regulations tighten? Then what happens when the political winds blow in another direction, and Bitcoin mining is out of favor? Businesses that invested heavily in infrastructure based on the promise of favorable regulations could find themselves stranded, their investments worthless.

We’ve witnessed this in other industries time and again. The government puts a carrot out there, businesses take the bait, and then they yank the rug right out from under them. Are we honestly going to put France’s much-lauded energy grid through that level of arbitrary regulatory uncertainty? Remember Solyndra? To takes place that solar but the analogy is the same. Government promises are not always bankable.

The Association for the Development of Digital Assets (ADAN) worked closely with legislators. Well, okay, but their interests are already completely aligned with Bitcoin mining. Where's the collaboration with consumer advocacy groups? Where's the collaboration with environmental watchdogs? What’s really needed is a significantly more balanced approach, rather than more industry cheerleading.

Bitcoin Volatility A Serious Concern

Bitcoin is notorious for its price swings. One minute it’s going to the moon, the next it’s heading back down to earth. How do you create a long-term, stable, reliable energy strategy based on something so fickle?

The legislators address many of the technical properties of mining, including scalability and ability to operate on-demand, as ideal for integration. Scalability and on-demand operations do not suddenly eliminate the underlying price volatility. If the price of Bitcoin crashes, mining operations are suddenly not worth it anymore. Unprofitable mining operations shut down. All at once, that “flexible” demand on the grid evaporates, leaving a hole.

This isn't just theoretical. We've seen it happen before. Entire mining operations have opened and closed depending on the price of Bitcoin, which is notoriously volatile. To expect that France could create a stable, long-term energy strategy based on such a changeable asset is, quite literally, to put faith in the wind. You can't base critical infrastructure on speculation.

In practice, though, negative pricing is almost always a sign of worse underlying market imbalances. Fixing the underlying causes of those disparities provides a much more long-term answer. Hoping that Bitcoin mining will somehow soak up the surplus isn’t the solution.

France must be extremely careful about how it engages this Bitcoin mining proposal. Now more than ever, a complete, independent risk assessment is incredibly critical. Before imagining a world where the future is funded by Bitcoin, they need to address these tangible dangers. These hazards are widely disregarded, but they shouldn’t be. The cost of leaving these risks unaddressed may be much greater than they think.