For most of human history, currency was a direct claim on tangible, productive output. Before the abstraction of government fiat or cryptocurrency, value was stored in things that required real work and resources, bushels of grain, livestock, gold, assets with their own direct productive output: horses, and tragically, slaves.

These were the foundational assets of economies, representing a direct link between labor, resources, and stored value.

As we accelerate into an all-electric, all-digital age, this fundamental link is re-emerging, but with a new unit of account. The 21st-century economy, defined by automated industry, robotic, electric transport, and now power-hungry artificial intelligence, runs on a single, non-negotiable input: electricity. In this new paradigm, the real base currency, the ultimate representation of productive capacity, is the kilowatt-hour (kWh).

The kWh is the new economic base layer.

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Last week, I was in Bijiashan Park at night overlooking Shenzhen, arguably the most technologically advanced city on earth, built over the previous few decades, partly on cheap electricity, cheap labor, and manufacturing innovations.

I could see the giant high-voltage power lines coming over Yinhu Mountain to power the constant light show that is Shenzhen at night. I couldn’t help but think about how cheap electricity and a strong grid have been critical to China’s exceptional economic rise.

As you stroll around the city, you see power everywhere. There are charging stations at every corner, including insane 1 MW charging posts, electric cars and trucks, trucks that carry batteries to electric scooter shops, which are also literally everywhere.

Everything moves on electric power. Industries are powered by electricity, and now, with the advent of AI, virtually everything is increasingly processed by LLMs, which are ultimately powered by electricity through power-hungry data centers.

In a world where everything runs on electricity, electricity itself becomes the currency of civilization.

It is measurable, divisible, storable, and universal – all qualities that a currency needs, but unlike fiat and crypto, it’s actually directly linked to productive output. No politics. No inflation. Just physics.

This concept is not merely academic; it appears to be the quiet, guiding principle in China. While others debate the merits of decentralized digital tokens, China is executing a multi-pronged strategy that treats electricity as the foundational strategic asset it has become.

First, China is building the “mint” for this new currency at an incredible, world-changing scale, and it has retained absolute state control over its distribution. Its deployment of new electricity generation, particularly from renewables, is staggering. The country met its 2030 target of 1,200 gigawatts of renewable capacity five years early, in 2025.

In 2024 alone, renewable energy accounted for a record 56% of the nation’s total installed capacity, with clean generation meeting 84% of all new demand.

Here’s a comparison of electricity generation between China and the US:

If this chart doesn’t scare the West. I don’t know what will. The trend is not reversing any time soon. In fact, it appears to be accelerating as China is doubling down on solar and nuclear.

State-owned monoliths manage this entire system, primarily the State Grid Corporation of China (SGCC), the world’s largest utility. For better or worse, this centralized control allows the state to execute massive national strategies impossible in a liberalized market, such as building an Ultra-High-Voltage (UHV) grid to transmit power from remote solar and wind farms in the west to the power-hungry industrial hubs on its coast.

Second, China wields its control over the grid as a precision tool of industrial policy. China’s average electricity rate of $0.084/kWh is cheaper than most of the rest of the world, but its power lies not in the base price but in its strategic application. The government deploys a “Differential Electricity Pricing” policy: a “stick” that penalizes low-tech, high-consumption industries with higher rates, and a “carrot” that provides preferential pricing to incentivize strategic sectors.

The most potent example is in the AI sector. China is now offering massive electricity subsidies, cutting power bills by up to half, for data centers run by giants like Alibaba and Tencent. The condition for this cheap power is that these companies must use locally-made, Chinese AI chips, such as those from Huawei.

China is spending its “electricity currency” to directly fund the growth of its domestic AI chip industry and sever its dependence on foreign technology. This same logic applies to its global dominance in green tech, where state-subsidized firms like BYD benefit from a state-controlled industrial ecosystem built on reliable, managed power.

Third, and possibly the most explicit exemplification of China viewing electricity as the base currency is its moves against cryptocurrency.

In 2021, the government banned all cryptocurrency transactions and mining. While the official reasons cited financial stability, the move might have had a deeper, strategic intention.

From the state’s perspective, it was a tool for capital flight, allowing wealth to bypass government controls. But in a world where electricity rules, cryptocurrencies are, in effect, a competing “currency” that burns the foundational asset (electricity) to create a decentralized store of value.

By banning crypto, China simultaneously reclaimed its monopoly on economic control and shut down a massive, “wasteful” leak of its most precious resource. It freed up that generating capacity to be strategically allocated to its preferred industries, like AI and manufacturing.

China’s actions, viewed together, are a clear and coherent strategy. By massively investing in and securing total state control over its domestic electricity supply (the “mint”), using its price as a tool to fuel strategic industries, and banning decentralized competitors that consume the same resource, China is making a clear bet. It has been recognized that in an age where all productivity is powered by the grid, the ultimate source of national power is not gold, fiat, or crypto, but the state-controlled kilowatt-hour.

The Blockchain and Crypto: Ledger vs. Furnace

This perspective brings a critical nuance to the role of blockchain technology. In an economy where electricity is the base currency, the blockchain makes perfect sense, but only as a ledger, not as a store of value.

A distributed ledger is the ideal technological layer to act as the accounting system for this new economy. It can track the generation, transmission, and consumption of every kilowatt-hour with perfect transparency. It can automate complex industrial contracts and manage the grid’s load balancing without a central intermediary. In this sense, blockchain is the “banking software” for the electricity standard.

However, “Proof of Work” cryptocurrencies like Bitcoin face a fatal contradiction within this paradigm. They aim to serve as a store of value by burning the base currency (electricity) to secure the network. If the kilowatt-hour is the 21st-century equivalent of gold, then Bitcoin mining is akin to melting down gold bars to print a paper receipt. It destroys the productive asset to create a derivative token.

Bitcoin is quickly losing credibility as a classical safe store of value. It trades like a security, at least over the last year, and its value is only whatever the next moron is willing to pay, with no valuable asset behind it.

China’s strategy reflects this precise understanding. While they ruthlessly banned Bitcoin mining (the “furnace” that wastes the asset), they have simultaneously championed the Blockchain-based Service Network (BSN) and the Digital Yuan. They have embraced the ledger to track and control their energy economy, while rejecting the supposed asset that destroys it.

This is a trap that crypto fans often fall into. They recognize the value of the blockchain, which is real, but they mistakenly broadly assign the same value to cryptocurrency, which is simply an application of the blockchain.

Electrek’s Take

What I’m trying to explore in this op-ed is the idea that if the present is electric and the future is even more electric, then it makes sense for electricity to be the foundation of the economy.

If electricity is the backbone of global trade and the metric of productivity, the kWh ultimately becomes the real currency of a truly electrified world.

And I think China has figured this out, as evidenced by its new electricity generation surpassing the rest of the world combined and by its ban on cryptocurrency.

They are going to let the rest of the world hold the crypto bag while they have more electricity generation than anyone to power their industries, which are already taking over the world.

I think the rest of the world should learn from this. Instead of pouring capital into meme coins and made-up stores of value, we should invest in electricity generation and storage.