Crypto excels at creating specialized hardware.

I recently spoke with David, a founder who in under three years has influenced the creation of 84 solar farms generating 20MW of energy and about $20M in revenue. Glow, his company, uses crypto incentives to boost nearly profitable solar farms. His token mechanism has created farms that wouldn't exist otherwise.

He core point in the conversation centered about the idea that that crypto has PMF for creating specialized hardware that meets arbitrary specifications. Consider the number of GPUs for Bitcoin or Ethereum mining (or other PoW L1s) and decentralized storage companies.

The idea is interesting because it has taken a backseat in how we view blockchains and crypto, despite:

• it's a historically successful use case for crypto

• It changes the world of atoms, at a time when it's stated priority for growing number of people in tech and government

• There's plenty of whitespace and opportunities

Crypto excels at creating hardware. Bitcoin, Ethereum, and many L1s proved it. DePin (Decentralized Physical Infrastructure Networks) is built on the principle that good mechanism design can let startups compete with incumbents without capex. Instead of investing millions upfront to create a network (e.g., batteries, broadband stations), network contributors do it at their own cost, at a small scale to mine the network token.

It's also a use case that improves the world of atoms by leveraging primitives we built in the world of bits. Good hardware and infrastructure improve lives. If crypto can design better incentives than governments or companies, then it can do a lot of good in people's lives.

I’m excited to hear about more business ideas and investment opportunities that follow this design pattern. Their key traits:

• Well-defined hardware requirements with measurable output that can be incentivized/optimized.

• The output is economically viable and used by more than the hardware installer/operator.

• Ideally, a network effect exists where the product quality scales geometrically with the number of operational hardware nodes.