They work like an airconditioner in reverse. They pump the refrigerant around and evaporate it when it gets to the outside of the house and condense it when it gets to the inside of the house. This is more efficient than electric heaters because you can pump more than 1W of heat into your house by using 1W of electricity to run the pump, a normal heat just converts that 1W of electricity directly to 1W of heat
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