Myth-Busting Environmental Arguments Against Bitcoin
Specifically, opponents of Bitcoin and cryptocurrency point to the energy requirements of the digital “mining” process. The arguments against coin mining are often flawed, however. It’s crucial to organize and address them now that Bitcoin has more attention than ever.
The big-picture includes Bitcoin’s colossal jump in prices, making this conversation timelier than ever. Moves like President Biden’s rejoining of the Paris Agreement illustrate where many governments’ priorities are as well (i.e., the environment).
Climate change is definitely at the forefront of the conversation, and it’s also the foremost detractor for Bitcoin mining and adoption.
Major world events like the complete power outage in Bitcoin-mining-rich Xinjiang, China in April also caused an acceleration of popular myths.
Here, we’ll attempt to bust some of the myths surrounding Bitcoin energy consumption. This will help make future conversations around Bitcoin more productive so everyone can win.
The History of Bitcoin and the Energy Debate
The energy required to mine Bitcoin is not a new concern. As soon as the blockchain was started, early adopters were aware of its energy requirements and their long-term impact.
The interest in Bitcoin rose regardless, however, and its surging market prices this year increased the incentive for more miners to deploy operations.
The name of the game is becoming a competitive miner today is in energy use and access to cheaper energy sources. Miners who are more competitive use increasingly sophisticated hardware to mine more efficiently, and also obtain cheaper energy, usually off the grid.
More efficient computational technology was spurred the last decade by Bitcoin, with systems like CPUs changing for GPUs and later for ASICs. Today, the hyper-efficient ASICs dominate the Bitcoin network, producing hashes at a rate thousands of times higher than CPUs just ten years ago.
These ASICs still require a huge amount of energy, however. And people continue looking at the environmental impact with concern.
The environmental impact of Bitcoin mining was first documented in 2014, and since then additional reports have been published that delineate its carbon footprint in no uncertain terms.
Are they really “uncertain,” though? Or are there holes in the arguments? We can demonstrate just how many holes there are in the most popular arguments today.
Statistics that opponents of Bitcoin have been frequent to repeat include statements like “The Bitcoin network requires more energy than the nation of Argentina.” Those energy demands aren’t spread evenly across a country, either, adding to concerns about failing infrastructures.
Looking to the Chinese example, Xinjiang demands the lion’s share of Bitcoin-related energy, producing over 30% of the country’s total hashrate. That lopsided energy demand and the recent crash of the grid in Xinjiang.
The Xinjiang crash actually proves how looking at the volume of energy alone is not the discussion we should be having. Bitcoin does demand an extraordinary amount of energy, but it’s not volume alone that determines its footprint. Instead, we should be looking at how to better distribute the demand and the renewable energy sources that can power Bitcoin instead.
The Energy Bitcoin Transactions Require
One of the favorite tactics of Bitcoin naysayers is to mischaracterize the network’s energy use.
For example, a much-quoted “Bitcoin Energy Consumption Index” claims that the environmental impact of a single Bitcoin transaction is 545 kilograms of carbon emissions and 103.9 grams of electrical waste. That’s per transaction. The index then compares these figures to the impact of a Visa transaction, and the figures are a minuscule fraction of the Bitcoin numbers.
These figures, however, disregard the existing infrastructure that Visa transactions rely on. If you combine the energy requirements of:
- Correspondent Banks
- Federal Reserve
- Diplomatic Presence
only then could you reach an accurate emissions index of what each Visa transaction really requires.
Bitcoin Energy—Could It Have Been Used Elsewhere?
Another argument among opponents of cryptocurrency asks rhetorically, “where else could that energy have been used?”
When looking at Bitcoin energy’s consumption as an “us or them,” however, one key factor is disregarded.
Look at the Xinjiang province as an example once again. The geographic area is characterized by a surging number of hydroelectric plants built within the last decade. That growth has outstripped the growth in energy infrastructure, which is what led to the recent power crash.
Were it not for the incentive to produce those hydroelectric plants thanks to the enormous boom in Bitcoin mining there, the investments in hydropower would have never been seen. Instead, that energy would have remained undeveloped or even stranded.
In India, the same rapid renewable energy development is happening with wind and solar facilities. Bitcoin, it appears, has become one of the keys to getting local renewable energy more quickly built out.
In other words, Bitcoin has become a “unique energy buyer” purchasing energy that otherwise wouldn’t have existed.
To avoid crises like the recent Xinjiang outage, however, local infrastructure development has to keep up.
Many Bitcoin mining companies are using even more sources of energy never before harnessed at this scale. EZ Blockchain’s own Sergii Gerasymovych spoke to the mobile mining cryptocurrency system called the Smartgrid, for instance, that the company has installed at multiple sites in North America.
Gerasymovych said: “I strongly believe that Bitcoin mining’s huge power consumption can be used as a tool to solve the global waste energy problem with solutions like utilizing flared gas for mining or stranded natural gas. This area has to have more coverage and research.”
Indeed, the natural gas flared (i.e., burned) away by oil producers due to a lack of infrastructure amounts to 150 billion cubic meters annually. That energy flared away is the natural gas released as a byproduct of oil drilling. The companies don’t want to flare it, however, there’s no infrastructure to treat and transport it to market.
In the same interview, Gerasymovych added that EZ Blockchain is also working on a solar mining project. This will offset the setup costs associated with harnessing sunlight to generate Bitcoin-destined energy.
Moving Bitcoin Mining Away from China
The hyper concentration of Bitcoin in certain areas of specific countries continues to be a detractor for the cryptocurrency network.
Currently, mining is starting to shift away from China. This is positive for the environment as well as for Bitcoin’s decentralized network.
Is the end of the debate in sight?
Those that see no value in the Bitcoin network apparently want the cryptocurrency to disappear entirely, while proponents find the recent shift in energy sourcing a sign to move optimistically forward.
The Bitcoin network has been aware of its own environmental impact, too, and it’s not just cheap energy they find exciting with renewable sources. Stakeholders have also recently created the Crypto Climate Accord as an industry organization to rein in the network’s energy requirements.
It’s no secret that Bitcoin uses a lot of energy. The conversation won’t end here, but it can become more productive. Education is the key.