This is an opinion editorial by Marie Poteriaieva, a Ukrainian-French crypto industry watchdog and educator who has been following the space since 2016.
Bitcoin is routinely treated as an environmental pariah: monitoring energy consumption and quickly labeling it as “anti-ecological” is fairly straightforward. This statement is false on many levels, but public opinion is rarely nuanced, and politicians have little to lose by attacking Bitcoin on ecological grounds – they can position themselves as a planet savior at the (relatively) small cost of alienating crypto enthusiasts. larger audience.
However, this approach will not last long. More and more voices are being raised to object to this immature presentation of Bitcoin, its mining and importance to the world. These arguments go in three main directions:
– The energy consumption of Bitcoin versus the traditional monetary system it is intended to replace.
– The potential to increase green mining and green energy development worldwide.
– Multipurpose use by miners, recycling waste heat or capturing flare gas.
Fiat System Energy Consumption
The concept of “many” only makes sense when compared. In the case of Bitcoin energy consumption, the most relevant comparison is with the fiat currency system (not with some small European countries, as some clickbait articles might cite).
While Bitcoin is pretty much self-sufficient, its job in the fiat world is done by a multitude of different entities responsible for issuance, distribution, administration, bookkeeping, and payment services.
A 2021 study by Galaxy Digital, an asset management company specializing in cryptocurrencies, delved into just four metrics of the fiat world – branches, servers, ATMs and data centers of card networks – and found that the banking system consumes more than 263 TWh per year. he guessed.
More detailed research, recently published by Michel Khazzaka of Paris-based consulting firm Valuechain Technology Ltd., scans the energy consumption of more aspects of fiat money: printing and issuing physical notes and coins, ATMs, cash in transit, cash in transit. electronic points of sale, card payments, banking offices, commuting of banking employees, banking IT and interbanking. The results are striking: the fiat sector, excluding finance and insurance, will consume about 4,981 TWh per year.
Bitcoin Energy Consumption
The Bitcoin network hash rate – the collective computational effort miners use to mine a block – is publicly available information, making it possible to calculate Bitcoin electricity consumption by estimating how much energy is required to produce it.
The most popular source for Bitcoin energy consumption is the Cambridge Bitcoin Electricity Consumption Index (CBECI), which relies heavily on electricity cost estimation and therefore estimates electricity use by “simple weighting of profitable hardware”, a method that is not particularly accurate. CBECI currently estimates Bitcoin’s annual energy use at 120 TWh.
the aforementioned study by Valuechain proposes a different methodology: counting miner nodes and their efficiencies, i.e. watts consumed per hash and the release date of each miner (assuming non-ASIC mining is marginal and should no longer be considered). This method yields another 88.95 TWh.
For this reason, it is estimated that Bitcoin consumes 2-56 times less energy than the fiat system to which it is an alternative.
Bitcoin as a Path to Greener Energy
A number of studies, such as those conducted by the Bitcoin Mining Council, have pointed out that the exceptionally high percentage of renewables in the Bitcoin energy mix – 58% – is far greater than any other major industry.
This is not surprising, because Bitcoin miners mobileand they naturally go where energy is cheapest – which in many cases means going to green energy sources that cannot efficiently stock and transport their extra energy.
Bitcoin mining is also flexiblemeans that a miner can be turned on and off instantly following energy fluctuations, which can be important in the case of green energy.
These two qualities allow Bitcoin mining farms to be installed in some of the most remote places in the world, such as a dam in the Amazon or a solar farm in West Texas, making them more profitable and profitable. promoting greener energy developments.
Two hydroelectric power stations built on the fringes of Virunga National Park in the Democratic Republic of Congo would be good examples of such incentive alignment. The initial investments were enough to build the power plants, but not enough to provide electricity to the people in Virunga who continued to use charcoal and cut trees, accelerating deforestation… until a Bitcoin mining company arrived from Paris. Now based in Switzerland, BBGS has made them profitable by installing mining rigs on the dams and allowing them to finance the remaining operations, including the necessary infrastructure.
Carbon-Neutral and Carbon-Negative Mining
Miners are subject to constant innovation not only in the size of their chips (smaller chips equal less energy required to transmit data), but also in technologies that allow them to capture and reuse the waste heat they generate, making mining a reality. carbon neutral.
Canadian MintGreen is using miners to heat water for a whiskey distillery, and a project is underway to heat buildings in Vancouver. Norwegian Cryptovault recycles waste heat into dry timber and soon to seaweed. Swedish Genesis Mining uses its miners to heat greenhouses. Similar initiatives are popping up all over the world, and projects like The Block’s “special silicon” rigs will only increase the number of ways a Bitcoin miner can be used.
Moreover, Bitcoin mining can be carbon negativethat is, effectively reducing the amount of greenhouse gases emitted into the atmosphere. You can do this by doing catching flammable gas — a byproduct of petroleum production, which is often very expensive to transport, so it disperses into the atmosphere, emitting harmful air pollutants such as black carbon, methane and volatile organic compounds. Oil producers around the world are increasingly being told to prevent a gas explosion, and Bitcoin mining is a smart way to do that.
Some small oil producers in Texas and Montana have already partnered with mining companies to capture the flaming gas, but it was ExxonMobil and its pilot Bitcoin mining program in North Dakota that definitely put this practice on the map.
Humanity needs energy to live and thrive, and we should aim to improve energy efficiency and sustainability, rather than trying to limit its use, bringing us back to the candlelight.
Bitcoin uses 2-56 times less energy than the fiat system, and the Lightning Network can allow it to scale as needed without spending much more.
Bitcoin mining is already the greenest industry and could spur many more green energy developments around the world.
Bitcoin miners can also be used for a number of non-mining efforts, including actually preventing further greenhouse gas emissions into the atmosphere.
Now, it’s the fiat system’s turn to justify its ecological footprint.
This is a guest post by Marie Poteriaieva. The opinions expressed are their own and are owned by BTC Inc. or may not reflect the views of Bitcoin Magazine.