This is an editorial opinion piece by Marie Poteriaieva, a French-Ukrainian crypto industry observer and educator who has been following the space since 2016.
Bitcoin is often considered a environmental pariah: that is energy consumption pretty simple to follow and fast label is “anti-ecological.” This claim is false on many levels, but public opinion is rarely so nuanced, and politicians are usually not at a loss by attacking Bitcoin on an ecological basis – at a small cost. is (relatively) alienating crypto enthusiasts who can position themselves as saviors for the planet. larger audience.
However, this approach will not last long. An increasing number of voices oppose this immature presentation of Bitcoin, its mining, and its importance to the world. These arguments go in three main directions:
– Bitcoin’s energy consumption compared to the traditional monetary system it is intended to replace.
– Green exploitation and the potential to promote green energy development worldwide.
– Multi-purpose use of extraction machines, recycle their waste heat or capture gas.
Fiat system energy consumption
The concept of “a lot” makes sense only in comparison. In the case of Bitcoin’s energy consumption, the most relevant comparison is with the fiat money system (and not with some small European country, as some clickbait articles may cite).
While Bitcoin is pretty much self-sufficient, in the fiat world its work is done by a lot of different organizations in charge of issuance, distribution, management, accounting and payment services.
One Galaxy Digital’s 2021 ResearchA crypto asset management firm, took a deep look at just four metrics of the fiat world — branches, servers, ATMs, and data centers of the card network — and estimated that the banking system consumption of more than 263 TWh annually.
Study in more detail, recently published by Michel Khazzaka of consulting firm Valuechain Technology Ltd. based in Paris, aggregates through energy consumption in many other aspects of fiat money: printing and minting of banknotes and coins, ATMs, cash in transit, cash at electronic points of sale , card payment, bank office, banker’s commute, banking IT and interbank. The results are astounding: the traditional currency sector – excluding finance and insurance – will consume approximately 4,981 TWh per year.
Bitcoin Energy Consumption
Bitcoin network hash rate – the collective computational effort miners are implementing to mine a block – is public information, making it possible to calculate Bitcoin’s electricity consumption by estimating the amount of energy needed to produce it.
The most popular resource in terms of Bitcoin energy consumption is Cambridge Bitcoin Electricity Consumption Index (CBECI), which estimates electricity usage by “simple weighting of beneficial hardware”, a method that relies heavily on electricity cost estimates and is therefore not particularly accurate. CBECI currently estimates Bitcoin’s annual energy usage at 120 TWh.
The aforementioned study of Valuechain proposes a different methodology: counts miners’ nodes and their efficiency, i.e. watts consumed per hash and each miner’s release date (assuming that non-ASIC mining is trivial and shouldn’t be counted come again). This method gives another figure of 88.95 TWh.
As a result, Bitcoin is estimated to consume 2-56 times less energy than the fiat system for which it is an alternative.
Bitcoin as a way to greener energy
Some studies, such as those done by Bitcoin Mining Councilpointed out that the share of renewable energy is exceptionally high in the Bitcoin energy mix – 58% – significantly more than in any other major industry.
This is not surprising, because Mobile Bitcoin Minerand of course they go where the energy is cheapest – which in many cases means going to green energy sources that cannot efficiently store and transport their excess energy.
Bitcoin mining is also very flexiblemeans that a miner can be switched on and off immediately after energy fluctuations, which in the case of green energy can be substantial.
These two qualities allow Bitcoin mining farms to be installed in some of the most remote places in the world, like a dam in the Amazon or a solar farm in West Texas, making them highly profitable. more and encourage the development of greener energy.
Good examples of such incentive alignment would include two hydroelectric plants built on the edge of Virunga National Park in the Democratic Republic of the Congo. Initial investments were enough to build factories, but not enough to provide electricity to the people, who continued to use charcoal and cut trees in Virunga, leading to its deforestation… until a Bitcoin mining company from Paris. Currently headquartered in Switzerland, BBGS installed mining rigs on the dams, generating profits and allowing them to finance the rest of the operation, including the necessary infrastructure.
Carbon neutral and negative carbon mining
Miners must constantly innovate, not only in their chip size (smaller chips equal less power needed to transmit data), but also in technology that allows them to capture and reuse waste heat that they create, making mining real neutral carbon.
Canadian Mint use miner warm water for whiskey distilleries, and a project to heat buildings in Vancouver is underway. Norway’s Kryptovault recycles waste heat into dry wood, and soon – seaweed. Swedish mining company Genesis uses its miners to heat greenhouses. Similar initiatives are popping up around the world, and projects like The Block’s “custom silicon” rig will only increase the number of ways a Bitcoin miner can be used.
Moreover, Bitcoin mining can negative carbon, that is, effectively reducing the amount of greenhouse gases released into the atmosphere. It can do so by gas flare shooting – a by-product of oil production, often too expensive to transport, so it simply bursts into the atmosphere, releasing harmful air pollutants such as black carbon, methane, and compounds volatile organics. Oil producers around the world are increasingly being asked to limit gas flare-ups, and Bitcoin mining is a smart way to do it.
Some of the smaller oil producers in Texas and Montana have partnered with miners to extract gas, but that’s the emergence of ExxonMobil and Bitcoin Mining Pilot Program in North Dakota that certainly put this practice on the map.
Humanity needs energy to live and thrive, and instead of trying to limit its use, returning us to candlelight, we should aim for efficient and sustainable energy development.
Bitcoin uses 2-56 times less energy than a fiat system, and the Lightning Network can allow it to scale as needed without much additional cost.
Bitcoin mining is already the greenest industry and it can encourage more green energy development around the world.
Bitcoin miners can also be used for a number of non-mining endeavors, including actually preventing greenhouse gas emissions into the atmosphere.
Now it’s the fiat system’s turn to justify its ecological footprint.
This is a post by Marie Poteriaieva. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.