By Anders Lorenzen
Due to the rapid rise of the value of the digital currency Bitcoin, last year it went mainstream alongside the whole cryptocurrency market. But then a trail of articles drew attention to its extremely high energy usage, arguing that the currency is having a negative impact on climate change. Writing for Grist, Eric Holthaus even claimed that the Bitcoin could cost us our clean energy future.
There is no doubt that Bitcoin’s energy usage is a problem, a problem that has increased as the currency has increased in value. Last year the value of one Bitcoin ranged from $1000 to $20,000. And today there are nearly 17 million coins in circulation. The process of mining the coins is hugely energy-intensive, due to the computer speed and storage needed to undertake complex mathematical calculations. Added to that, huge numbers of coins are being mined in China using coal power, which obviously adds to the problem.
But with China cracking down on Bitcoin mining as well as on coal, it is likely the problem will start to become less of a problem in the future. But fundamentally Bitcoin mining is changing and there are efforts being made to make it more energy efficient. People and companies who mine Bitcoin are attracted by cheap energy prices.
And the real problem so far has been that the dirtiest energy has been the cheapest. With the huge strides made with renewables in recent years, and with prices plummeting, it is not unlikely that renewables could be the preferred energy choice for Bitcoin mining in the not too distant future. There are also plausible arguments that Bitcoin could actually increase interest in renewables, introducing them to people who have not previously been interested.
But even by today’s standards, let’s put some of the arguments made about Bitcoin’s high energy consumption into context. Globally the whole energy footprint of Bitcoin only accounts for 12% of US data centre footprints. Did you get that? 12%. So we could easily make the argument that Facebook could cost us our clean energy future. And further, if one really wants to ask what is Bitcoin good for, one could make the same point about many of the other digital systems that use data centres .
For instance, we might as well get rid of Facebook, Twitter, Snapchat, Netflix, Amazon etc…, because they are really just a waste of energy – right? A recent Greenpeace investigation has uncovered the extremely dirty energy sources of Netflix and Amazon, and in the past, they have run campaigns against Apple and Facebook. The reality is that our world economy is one that has transitioned to a digital economy. Even the banking sector is using huge amounts of energy where, literally, digits jump from one screen to another. I don’t hear questions about the carbon footprint and the energy intensity of the banking world.
And crucially the people behind Bitcoin wanted to create a fully transparent monetary system. This is a system where every transaction is recorded, unlike today’s monetary system where your money, without your permission or knowledge, is being switched in and out of investments, often funding unsustainable industries from fossil fuels to weapons.
And what if Bitcoin and the Blockchain technology which underpins it not only helped transform the banking industry to a sustainable and transparent industry but also makes it easier to invest in and trade in renewables. This in return would make the industry more democratic, so that it is not only the big companies who can invest but you and me. This is after all what some of the companies who have adopted the blockchain technology are doing.
Would you still say that it is a waste of energy?