Bitcoin mining has long been recognized for its contribution to increasing global CO2 emissions. Fortunately for the groundbreaking cryptocurrency, many of these reviews are based on false assumptions and predictions, divorced from an understanding of Bitcoin’s built-in energy-seeking incentives, and underscore the positive impact it could have now and in the future for billions of global citizens. While it is true that the global Bitcoin network consumes a significant amount of energy, this consumption must be put in context and weighed against its benefits if we are to have a consistent debate. We don’t often hear criticism of Netflix or Google’s data and energy consumption costs, so why Bitcoin?
Some estimates put the Bitcoin network using around 120 terawatt hours of electricity annually, which is more than some small nations and 0.55% of total global electricity production. Despite the high energy consumption by mining, the Bitcoin Electricity Consumption Index of the University of Cambridge comes to the conclusion that “the ecological footprint of Bitcoin currently remains marginal at best”. How can both things be true?
First, Bitcoin requires less energy to use than both the traditional financial sector and the gold mining industry. A recent study finds that Bitcoin’s energy consumption is less than half the energy consumption of these two legacy systems. This doesn’t even take into account the continuation of the planet-warming fossil fuel projects through the banking system.
In addition, many critics fail to recognize that energy consumption is not synonymous with CO2 emissions. A unit of wind power doesn’t have the same environmental impact as a unit of coal, and luckily the Bitcoin network has an incentive to look for renewable energy in particular. The University of Cambridge states that renewable energy sources make up about 40% of Bitcoin’s energy consumption worldwide and 66% in North America. With mining moving further west in response to China’s recent mining ban, we should expect the trend of increasing use of renewable energy in Bitcoin to continue.
In fact, numerous initiatives are underway to make Bitcoin more energy efficient. Under the direction of the CEOs of the leading North American crypto mining companies, the Bitcoin Mining Council was established to promote energy transparency and improve efficiency. The Crypto Climate Accord is another notable initiative that aims for the entire crypto industry to achieve net zero emissions by 2040.
However, determining Bitcoin’s energy consumption and the best ways to reduce its CO2 emissions by using renewable energy is only part of the discussion. The network’s energy consumption is easy to criticize for two main reasons: first, it is easy to quantify due to the openness of the network, and second, the scope of the benefits of Bitcoin is not yet widely recognized. In fact, many services that society implicitly or explicitly deems worthy of their high energy consumption, such as modern air travel, big-tech data centers, and same-day shipping, are not nearly as heavily criticized as using Bitcoin.
By segregating Bitcoin from other industries with particularly high emissions, the critics of Bitcoin are exposing a simple fact: They don’t believe that the promise and potential of this technology is worth all energy consumption. This is a failure of the imagination and possibly a failure of Bitcoin’s supporters to prove Bitcoin’s potential over the long term. Rather than spending the majority of our time disproving Bitcoin’s climate skeptics, we should advocate that the network’s emissions are worth the undeniable benefit of this technology. We made this decision for other services and industries and thus made peace, albeit reluctantly, with the emissions trade-off. We as a society should do the same for Bitcoin.
Lindsey Kelleher is a Senior Policy Manager at the Blockchain Association.
This is a guest post by Lindsey Kelleher. The opinions expressed are solely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.