An Environmentalist's Guide to Bitcoin
Volcanoes, Economic Incentives, and Renewables
In 2021, Emma Newbury, writing for The Fool, outlines arguments against Bitcoin, citing the environmental impacts that Bitcoin could have.
She writes, “it's also hard not to think of Bitcoin as a big old truck belching out fumes as it's overtaken by faster, more environmentally friendly models. Cryptocurrency exchanges are bursting at the seams with Bitcoin alternatives. Many newer cryptocurrencies use more ecofriendly mining models, which environmentally conscious investors might want to check out.”
Newbury, along with hundreds of other outspoken environmentalists including Elon Musk and Elizabeth Warren, are fearful that Bitcoin adoption could lead to more drastic climate change. The notion that the Bitcoin network, which is the most secure computer network created in the history of the world, is of lesser value than some other coin being shilled on Coinbase is absurd, and completely ignores the inherit value of a secure, decentralized, and private form of money. Nevertheless, energy usage and emissions in Bitcoin are the hot topics in the Bitcoin environmental debate. While it is paramount to be aware of the possible effects of new industries and technologies on the climate, these arguments against Bitcoin are misguided and misleading.
Bitcoin miners secure the network by validating transactions and are rewarded with Bitcoin in return. The financial incentive for miners is to pay as little money as possible to be rewarded with the greatest amount of Bitcoin.
CEO of Foundry, Mike Colyer, said “The Bitcoin network is ruthless in its drive for the lowest cost. Miners around the world are looking for stranded power that is renewable. That will always be your lowest cost. Net-net this will be a big win for Bitcoin’s carbon footprint.”
The concern that most anti-Bitcoiners have on energy consumption is that the Bitcoin network is far too carbon-intensive due how much electricity the network uses. However, very few Bitcoin miners are using energy from nonrenewable sources. In fact, it is estimated that about half of US Bitcoin miners use renewable energy to power their machines. The simple fact is renewable energy is more affordable than nonrenewable for these miners. The exodus of miners from China to Iceland, Canada, and the United States allowed for greater use of geothermal, wind, and nuclear-powered Bitcoin mining operations.
As Colyer stated, it is in the miner’s best interest to use renewable energy. Plans to mine Bitcoin with geothermal energy from untapped volcanos have been proposed in El Salvador and the pacific island, Tonga, the former being a country with Bitcoin as a legal tender, and the latter planning on doing so soon. Tonga is a small nation that has 21 active volcanos. Each volcano can produce 95,000 megawatts of energy at any time. With only 120,000 people living in Tonga, 40,000 megawatts would be enough to power their entire national grid. Lord Fusitu’a, a former member of Tongan parliament, stated that the excess energy would be used to mine Bitcoin. Each volcano could generate $2,000 in Bitcoin per day, all mined from free geothermal energy that was otherwise going untapped. Tonga is by no means a rich nation, so transforming their only natural resource of geothermal energy into income for its people, while also securing the Bitcoin network, shows the incredible opportunity that Bitcoin extends to underdeveloped nations without draining the energy grid. Critics argue that Bitcoin uses too much energy, but they overlook the clear benefit that Bitcoin and Bitcoin mining has. Never was there a method to convert excess energy into money until now. While there are miners that use nonrenewable energy, there is a tremendous incentive for Bitcoin miners to use otherwise wasted geothermal energy, and the mining industry will most likely proceed down this route in the coming years.
With Bitcoin mining quickly moving green using free geothermal energy, another concern with Bitcoin is the large amount of energy that securing the network draws. Estimates rate Bitcoin’s energy usage at less than 1% of the worlds energy usage. While this is a large number, it is misguiding when thrown around as an argument against Bitcoin’s utility. No, 1% of the world’s energy is not an efficient use when dedicated to a worthless internet coin, but Bitcoin is so much more than that. The less than 1% of the world’s energy that Bitcoin takes reflects the most efficient use of energy in the world. Instead of being turned away from Bitcoin for this statistic, you should instead be amazed at what Bitcoin could do for only a small share of the world’s energy consumption.
Think about this:
Bitcoin adoption would remove the need for banks. Banks have hundreds of offices and buildings around the world, and thousands of commuters who drive to and from work each day. The banking industry consumes roughly 260 terawatt hours per year, more than twice the energy that Bitcoin consumes.
Bitcoin adoption would also remove the need for mints, treasuries, and other government organizations that create and store physical money. These buildings draw significant energy, have a massive carbon footprint, and similarly require thousands of commuters to drive to and from work in their gas-powered cars, and use their computers that draw energy. Bitcoin adoption would provide banks and freedom of money to billions of people across the globe, protecting them from government corruption, theft, and irresponsible monetary policy. This humanitarian cause alone is worthy of substantial resources put behind it.
The bottom line is this:
Every industry in the world uses some of our energy resources on Earth. As citizens of the world, we should be focused not on squashing innovation because it has costs, but on finding the most efficient uses of our limited resources. Bitcoin is the most efficient use of energy ever created and has a built-in financial incentive to use renewable and untapped clean energy sources. While Bitcoin comes with a cost of energy consumption, it is irresponsible to write it off for this reason, as this standard would similarly write off many other important technologies being used in the world today.
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