How Bad is Bitcoin?

Bitcoin and Energy Use

There is a lot of chat about Bitcoin and electricity use at the moment with many sources quoting that Bitcoin uses “More than all the worlds solar panels create” or “more than XX country”. Whilst I am not defending bitcoin energy use (it is very high) these arguments are incorrect and unhelpful.

In 2020 the total solar power produced was 844TWh, whilst estimates for Bitcoin put it somewhere around 115-139TWh. That means Bitcoin uses the equivalent of 16% of solar energy (roughly). Very high for sure but there is no need to make up stats to make it worse, otherwise you undermine your credibility by parroting an easily disputable “fact”.

 Bitcoin generates energy as people use computers to “mine” (solve complex problems) which gains them bitcoin essentially. How this model of currency compares to the rest is unclear, the current banking system also uses masses of energy and materials (metal etc) which Bitcoin proponents often argue. This is true but this is also not a valid argument, you can’t compare Bitcoin to the global financial system, you would have to compare all the cryptocurrency footprints collectively if you are arguing this system will replace the current one. There is a valid point in here, the metal in our coins also got mined, smelted and shipped so there will be a high material and electricity cost from that and from the bank computer servers. You could easily argue that precious metal mining is worse than Bitcoin mining for sure. Really neither should exist in the form that they currently do. If it is just that Bitcoin uses more energy then maybe that is ok? Afterall, we can probably tackle energy use more easily than say exploitation and child labour in physical mining. Maybe high energy outweighs massive human rights abuses?

But is electricity use the issue?

Many argue that Bitcoin has been set up in many places to use excess energy, indeed I visited a renewable energy place in Scotland who were considering it as they had to dump vast amounts of renewable produced electricity that couldn’t be used by the grid, they just let it out as heat. It’s a tricky area to estimate, you have to look at what Bitcoin’s current output is, estimate the electricity use of the hardware, work out where it is in the world and calculate the fossil fuel/renewable energy mix in use in that country to estimate the carbon footprint.

A study by a cryptocurrency research group estimated that 73% of the energy used in Bitcoin is carbon neutral, a University of Cambridge study says 39%. More than double the US electricity grid and actually a very good number. The reason being it tends to use renewables is that poor areas like South America and Southern China mine the most and have high hydropower grids where energy is often wasted as it cannot be used. This is further complicated when you consider the poverty in these areas, it’s hard to argue with someone in poverty trying to make things better by mining Bitcoin, particularly in a pandemic.

Most Bitcoin energy comes from production and not use, so as mining slows down the overall energy drops. This means the rise will not be exponential and should drop off. It’s not a surprise that a new industry uses more energy than the one it replaced. Laptops use more than typewriters, cars more than horses and smartphones more than landlines. It comes down to whether the increase is justified or not.

Bitcoin does use a lot of electricity and competitors like Ethereum argue they use less as a way to attract customers. I’m not advocating the use of Bitcoin as I do feel the energy use is very high (unless using excess renewables that would be dumped) but misleading stats and figures make this worse.

It is extremely easy for the Bitcoin industry to disprove these arguments. The environmental industry can argue their case for lowering the footprint and pressurise those in power to act. Governments already dislike Bitcoin so it is a fairly easy argument to win meaning it’s such a needless lie to tell.

 We regularly argue against industries that lie about climate change and their emissions and I really hate to see environmental groups go down the same route. The best argument is a true argument regardless of which side you are on.

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