This is an op-ed by Marie Poteriaieva, an observer and educator of the Ukrainian-French crypto industry, who has been following the space since 2016.
Bitcoin is routinely treated as a environmental outcast: its energy consumption it’s pretty simple to track and quick tag as “anti-ecological”. This statement is wrong on many levels, but public opinion is rarely nuanced, and politicians often have little to lose by attacking Bitcoin on ecological grounds: at (relatively) small cost of alienating cryptocurrency enthusiasts, they can position themselves as saviors of the planet to a larger audience.
However, this approach will not last long. More and more voices are being raised to question this immature presentation of Bitcoin, its mining and its importance to the world. These arguments go in three main directions:
– Energy consumption of Bitcoin compared to the traditional monetary system that it intends to replace.
– Green mining and its potential to drive the development of green energy around the world.
– Multipurpose use of miners, recycling their waste heat or capturing flare gas.
Fiat system power consumption
The notion of “a lot” only makes sense 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 fairly self-sufficient, in the fiat world its work is done by a large number of different organizations in charge of issuing, distributing, managing, accounting, and paying services.
A Galaxy Digital Study 2021an asset management firm that specializes in cryptocurrencies, took an in-depth look at just four metrics from the fiat world (branches, servers, ATMs, and card network data centers) and estimated that the banking system consumes more than 263 TWh per year .
more detailed investigations, recently published by Michel Khazzaka of Paris-based consultancy Valuechain Technology Ltd., looks at the energy consumption of more aspects of fiat money: the printing and minting of physical notes and coins, ATMs, cash in transit, cash at electronic points of sale , card payments, bank offices, travel of bank employees, banking and interbank IT. The results are surprising: the traditional monetary sector, excluding finance and insurance, would consume around 4,981 TWh per year.
Bitcoin power consumption
Bitcoin’s network hash rate, the collective computational effort that miners are deploying to mine a block, is public information, making it possible to calculate Bitcoin’s electricity consumption by estimating how much energy it takes to produce it.
The most popular resource on Bitcoin power consumption is the Cambridge Bitcoin Electricity Consumption Index (CBECI), which estimates electricity use using “simplistic cost-effective hardware weighting,” a method that relies heavily on estimating the cost of electricity and is therefore not particularly accurate. CBECI currently estimates Bitcoin’s annual energy usage at 120 TWh.
The aforementioned study Valuechain proposes a different methodology: count the mining nodes and their efficiency, i.e. the watts consumed per hash and the launch date of each miner (assuming that non-ASIC mining is marginal and should no longer be taken into account). This method gives another figure of 88.95 TWh.
Therefore, it is estimated that Bitcoin consumes between 2 and 56 times less energy than the fiat system to which it is an alternative.
Bitcoin as a greener form of energy
A number of studies, such as those conducted by the Bitcoin Mining Councilhave pointed out that the exceptionally high percentage of renewable energy in Bitcoin’s energy mix (58%) is considerably higher than that of any other major industry.
This is not surprising, for Bitcoin miners are mobileand they naturally go where the energy is cheapest, which in many cases means going to green energy sources that cannot efficiently store and transport their extra energy.
Bitcoin mining is also flexiblemeaning a miner could turn on and off instantly following power fluctuations, which in the case of green power can be considerable.
These two qualities allow Bitcoin mining farms to be installed in some of the most remote places in the world, such as a dam in the Amazon or a solar farm in West Texas, making them more profitable and profitable. incentivize more green energy developments.
Good examples of such an alignment of incentives would include two hydroelectric plants built on the edges of the Virunga National Park in the Democratic Republic of the Congo. The initial investments were enough to build the plants, but not enough to bring electricity to the people, who continued to use coal and cut down trees in Virunga, precipitating its deforestation… until a Bitcoin mining company from Paris arrived. Now based in Switzerland, BBGS has installed mining equipment in the dams, which makes them profitable and allows them to finance the rest of the operations, including the necessary infrastructure.
Carbon-Neutral and Carbon-Negative Mining
Miners are subject to constant innovation, not only in the size of their chips (smaller chips equals less power required to transmit data), but also in technologies that allow them to capture and reuse the waste heat they generate, making that mining is de facto carbon neutral.
Canadian Mint Green use miners to hot water for a whiskey distillery, and a project to heat buildings in Vancouver is underway. Norwegian Kryptovault recycles waste heat to dry wood and, soon, seaweed. Sweden’s Genesis Mining uses its miners to heat greenhouses. Similar initiatives are springing up around the world, and projects like The Block’s “custom silicon” rigs will only increase the number of ways a Bitcoin miner can be used.
Also, Bitcoin mining can be carbon negative, that is, effectively reducing the amount of greenhouse gases emitted into the atmosphere. You can do it for flare gas capture — a byproduct of oil production, which is often too expensive to transport, so it simply burns up in the atmosphere, emitting harmful air pollutants like black carbon, methane, and volatile organic compounds. Oil producers around the world are increasingly being told to curb gas flaring, and Bitcoin mining is a smart way to do it.
Some smaller oil producers in Texas and Montana have already partnered with mining companies to capture flared gas, but it was the arrival of ExxonMobil and its Bitcoin mining pilot program in North Dakota that has definitely put this practice on the map.
Humanity needs energy to live and develop, and instead of trying to curb its use, returning to candlelight, we should aim to develop energy efficiency and sustainability.
Bitcoin uses 2 to 56 times less energy than the fiat system, and the Lightning Network can allow you to scale as needed without spending much more.
Bitcoin mining is already the greenest industry and can incentivize many more green energy developments around the world.
Bitcoin miners can also be used for a number of non-mining activities, including preventing further greenhouse gas emissions into the atmosphere.
Now it is the fiduciary system’s turn to justify its ecological footprint.
This is a guest post by Marie Poteriaieva. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
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