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Bitcoin has always had a crowd of skeptics, and they are just like those staunch Bitcoin fans who insist on their position no matter what information is posted on the market. Skeptics insist that Bitcoin, in addition to being a Ponzi scheme bubble, has no intrinsic value or utility, is a catalyst that wastes energy and brings environmental disaster to the world.
Soon after Elon Musk announced that Tesla had purchased $1.5 billion worth of BTC as a way to protect its cash reserves against inflation, skeptics said the move increased the company’s carbon footprint to the point of violating its acceleration. The mission of adopting renewable energy.
It is true that Bitcoin consumes a lot of electricity, but whether this is a waste of energy remains to be discussed.
Why is Bitcoin's electricity consumption so large?
Bitcoin allows us to directly make peer-to-peer payments without having to rely on a central authority as an intermediary to verify transactions. Bitcoin and other cryptocurrencies replace payment intermediaries with an open network of independent users (called "miners"). These miners compete to verify transactions, and any transaction requires the consent of a majority of people to be approved.
The complex computational mathematical problems that miners are racing to solve enable transactions to be executed. These problems are so complex that even an incredibly powerful computer is difficult to solve. The luck and work required by the computer to solve one of the problems is equal to the effort of the miners in mining. The correct chance is about one in 13 trillion. Other miners who have failed in the competition are just wasting energy in the process.
This requires a lot of energy, and also wastes a lot of energy, and this is completely designed. Because transactions need to reach a consensus before they can be posted, if they violate the consent of other miners, using false transactions to deceive the system requires huge computing power, making fraud uneconomical.
So how much energy does the entire Bitcoin ecosystem currently require? Researchers from the University of Cambridge stated that it consumes about 121.36 terawatt hours (TWh) per year-only higher than Argentina’s annual electricity consumption, but lower than Sweden’s. This may seem interesting, but it doesn’t tell you: Argentina has a population of 45 million, while Sweden has a population of 10 million and consumes more electricity. You can make a comparison between these two countries, but the fact that Bitcoin is somewhere in between does not tell much. Bitcoin represents a new global financial system, not a country's economy.
Maybe we should not only focus on quantity, but more on quality.
Where does the electricity come from
Driving a Tesla is not inherently better for the environment. It all depends on how the electricity is generated at the source-for example, using coal-fired power to drive it has no effect on achieving sustainable development. Elon himself explained that over time, Tesla will “become greener” as renewable energy increasingly replaces our more harmful way of generating electricity today.
Essentially, when we look at the energy consumed by Bitcoin worldwide, especially the way in which electricity is generated, we should take the same point of view. Although a lot of data is based on estimates, some people believe that nearly 75% of Bitcoin mining is fueled by renewable energy.
Iceland is still very popular with Bitcoin miners. A lot of electricity is generated by using renewable geothermal resources, and the carbon emissions of geothermal resources are much lower than that of coal-fired or gas-fired power plants. Canada uses hydropower to generate 59% of its electricity. In the crypto-friendly province of Quebec, 95% of electricity is hydropower.
China is the largest Bitcoin mining market. Currently, coal-fired power plants are mainly used, which is obviously not clean energy. Although, Sichuan Province, where most of the mining sites are located, has excess hydropower capacity. In addition, in recent years, China has been investing heavily in upgrading economic infrastructure to rely more on renewable energy, and plans to increase the minimum proportion of renewable energy purchases nationwide to 40% by 2030.
In general, if governments around the world act together, as the world invests more in the right infrastructure and develops policies to use renewable energy and sustainable practices to power the global economy, over time, Bitcoin will actually "become greener." Of course, this is a bigger problem, and it will have a positive impact on more people than just the mining of Bitcoin. Such a huge transformation may take decades to reach a meaningful level.
At the same time, some participants in the Bitcoin mining industry are developing innovative methods on their own to reduce energy waste in some way. For example, Steve Barbour, the founder of Upstream Data, runs Bitcoin mines on Canadian oil fields. These mines are designed to consume energy wasted by oil wells. Upstream Data does not use methane, which is considered uneconomic by oil companies, but uses potential resources to earn Bitcoin.
What's the point of all this
It can be said that most reports on the environmental damage caused by Bitcoin mining are basically exaggerations. The environmental impact of mining is more related to the energy policy of the country where the miner is located. And now that we know why Bitcoin needs energy, how much energy it uses, and how it is generated, we can consider whether Bitcoin is wasted. It depends on how much you think Bitcoin is worth.
With Bitcoin, we have the tools to create a new alternative financial system, which is controlled by individuals and managed by technology, rather than guards and central authorities. It can change the way the world works. Of course, it requires some energy support.
Of course, people can also ignore the meaning of Bitcoin at all, but the argument for sustainable development is hollow. By the same token, unless most of the energy produced in a country has been produced using sustainable practices, no one should buy an electric car.
And we all know that a fundamental change cannot be achieved by waiting for others to do everything well.