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Bitcoin isn’t getting greener

Four environmental myths about cryptocurrency debunked.
Image: Bloomberg

The price of bitcoin has reached US$50 000 (£36 095) – another all-time high. It’s hard to believe that 10 000 bitcoin would only buy a couple of pizzas ten years ago. It’s even stranger to think that bitcoins are completely virtual. You can’t hold one, except on a hard drive, and there’s no underlying asset to them. A bitcoin is simply a digital representation of the computer power needed to make one, what’s called its “proof-of-work”.

This isn’t actually a new idea though. Rai stones were one of the first forms of money used on the Micronesian islands of Yap. To get hold of a Rai, you had to row a canoe for 500km or so to Palau and chisel away at some local limestone. Then you needed to take the 3m-wide lump of rock back to Yap without sinking in the Pacific. No one is quite sure when it started, but the practice is at least several centuries old. Yapese money had no inherent value. For everyone to respect the proof-of-work, the process was deliberately inefficient and incredibly resource-intensive, just like bitcoin.

Instead of relying on intrepid voyagers, bitcoin uses a global network of competing computers. Like safe crackers at a safe-cracking contest, these bitcoin mining machines guess the combination to a digital lock (a long string of digits) with the correct combination winning a few new bitcoins. The combination changes every ten minutes, and the contest continues.

This might all sound like a harmless game of digital bingo. But with more and more people enticed by the heady rewards, bitcoin mining on some days uses as much energy as Poland and generates 37 million tonnes of CO2 each year.

New institutional investors, like the carmaker, Tesla, are driving the asset’s price skywards while ignoring bitcoin’s climate-changing appetite. And to keep the bull market charging, supporters are working hard to argue for bitcoin’s green credentials.

For the sake of a stable climate, these myths need debunking.

Myth one: bitcoin mining is becoming more efficient

Bitcoin’s carbon emissions are not the network’s only dirty secret. In 2011, competing miners could win the bitcoin bingo with an average laptop. Today, viable operations require investing in warehouses filled with specialised hardware known as Application Specific Integrated Circuits (ASIC). As the majority of mining costs come from energy to run these units, bitcoin miners are always careful to use the cheapest. To avoid wasting energy, the global arms race for bitcoin requires ASICs to be replaced for newer and more efficient models every year.

ASICs can’t be easily repurposed for general computing. Redundant units create around 11,500 tonnes of hazardous electronic waste each year, much of which is dumped on cities in the global south.

Myth two: bitcoin encourages investment in clean energy

Chinese hydroelectric power plants are popular spots for bitcoin mining. While China cracks down on the industry, 61% of bitcoin mining is powered by fossil fuels.

Cheap coal in Australia has found new buyers through bitcoin, as formerly redundant coal mines are reopened to power mining. Miners are willing to move anywhere for residual energy, increasing the profitability of natural gas in Siberia and supporting oil drilling in Texas.

In Virunga National Park in the Democratic Republic of Congo, bitcoin miners are getting special access to cheap, clean energy produced by an EU-funded hydroelectric plant. The plant was designed to help locals find livelihoods beyond poaching and stop them resorting to scouring parkland for wood fuel. Bitcoin miners employ armies of computer servers, not the ex-combatants the plant could help.

Myth three: bitcoin replaces the need for gold mining

Gold mining is one of the world’s most destructive industries. Bitcoin was originally intended as a digital replacement for gold that was also a deflationary means of exchange, capable of rendering wasteful banks and regulators redundant.

But for many institutional investors, gold is being bought to hedge against bitcoin’s volatility. Tesla poured US$1.5 billion into bitcoin, but also declared an interest in gold. While bitcoin is currently experiencing all-time price highs, gold hit one of its own in 2020.

Nor has bitcoin displaced traditional finance institutions. Major banks are vying to get very rich indeed on the back of it.

Myth four: corporate players will boost market for ‘green bitcoin’

Some argue that institutional investors can turn bitcoin green. Yves Bennaim, the founder of Swiss cryptocurrency think tank 2B4CH, claims that as investors like Tesla push prices up, “there will be more incentive to make investments in renewable sources of energy” for bitcoin mining. But miners will always use the cheapest option to maximise returns. It’s not possible to allocate additional rewards to miners using renewables, because it’s difficult to know exactly which bitcoin miners use renewables.

Unfortunately, there is currently no such thing as a “green bitcoin”.

Not all cryptocurrencies are as energy-intensive as bitcoin, though. There are alternatives to proof-of-work. The second biggest blockchain project, ethereum, is switching to proof-of-stake, a new system which is supposed to remove the need for data miners and perpetual hardware updates. Bitcoins are dirty things, but pointing this out to would-be investors should not mean throwing the blockchain baby out with bitcoin’s bath water.The Conversation

Peter Howson, Senior Lecturer in International Development, Northumbria University, Newcastle

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Great article so now that we know bitcoin uses about 9 GW of installed power, how much does all the cloud computing use. We all have photos and videos and useless and useful documents on servers in the cloud. All these servers in data centres use massive amounts of power. A 40MW data server is more than a small smelting furnace uses.

Don’t spoil a nice story with the simple facts ma’am … 😉

Cash is the only means of exchange that has the possibility of being perfectly anonymous. This quality is essential for maintaining bribery and corruption. Cash exchange is quick, costs nothing, incurs no tax.
The world as we know it simply cannot exist without vast amounts of bribery and corruption.

This is quite biased because their is no balance of facts in the article rather the author is pushing a negative narrative and that is it.

Instead of this being classified as news and making headlines it should have being thrown out or brought in with an equally biased article.

Which I will write below.
Gold and a basket of the world currencies which act as both a store of value and tradeable assets commit this largest source of CO2 pollutents relying on the destruction of nature, water resources and using combustion engines to transport their physical distribution.

What possible facts could the author have included to make it more “balanced”? The answer is none, bitcoin is inefficient, most people have accepted this, a whopping 7 transactions per second is not going to turn BTC into a medium of exhange, you should celebrate the fact that its this inefficient as a medium of exhange, after all its what gives credence to the claims of : Store of value.

For reference it takes around 653kWh to confirm a single bitcoin transaction, VISA confirms 100 000 transactions for 149kWh
So you have to decide what is it going to be?
Store of value? Or medium of exhange? Because it can’t be both, or well it could be, but that would require a change in the protocols and the majority of the hash power to agree, which I don’t see happening at all.

I just checked now, as I usually do after a BTC pump the TX fees are through the roof, sure moving 1B worth of USD for 23USD is a bargain for a store of value item, but paying 23USD for a coffee is not acceptable.

“a whopping 7 transactions per second is not going to turn BTC into a medium of exhange”

Yeah…that why the Indian government is mulling over banning Bitcoin and in Nigeria…more transactions happen in a day than anywhere else in Africa….and by the poor nogal

Morgan Stanley has come out openingly declaring that Bitcoin will replace the dollar as the de-facto reserve money to all currency

@Leah

Do you even know what the current block size limit is for BTC?
The current block size limit (theoretical limit of 4MB) is the speed limit.

Unless the miners agree to increase or even lift the limit (many implications in both cases) BTC will continue to be slow and expensive to transact.

Its not a bug, its a feature, its designed this way.

I just checked now if you want your BTC transaction to confirm in the next block you would need to spend 102 satoshis per byte. a normal transaction is about 220 bytes.
That would equal 0.0002244 btc (or R191.63) per transaction, sure if you have time on your hands you can spend a quarter of that amount and wait a couple hours for your transaction to confirm.
at 25 satoshis per byte it will cost R47 and you will have to wait between 3-42 blocks for your transaction to confirm (meaning 30-420 minutes).

If you went on the extreme end of the scale you could spend 2 satoshis per byte for your transaction, this would see a cost around 0.25USD (R3.68) for the transaction, you would however need to wait 3-64 blocks before you would have a chance of it confirming, and that is now, can you imagine if the traffic picks up?

Many people have tried to fix this problem, disagreements happen and then eventually a group of dissidents fork the code, steal a little bit of hashing power and start their own chain, que : Bitcoin cash, Bitcoin gold and Bitcoin SV.

Funny enough big banks would love it if the block size limit stays as low as it is now, it would be a perfect way in keeping us on the fractional reserve banking system.
The fees will continue to skyrocket and eventually it will only be institutional money (banks) that would be able to afford to transact on the network.

Its mining the remaining BTC that’s environmentally unjustifiable. your comparison doesn’t really hold true as it pertains to currency which desn’t require enironmental destruction to exist. BTC remains a religion and once people catch onto crypto with real-world-use like ETH it will hopefully follow Rai stones to its place as a historical oddity.

Gold mining is done as cheap as what is humanly possible, those who can’t mine at reasonably low cost makes no money.

Bitcoin uses an elaborate game of solving algorithms, (completely unnecessary) to create something that (unnecessarily) costs a lot of money to create. Never mind the ESG issue, which is real.

It feeds of the belief that money must have some inherent value and that governments should not be able to print money cheaply. It is effectively a revolt against governments growing the supply of money to match the growth in supply of goods to ensure a stable price environment (low inflation) for economic activity to be performed.

Humans have done many crazy things in the past, resulting in many bubbles. All of these bubbles were based on some form of misplaced rationale that convinced many that it made sense. It always made sense initially but eventually reality trumped misplaced ideology.

Bubbles require limited supply and increasing demand. Strong price movement in itself draws attention and then with some supporting rationale boosts demand. It also helps that we have significant suspicion against governments and big tech/social media.

So a couple of uncomfortable questions to test the rationale:
1) Why do we need what is being limited in supply? Why do we need Bitcoins in particular? (look how easy it is to create so many other different cryptocurrencies). Is it special because it is artificially expensive to ceate and limited in supply?
2) If Bitcoin or similar is the future of currencies, then how will the economy function if we limit the supply of currency? Price instability? Deflation? In itself the limited supply signals its death as a currency (same reason why gold is not used anymore)
3) If blockchain/cryptocurrencies are better/cheaper technology and a decentralised ledger is more efficient than the current centralised banking system, then why do you believe that governments won’t in future adopt this new tecnology and through their agents (banks) not also be the regulators thereoff, to once again ensure a stable price environment for the economy to function.
4) Are we saying governments and their control/regulation is something of the past? Really? Is this reality or ideology?

The frenzy in itself is causing the volatility in prices of cryptocurrencies and is exactly why it can’t be used as money. The frenzy is based on the belief it is the future of money (catch 22). The story and ideology makes sense and excites many. You can’t have currency if the supply can’t be controlled by someone! Who do you want that someone to be?

There is so much uncertainty as to how cryptocurrencies will be used in the future of money. Do you think governments will simply stand back and lose their sovereignty? No more taxes? Perfect world?

This will end in tears for those that are sucked in later/last. The mania may not have peaked yet and it is bound to suck in more due to their own greed.

Pass me the popcorn

“…The frenzy in itself is causing the volatility in prices of cryptocurrencies and is exactly why it can’t be used as money”

The one word used in your sentence describes BTC over fiat currency…MONEY

Gold is limited in supply and has been the defacto money with silver for thousands of years…but try lugging a kilo through an airport

BTC is open source and mining is the creation of the block chain behind it…so it cannot be counterfeited or confiscated…especially by central banks if you keep the hash key safe

I was a doubting Thomas…now I buy fractions of BTC when I can and the next time I am in the far east I will buy more BTC and keep it out of the prying eyes of the ANC thieving hands

Spoken like someone believing we should carry our money with us and that money is not a medium to facilitate the exchange of goods (goods are of value), but rather the item of value itself. The world doesn’t work like that, but bitcoin believers think it should, they just love the story.

“BTC is open source and mining is the creation of the block chain behind it…so it cannot be counterfeited or confiscated…especially by central banks if you keep the hash key safe”

Oh it can most definitely can be taken away, all you would need is a successful 51% attack and gone are you coins, of course the chances of a 51% attack are extremely low, but as mining becomes more difficult and centralized it becomes more likely.

I am not here to spread FUD (as many of my friends are now claiming) but people should no that there are risks, however small or unlikely they might be.

I don’t need to lug a kilo of gold through the airport check-in. I have a Visa card and a smartphone that can transfer funds anywhere in the world.

There is good reason for limited supply, completed to the US which printed an additional 20% 0f all bank notes in existence last year.

Bitcoin is more of gold 2.0 than a transactional currency.

There will he many crypo currencies available and they will be more efficient than BTC and with better technologies. POW is suppose have these qualities as it is exactly this that supports Bitcoin underlying value which is Trust through Automatic Verification, no human can verify the BTC transaction without the need for first acquiring large advance and expensive computing parts whilst paying the price to do so using resources such as electricity.

Crypo which do not have a limited supply and have employees working on them are very dangerous, they effectively compete with FIAT on a 1 to 1 basis and act as a central bank which can just print more money at any time.

I will have the last laugh when BTC hits $250,000 and tops out at $800,000

Interesting article
So Elon Musk helps Bitcoin push Oil Prices higher
So Tesla vehicle look more affordable to run.
Win Win

No such thing as a free lunch …

One sided article that doesn’t even touch on all the dinosauric resources mining sectors like oil/paper mill/fracking etc that make crypto’s green sheet look positively squeaky clean in comparison !

Fact is, you can’t kill an idea. Bitcoin extends beyond just code, it’s a mindset. People who understand and buy into Bitcoin have already gone down the proverbial rabbit hole. They’ve had to challenge their assumptions of money, government, and social coordination.

Once you understand this, the red pill has hit.

No its not squeaky clean.
Do you know how much energy 650kWh is?

If I give you the benefit of doubt and say 30% of global BTC mining energy is from renewables and 70% is from fossil fuels.

To confirm a single bitcoin transaction would use 455kWh of fossil fuel energy. if its coal energy its 1.01 kg of CO2 per kWh, so you would generate 455kg of CO2 for a single transaction!

Gold mining generates 400kg of CO2 per ounce for underground mining and 850kg of CO2 for open pit mining per ounce.
And after gold is mined people and trucks don’t need to keep driving around in the pit for gold to be transferable.

@PJJ

Yawn…you’ll have to do better than that.

Sorry, BTC is here to stay.

Fast, easy and efficient.

Just like air travel – take you any bet you never refused to get on a plane because of jet pollution ?????

Guess you used that horse and buggy instead hey!??

LMAO

@Realitybites

What have I missed? You made a statement, I proved it false, and your response is : Yawn?

“Fast, easy and efficient.”
BTC is not fast or efficient, its secure, ill give you that, you would need the power of a whole nation state to pull of a 51% attack and getting access to a couple unused GW is not easy.

If you read my earlier post you would know that there is a very easy way to increase the number of transactions per second : simply increasing the block size limit, until that happens BTC will stay slow, the world can’t function on a 4MB block size limit.

Of course increasing the block size limit brings with it a bunch of other issues, I have zero doubt crypto is here to stay, but I have serious doubts around BTC.

“Just like air travel – take you any bet you never refused to get on a plane because of jet pollution ?????”

If I need to cross the ocean I can only use a plane or boat, both produce large amounts of CO2, but I have no choice, I need to get from A to B.
So the world can’t function without aviation, the world can however function perfectly well if BTC fell off the face of the world tomorrow.
If you don’t hold BTC you would not be affected one iota if it suddenly ceased to exist.

Just compared to other crypto’s BTC is inefficient there are plenty of coins that can confirm more transactions using less energy and faster than BTC, BTC was just the first kid on the block.

@PJJ

You missed everything.

Trying to bad mouth BTC for being ‘non-green friendly’ is like saying Cindy Crawford is ugly because of her beauty spot,

In that same light, you throwing out the baby with the bath water and missing what BTC is all about.

Rather, if you looking for perfection where every single one of your little wish boxes are ticked, then write them on a wish list for Santa next time around the Festive period.

Otherwise, the world is moving on while you hammer away at your keyboard in your little room moaning about BTC because you probably missed that train already.

Too bad, the rest of the planet won’t wait for you, and your overall argument doesn’t hold water otherwise BTC wouldn’t be the 400lb gorilla in the ring that it is

Good luck taking BTC on.

“BTC is here to stay”

Any bets that the world will still have BTC as a leading crypto?

The only thing that can defeat Bitcoin….will be another (promising) crypto. And there are many. And crypto is still in its infancy.

It’s even stranger to think that bitcoins are completely virtual. You can’t hold one, except on a hard drive, and there’s no underlying asset to them. A bitcoin is simply a digital representation of the computer power needed to make one, what’s called its “proof-of-work”.

Need anything more than this…? It isn’t anything and yet it worth some stupid amount of money. Madness.

End of comments.

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