In a recent article on Vice’s technology news feed, Motherboard, author Sebastiaan Deetman explores the energy efficiency of Bitcoin.
The article begins with a brief and fatalistic assertion regarding the environmental impact of mass migration to Bitcoin (or a similar energy intensive cryptocurrency).
Another Vice Motherboard contributor, Christopher Malmo, is quoted as saying, “Adopting Bitcoin as a major currency anytime in the next few decades would just exacerbate anthropogenic climate change by needlessly increasing electricity consumption until it’s too late.” At the time that Malmo published his sustainability piece in mid-2015 on the energy sustainability of Bitcoin, he calculated that the “a single bitcoin transaction requires as much electricity as the daily consumption of 1.6 American households.” This is a substantial figure no matter how you slice it.
Deetman goes through a series of bottom-up calculations starting with how hashing is related to mining which consumes energy. He then moves into a discussion into the efficiency of available mining hardware. He crafts some interesting plots on Cartesian planes comparing efficiency and product ship dates. Then moves to brief discussions of mining trends and scalability.
Deetman provides a cool chart that discusses his “optimistic” and “pessimistic” energy forecasts. These numbers are sizable and definitely noteworthy.
One of Deetman’s most salient points he presents during his conclusion. He states, “Personally, I haven’t given up on the idea of distributed network transactions, but a radical rethinking of how these may be secured would be beneficial, be it at least for the environment. Perhaps a system where all miners are rewarded for their pledged surplus in CPU processing power, but the actual hashing is performed only by a few thousand randomly selected and continuously changing CPUs, would be a solution.
“We could throw the remnants of our destructive arms race for hashing power out the window, perhaps find a way to make a few old miners useful in functional calculations, and use the rest of them to build a rusty totem in honor of Satoshi.”
Clearly Deetman is a sharp guy and has thought about the environmental ramifications at length. Not to take anything away from his argument, which is certainly valid within his presentation, I still feel I must present an alternative perspective.
If the masses started to adopt Bitcoin (or a similar crypto in terms of energy consumption) the consensus is that the functionality of many finance institutions and processes would be disrupted or altered. Many of these entities have physical locations. All of these physical locations consume lots of energy…lots and lots of energy.
Cumulatively, probably more than Deetman suggests could be the “worst case” scenario for Bitcoin energy consumption. Here is a quick reference on energy consumption for bank locations alone. Interesting stuff.
The point in this being that if a crypto becomes the most popular currency, many other energy consumptive functions related to supporting our current physical fiat may become irrelevant. Thus the question becomes: Can a digital cryptocurrency provide a net-net energy savings if it takes the place of some of the systems and locations needed to support physical fiat currency?
Deetman’s article is well researched and well presented (Vice definitely has some great writers). I think that his presentation is slightly narrow within the larger context of the energy it takes to drive our current physical fiat system. However, I do not think that this is the point of Deetman’s article. To me, the point is a conversation starter.
These are very real considerations that will need to be properly and preemptively addressed if cryptos are to make the transition from Cypherpunk/ programmer playland to real world usage. Folks like Deetman are chipping away at the gilded surface of Bitcoin and revealing the multifaceted and completed reality of worldwide adoption.
To me, the point is a conversation starter. These are very real considerations that will need to be properly and preemptively addressed if cryptos are to make the transition from Cypherpunk/ programmer playland to real world usage. Folks like Deetman are chipping away at the gilded surface of Bitcoin and revealing the multifaceted and completed reality of worldwide adoption.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:47 PM