Every now and then a major news outlet gets carried away and reports that Bitcoin will consume all the world’s power.
A conspiracy theorist might say that such stories are instigated by the international banking cartels in order to stoke fears that Bitcoin is not a sustainable alternative to fiat currency, and recent findings by experts on the matter will do nothing to assuage such beliefs. The fact is, it’s not possible for Bitcoin to consume all the world’s power and moreover, the metrics used to reach such conclusions were faulty in the first place.
Responding to an article published in Nature Climate Change and an earlier one published in Newsweek, a Dr. Jonathan Koomey has pointed out that the methodology used to make conclusions such as “Bitcoin mining on track to consume all of the world’s energy by 2020” or “Bitcoin emissions alone could push global warming above 2°C” is not sound.
While I encourage everyone in the electricity sector to track Bitcoin as a potential source of new load growth, please use caution and avoid being misled by the hype. Breathless media coverage papers over the uncertainties in the underlying data, and makes it seem like Bitcoin is taking over the world, but in fact it’s likely only 0.1% of global electricity consumption, and it is unlikely to continue growing at recent historical rates.
Also during his interesting response, he points out that Bitcoin is not the first technology to be targeted and vilified as an energy hog. He points to reporting from the early 2000s which asserted that the Internet as a whole was using more than 10% of the world’s electricity and that in fact these assertions were false, but it wasn’t for years that the claims were successfully debunked, largely because good science takes time and quality data collection is hard.
“Misleading factoids about information technology electricity use emerged from coal-industry funded studies around the year 2000, at the time of the first dot com bubble and the California electricity crisis. They popped up again, from the same authors and funders, in 2005 and 2013,” he wrote. “The claims were reported in every major newspaper, cited by investment banking reports and politicians of both political parties, and avidly promoted by people and companies who should have known better […] All of these claims turned out to be bunk, but it took years of creating peer reviewed research to prove it. We found that the Internet (defined as those authors defined it) used only 1% of US electricity in 2000, all computers used 3%, the total would never grow to half of all electricity use, and that the factoid about the wireless Palm VII overestimated networking electricity by a factor of 2000.”
According to Koomey, total Bitcoin mining usage of the world’s electricity supply currently sits at about 0.1%. Importantly, it is not scheduled to continue growth at recent rates.
While he says that Bitcoin is certainly an important factor for electric companies to consider as they expand operations, recent reporting on the subject does nothing to help. “It’s not a crisis, but we need more research.”
It’s interesting how far misinformation can go. As we went to press with this story, the Washington Post published yet another article on the subject of Bitcoin being a bane to climate change. It would be useful if experts with countering opinions were consulted by such outlets from time to time. The Post writes:
But the study then compared a hypothetical future rate of bitcoin adoption to the history of technologies such as the credit card, the dishwasher and electricity itself, and it found that if bitcoin continues to catch on — and if computations to record transactions and generate new bitcoin become ever more complex and demanding — greenhouse gas emissions from the mining could explode.
Certainly, Bitcoin uses a lot of energy, but mining hardware also becomes more efficient with every new generation, and the amount of energy available in the world also increases regardless of Bitcoin.
Such reporting around them seems to imply that the world would be better off – in a literal way – without Bitcoin. Such notions fail to take into account the many positive ways that Bitcoin and other cryptocurrencies can contribute to solving the world’s problems.
Featured image from Shutterstock.