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Wasted Naysayers Continue to Flog Wasteful Energy-Consuming Bitcoin

Last Updated March 4, 2021 2:36 PM
Ryan Smith
Last Updated March 4, 2021 2:36 PM

By CCN.com: Here we go again. Yet another article has surfaced taking potshots at the perceived threat of Bitcoin’s energy consumption.

A recent article out of MIT Technology Review  claims that:

Mining Bitcoin is a hugely wasteful process. For miners to accrue more of the cryptocurrency, powerful computing hardware must solve increasingly difficult, and pointless, puzzles.

The article cites an in-depth study  conducted by researchers at MIT and the Technical University of Munich. A slightly different approach compared the hardware and efficiency use from the IPO filings of the largest three mining producers: Bitmain, Canaan, and Ebang.

The study concluded that annual Bitcoin energy consumption totals about 45.8 terawatt hours (TWh) with a carbon footprint of around 22.5 metric tonnes of carbon dioxide (MtCO2). To put that in perspective, the researchers claim the output is equivalent to that of Kansas City or a small country like Jordan.

Bitcoin energy consumption
  Bitcoin is not a country but people love to compare it to one. Source: Twitter .

For some reason, Bitcoin skeptics love to throw countries into the mix when making comparisons with the mac daddy of crypto. Most likely to exaggerate their rather bold claims.

Can You Even Make an Apples to Apples Comparison?

The problem with naysayers is they fail to take into account the electricity usage of the current banking system. Electricity hogs include the likes of:

  • Bank offices that are lit 24/7
  • Data centers that manage clearing and fraud detection non-stop
  • ATM’s
  • Bank branches
  • Card readers
  • Trading floors
  • The list goes on

As Bitcoin expert Andreas Antonopolous points out, the parts that make the current industry tick are extensive and difficult to track.

That didn’t stop one blockchain analyst from trying though. Carlos Domingo of SPiCE VC conservatively estimates  that banking infrastructure worldwide uses around 100 TWh of electricity every year.

Even with the latest MIT study that still places Bitcoin at more than twice the efficiency of our current system. Of course, other highly cited studies  put Bitcoin’s tally anywhere between 36 and 65 TWh. That’s an enormous deviation making any reliable conclusion dubious at best.

Is Bitcoin’s Energy Consumption Worth the Price?

As CCN.com recently reported, a large proportion of Bitcoin mining is actually powered by renewable energy. Savvy readers will know that Bitcoin miners are a ruthless bunch and only the most profitable survive. That incentivizes miners to seek out the cheapest electricity providers on the planet.

Energy costs. Bitcoin energy consumption

To that end consider that the world will continue moving over to renewable sources. Then consider that miners will also have less of an impact going forward as they receive fewer rewards with each Bitcoin halving. Andreas does make a good point though:

We need one planetary-scale proof-of-work system to offer us true energy-dependent immutability but maybe we can only afford one. Turns out that might be Bitcoin’s killer app.

Even the MIT Technology review acknowledges that Bitcoin’s energy consumption is nothing other than a drop in the bucket:

To be sure, 23 megatons of carbon dioxide is a relatively small share of the roughly 30,000 megatons of energy-related emissions globally each year

Maybe I’m missing something but it appears at this stage that Bitcoin’s negative environmental impact is more drama than substance.