Don’t worry about the energy Bitcoin uses
The word “bitcoin’ is likely to elicit both a frenzy of excitement and a scathing criticism. The financial community sees potential in trades that are currently unregulated. Others argue that the work is a distraction from the long-term viability of U.S. Financial Institutions.
Bitcoin’s energy usage has been a topic of discussion in recent months. According to a Forbes article from May 30, bitcoin increases global energy consumption, and electricity is its Achilles’ heel.
As a researcher, I study clean technology and the transition to decarbonized energy. The discussion around bitcoin and energy is oversimplified.
Energy is often a major concern with new technologies, such as computers, data centers and trains. All of these technologies have improved over time. It is a natural progression for any technology. Saving energy equals saving money.
Many people fail to see the benefits of renewable energies when they focus on the energy consumption alone. The production of electricity can be increased while maintaining minimal environmental impact. Instead of focusing on the amount of energy that bitcoin consumes, we should focus instead on who is actually producing it and where they get their power.
Unlocking bitcoins requires a lot of computing power. Bitcoin is a hidden currency code where the value is determined by solving a programable puzzle. This puzzle is only possible with computer intelligence.
Electricity accounts for 90% of the costs to mine bitcoin. Bitcoin mining consumes a huge amount of energy: between an estimated 30 Terawatt Hours alone in 2017. This is enough electricity to power Ireland for an entire year.
This is not an excessive amount of money. The banking industry consumes approximately 100 terawatts per year. Even if Bitcoin technology matured by 100 times the current market size, only 2 percent would be destroyed.
Bitcoin mining is a growing industry in the world, but does it increase carbon emissions? In the past, Bitcoin miners have set up shop in China, where coal provides 60% of the nation’s power.
Bitcoin mining has exploded in places with cheap electricity, such as the Pacific Northwest. The availability of low-carbon hydropower is the main reason for its cheap power.
Bitcoin mining could be a problem in China with its fossil fuel-based electricity. China is one of the largest contributors to carbon emissions in the world. However, bitcoin mining in Oregon? It’s not the same. Not all energy production has the same impact on the environment. Nor does it rely on the same type of generation in every state and market.
Iceland, for instance, is a hotspot for Bitcoin mining in Europe. This nation uses nearly 100 percent renewable energies for its production. The abundance of geothermal energy and hydropower makes Bitcoin’ electricity demand cheap and almost irrelevant.
In the Pacific Northwest, where hydropower is dominant, miners can expect to make a profit while not causing a large amount of carbon emissions.
Discussions about the right topic
Bitcoin is not a bad guy, but it’s a relatively new and poorly understood industry.
It is unfair to discuss energy consumption in relation to bitcoin without mentioning the energy intensity of all new technologies, specifically data centers.
Instead of discussing Bitcoin’s energy consumption, we should focus on the carbon produced by Bitcoin and whether certain mining towns add to the already heavy environmental burden.
There have been many media articles about Bitcoin’s energy usage, but I am not aware of any studies that actually calculate the relative carbon footprint of the Bitcoin process.
The global electricity consumption is increasing. U.S. Energy Information Administration projects that global electricity consumption will rise by nearly 28 percent in the next 20 years. However, increasing energy consumption will only be harmful if we don’t shift to less carbon-intensive power production. Only miners have moved to cleaner areas of the world.