Taking a deep analysis into subject matter of Bitcoin and the environment, one of the most hotly debated topics surrounding, not only Bitcoin, but the entire cryptocurrency industry is the environmental impact these new technologies have on our planet. The most prevalent discussion is around the proof-of-work validation mechanism, responsible for Bitcoin mining and transaction processing on the Bitcoin network. As of October 2021, there are roughly 6,000 cryptocurrency coins/tokens, many of which also use the proof-of-work algorithm, also native to Bitcoin. This is because it has been found to be the most secure, reliable, and efficient method of processing transactions on the blockchain. It also essentially “anchors” these digital coins to something physical in our analog world, thus giving them real tangible value and worth. Just as gold uses physical resources to be mined, the exact same can be said of Bitcoin, or any other crypto utilizing proof-of-work validation/mining.
While the security this type of system provides is rarely challenged, the impact it has on the environment, and long-term implications of using an energy intensive mining operation is often challenged and criticized. Removing all the noise from the argument and having clear cut, definitive facts can provide clarity and give context to just how much (or little) Bitcoin impacts the environment, in comparison to our existing global financial system.
As the Bitcoin energy usage topic gains more traction, experts are eager to find the truth. Many studies have been done calculating and comparing the energy consumption of Bitcoin to various other countries, financial systems, and mega-cap corporations. As of summer 2021, the estimated global energy consumption of the worldwide financial system is 238 TWh (TeraWatt Hour(s)) per year. In contrast, the Bitcoin network uses roughly 121 TWh per year. According to this data, Bitcoin uses half of the energy of the global banking system and is a more efficient, robust, and incorruptible product.
Furthermore, consider the world generates 160,000 terawatt hours of energy annually. Of that, 50,000 terawatt hours of energy is wasted every year. Given, Bitcoin uses roughly 120 terawatt hours to uphold the network – Bitcoin uses only 25 basis points of all the wasted energy in the world annually. Providing hope of a decentralized, unmanipulated currency system across the globe is well worth using 1/4 of one percent of the wasted energy in the world.
Skeptics also like to compare Bitcoin’s energy usage to small countries like Argentina and Venezuela. According to a recent study by CoinDesk, at its current level of annual usage, Bitcoin would rank number 39 amongst all the world’s countries coming in just under 100 TWh in fall 2021. The point is also tested by mega-cap corporations. It has been said Bitcoin uses more energy than Google, Facebook, Apple, and Microsoft combined annually. Such an argument is hard to validate or contend with given, Bitcoin’s technological advance for future generations will be much more profound than Google, Apple, Microsoft, etc. have been. Bitcoin is the single largest innovation we have seen in our lifetimes, and potentially for centuries.
If Bitcoin ceased to exist, the world would continue to waste 50,000 TWh yearly in complete vein, and in turn deprive 8 billion people globally of a fair and hopeful financial system. Bitcoin mining is constantly decentralizing itself to the most politically supportive environments of the world. Wherever mining is welcome, taxes, and other incentives like hashing power control and ability to raise capital (for new mining ventures) via financiers will be supporting the jurisdictions who are supporting Bitcoin. Bitcoin will become interwoven into the financial energy grid as a lucrative and supportive force in global banking, as well as at the local and federal level due to tax collection of mining proceeds.
PoW (proof-of-work) mining provides the ability to scale securely, and due to compensation for participating in mining pools, becomes more and more secure over time. Meaning, because Bitcoin miners are constantly competing to solve the algorithm to obtain a compensation reward, the miners with the newest, most secure hardware will yield the most return. Thus, driving more miners to upgrade to compete, creating an environment where the Bitcoin network is forever upgrading its tech and becoming more and more secure, and able to process transactions faster and faster as time goes. These benefits are simply not factors for cryptocurrencies using other types of validation such as Proof-of-stake (Ethereum plans to fully migrate to PoS in 2022), proof-of-capacity, or proof-of-elapsed time, just to name a few.
Bitcoin provides hope for 8 billion citizens globally. It’s technology and impact on the world, not just financial system, will be so profound it may still take decades to fully realize. When the lightbulb was invented surely people were stuck to candlelight. When the automobile was invented, many people probably claimed to prefer horse and buggy. These life-changing inventions have come at a cost, one of these costs being energy. We live in an extremely environmentally conscious society, necessary to move humanity forward on this planet, but we must not loose sight of innovation and technological propulsion. At the turn of the century, in the early 2000’s, everyone experienced the shift from an only analog world to a digital world, with the internet in nearly every home. The coming decades will tell the story of blockchain technology and show why Bitcoin has earned its top position, and why it will remain.
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