Is Bitcoin Bad for the Environment?
In the 15 years since Bitcoin was created, significant material has surfaced regarding the detrimental aspect of Bitcoin mining on the environment.
Is Bitcoin really bad for the environment?
Critics argue that the energy consumption required for Bitcoin mining is excessive and harmful to the environment.
However, a closer examination reveals a more nuanced picture.
Bitcoin Energy Consumption vs. Other Industries
Bitcoin mining, the process by which new bitcoins are created, and transactions are verified, requires a significant amount of energy.
This is for good reason. Historically, gold has been the standard for hard money because it maintains its purchasing power.
This is because it is hard to obtain (increase supply) and is energy intensive.
It requires hard work.
In most cases, the harder it is to create something, the more valuable it is.
The energy consumption of Bitcoin is part of what gives it value.
When you compare the traditional banking systems and gold production to Bitcoin mining, it sheds some light on the context of Bitcoin's energy usage.
Banking System: The global banking system consumes an estimated 263.72 TWh of energy annually. Bitcoin's annual energy consumption is around 120 TWh, making it significantly less energy-intensive than the banking system, the very system it was invented to replace.
Gold Mining: Gold mining is also an energy-intensive process, consuming roughly twice the amount of electricity as Bitcoin mining. It is estimated that gold mining consumes around 240 TWh per year. This includes the energy used for extracting gold from mines, processing it, and refining it.
Bitcoin Mining is Incentived to Be Sustainable
Bitcoin mining relies heavily on renewable energy sources. The sustainable energy mix used by Bitcoin miners is approximately 52.6%. This means that over half of the energy used for Bitcoin mining comes from renewable sources such as solar, wind, and hydropower.
Bitcoin miners are constantly looking for the cheapest energy sources on the outskirts of the grid. They are not incentivized to be massive electricity consumers but rather find renewable sources that make it easier and more profitable to mine.
The Benefits
Bitcoin mining can actually help promote the adoption of renewable energy sources. Bitcoin mining can help drive the development of renewable energy infrastructure and contribute to a more sustainable future.
Bitcoin mining also helps reduce energy waste. For example, miners can use stranded energy, which is energy generated but not used due to its remote location.
While Bitcoin's energy consumption is significant, it is important to consider the broader context. When compared to other industries, Bitcoin's energy usage is relatively modest. Furthermore, the use of sustainable energy sources and the potential to reduce energy waste make Bitcoin mining a more environmentally friendly process than many realize.
By understanding the true environmental impact of Bitcoin, you can make sound economic decisions, considering the importance of hard-to-create money.
