in

Myths concerning Bitcoin’s Carbon Footprint debunked

The energy usage of bitcoin is explained.

Elon Musk recently announced in a tweet that Tesla would no longer accept Bitcoin for any purchases. The story that Bitcoin wastes a massive amount of energy quickly became a popular headline.

Coming from a background in carbon and energy markets, I see the narrative as unfounded and, in some ways, misguided.

This is why.

The first thing to know is that Tesla did not sell its Bitcoin after the tweet. Bitcoin is still held by Elon Musk, Tesla, and SpaceX in the billions of dollars. They’re also not selling it due of the energy story. So let’s focus on what they do rather than what they say.

Elon stated in a tweet that “we are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emission of any fuel.”

That is incorrect.

Allow me to explain. 76 percent of miners, according to the Cambridge Center for Alternative Finance, employ renewables in some form. The miners have a financial incentive to develop a mining operation on the other side of the world and locate the most cost-effective power generation method. The most significant cost input is electricity. Because coal-fired power stations are burdened by various carbon trading programs and carbon taxes, miners have a financial incentive to switch to renewable energy.

Bitcoin’s energy usage is explained.
Every year, the world produces 25,000 terawatt-hours (TWh) of electricity. 5,000 TWh of that is squandered. To put it another way, one-fifth of all electricity produced is surplus. About 150 TWh is consumed by the Bitcoin network. And the media likes to point out that it consumes more energy than Argentina.

In reality, that’s barely 0.6 percent of the power generated worldwide in a year. Furthermore, the 0.6 percent accounts for almost 3% of total wasted energy.

Bitcoin miners have effectively become critical clients for power grids in the day-ahead markets, ensuring a balanced system. To put it another way, instead of wasting production, grid operators can earn extra money.

As a result, the 3% of all wasted energy provides a possibility for people in Asia, Africa, and South America to defend their livelihoods from poverty.

Even if Bitcoin were abolished and women and children in Venezuela, Nigeria, and Zimbabwe were deprived of a fair standard of living, we would still waste almost a third of the electricity generated.

China’s energy mix is shifting.


China is the world’s leading Bitcoin miner, accounting for more than 65 percent of the hash rate.

Many say that Chinese miners mostly mine digital currency using coal. That’s also not correct.

Xinjiang, Sichuan, Yunnan, and Inner Mongolia, according to the University of Cambridge, account for over 90% of China’s mining capability. During the rainy season, Xinjian is powered by 50% renewable energy, Sichuan and Yunnan are virtually entirely powered by hydropower, and Inner Mongolia just prohibited bitcoin mining.

Furthermore, China’s market dominance is gradually eroding in favor of the United States and Canada. More renewable energy could result as a result of this. Not to add, as China’s energy mix shifts, Chinese miners are becoming more environmentally conscious.

The price of safeguarding the Bitcoin network


When you look at the Bitcoin network, you’ll notice that the cost of network security is really minimal. Bitcoin’s market capitalisation is currently around one trillion dollars. If we assume that the average cost of electricity production is 3 cents per kWh, the overall cost of network security is around $4.5 billion per year.

That’s 0.45% of the Bitcoin network’s total assets under management. With that in mind, it’s important to realize that the Bitcoin network makes use of power that would otherwise be wasted. That is to say, its societal marginal value is zero.

Furthermore, once you understand the concept of proof-of-work, it becomes evident that the Bitcoin network’s energy consumption is an important characteristic.

Understanding proof-of-work in greater depth could aid in the transformation from “inefficient and wasteful” to “secure and censorship-resistant.” Every opponent of energy consumption should reconsider this concept.

Is it really worth it?

Whatever the case may be, it is evident that Bitcoin mining not only consumes a lot of energy but also emits CO2. Some people wonder if Bitcoin is even worthwhile.

Although this may appear to be a legitimate argument, not long ago, people questioned the necessity of railways, automobiles, and airplanes.

Forbes, for example, argued in 1999 that the internet “burns up an awful lot of fossil fuels” and puts the globe on a catastrophic energy-use trajectory.

Consider what would have happened if entrepreneurs, investors, and developers had heeded Forbes’ advice and stopped developing the internet.

Over 100 million people trust Bitcoin, a trillion-dollar open, decentralized, and censorship-resistant monetary network. We can talk about replacing Bitcoin if someone comes out a more energy-efficient way to protect it without sacrificing one of these attributes.

No, Dogecoin isn’t the solution.

Will Elon Musk cease selling electric vehicles in China if he is so concerned about coal-fired power?

Or, more likely, will he cease accepting US dollars as well?

What is the real purpose for Elon Musk’s tweet?


Tesla is a renewable energy company in addition to being an automaker. Elon Musk is a brilliant marketer, and this might be another one of his ingenious marketing ploys. The concept may be “a launching pad for Tesla to start a renewable power mining rig or even mining equipment,” according to Anthony Pompliano.

It is possible to achieve anything.

What is the real purpose for Elon Musk’s tweet?


Tesla is a renewable energy company in addition to being an automaker. Elon Musk is a brilliant marketer, and this might be another one of his ingenious marketing ploys. The concept may be “a launching pad for Tesla to start a renewable power mining rig or even mining equipment,” according to Anthony Pompliano.

It is possible to achieve anything.

What do you think?

Written by Winston

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading…

0

Bitcoin is represented by 19 stocks.

Is Bitcoin Really That Expensive?