Is Bitcoin Really Bad for the Environment? by@mashacryptoprlab

Is Bitcoin Really Bad for the Environment?

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Masha Prusso

Entrepreneur. Attorney. Athlete. I write about innovations in blockchain and crypto space. Passionate about DeFi.


One of the most commonly cited criticisms of Bitcoin, the original cryptocurrency, was that it had a major environmental impact, which is unsustainable long term. The inference from these criticisms was that supporters of Bitcoin were also supporting a heavy carbon footprint, by using an environmentally damaging technology.


It’s a legitimate question and the unaddressed proverbial elephant in the room, especially in a world that is becoming increasingly environmentally conscious due to systemic pollution. But the claims need to be thoroughly assessed and analyzed in the context of other variables, and not merely taken at face value.

Global Bitcoin Energy Consumption

Bitcoin uses a Proof-of-Work consensus mechanism in order to secure its network. What this means is that miners (computer servers) verify transactions (puzzles). Each verified transaction is another block on the chain - the blockchain.


In order to do this, the Bitcoin miner (now an ASIC) needs significant resources and a fan to cool it down. It’s a serious operation and the mining aspect of Bitcoin is pretty centralized. You need experience, cash, and a solid team to run a successful mining operation. Most mining operations are located in regions where energy is cheap. This used to be China, but it has recently cracked down on mining operations and miners have fled to other areas.


Ultimately, Bitcoin energy consumption is quite high. The Cambridge Center of Alternative Finance estimates that annualized consumption of Bitcoin amounts to 135 TWh. This is about 0.7% of global consumption, more than most small countries (a point which politicians and certain news outlets have so fondly stated). However, the crackdown and emphasis on Bitcoin being unsustainable is completely misplaced as compared to other industries.


There is definitely a problem with Bitcoin’s energy usage. But claims are overblown.

A Series of Unjustified Criticisms

Despite a significant energy usage via Bitcoin mining, claims that the Bitcoin network is unsustainable and bad for the environment are misleading. First, a lot ties back to societal values. 0.7% seems like a completely acceptable price to pay for fair finance, at least from the point of view of this author. It’s certainly acceptable when you compare it with other industries.


The aviation industry uses between2% - 4% - more than many of the larger countries. But we don’t see continual news articles about evil aviation industries. Despite the fact that they’re currently flying ghost planes to nowhere in order to retain their landing slots. The Lufthansa Group flew 18,000 empty flights in a single quarter.


The same holds true for multiple sectors that all use more energy than Bitcoin, which is an international industry that should use more energy than a single state. In many ways, it’s beyond national boundaries and more important due to its global effects.


AGalaxy Digital Report found that Bitcoin energy consumption in comparison to other industries was pretty benign. Especially as compared to legacy finance, when you account for all the servers in banks and their ATMs, card networks, payment providers, as well as the multiple audits and paper trails required, not to mention the storage of customer and client information for decades. All this will be much more easily done (automatically) on blockchains at a fraction of both cost and energy consumption. Bitcoin.com estimates that energy consumption from the banking sector is double that of Bitcoin, at 263 TWh.


Then there is the question of what Bitcoin actually does for the global economy, with the ability to transfer micro funds across borders in a rapid time frame, with hardly any fees. Indirect implications also have to be considered. Central banks can print money, give it to nation states, who offer 0% finance to oil and gas conglomerates.


The end result is low-cost fossil fuels that are extremely bad for the environment. Needless to say, Bitcoin miners (and pretty much the entire world of distributed ledger technology) do not benefit from such government incentives, at least not directly. If anything, they get systematically attacked by mainstream media and political actors, instead of supported for the role they play.

Better Options Available for Environmental Sustainability

There are likely some better options than Bitcoin. Polygon, Solana, and Ethereum are chains that are generally regarded as safer, faster, more secure, and more environmentally friendly. Vitalik Buterin, one of the most respected developers in the crypto space and the original founder of Ethereum, stated that the energy usage of Bitcoin was a major downside.


Ethereum has since moved from the Proof-of-Work consensus mechanism towards a Proof-of-Stake mechanism. The Proof-of Stake mechanism could be anywhere between 90% - 99% more energy efficient. And there are many more mechanisms, including Proof-of-History (Solana) as well as hybrid systems.


Elon Musk is another notable figure who has highlighted Bitcoin’s environmental inefficiencies and the Tesla firm has actually stopped accepting payment in BTC for this reason. Previously, he had been a big supporter. While there are multiple Bitcoin Maximalists who claim that the environmental figures are miscalculated or misleading, the fact is that better blockchain options are available - even if Bitcoin is superior to the existing banking system from an energy usage perspective.


Choosing modern blockchains can have a reduced environmental impact.

Can Distributed Ledgers Actually Help the Environment?

Distributed ledgers can actually assist the environment in major ways - aside from choosing chains with low energy consumptions and migrating industry data onto them. There are a sleuth of projects coming out that are geared specifically towards ecological concerns.


WildEarth is one of the largest broadcasters of nature shows and has recently integrated NFTs in order to help specific animals. Over 5 million viewers watch the various distribution channels on Roku, DStv Africa, Amazon, iOS, Android, Plex, Bolt, Huawei, Xumo, Samsung+, Sling, LG+, and Zeasn. 40% of funds go to the custodians of the habitat and NFT owners can watch and track the animals on their devices, in real-time and with historical clips, across time and locations.


WildEarth has chosen the Polygon blockchain due to its speed and efficiency, which are viewed as major environmental concerns. And this choice is not just limited to nature-based projects. SolChicks is among the first Web 3.0 NFT RPG games similar to the likes of Crypto Kitties. On the SolChicks Play-To-Earn platform, users are rewarded for their time in leveling their characters' NFTs through missions and quests. Crypto Kitties was effectively ruined due to high fees on the Ethereum network. SolChicks, like many other games, has chosen Solana as their blockchain of choice due to increased speed and efficiency with little latency.


Then there are projects geared towards disrupting the energy sector directly. Power Ledger (POWR) is based in Australia and is seeking to set out to install a blockchain-based renewable energy system for households. It will allow energy to be bought and sold easily among participants using a cryptocurrency. It actually uses two blockchains with two tokens. Not only does it promote renewable energy, but it also cuts out the middleman. If your household generates more energy, you are free to sell at a price others are willing to pay for. Or contribute it back to a localized energy grid for the community, depending on your preferences.


Other NFT projects can help in a more indirect fashion.Animal Concerts, though having nothing to do with the environment, is seeking to bring live metaverse VR streaming of the concert industry. It is providing a new online entertainment model by integrating VR, distributed ledgers, and cryptocurrencies into the live music arena. As mentioned above, the aviation and wider travel industry play a huge role in environmental contamination and global warming. With millions watching concerts from home instead of physically traveling (and creating no small amount of waste at the concert location), it could indirectly assist the planet.

Bitcoin & Future Sustainability

Bitcoin uses a considerable amount of energy to maintain its ecosystem. However, its usage is offset by the fact that it contributes a significant amount of societal good in the form of fair finance. The environmental concerns are overblown and the benefits far outweigh the disadvantages. As noted on the Coinbase Blog:


  • 75% of Bitcoin miners use renewable energy.
  • Miners are incentivized to use the cheapest energy source.
  • Bitcoin’s environmental consumption may be a lot more sustainable than legacy banking.


Moreover, Bitcoin has also paved the way for far more sophisticated ledgers that are working to directly improve the global environment in areas like animal conservation, renewable energy, and climate change.


For all the hype and hysteria, Bitcoin and other distributed ledgers could play a key role in reducing the global carbon footprint, instead of contributing to it.


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Masha Prusso HackerNoon profile picture
by Masha Prusso @mashacryptoprlab.Entrepreneur. Attorney. Athlete. I write about innovations in blockchain and crypto space. Passionate about DeFi.
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