Bitcoin is eco-friendly. Accusations of BTC being an energy hog are completely unfounded
Bitcoin can actually make electricity production cleaner and more efficient
Cultural Lag
Bitcoin is one of the most misunderstood technologies humankind has ever invented. It is now the victim of a clear example of the cultural lag phenomenon, that is, the delay between technological leap and culture being able to catch-up to hi-tech innovations. Bitcoin mining involves new hardware and software — and repurposed hardware -, all of which are part of material culture. The non-material bit refers to how the social symbols relating to Bitcoin are internalized in a given culture, that is, how it acquires meaning and social relevance. This lag between the actual state of the technology and the cultural awareness is easily diagnosed when Bitcoin miners are accused of harming the environment due to electricity consumption.
When faced with a new technological phenomenon, it is expected that sectors of a society are going to transplant categories from the past in order to understand it; they hold to what they know to explain that which is inherently disruptive, trying to fit it into existing categories. I contend that not only environmental alarmists are wrong about this matter, but also that Bitcoin can be an asset in making electricity generation cheaper and more efficient.
The Blockchain(s)
A blockchain is a public ledger which is impossible to change (the exception being the hypothetical 51% attack). Bitcoin kickstarted the blockchain revolution by solving the double-spending problem through decentralization. This decentralization is central to understanding how cryptocurrencies can be interpreted as “eco-friendly”: they started out using repurposed hardware, by finding a new use-value for CPUs and GPUs that billions of people already had. This is still the reality for many cryptocurrencies today, some of which are purposefully built to be resistant to ASICs. Most articles criticizing Bitcoin’s energy expenditure don’t mention how the hundreds of blockchains in existence today are spawns of the original crypto. These blockchains are, in turn, already saving a lot of electricity by making real-world processes such as logistics more efficient, for instance, the China-Europe rail trade made 200 trips from Chengdu to Europe in the past 3 years, but after the adoption of blockchain, the same amount of trips was conducted in 2 months. Some might argue, instinctively, “doesn’t that mean that blockchain is causing more energy to be consumed, because trains are being moved more frequently”? That’s not the comparison that should be made: in 3 years the same rail trade can be performed 3.600 times. Now I ask: how much energy would be spent to execute the same 3.600 trips without blockchain? The train would some times wait for 3 days at the border until all cargo was inspected, and those 3.600 trips would take 17-18 years to complete. It involved thousands of workers doing checks and stamping cargo, not only at the cargo site, but also in offices all over a country, add to it an insurmountable paper trail, and bureaucracy workers, all of which require energy as well, not to mention train and rail maintenance over a timespan of 18 years. The more inspection a cargo is subjected to, the likelihood of it being damaged also increases, which amounts to more electricity in re-manufacture, logistics, bureaucracy and human labor.
This aspect of blockchain, how it is being actively applied to solve real-world problems by thousands of companies is glossed over by the electricity-fixated critics. The amount of fuel saved by smart-contracts, for instance, is never mentioned. The amount of work-hours needed, personnel, buildings, offices, printers, paper, safes, lawyers, accountants, etc, it is all going to decrease proportionately to the increased productivity of labor. Human labor does not happen in a vacuum, the farms, factories, offices, agricultural machinery, factory equipment, office devices, it requires overwhelming amounts of energy.
The role of FIAT currency itself in energy expenditure is seldom mentioned as well. FIAT currency not only requires huge amounts of electricity to be printed and secured, but the whole ecosystem surrounding the production, transporting and safekeeping of money requires far more electricity than any cryptocurrency would ever require. “Why is that?”, one might ask, take the world’s standard FIAT currency (USD). The USD existed for approximately 240 years, and in order to reach its status as the international currency, it required the loss of millions of lives due to colonialism, two world wars, neo-imperialism, sanctions, sabotage, and intentional impoverishing of developing and underdeveloped nations (IMF rings a bell?), all of which involve more harm done when compared to the most energy-intensive cryptocurrency. FIAT currency doesn’t simply “exist”, it carries a long story with every transaction. The dollar doesn’t carry its value due to political and financial actions of the past 10 years, the same can be said of other traditional FIATs such as the Swiss Franc (CHF). The environmental alarmists seem to forgo that more than half of all Bitcoin in circulation was already in existence back in early 2012, when mining was far less energy-intensive than nowadays.
Generating Income in Developing Countries
How much electricity does a worker spend to generate income? Especially in developing countries, where labor productivity is low? Let’s take a look at Brazil’s situation with pre-pandemic data: by 2019 more than half of Brazil’s population lived with less than 76 dollars per month. That’s about $2.53/day. Many of these people are not unemployed, rather, they work hard, as cleaners, farm workers performing back-breaking jobs such as sugarcane harvesting under intense heat occupational stress. And yet, as I write this text, these workers are making less money per day than 1 single GTX 1080 selling hashpower. Less money per day than a GPU from 2016. The question that should be asked is not whether Bitcoin spends a lot of electricity, but if the alternative is not worse, otherwise the comparison doesn’t make sense. It also helps understanding that electricity is not created, it is converted from one form of energy to another (fundamentally, human labor and electricity can be compared). Unproductive labor in developing and undeveloped countries leads to more environmental issues than a highly developed society which relies on blockchain to reduce the expenditure of human toiling to solve real-world problems, and as a bonus, it can free people from overexploitation, by giving workers more options, such as domestic mining of crypto instead of a factory job… And guess which one is cleaner, environmentally friendlier?
When the cost of human labor is lower than automating, employers lack the incentive to automate production, which causes production to be shifted from developed countries to underdeveloped ones, in search of lower wages and lax environmental legislation. This of course exponentially raises the carbon footprint of producing merchandising. Crypto can help developing countries in generating more income, which also means giving these countries the means to better handle waste, and also work as an incentive to keep forests intact. Then again, the benefits overshadow the electricity expenditure of crypto.
How Crypto Mining Can Make Electricity Generation Cheaper and More Efficient
Electricity production and expenditure happen in real time. Storing electricity in batteries is neither environmentally friendly or cost-effective. This creates some synchronization issues, especially with renewable energy such as wind and solar, causing situations such as California paying other states to receive its excess production of electricity to avoid overloading the grid’s powerlines.
Ways of storing electricity involves processes such as compressed air energy, in which excess electricity in used to compress air that is then used to move turbines during the night or when the wind is not blowing, another variation of this concept involves elevating water to a high altitude with the surplus electricity and using it to move turbines when necessary, and also electrolysis to produce hydrogen gas. This always involves losses in one way or the other, for instance, in the case of storing electricity in water, even the most efficient hydropower turbine is able to convert at most 90% of kinetic energy into electricity.
A far simpler way of “storing” energy (in the form of value) would be using the excess electricity to mine crypto or to run blockchains connected to real-world activities, including the power grid itself, in the form of Smart Grids. Even though private companies can apply this dual solution, I think States with planned economies are in a privileged position to achieve higher scalability, especially by creating their own digital currencies and being able to apply the surplus electricity in connection to a nationwide grid.
This way, cryptocurrency mining can make renewable sources of energy more financially attractive by granting them another use-value, that is, the inability to produce negative-value electricity. The concerns of how to store electricity produced by renewable plants would be lessened due to both cryptomining structures annexed to solar/wind farms and blockchain-synchronization with the Smart Grid.
As we can see, there’s a lot more nuance to how Bitcoin mining consumes electricity, contrary to what the neo-luddites preach, I argue that cryptocurrency mining and blockchain integration can help us save energy, make the adoption of renewable energy cheaper and faster by reducing risks related to storage of electricity, and also generate income in developing countries, which would discourage people from exploiting natural resources such as forests and river streams.
