Bitcoin mining, the process that rewards those who secure the network by solving complex mathematical equations, is very energy intensive. As you can imagine, those engaged in that mining what to spend as little on energy as possible to keep their costs low and their profits high. There’s a built-in need to secure the cheapest energy possible, and there’s nothing as cheap as free abundant natural energy. It’s little wonder that bitcoin miners congregate around green energy sources and use mostly excess energy, that which is being produced and would go to waste if no-one else used it. A good example of this are the massive hydroelectric dams in China which produce a given amount of cheap clean energy at a rate in excess of and unconnected to demand. Increasingly, bitcoin is also cleaning up the practices of non-renewable energy production as waste from oil and gas extraction is captured and burned as efficiently as possible to direct that energy to bitcoin mining, rather than burned off.
Is bitcoin boiling the oceans and releasing greenhouse gasses as the media claims? No. Doing so wouldn’t be profitable.
A “Waste” of energy
Bitcoin uses a certain amount of energy to perform a certain function. Is the amount of energy used, despite everything else we’ve mentioned, too much? It’s a strange argument to make considering bitcoin miners are encouraged by the profit motive to use energy that would otherwise be wasted so is sold on very cheaply, and to use energy that no-one else was going to use for other purposes, so again, is sold on very cheaply. This means we can establish that bitcoin makes use of energy supplies that would otherwise go to waste and that it doesn’t take away energy from anyone else who might need it – directly disproving mainstream media FUD that bitcoin is bad because it uses more energy than X country or X purpose. So is it a waste? How can we determine that?
Some say bitcoin uses more energy that gold mining. It may well do, but does it use more energy that mining generally, where precious metals are byproducts of other industrial materials mining? Does it use more energy than the transport or those materials around the world, and their final utilization? Unlikely. Does it create as much destruction as gold mining, which has devastated the natural environment in important ecological zones like the Amazon rainforest? Unlikely.
Fiat-worshippers complain that bitcoin uses too much energy compared to something like the USD, and they have charts to prove it. The thing is, these do not include the externalities involved in the upkeep of the USD, which includes everything from the carbon emissions from the massive armed forces of the United States or the deaths of millions in wars for the oil needed to keep the USD afloat. Compared to this wasting of energy, bitcoin has the entire fiat system beat.
Finally, who’s to judge the value of energy and what it should be applied to. Why is the never-ending printing of the USD and the problems it causes considered a good energy investment but the creation of an efficient, secure, incorruptible hard money considered a waste of energy? We say it isn’t.
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