A recent Bloomberg article claimed that bitcoin mining was less environmentally friendly than it was portrayed to be in pop culture, and that it has a negative environmental impact. The author of the article claimed that bitcoin has negative environmental impact. This article provides evidence that bitcoin mining is less environmentally unfriendly and more environmentally friendly than it is portrayed to be in pop culture.
There’s been a lot of noise over the past few weeks about Bitcoin’s energy usage, and whether it’s really greener than other, more traditional methods. We reached out to some experts to get their view.
While the topic of Bitcoin mining often tends to be overblown, it is still something that matters to many of us. The process, however, is not necessarily as energy intensive as many reports have suggested. The real question is whether Bitcoin mining is greener than it looks. The answer is yes.Is it possible to mine bitcoins (BTC) using only 100% renewable energy sources and achieve the same economic return as carbon sources? The answer is yes, according to Square’s recent analysis of the cost of renewable energy and their impact on bitcoin mining. Unfortunately for our industry, the number of headlines and tweets about bitcoin’s energy consumption and potential environmental impact has kept pace with its rising value in recent months. The increased media attention has led to new calls for regulation and even a bill in the New York State Senate to impose a three-year moratorium on non-renewable bitcoin mines in the state. Related: Green blockchain should work smarter, not harder This is one of those arguments where both sides are right. The critics are right: Mining bitcoins consumes a lot of electricity. The Cambridge Centre for Alternative Finance estimates that the total amount of electricity used by bitcoin miners worldwide averages 113 terawatt hours per year. In terms of energy consumption, bitcoin sits somewhere between the United Arab Emirates and the Netherlands, two countries with a total population of about 170 million, which is certainly a lot. However, a recent study by the Cambridge Centre for Alternative Finance 3rd Global Cryptoasset Benchmarking Study found that 76% of miners use at least some renewable energy in their work and that 39% of the total energy used in mining. of bitcoin, for example, comes from renewable sources. Related: Is bitcoin a waste of energy? Pros and Cons of Bitcoin Mining Now that we’ve discussed the energy consumption and carbon footprint of bitcoin mining, let’s try to put these numbers in context. By examining three directly relevant comparisons: the US electricity grid, the traditional financial system, and gold mining.
Energy network, traditional financing and gold mining
Let’s start by comparing bitcoin mining to the power grid in general. Data from the U.S. Energy Information Administration shows that by 2020, about 20 percent of U.S. electricity generation will come from renewable sources. With 40% of the energy used coming from renewable sources, bitcoin mining is twice as environmentally friendly as the national grid as a whole, reflecting the industry’s conscious decision to minimize its carbon footprint. In terms of conventional finance, the sector needs to be looked at from two critical angles: 1) fossil fuel project finance and 2) the sector’s carbon footprint. The first point is a crucial part of the discussion, since the transfer of deposits away from traditional financial institutions reduces their ability to finance activities that are harmful to the environment. According to the Rainforest Action Network’s Banking on Climate Chaos – Fossil Fuel Finance Report 2021, published in March, the world’s 60 largest commercial and investment banks have provided $3,800,000,000,000 in fossil fuel finance since the Paris Climate Agreement was signed in 2015 – yes, $3,800,000,000,000. Think about it – the Paris Agreement is the final step in the fight against climate change, yet since it was signed, the world’s largest banks have poured an amount equal to the GDP of Germany, the world’s fourth largest economy, into fossil fuels. Despite all the outdated and exaggerated criticism of bitcoin as a vehicle for money laundering, terrorist financing and the like, the traditional financial sector has a lot to answer for when its capital is used for disruptive activities. Galaxy Digital published an article in May about bitcoin’s energy consumption, looking at the carbon footprint of the traditional financial sector: A quantitative approach to a subjective issue that provides an analysis of the energy consumption of bitcoin mining and two industries to which bitcoin is often compared: traditional banking and gold mining. An analysis of the conventional banking system looks at the energy consumption of the world’s 100 largest banks and breaks it down into four main categories: Data centres, branches, ATMs and card network data centres. Based on publicly available data from industry leaders, Galaxy estimates its energy consumption at about 260 TWh per year. This figure is more than double the energy consumption associated with bitcoin mining and certainly does not take into account the main pillars of the system, including central banks and clearing houses, due to the lack of reliable data sources, suggesting that the multiplier could be much higher. Like the traditional analysis of the banking system, the Galaxy analysis of gold mining probably covers only a fraction of the total energy use in this sector. Using the World Gold Council’s own analysis, included in the 2019 report Gold and Climate Change: Current and future impacts, and by limiting the scope of the analysis to direct GHG emissions, GHG emissions from electricity purchased from gold mining operators, and GHG emissions associated with gold refining and processing, Galaxy estimates GHG-related electricity consumption at 240 TWh per year. In fact, this means that gold consumes about 85% more energy per year than bitcoin mining. However, when one considers that the Cambridge Centre for Alternative Finance estimates that about 40% of the energy consumed by bitcoin miners is renewable energy, this means that the non-renewable energy consumption of gold miners is three times that of bitcoin miners.
Bitcoin’s Green Potential
It’s not enough to be better than your worst comparisons. For bitcoin and bitcoin mining to reach their full potential, we as an industry need to do a better job. We think the two main levers in this regard are thoughtful regulation and industry action, but the inclusion of the former may surprise you. Shouldn’t bitcoin be full of people who reject the rules? The truth is that regulation is neither good nor bad in itself, but depends on how it is designed. Well thought-out and specific regulation can oxygenate the sector by supporting innovation, encouraging the good players and discouraging the bad, and ensuring public confidence. Look at the state of Wyoming, where lawmakers have worked with blockchain industry leaders since 2017 to pass 22 bills creating a clear and supportive regulatory environment that has since brought billions of dollars in business to the state. At the same time, overly broad and unwieldy regulation, such as the anti-mining law proposed by the New York State Senate, could destroy the industry. We look forward to working with regulators to develop a regulatory regime that provides oxygen to the industry while meeting the very legitimate interests of the public. Related: Blockchain will thrive if innovators and regulators work together. Finally, we turn to the players who bear the greatest burden, but also have the greatest opportunity to decarbonize bitcoin mining: the industry itself. An estimated 40% of the industry’s energy comes from renewable sources, twice as much as the entire U.S. power grid, and we can be proud of the progress we’ve made. However, we firmly believe that more needs to be done. We think the cryptocurrency climate deal is a brilliant first step. We encourage everyone in our industry to not only sign the agreement and meet the goals of zero emissions in electricity consumption by 2030, but to exceed those goals as soon as possible. We believe that this will happen, not only because it is the right thing to do, but also because the players in the sector who implement 100% renewable energy strategies will be rewarded. Related: The future of bitcoin mining is green, and Russia has every chance to make that happen. The market is the ultimate arbiter of success, and we believe the era of responsible capitalism has arrived – investors and consumers voting with their wallets, supporting responsible actors and shunning those whose actions create negative externalities. This article contains no investment advice or recommendations. Any investment or business transaction involves risk, and readers should do their own research before making a decision. The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent those of Cointelegraph. Dan Tolhurst co-founded Gryphon Digital Mining in 2020 to create a GSE-focused bitcoin miner, and he looks forward to the day when all bitcoin mining is powered by renewable energy. He has extensive experience as a strategy executive at Netflix, The Walt Disney Company and Booz & Co. and his career spans five continents. He holds an HBA and MBA from the Ivey Business School at Western University and an LLM from Osgoode Hall Law School at York University. In his spare time, he explores London’s parks, travels and encourages his beloved Toronto Raptors.As Bitcoin continues to power up its global network of computers, with the help of China’s controversial power grid, 2017 becomes another benchmark year for cryptocurrency mining. Yet, the most common story being told about Bitcoin mining is that of an electricity-wasting, environmentally unfriendly activity. And that’s simply not the reality.. Read more about xrp vs bitcoin energy consumption and let us know what you think.
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