Sunday, May 29, 2022

Bitcoin Won’t Destroy Earth, but It’s Wasteful: Bloomberg

Bitcoin Won’t Destroy Earth, but It’s Wasteful: Bloomberg

In an article titled “No, Bitcoin Won’t Boil the Oceans,” author Elaine Ou writes that Bitcoin is often accused of being an energy hog. The truth is that Bitcoin is actually incredibly useful when compared to other alternative sources of energy consumption.

Also read: $28K Bitcoin Price in Sight as Futures Trading Gets Underway

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Bitcoin the Biggest Energy Hog? Not Quite.

Last week, we wrote about how banks’ energy consumption compares to Bitcoin. The result was somewhat predictable, in that banks out-consume Bitcoin by a large margin.

In Ou’s article, she notes that according to a recent study, the global energy consumption for the gold mining industry is almost 20 times that of Bitcoin at a gut-busting 132 terawatt hours annually. This is in comparison to bitcoin’s 8.27 terawatt hours per year.

The author of this article suggests that bitcoin and other cryptocurrencies are “wasteful by design.” Many would disagree with that assertion. Notably, Andreas Antonopoulos notes the following in the response to a tweet about bitcoin energy use:

“Immutability is not a waste of energy. Christmas lights are a waste of energy.”
Immutability isn’t worthless – Andreas Antonopoulos

What Is ‘Wasteful’?

This brings us to an important, potentially philosophical question. What constitutes a waste of energy?

In the example of Christmas lights, which give joy and festive feelings to millions each year, are they really a waste? What about washing machines or electric coffee grinders? Certainly one could argue that these devices are less productive in terms of their ability to reshape the trajectory of humanity at large, but are they wasteful?

In that same line of thinking, is a fully decentralized, censorship-resistant, borderless payment system that puts individual financial freedom in the hands of the many instead of the few a waste of electricity? Is, as Antonopoulos suggested, guaranteeing the veracity of transactions on a trustless system a waste? The philosophical merit needed in order to declare something a “waste of energy” is clearly open to interpretation.

Data Centers a Bigger, Growing Energy Hog?

The next point that Ou’s article makes has to do with data centers, particularly those owned by Google, and the environmental impact that they could have. Ou cites studies that suggest that despite the growth of the number of data centers in the world, their overall energy consumption has leveled off. This is perhaps due to improvements in technology and design.

As internet usage continues to grow and increasingly larger amounts of internet bandwidth is dedicated to high definition video streaming, data centers will continue to pop up and consume massive amounts of energy.

Going back to our question of what is or isn’t wasteful, are cat videos stored in a data center and viewed on YouTube wasteful? Are they more wasteful than bitcoin? What about binge watched episodes of Lost or Fringe? Where exactly does one draw the line of what is wasteful and what isn’t?

The article closes with a very important point. People in certain parts of the world like Zimbabwe and Venezuela are relying on bitcoin to facilitate their daily needs because the local fiat currency has failed to maintain its value.

It would be immoral for us in more privileged countries to assume that something that is helping people both in the developing world and in suffering economies is wasteful. While it’s fair to declare Christmas lights as not being particularly useful, they aren’t necessarily a total waste of energy.

Is Bitcoin a waste of energy? Are cryptocurrencies wasteful by design? Let us know what you think below.

Images via Genesis Mining, Crosscut

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