- Bitcoin has come under fire for its energy use in recent months
- Supporters have taken to comparing it to the energy used by the global banking system, but this is a mistake
- The global banking system is so integral that it justifies its energy use, compared to other more frivolous industries
Bitcoin’s energy use has come under attack in recent months, and, while advocates can argue (correctly) about the validity of the figures used in such attacks, even the staunchest supporter cannot sweep the entire critique under the carpet. However, some Bitcoin supporters turn to the energy used by the global banking system as a ‘we might be bad but they’re worse’ argument. Setting aside the problematic principles attached to this line of reasoning, the use of the global banking system in the narrative is a mistake from the Bitcoiners’ point of view, especially when there are other easy targets out there which are, for very obvious reasons, being ignored by mainstream media outlets.
Bitcoin’s Energy Issues Have Been Exposed and Magnified
Bitcoiners are a passionate bunch, and no more so than when it comes to the old energy consumption argument. Mainstream media outlets were having a fine old time bashing Bitcoin’s energy usage even before Elon Musk shone a beacon onto it last month. Naturally, Bitcoin supporters came to the defence of the cryptocurrency, using many arguments to explain why it wasn’t as bad as the press and Musk were saying.
Some of these arguments were spurious while others were accurate, but one of the methods chosen was to attack the energy usage of the global banking system. This argument fails on two fronts and only ends up making the proponents look silly.
Use Case Validates Energy Consumption
Firstly, of course the global banking system uses more energy than Bitcoin. Offices and branches in almost every major town and city in the world need to be powered, as do the software systems that make the ones and zeros go round. This is a moot point, whatever you think about the banking system.
Secondly, the reason why so many offices and branches need to be powered is because, at present, almost the entire world uses the traditional banking system for its daily activities. Even you, reading this, probably have a bank account, and maybe a credit card or two, maybe even a mortgage. Even the biggest Bitcoin supporter will have trouble living off the cryptocurrency for all their everyday needs.
The traditional banking system supports some seven billion individuals, and the amount of energy it uses is, broadly speaking, appropriate to the services it provides. Bitcoin is of course nowhere near this level of adoption yet, which is the crux of the argument against it – Bitcoin uses a lot of energy for what it does, which is currently offer an alternative to those who have a beef with fiat currency. This, at present, is not many people – certainly not enough to warrant the energy use, so the argument goes.
The same could be argued with vehicles – cars are essential for billions of people, so we largely ignore their environmental impact. It would be inconvenient to lose cars and banks, but it wouldn’t be inconvenient for most people to lose Bitcoin, so it acts like a lightning rod.
Other Sectors Can’t Justify Environmental Cost
The use of the global banking system as a comparison is particularly unfortunate when there are plenty of alternatives that are far less useful than Bitcoin but that are more wasteful than Bitcoin. Online video accounts for up to 75% of the world’s internet traffic, with high definition using far more than standard definition. This usage requires up to 150 TWh of energy, generating some 30 megatons of CO2 in the process, which is the same as South Africa and just short of Bitcoin’s annual output. Think of all the rubbish that gets posted and watched online and then say that Bitcoin is wasteful.
Even the precious metals market is a fair target. The amount of environmental destruction caused by gold mines, silver mines and the like far outweigh the damage done by Bitcoin mines, and yet what are precious metals for? To look nice on wrists, fingers, and necks. And don’t be fooled by the argument that they’re used in technology – less than 8% of the gold produced globally is used in technology. The rest is used for jewelry and, oh yes, as an alternative store of value for governments and the wealthy. Where have we heard that before?
AThe agricultural industry is also one of the world’s biggest producer of carbon dioxide, and yet demand continues to rise in many countries in the world. Are these Bitcoin critics also eschewing meat because of its environmental impact? We suspect not.
Banking System Should Not be the Yardstick
These examples show why Bitcoin supporters should not be using the global banking system as the comparison yardstick when it comes to energy use. Yes, these supporters may well believe that Bitcoin might one day supersede the existing system, but that doesn’t reflect the current status.
The fact is that the global banking system underpins the world’s economy, something that Bitcoin will probably never do, so it’s better to compare Bitcoin’s energy use to precious metals, video streaming, and mass agriculture as examples of energy hogs that have an arguably worse use case than Bitcoin.