- Bitcoin’s energy usage has come in for criticism over the years
- This criticism has ramped up in recent months as its price has rocketed
- However, the arguments are based on very unscientific and often contrary data
Countless myths surround Bitcoin, as the rise of the leading cryptocurrency has pleased plenty and arguably rubbed others up the wrong way. Plenty of mainstream media outlets have taken aim at Bitcoin, jumping on minor stories and using them to create myth and rumor. For that reason, it’s worth looking at these statements and effectively debunking them. Today, we are looking at power, specifically the belief that Bitcoin – to function, operate, and be mined – requires a huge amount of energy consumption.
Don’t Believe the Data
When it comes to Bitcoin and energy consumption you need to deal in facts. So, on a base level it is fair to say that Bitcoin is not – at least in its current form – an energy-light commodity. For mining Bitcoin on a mass-scale, thousands of ASICs (Application-Specific Integrated Circuit) – hardware designed exclusively for mining cryptocurrencies – are required to handle the graft. Despite a recent resurgence in Bitcoin mining in the west, the majority still takes place in China, a region that relies heavily on fossil fuels for its electricity.
Another factor that appears to contribute to the great Bitcoin energy myth is that many of those bashing Bitcoin’s energy consumption are doing so off non-existent or somewhat questionable statistics. There are a number of projects that claim to track Bitcoin’s energy use, but in many cases they only help muddy the waters. For example, The Cambridge Bitcoin Electricity Consumption Index says that Bitcoin uses 128.77 tWh annually, whereas Digiconomist puts the figure at 82 tWh.
Both of these sites, and others, are doing their best with the data available, but as one recent critical report in the Guardian said, “there is no way of knowing whether miners are using electricity that is fueled by renewable energy or fossil fuels”. Even The Cambridge Bitcoin Electricity Consumption Index has to give an upper and lower band of likely usage, which ranges from 82 tWh to a whopping 439 tWh., showing just how little of an exact science this is.
Digiconomist also estimates that miners spend approximately 60% of all revenues on operational costs, with 1 kWh consumed for every 5c spent. These figures don’t seem realistic at all, which raises doubts over its other data. Again, it’s a case of Digiconomist doing its best to present the data it has, but it isn’t anything that anyone can take as gospel, although sadly mainstream media outlets do because it serves their narrative.
Putting It All in Perspective
At times, the data related to Bitcoin energy consumption can be misleading, but that isn’t the only thing that is perpetuating the myth that Bitcoin is a power drain. Many are levelling criticism at Bitcoin’s energy consumption because its energy use seems obvious in the public eye. However, when you put things into perspective, when compared to other, traditional currencies, Bitcoin may be a little more “green” than many people realise.
People either forget – or are simply unaware – of what stands behind every single standard card transaction that takes place. Every time you use a debit or credit card, the transaction must pass through thousands upon thousands of large data centres that conduct data processing and extensive fraud detection.
Running 24/7, this is just one cost heavy factor that stands behind fiat currency use. Yet, because these mass energy-consuming elements aren’t routinely discussed, they are often forgotten. When you weigh up Bitcoin and its digital presence against that of “standard” currencies, things don’t exactly look as awful as some would have you believe.
Bitcoin’s energy use is also just half of that of internet video streaming, which hardly offers anything as beneficial as an alternative form of currency, but because mainstream media journalists use internet video platforms this isn’t brought up.
Bitcoin Is Greener Than You Think!
Stories seem to be published everywhere labelling Bitcoin as “power hungry”, but this really is a false label. Bitcoin actually doesn’t need a huge amount of power to function, especially when it is compared to fiat currency operations and other heavy users of energy, such as precious metal mining and internet video streaming. It also ignores the fact that Bitcoin mining operations are getting ever greener, and it won’t be long before coal-powered operations are in the minority.
Other cryptocurrencies are also working to battle this issue, such as Ethereum moving to a proof-of stake consensus mechanism, which makes the argument against the Bitcoin energy consumption myth that much stronger. It might be a stretch to label Bitcoin as a “Green Coin”, but it isn’t a stretch to say that it has the potential to be the most efficient way to conduct transactions on a global scale. Debunked and dismissed, next time you hear someone say that Bitcoin is “power hungry”, you can now see that such statements are based on little more than estimates and don’t actually hold much water.