Among the shimmering spires of Manhattan, the facades of tall skyscrapers recently served as canvases for Greenpeace USA’s daring public spectacle. The agency projected laser-eyed animations of the CEO’s of JPMorgan Chase and BlackRock, coupled with alarming statistics on bitcoin mining’s environmental impact.
Greenpeace stresses the severity of bitcoin’s ecological footprint, with comparisons being drawn to the energy consumption of entire countries and carbon emissions of millions of vehicles. Bitcoin’s energy-intensive mining operations, they posit, could catapult pollution rates into terminal heights, amplifying our environmental crisis. Nevertheless, their view might not paint the full picture.
As an environmentalist and scholar studying bitcoin mining’s energy usage since 2011, I see a vastly different potential for bitcoin. Its capacity to decarbonize and electrify heating systems, whilst cleaning up waste methane, manifests to me not as a doom-bringer but as a promising tool for combatting climate change.
Underlying our discordant outlooks is a less-known and underappreciated facet of bitcoin mining: its inclination towards exploiting the cheapest electricity available, irrespective of its geographical location. A vast majority of miners already pay significantly lower than the average price per kilowatt hour. This trend, I maintain, will continue its trajectory until the process becomes practically cost-free. This adjustment towards greater energy efficiency will invariably birth more economically viable and environmentally friendly energy systems.
Break it down, and the crux of mining bitcoin lies in producing a valuable commodity from a uniform input – electricity. Miners are capable of attenuating and interrupting their power consumption at will, which minimises loss in profit. Given that approximately 70% of mining expenses are delegated to energy, finding cheaper power sources gives miners a defining edge in the marketplace.
Every four years, the “halving” of bitcoin issuance (next one due in April 2024), is a brutal reckoning for less-efficient miners, creating an incentive for miners to find cheaper energy. Post halving, the energy expenditure of bitcoin miners globally would decrease by nearly 50% in nine months, forcing marginal miners aside, unless, of course, they adapt to consume cheaper energy.
Energy that is currently considered useless because of its generation at the wrong time or in the wrong place, could become hugely valuable. This unused, stranded energy is habitually the by-product of non-fossil fuel sources. Encouraging bitcoin miners to exploit these wasted resources can strengthen non-traditional electricity generation’s viability.
The impact of mining bitcoin isn’t merely financial. It encapsulates waste mitigation and incentivizes the electrification of heating. Despite the exceptions brought about by factors such as market instability and regulation, bitcoin mining’s relentless pursuit of cheaper energy indicates its potential to usher an era of virtually free and environmentally benign energy consumption.
Even as Greenpeace persists in voicing alarmist concerns over bitcoin, prudent policymakers and industry leaders need to dig deeper and evaluate its essential nature – a voracious, decentralized, and flexible power consumer that can transform the way we view and use energy.
Source: Coindesk
