Is Bitcoin the Ultimate Threat to Our Climate? Discover the Shocking Truth!

I realize that this article is not going to be popular with everyone. Bitcoin is a kind of tech financial fantasy, whereby many tech fans have come to the conclusion that we can live in some kind of financial utopia divorced from inflation and economic woes if we follow this fake mining path. There are probably many CleanTechnica readers who are big bitcoin or who at least have significant bitcoin holdings.

Unfortunately, bitcoin is a really stupid idea that is massively energy intensive and could become the nail in our climate coffin. Naturally, it’s not one thing that is going to destroy a livable climate for humans (unless you want to say “burning fossil fuels,” which is by far the biggest factor). However, bitcoin — or cryptocurrency mining more generally — is a notable problem, and it basically just captures the essence of our broader problem as humans.

The Bitcoin Problem

Four years ago, when Tesla bought some bitcoin holdings, Maximilian Holland explained why bitcoin is not good for the climate. Here’s part of his piece (bold emphasis added):

“The problem is that bitcoin’s proof-of-work blockchain validation architecture is undoubtedly a negative phenomenon for climate protection compared to alternatives. There are both other more energy-efficient cryptocurrencies available to choose from and more established currency-hedging strategies to protect Tesla’s cash pile, if that is indeed the prime objective. Almost any of these would have been much more aligned to Tesla’s often-touted mission ‘to accelerate the world’s transition to sustainable energy.’”

Bitcoin’s verification system uses a “proof of work” mechanism — which involves validators demonstrating computational effort to solve cryptographically secured number-crunching puzzles, and notably, expenditure of significant computational energy in the form of electricity. This puzzle-solving helps keep accurate transaction records and is then rewarded by the allocation of a newly minted bitcoin. As bitcoin's value rises, so does the energy expended to mine it.

“Electricity demand associated with U.S. cryptocurrency mining operations has grown very rapidly over the last several years,” the US Energy Information Administration wrote earlier this year. Concerns have grown about the energy-intensive nature of the business and its effects on the U.S. electric power industry.

Counterarguments

Some argue that bitcoin mining will just use solar and wind and hydropower more and more. However, the issue is that every serious model for reducing CO2 emissions includes the need to cut energy use as well as the need to use renewable energy more. If you spike demand for electricity, it only becomes that much harder to shut down fossil fuel power plants while adding new clean energy ones.

Human Failings

When it comes down to it, we’ve seen time and time again that humans are just too greedy. Bitcoin is all about “gaming the system” and becoming richer. It’s not about adding value to society. It’s about trying to financially maximize one’s savings in the easiest and most reliable way. Greed is winning big time right now and doesn’t seem likely to slow down or turn around. The bitcoin story is either going to be much better in 4 years or much worse in 4 years. I’m afraid that I’m going to be very right about this one…