Bitcoin Does Not "Waste" Energy
Common Arguments Around Bitcoin's Environmental Impact
Many people avoid bitcoin because they think it harms the environment. After all, Bitcoin mining uses more energy than Sweden, and the European Union has tried twice to ban proof-of-work mining in Europe, along with some American politicians. While bitcoin believers may not care about the environmental arguments, many crypto enthusiasts and interested investors do. So here are the environmental arguments against bitcoin, plus some counter arguments.
The premises of the environmental argument against bitcoin are straightforward:
Wasteful activities with big carbon footprints should be banned. Bitcoin mining is an activity with a big carbon footprint. Bitcoin mining wastes electricity. Therefore, bitcoin mining should be banned.
Let’s dive into the first premise. Wasteful activities with big carbon footprints should be banned because they hinder our progress on preventing climate change. The larger bitcoin gets, the more energy consumed, and the more emissions it creates. Bitcoin mining also makes energy more costly because it adds to the demand for energy. If it’s wasteful, we should not use it.
The issue with this premise is that waste and value are purely subjective phenomena. If something is a waste to you, you should simply avoid it. For example, I think hairdryers are a waste because a towel can do the same thing, but without energy. However, others disagree, and they “waste” their money on hair dryers. Though we disagree, I should not prevent them from using hairdryers. The same goes for bitcoin. Nobody who buys bitcoin thinks that it is a waste. As long as some people buy it, then it is not a waste to them.
Next, bitcoin mining has a big carbon footprint. Bitcoin mining uses roughly 136.48 TWh of energy in a year, more than many countries. The computers used for mining add to the footprint too. They last for 18 months and then go to the landfill, where their toxins leak into the landfill.
Nobody denies that bitcoin mining has a carbon footprint, along with fridges, hair dryers, and solar panels. But does bitcoin mining have to have a big carbon footprint? No. 40 to 75% of bitcoin miners use only green energy, like solar or wind.
Bitcoin mining also uses a lot of wasted energy, like flared gas. Flared gas is natural gas that oil producers dig up and then burn off because it is not profitable to move it to a city. But instead of burning it, many producers now use it to power bitcoin miners. Using wasted energy does not add any new emissions.
Bitcoin mining may produce e-waste, but so do computers, solar panels, and cell phones. But we keep using them because the benefits are worth more than the costs. Similarly, bitcoin’s status as immutable, decentralized money is worth more than its production cost.
Things like hair dryers may be found as wasteful to some, but not to others. The same goes for bitcoin. A large portion of the energy powering bitcoin mining comes from renewable energy and wasted energy that adds no extra emissions.
But ultimately, this debate boils down not to “the particulars of mining, but rather the societal merit of non-state money.” Keeping all of this in mind will help you convince people on the fence about its value.