Bitcoin isn’t getting greener — 4 environmental myths about cryptocurrency debunked
Myth one: Bitcoin mining is becoming more efficient
Bitcoin’s carbon emissions are not the network’s only dirty secret. In 2011, competing miners could win the bitcoin bingo with an average laptop. Today, viable operations require investing in warehouses filled with specialized hardware known as Application Specific Integrated Circuits (ASIC). As the majority of mining costs come from energy to run these units, bitcoin miners are always careful to use the cheapest. To avoid wasting energy, the global arms race for bitcoin requires ASICs to be replaced with newer and more efficient models every year.
ASICs can’t be easily repurposed for general computing. Redundant units create around11,500 tonnesofhazardous electronic wasteeach year, much of which is dumped on citiesin the global south.
Myth two: Bitcoin encourages investment in clean energy
Chinese hydroelectric power plants arepopular spots for bitcoin mining. WhileChina cracks downon the industry, 61% of bitcoin mining ispowered by fossil fuels.
Cheap coal in Australia has found new buyers through bitcoin, asformerly redundant coal mines are reopenedto power mining. Miners are willing to move anywhere for residual energy, increasing the profitability ofnatural gas in Siberiaand supportingoil drilling in Texas.
In Virunga National Park in the Democratic Republic of Congo, bitcoin miners aregetting special accessto cheap, clean energy produced by anEU-funded hydroelectric plant. The plant was designed to help localsfind livelihoodsbeyond poaching and stop them from resorting to scouring parkland for wood fuel. Bitcoin miners employ armies of computer servers, not the ex-combatantsthe plant could help.
Myth three: Bitcoin replaces the need for gold mining
Gold mining is one of the world’smost destructive industries. Bitcoin was originally intended as adigital replacement for goldthat was also a deflationary means of exchange, capable of rendering wasteful banks and regulators redundant.
But for many institutional investors, gold is being bought tohedgeagainst bitcoin’s volatility.Tesla poured US$1.5 billioninto bitcoin, but also declared aninterest in gold. While bitcoin is currently experiencing all-time price highs,gold hit one of its ownin 2020.
Nor has bitcoin displaced traditional finance institutions.Major banksare vying to get very rich indeed on the back of it.
Myth four: Corporate players will boost the market for ‘green bitcoin’
Some argue that institutional investors can turn bitcoin green. Yves Bennaim, the founder of Swiss cryptocurrency think tank 2B4CH, claims that as investors like Tesla push prices up, “there will be more incentive to make investments inrenewable sources of energy” for bitcoin mining. But miners will always use the cheapest option to maximize returns. It’s not possible to allocate additional rewards to miners using renewables, because it’sdifficult to knowexactly which bitcoin miners use renewables.
Unfortunately, there is currently no such thing as a “green bitcoin.”
Not all cryptocurrencies are as energy-intensive as bitcoin, though. There are alternatives to proof-of-work. The second biggest blockchain project, ethereum, is switching toproof-of-stake, a new system that is supposed to remove the need for data miners and perpetual hardware updates. Bitcoins are dirty things, but pointing this out to would-be investors should not mean throwing the blockchain baby out with bitcoin’s bathwater.
This article byPeter Howson, Senior Lecturer in International Development,Northumbria University, Newcastleis republished fromThe Conversationunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
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