Ask CryptoVantage: Is Bitcoin Really That Bad for the Environment?

Bitcoins’ Electrical Usage

The fact of the matter is that Bitcoin does use a ton of electricity. The stat people like to cite is that it uses more electricity than the entire country of Argentina does. That works out to 121.6 terawatt hours. Certainly not a small number, and it’s a number that is unlikely to decrease assuming Bitcoin doesn’t drop off the face of the Earth. It’s more likely that the number will rise assuming Bitcoin continues to enter mainstream adoption amidst record inflation rates. More miners will enter the sector, increasing Bitcoin’s electrical usage.

The reality of that electrical usage is that it’s correlated to the success of Bitcoin. Bitcoin wouldn’t be using all that much energy if the network wasn’t being used and mining wasn’t profitable. As Bitcoin’s price increases it increases the incentive for others to try and mine Bitcoin, adding to the electrical demand of the network in its entirety. If Bitcoin became a worldwide accepted currency, the overall cost of electricity for protecting an integral financial tool’s security (the Bitcoin network) would likely be acceptable.

E-Waste Related to Bitcoin Mining

Another factor in Bitcoin’s environmental impact is the e-waste generated through Bitcoin mining. E-waste refers to electronic hardware that is being thrown away to be replaced by newer, more efficient versions. A research article found that Bitcoin accounted for quite a large chunk of e-waste worldwide. The reality is though, that the article and researchers made a lot of assumptions to reach their conclusions, such as assuming that mining equipment is thrown away rather than re-used. That assumption is incorrect, as many rigs are re-sold. It seems unlikely that people spend hundreds if not thousands on a rig and then just throw it away without trying to get any value back for it, doesn’t it?

When you look at the bigger picture though, Bitcoin’s e-waste, even at inflated numbers due to assumptions, accounts for only 0.056% of the world’s total. This is not exactly a lot now, is it? There are clearly many worse sources of e-waste than Bitcoin miners. This doesn’t fit the narrative that mainstream media wants for Bitcoin, which is often one of uselessness.

Justification for Bitcoin’s Energy Usage

Overall, while Bitcoin uses a lot of energy, its energy use is justified. As aforementioned, a lot of its usage is due to it being used, meaning the Bitcoin network. It would be one thing if Bitcoin was using enough electricity to power a country while providing no utility, security, or profitability for users, but this isn’t the case. It’s the opposite, the network continues to grow, increasing its energy use. The large-scale use of electricity just means that the network is being used, and the more users, the more secure the network as it becomes harder to attack.

Bitcoin miners are also, or could be, one of the biggest consumers of electricity that would be going to waste otherwise. This is because when grids have excess electricity it is usually dispelled into the ground, meaning it is completely wasted. Bitcoin miners could very easily take on this excess energy, as they want cheap electricity, while the power company doesn’t want to waste margins.

The emergence of Bitcoin Layer-2s such as the Lightning Network could also dramatically reduce the overall energy consumption of the network.

Finally, Bitcoin’s energy use is sparking a conversation around renewable energy sources. The reality is that Bitcoin miners will use the cheapest energy available, it doesn’t matter if it’s coal or solar power, they just want the cheaper option. So, if renewable energy sources make themselves available to Bitcoin miners at a lower price than current non-renewable sources, there would be huge incentive for them to migrate to that source. A win for their bottom line, the renewable source, and the planet.