Is Bitcoin Environmentally Friendly?
Bitcoin production or mining depends on proof of work (PoW) technology based on massive electricity consumption; It is estimated that renewable sources provide an average of 40% of the total energy used in the complex calculations of crypto coins. 76% of all miners stated that some of the energy sources they use are renewable sources, among which hydroelectricity is the most widely used.
Fossil fuels are one of the most important, if not the only, causes of greenhouse gas accumulating in the atmosphere, and these gases cause global warming, climate change, and damage to living things, nature, and the environment; Therefore, it is desired to use renewable energies with less carbon footprint. The Cambridge University Bitcoin Energy Consumption Index measures the energy consumption of the bitcoin production/system, carbon footprint, etc. According to this source, the total energy consumption of the bitcoin network is seven per thousand of the world’s consumption.
Jackson Laskey, a partner at Unbounded Capital, claims that Bitcoin might be the most eco-friendly technology ever. According to Laskey, Bitcoin can optimize various industries to save energy compared to alternative systems for Bitcoin. In other words, Bitcoin makes it possible to develop technologies that will benefit the environment, such as reducing the total amount of energy and reducing carbon emissions in various industries. This situation causes Bitcoin to be more environmentally friendly day by day.
On the other hand, according to many counterarguments, it is thought that Bitcoin production is wasting the world’s energy; that is, it is not worth the result, and the damage is getting more significant with its increasing price. Various calculations, such as the annual terawatt usage of the carbon-intensive energy consumed by the bitcoin network, and based on this, comparisons with the yearly electricity consumption of small and medium-sized countries are shown as a basis of the criticism.
However, when making such a comparison, attention should be paid to the value created in the end. While it is said that a bitcoin transaction consumes thousands of times as much electricity as a credit card transaction alone, it should be considered as a whole whether decentralized finance or traditional finance consumes more energy. It should be noted that the trend towards using renewable energy in mining is increasing. As mentioned before, Bitcoin may also enable many industries to save energy.
In conclusion, even though many criticisms arise regarding the total energy consumption of Bitcoin, this should not be the sole concern to evaluate whether Bitcoin is energy efficient or not. When considering the whole, traditional finance and other industries also spend energy that may harm the environment. However, thanks to the possibility of diminishing energy consumption in various industries via Bitcoin technology, it seems like Bitcoin will be more environment-friendly in the future.
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