No matter how invested you are in cryptocurrencies, you probably know that Bitcoin's proof of work consensus has made the currency a rather tough nut to crack. In fact, by one estimate, mining Bitcoin consumes as much electricity as Argentina does in an entire year.
This naturally begs the question, is Bitcoin, or at least Bitcoin mining, an environmental catastrophe? Now, the opinions on this vary. Miami mayor Francis Suarez is all for Bitcoin mining, especially if this comes from sustainable, renewable sources.
Yet, he has spared no criticism for what he describes as “dirty mining practices”, referring to any energy that comes from fossil fuels or other unsustainable resources. In Suarez words, this is 90% of all Bitcoin mined outside of the US.
In 2018, two Russian scientists were accused of attempting to dupe the government and use a nuclear facility to mine Bitcoin. Had they succeeded, perhaps mining would be a little greener today!
While Suarez's argument was a little more patriotic in nature, two distinct points of view delivered by Bloomberg columnist Noah Smith and Coin Metrics co-founder Nic Carter emerged this week. One argued the case against and one for Bitcoin mining, particularly relating to its environmental impact.
Smith’s argument weighs the pros and cons of Bitcoin and gauges its environmental impact, pointing to issues such as soaring chip prices and energy use. His reasoning is not very deep on the face of it.
However, Carter has decided to dive into the nitty-gritty and produce a lengthy defense of why Bitcoin mining is okay and not, as hinted by Smith, an environmental issue.
An objection out of principle
Essentially, Carter has provided evidence that the shortage of chips may be ascribed to the pandemic rather than Bitcoin's soaring demand for quicker hardware. He similarly refuses to accept the high energy consumption argument, arguing that Bitcoin miners are specifically located in areas with “excess energy production”.
This all makes sense and we too endorse cryptocurrencies and find logic and reason in Carter’s rebuttal to Smith’s article.
However, here is a slightly alternative point of view that may not enjoy the merits of the same depth of research. Just because you have excess energy, this doesn't mean you should use it. Or that you should aim to produce it in the first place. As we face numerous environmental threats, Bitcoin helps our societies function in a more liberal and open way, but does it help tackle the climate crisis?
Bitcoin is free of politicking, as Carter notes himself, and ultimately it doesn't matter how much you have mined or how much you hold. You have more or less the same rights within this ecosystem.
Yet, Bitcoin wealth would probably not help us solve our environmental challenges. Both Carter and Smith’s arguments stand to reason as one demonstrates how we can use existing resources to produce value and the other one cautions that external factors may influence cryptos future whether we think it is right or that is does so, or not.
Of course, Tesla founder and CEO Elon Musk has invested copiously in Bitcoin and after all, Musk is in the business of making our future greener. So, is the conflict between Bitcoin and the environment as clear cut as either Smith or Carter think?