It has long been completely clear that the “greens” in the United States (in fairness – not all, only those for whom this is a real business, and not a real concern for the problem) have opened another niche in their vast business, and all their “fears” about energy emissions from bitcoin mining is just another well-paid lobbying propaganda. In light of receiving more money from various stakeholders, Greenpeace USA – an environmental group – has launched another round of talk that Bitcoin has an “outdated and inefficient” code system. On its social media channels, the organization repeated claims that Bitcoin’s proof-of-work mechanism is contributing to the climate crisis. As an alternative, it was once again proposed to replace the code with a less energy intensive mechanism such as proof of stake.
The advocacy group’s statements were made in response to Thursday’s successful Ethereum merger, an event that transitioned the protocol from proof of work to proof of stake. The “non-profit” organization said: “Ethereum has just proven that cryptocurrencies don’t have to come at the cost of killing a habitable planet. Meanwhile, we continue to criticize Bitcoin for continuing to consume more electricity than “whole countries”.
According to US Greenpeace, Bitcoin’s power consumption can fluctuate as market conditions change, but it tends to increase over time as the Bitcoin mining industry expands. According to the Cambridge Bitcoin Electricity Consumption Index, its theoretical upper consumption limit is now approximately 159.63 TWh. For comparison, according to Forbes last year, the whole of Norway consumes about 124 TWh. It is clear that the “greens” are deliberately not telling the whole truth, so as not to devalue their pressure in the field of cryptocurrencies. Bitcoin mining is actually a much smaller environmental issue than what the greens have been told by others. We rather believe, however, that it is not even a matter of public opinion, but of lobbying competing interests in the crypto industry.
The energy footprint of a cryptocurrency comes down to proof of work, a mechanism for achieving consensus and securing the blockchain through energy consumption. Specifically, users (miners) consume energy in the race to create the next bitcoin block, where the winners are rewarded with bitcoins. Naturally, as the price of Bitcoin rises over time, they have an incentive to burn more energy to earn additional rewards. As Greenpeace explained, this process encourages miners to “bring back to life” old coal and gas power plants, thereby “fueling the climate crisis.” However, if you look closely at the same statistics, it turns out that the “green” data is only partly true, without explaining the important features of energy consumption, and misleading the public.
Yes, the claim that the Bitcoin network currently consumes more power than any other blockchain network is quite true, by a wide margin. This is indeed due to its Proof of Work (POW) consensus mechanism, which requires energy-intensive computer rigs (miners) to secure the blockchain. The only network of comparable size that has previously used this mechanism is Ethereum. However, since the Merger, Bitcoin has remained virtually the only cryptocurrency with a noteworthy energy profile. However, if we take the issue seriously, Bitcoin’s contribution to climate change is still a “rounding error” in the overall global energy balance.
It could well be argued that “99.92% of the world’s carbon emissions come from industrial uses of energy other than bitcoin mining. Bitcoin mining is neither a problem nor a solution to reducing carbon emissions.” So, one of the reasons for the low carbon emissions of Bitcoin is the widespread use of renewable energy sources in mining. A survey conducted by the Bitcoin Mining Council in July showed that in the energy balance of mining structures, “green” energy is 59.5% – and this figure is growing over time. For comparison, the total balance of green energy production in the world is approximately 21.7%.
In addition, bitcoin mining provides other objective benefits for the environment and energy systems. For example, miners could be used to monetize methane emissions, which are currently burned in a much more environmentally damaging way.
In addition, miners can provide a flexible load on power grids with “unreliable” renewable sources such as wind and solar power. This will help these networks remain profitable and “finance the additional capacity needed to responsibly power large industrial and population centers.”
It is not uncommon for frontmen of other cryptocurrencies to vilify Bitcoin’s energy requirements, especially those that support proof-of-stake coins. The same US Greenpeace last targeted Bitcoin in March, after Ripple co-founder Chris Larsen funded a $5 million campaign (and has now provided another $1 million from the same source) to see Bitcoin transition to proof-of-stake. That is, Ripple co-founder Chris Larsen has funded an environmental campaign aimed at spreading awareness about the potential harm to the environment of Bitcoin. And like last time, Greenpeace has also called on Bitcoin-related tech billionaires, including Jack Dorsey and Elon Musk, to spread the word about its energy footprint. For example, Cardano co-founder Charles Hoskinson told Lex Friedman last year that Tesla should accept ADA to pay for a car, not energy-hungry bitcoin.
The impact of such efforts appears to be another surge designed to have some sort of impact on the Bitcoin network both on the free market and in terms of exchange regulation. While some companies have refused to accept Bitcoin payments due to environmental concerns, the White House is currently considering a total ban on mining operations to address this issue. In our opinion, these lobbying efforts are simply meant to draw government attention away from proof-of-stake cryptocurrencies, which have their own regulatory issues.
Based on the statistics, it’s safe to say that environmentalists’ arguments against proof of work are simply not being made in good faith.
For example, Jack Dorsey, one of the leading technology contributors to Bitcoin, made clear his distaste for proof-of-stake protocols after sharing a blog post extolling the superiority of proof-of-work. In May, Dorsey also signed a letter in support of proof-of-work to the Environmental Protection Agency, criticizing proof-of-stake for being centralized. “[Bitcoin’s carbon footprint] would hardly have been noticed were it not for the competitive guerrilla marketing activities of other cryptocurrency promoters and lobbyists who seek to draw negative attention to Proof of Work mining.”
In fact, as MicroStrategy Executive Chairman Michael Saylor rightly pointed out, such bursts of “activity” “distract regulators, policymakers, and the general public from the inconvenient truth that Proof of Stake crypto assets are typically unregistered securities traded on unregulated exchanges. to the detriment of retail investors.” For example, the same Ripple is currently involved in a lawsuit with the Securities and Exchange Commission (SEC) for the alleged sale of unregistered securities in the form of XRP. Meanwhile, cryptocurrency exchanges like Coinbase are being targeted by listing fees for several cryptocurrencies that pass the Howey test.