Having worked in the mining space for the last two years, perhaps the most common question and complaint we hear from the general public is that Bitcoin mining, the process by which the network is secured and transactions are completed, is a catastrophic waste of energy and a major contributor to global warming. While indeed it is indisputable that the Bitcoin network does use an incredible amount of energy, most naysayers are unaware that somewhere in the ballpark of 75% of the network is powered by renewable energy, effectively making the 10 year old Bitcoin network the greenest form of value transfer on the planet today(1).
Yet despite the Bitcoin community’s best efforts, these unfounded myths continue to proliferate. This is in large part due to sensationalized news articles that love to utilize blanket metrics for shock effect such as “the Bitcoin network consumes as much energy as Austria while achieving the carbon footprint of Denmark”.
However, the availability of these metrics is also a byproduct of the Bitcoin network’s transparency and decentralization. The readily available public metrics associated with network hash-power (computational power) and the available electrical efficiency specifications of the most common hardware run on the Bitcoin network make for easy calculations and thus a clear understanding of the energy consumption of the network, figures that are consistently used to discredit this incredibly innovative technology.
These metrics also exist in stark contrast to the almost unquantifiable energy costs and carbon footprint of traditional fiat systems who’s combined physical and digital nature and tightly guarded proprietary distribution shroud the electrical consumption and environmental impact of these incumbent systems in layers of secrecy.
It is rather easy to postulate on the average amount of electrical power, and thus carbon footprint, of each transaction on this completely digital asset. Every transaction from network inception to this very moment is recorded in the distributed ledger of the Bitcoin network, available to anyone with a computer and an internet connection.
In comparison, quantifying the power costs and carbon footprint of logging, or mining, then transporting the wood or metal and finally minting physical currency is nearly impossible, and this doesn’t even begin to take into consideration the transportation and security systems required for these physical assets or the power needs associated with physical banks and servers to handle digital transactions in the incumbent system.
As the Bitcoin network grows and matures it will maintain the same level of transparency that the fiat system currently fails to display. Only time will tell if this increased transparency will bode well for the network or whether it will continue to place it in the media’s crosshairs over power consumption and climate change concerns.