Elon Musk’s statements that Tesla will no longer accept bitcoin as a means of payment have once again put the spotlight on the issue of Bitcoin’s impact on the environment.
The words of Tesla’s CEO specifically referred to the consumption of polluting energy, in particular coal.
Bitcoin’s impact on the environment
The process of mining Bitcoin has a high impact on the environment and requires a lot of energy. Mining bitcoin is in fact not at all convenient for a private citizen. The costs of solving the complex algorithms behind the blockchain’s consensus mechanism require mining farms, rooms with high-performance computer processors that consume electricity, both to mine and to validate transactions, and ultimately to cool the machines.
But how much does Bitcoin mining consume?
According to recent research by the University of Cambridge, which has compiled a special index called the Cambridge Bitcoin Electricity Consumption Index, Bitcoin mining requires more energy than entire countries use. And against this, a crusade has begun.
In the New York Times, Bill Gates declared:
“Bitcoin uses more electricity per transaction than any other method known to mankind, and so it’s not a great climate thing”.
And while it is true that a Bitcoin transaction consumes as much as 735 Visa transactions or 55,280 hours of YouTube videos, it is also true that on average a Bitcoin transaction is worth $16,000, while a Visa transaction is worth $46.
But it is precisely these figures that must have embarrassed Tesla. After all, what sense does it make for a company that produces electric cars, considered one of the solutions to pollution, to then accept a currency that pollutes? That was one of the theses of HBO host and comedian Bill Maher. In reality, there are other aspects to the question.
Bitcoin and energy consumption, the solutions
Does bitcoin consume energy? Yes, it does. But Bitcoin supporters are not necessarily unscrupulous polluters. Bitcoin’s energy consumption is changing and evolving in favour of renewable resources.
Anthony Pompliano explained in recent days how progress is being made in this respect. For example, in China, Mongolia has banned mining, precisely because of its high consumption of coal. Another region in China, Xinjiang, known for its high coal consumption, is now consuming 40-50% renewable energy. In Sichuan and Yunnan, Bitcoin mining farms run on hydropower.
In addition, China is gradually losing its dominance in Bitcoin mining. Canada and the United States are also entering this sector in a big way, with most of the energy used coming from renewable sources.
In addition, there are projects undertaken by major players, such as Jack Dorsey’s Square and Cathie Wood’s Ark Investment, that support the production of Bitcoin with renewable energy as a means of ecological transition.
In short, Bitcoin’s “stakeholders” are well aware of the environmental problem, and are also actively seeking a solution.
In any case, research by Ark Invest in 2018 dismantled this myth that Bitcoin is the killer of the world’s environmental system due to its excessive energy consumption. This is because mining gold consumes more than Bitcoin. More surprisingly, the consumption of the traditional banking system is much higher than that of BTC. But no one seems to be shocked by this.