Bitcoin miners use a lot of energy. But the devil is in the details.
Tesla CEO
It’s been three weeks since Tesla CEO Elon Musk tweeted that the electric-car company had dropped bitcoin as a payment option, citing concerns over the cryptocurrency’s link to greater consumption of fossil fuels. Since May 12, bitcoin BTCUSD, 3.01% has plunged by about a third, dragged down, in part, by criticism over its carbon footprint. Today I’m joined by Alexander Benfield, a cryptocurrency analyst at Weiss Ratings. Instead of focusing on overall market dynamics, we’ll talk about bitcoin and issues surrounding its energy consumption during the mining process. The cryptocurrency’s network relies on computers solving puzzles, which uses electricity. Annual power consumption of bitcoin mining is about 130 terawatt-hours, according to the University of Cambridge. To put that in perspective, the U.S. uses almost 4,000 terawatt-hours of electricity a year.
Big-picture thinking
There you have it. After having this conversation with Alex, reviewing Nic Carter’s research (the link is above, I highly recommend you read it) and other papers on the topic, it seems that many of the issues concerning bitcoin’s carbon footprint may have been overblown or simply misrepresented. Determining bitcoin’s effect on the environment requires a lot of big-picture thinking. It is easy to miss the forest for the trees, and easier still to rely on information that has been since debunked, simply because it favors one’s cognitive bias. The way I see it, cryptocurrencies aren’t going away, and by the looks of it, neither is bitcoin. Current market action looks like nothing out of the ordinary — yet more volatile crypto action, the likes of which we’ve seen in the past. This slump is likely just a pause. What do you think? Do you support the use of bitcoin or would you rather invest in one of the “green” cryptocurrencies? Which one?
