Written by George Danayan, July 21st 2022

Bitcoin Mining and the Environment

One of the most common objections Bitcoin is faced with is that it uses too much energy. Comparisons to the latest Country that Bitcoin has surpassed in energy usage, or how many homes could have been powered by the energy used are on the news frequently. These arguments are very surface level and overlook a huge amount of benefits and information that arise when you look deeper into the world of Bitcoin mining and its energy usage.

Let’s start by addressing the idea that energy usage is inherently bad, and that it should always be minimized. This argument pushes the idea that there is some arbitrary hierarchy in which there are acceptable and unacceptable uses of energy - the idea that certain uses of energy can be deemed a waste. As an example, festive lights account for over 6,000,000,000 kilowatt hours of electricity usage annually in the United States alone. Those numbers even pale in comparison to higher-energy usage appliances like clothes dryers, air conditioners, or even as of recently, the explosive growth of electric cars (in which case electricity usage is seen as greener and good for the environment). Whether energy is used for decoration, entertainment, convenience, or even securing the world’s most resilient monetary network - there should be no arbitrary hierarchy.

For all of civilization, humans have been ramping up our collective energy usage - most notably during the industrial revolution. Humans constantly will harness more energy as society and civilization grows, exponentially. But this trend goes back thousands of years! From the first time we harnessed animal labour to plow fields more efficiently, to today where we harness the power of the sun using solar panels to power our cities. Energy usage is what drives society forward, we use orders of magnitude more than we did in the 1800’s - and we have a lot to show for it! The quality of life of people around the globe has drastically improved since then, with our cities, cars, planes, heating, cooling, refrigeration, computers, the list goes on. The demand for energy will always keep increasing, so we must instead turn our attention to the supply of energy to meet these demands.

We must first get rid of the notion that energy is incredibly scarce. There is an infinite (relative to us) supply of energy sources around the world. Wind, solar, hydro, gas, coal, nuclear, and many more. You could power the entire global energy demand with solar panels that only cover 1.2% of the Sahara Desert - and that’s just solar. The issue is being able to harness that energy. There are many sources of energy around the world that would be amazing to use, however are just not economically viable for any sane investor to set up the infrastructure associated with building, harnessing, and transporting that energy.

One significant reason that there is a lack of large scale renewables projects is due to the nature of the supply and demand of the energy that would result from them, and our lack of ability to store that energy for later use. Right now, energy must be supplied as it is needed, and there are limited ways for us to create energy for use at a later date. This poses a problem for a lot of renewables as they will produce power whether or not there is demand for that power. Take for example a hydroelectric dam. The turbines creating power in that dam create a steady, constant supply of electricity to a region that does not have a steady constant demand.

Source: University of California: Beyond 100% Renewable

This means that our sources of energy must always be enough to provide for our peak energy demand, but when demand is less than that, there is a potential surplus of energy that is not being used or capitalized on and is often just wasted - we do not have the ability to store it. For an investor that is looking to create these large scale renewables projects, that huge amount of wasted energy that exists between off-peak demand and their supply, is a massive reason for not creating these energy projects, as they may not be lucrative enough, or too risky without energy usage being a certainty.

But, imagine for a moment that there was a world in which that gap between off-peak demand and the energy supply did not exist. Imagine that no matter how much energy was created, there would always be a buyer and a use-case for it. That is the world that we currently live in if these renewables projects fully utilize Bitcoin as a way to off-load excess energy. The additional income from this would entice massive projects that would help transition the world to greener energy due to added investments, and would help stabilize the energy-grid by having a more constant, unfluctuating demand. And this is something that is happening today with energy projects around the world.

In summary, Bitcoin mining may use a lot of energy, however we must be able to zoom out and realize that energy usage is not inherently bad. If Bitcoin mining can be the economic catalyst for helping transition the world to more sustainable forms of energy, while also helping stabilize the energy grid globally, we should embrace it instead of being afraid. 

If you have any questions about Bitcoin mining, or Bitcoin in general, never hesitate to reach out to one of our Bitcoin brokers and we would be more than happy to help guide you. We also have a large collection of resources around the web that can be found here.