Bitcoin is regularly criticized for its ecological footprint. The most common accusations point to its high energy consumption, with some even going so far as to say that it “takes up all the electricity” in some countries. However, this is often a very simplistic view and does not take into account the full complexity of the subject and tends to make Bitcoin an ideal scapegoat. It is essential to demystify these preconceived ideas by taking a closer look at the real environmental issues related to Bitcoin mining.
Energy Consumption to Put into Perspective
There’s no denying that Bitcoin mining requires a large amount of energy. It’s even said that the Bitcoin network consumes as much electricity as countries like Argentina or the Netherlands, by some estimates. However, it’s necessary to put these raw numbers into context. For example, the traditional banking industry also consumes massive amounts of energy to maintain its physical and digital infrastructure, but this consumption is rarely questioned in the same way.
According to a study by Galaxy Digital, the banking sector consumes about 264 TWh of energy per year. For comparison, gold mining, another activity often compared to Bitcoin, uses about 240 TWh each year. And yet, Bitcoin is constantly singled out for consumption, even though it consumes around 100 TWh per year, well below other major industries.
To have more recent data and to see that the impact of BTC consumption must be absolutely nuanced, I invite you to consult the Cambridge Bitcoin Electricity Consumption Index (CBECI), World Gold Council website.
Energy Use: A Question of Regional Context
Another common criticism is that Bitcoin mining exacerbates electricity problems in some countries, especially those where the power grid is already unstable. However, it is important to consider that in some of these countries, the problem pre-existed mining. For example, in Venezuela or Iran, energy infrastructure is historically failing and the grid is often overloaded, with or without Bitcoin.
The Case of Localized Overloads
Consider Kazakhstan, where Bitcoin mining has been blamed for causing power outages. While increased mining activity has certainly contributed to increased demand, it is also true that Kazakhstan’s grid was already fragile and prone to regular outages long before the massive influx of Bitcoin miners. Lack of investment in infrastructure and mismanagement of energy production are equally, if not more, critical factors.
On the other hand, in some countries like Norway or Canada, where electricity is mainly produced from renewable and abundant sources, Bitcoin mining can even play a role in stabilizing the grid by absorbing excess energy produced during periods of low demand.
Energy Overproduction and Bitcoin Mining
One aspect that is often overlooked in discussions about Bitcoin mining is the overproduction of electricity in some regions of the world. Many countries or regions sometimes produce more energy than they need. However, this surplus is often wasted because local infrastructure does not allow for efficient storage or distribution of this energy.
The Case of China and Texas
For example, in China, before the restrictions imposed in 2021, much of Bitcoin mining was taking place in provinces like Sichuan, where hydroelectric power is abundant during the rainy season. The excess electricity produced would have been wasted if it had not been used to power mining farms.
In Texas, in the United States, another example is emerging. With the rise of renewable energies, particularly wind power, Texas sometimes produces more electricity than it can consume. Bitcoin mining is then seen as a way to valorize these surpluses by converting them into digital assets.
Towards a Greener Energy Transition?
Bitcoin’s carbon footprint remains a topic of debate. However, the mining industry is rapidly moving toward more sustainable practices. Today, about 58% of the energy used for Bitcoin mining comes from renewable sources, according to a report by the Bitcoin Mining Council. This means that the mining industry is already greener than many other industrial sectors.
Blaming Bitcoin for being an environmental disaster without considering the broader context and nuances is a reductive approach. It is crucial to understand that Bitcoin mining, while energy-intensive, can also play a positive role in some regions by using excess energy that would otherwise have been wasted. However, as with any booming industry, improvements are always possible and necessary, especially when it comes to integrating renewable energy sources.
Disclaimer This article is not investment advice. It is essential to do your own research and consider all aspects before making any financial or investment decisions.
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