A response to Nic Carter’s “The Last Word on Bitcoin’s Energy Consumption” (CoinDesk, 19 May 2020), by Michael Reece Purson.
Now I am no environmentalist. In fact with the amount of stuff I have plugged in at the moment (simply because I’m too lazy to unplug anything that isn’t within arms reach), I’m probably the exact opposite.
But even I could smell something was wrong with this article the moment I saw the number of (otherwise lovely and sane) people gushing over it on my Telegram feed.
You should always be extra skeptical of anyone who says that they have the “last word” on any topic, especially on world changing ones. Sorry, Nic, but you don’t get to tell the rest of the world what the “last word” is on a large scale issue simply because you have “analyst” in your job description.
So bored, drunk, and angry that my favorite cafe is still not doing takeout, I decided to take my anger out at something that completely deserves it.
Let’s get started with this dissection. (Quotes are from Carter’s article.)
Electricity decays as it leaves its point of origin; it’s expensive to transport
So instead of improving this, we create a system where you’re incentivized to not ever improve transport or battery technology, because you are making internet money out of thin air. How is this better?
Unless I’m completely blind, his entire argument is “We lose energy because we are bad at allocating it, so we should incentivize never fixing it.”
While there certainly are fundamental limitations on how much energy can be transported, subsidizing inefficiency and not increasing the efficiency of energy production and storage is the wrong way to deal with them.
This doesn’t fix the problems he describes, it entrenches and monetizes them. All this does is subsidize inefficiency.
This also brings up the question if subsidizing poorly performing remote energy sources (that would otherwise be shut down) is a good thing. Why dismantle a poorly running energy plant as long as you can keep squeezing more Bitcoin out of it? [“Australian coal-fired power plant to mine Bitcoin”]
Before Bitcoin, aluminium served this purpose.
Aluminium has a large use-case (beyond just speculation), and after aluminium (and gold) is mined, you don’t need to keep mining it for it to exist. Also, if Bitcoin displaces aluminium production and aluminium still has a high demand, then this would mean we would be mining the same amount of aluminum AND mining Bitcoin. This is worse for the environment overall, not better.
I can’t even make my tinfoil hat out of Bitcoin.
This is why so many oil miners (whose business results in the production of lots of waste methane) have developed an enthusiasm for mining Bitcoin.
As a general rule, it’s never a good sign when the oil industry is on your side and cheering you on while arguing about the climate. They are happy because they have a way of generating profit without having to come up with any solutions that would help distribute that power. Why risk and innovate when you can just mine internet money?
And considering that so many different governments have limited how much power miners are allowed to draw, I don’t think it’s as rosy a picture as Nic is implying.
[“Government of Abkhazia Cuts Off Power to 15 Cryptocurrency Mining Facilities”; “Norway Withdraws Electricity Subsidies From Bitcoin Mining Farms”; “Rural Washington County Utility Proposes Increased Electricity Costs for Crypto Miners”; “The fightback against the bitcoin energy guzzlers has begun”]
What matters is the type of energy source being used to generate electricity, as they are not homogeneous from a carbon footprint perspective.
The assumption that renewable (“green”) energy is somehow neutral or preferable to no energy being used or wasted is laughable. [“When 100% renewable energy doesn’t mean zero carbon”]
Along with that, Bitcoin mining is not beholden to only use renewable energy, only when it’s the cheapest. When said renewable resource is not available at a certain time or the price of other fuel becomes less expensive, miners will switch back to dirty forms of electricity in a heartbeat. With the falling costs of energy, what would stop miners from moving to a cheaper but dirtier source? (Good will? Caring for the planet? Existential dread?)
The ‘Bitcoin is powered by renewable energy’ narrative seems to only be true as long as renewables are cheaper than dirtier types of energy.
[“Renewable energy is growing fast in the U.S., but fossil fuels still dominate”; “Antonopoulos: Drop in Oil Prices Give US Miners a Competitive Edge”; “Sichuan Rainy Season to Give Bitcoin Hash Rate a Much Needed Jolt”; “How Wasteful Is Cryptoasset Mining?” (p83)]
Nic (and apparently everybody else who writes about this) is also forgetting that the mining hardware itself costs a hell of a lot of energy to make, and in areas where it would otherwise be used (e.g., Shenzen); plus the minerals and metals needed to make them (conflict resources); and (potentially slave) labor; [“China Moves Uyghur Muslims Into ‘Forced Labor’ Factories”; “China Uighurs ‘moved into factory forced labour’ for foreign brands”] and transport and disposal, when those miners become overpriced paperweights when the difficulty adjusts.
The razor thin margins of mining forces prices to be a low as possible (necessitating finding the cheapest sources of materials and labor possible), so this probably won’t change to something more ethical either. It’s not like phones, where people will pay a premium for more ethical hardware. You won’t find the Fairphone of ASIC hardware any time soon.
The discussion seems to have been limited only to CO2 emissions, rather than the entire cost of Bitcoin mining.
Here is the short version of the life of an ASIC miner:
- Minerals/metals mined (from generally unethical sources and driving up the price of the materials).
- Materials are shipped to China to be turned into the machines (using generally badly regulated worker conditions).
- Miner is then shipped to Mining/Energy company.
- Miner is used for 1-2 years.
- Miner is either scrapped or sold to a grey market with low electricity costs (Iran, Venezuela, etc).
- Miner is finally scrapped or disposed of (bear in mind that the recycling of the parts also takes energy).
Each one of these steps creates greenhouse gases, heaps of pollution and miscellaneous waste like styrofoam/cardboard for shipping. None of this ever seems to be accounted for in Bitcoin climate impact estimates.
Now you might ask: “But what about computers? Aren’t computers just as wasteful?”
Well my good sir or ma’am, computers can be used for more things than just hammering at sha256 puzzles all day. Their lifespans can be extended until their components break and can be repurposed or donated. ASICs on the other hand can only be used for one thing, and only as long as the mining company can profitably use them.
Also, I can’t watch any cat videos on an ASIC.
The prospects look even sunnier when you consider the changing nature of Bitcoin security spend. Eighty-seven percent of Bitcoin’s terminal supply has been issued already.
Bitcoin’s energy consumption is a linear function of its security spend. Like any other utility, the public’s willingness to pay for block-space will determine the resources that are allocated to providing the service in question.
This is completely irrelevant if the demand for Bitcoin keeps growing, and if we are talking about its environmental impact. There isn’t a cap on the difficulty, so you could theoretically start burning stars, and still need more energy if people are willing to pay for what you produce by doing that.
Thus it’s unlikely that security spend results in the world-eating feedback loop that has been posited in the popular press. In the long term, Bitcoin’s energy consumption is a linear function of its security spend. Like any other utility, the public’s willingness to pay for block-space will determine the resources that are allocated to providing the service in question.
If it scales with security AND becomes muh world currency, then it would be using WAY MORE energy, not less. Unless we want our world currency to have the security of a moldy biscuit.
The Bitcoin-energy supplicants are mum when it comes to the energy used to illuminate Christmas lights, to power the data centers behind Netflix or to distribute untold millions of single-serve meal kits.
Yes, but these industries ACTIVELY TRY TO LOWER THEIR IMPACT and lose money the more energy they burn. Bitcoin mining is the precise opposite in terms of incentives and in practice.
They lose money the more energy they use. Bitcoin mining is the exact reverse. Making it so that burning more energy is profitable rather than reducing consumption, improving efficiency, and re-allocating it to areas that need it is a horrible proposition.
I can also choose to buy more eco-friendly Christmas lights that work just as well as less eco-friendly ones. I can’t buy a more eco-friendly version of a Bitcoin.
Not to mention the fact that “Other things are bad for the environment so my bad thing for the environment isn’t bad” isn’t great logic.
The truth is that blockspace is a service which is paid for, and that’s where its resource cost is derived
If it costs tons of CO2 and environmental damage just to buy a coffee with Bitcoin, then I don’t want to live on this planet or use Bitcoin for anything.
Something duly purchased cannot, by definition, be a waste.
I see you’ve never been on eBay.
Just because people buy things doesn’t mean those things are not completely stupid and wasteful (see cruise ships). The fact that someone is willing to buy something doesn’t excuse its impact on others.
Also sidenote, Bitcoin is not the only cryptocurrency burning energy on a massive scale. Are we forgetting ETH, BCH, BSV, etc? Are those also being mined and is it justified based on “Something duly purchased cannot, by definition, be a waste”?
Ultimately it’s just a matter of opinion as to whether the existence of a non-state, synthetic monetary commodity is a good idea.
No it’s about how much that money kills the bloody planet in being a “non-state, synthetic monetary commodity”. It’s a false dichotomy to assume that its either non-state money or a livable planet.
These same arguments have been made countless times about perceived “costs” of the gold standard
Yes, gold is a shiny rock. Stop liking a shiny rock. It’s just as dumb when people destroy the world over a shiny rock.
The fact that gold production wastes energy and pollutes does not excuse Bitcoin production wasting energy and polluting. And again, you don’t need to keep burning energy to keep gold existing.
There is a solution. All they must do is persuade Bitcoin fans to use and value an alternative settlement medium.
So convince mad people to not destroy the planet for internet money?
Seeing as the demand for cryptocurrencies won’t go down, I suggest either pushing for anti-ASIC mining (which won’t lower the amount of energy used but at least would push for more advancement in consumer grade computers) or adding some extra use to Bitcoin mining (like folding proteins or finding prime numbers) or (if this ever comes into existence rather than be a pipe dream) robust Proof of Stake (eliminating the problem entirely).
Cheering and defending a system that creates pollution for (only one type of) security is a step backwards for crypto and humanity in general. You don’t need to bullshit to defend what you like.
After reading this article, my opinion is that the only renewable resource in crypto is hot air. If we would power our miners with that, then Nic might have a point.
Thank you to David for letting me hijack his blog for a minute.
I’m off to find another cafe.
— Michael Reece Purson
(Researcher, crypto fan, and perpetually annoyed person)
Update: Nic notes that his present job title does not include “analyst.” [Twitter]
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