A common misconception, bitcoin is not a drain on the environment but an incentive for ever-increasing energy efficiency.
Reading the opinion piece in the Chronicle of San Francisco written by Steve Westly, it reminds us of Brandolini’s Law, which we are paraphrasing here: “The amount of energy needed to refute disinformation is an order of magnitude greater than what is needed to produce it.” In order to avoid wasting our time or that of our readers, we will refute Mr. Westly’s claims as succinctly as possible, drawing on the vast canon of public data and literature that already exists on Bitcoin and energy. . His claims are not new, they are grossly misleading, and they have been refuted over and over again.
Yes, Bitcoin miners migrated from China to the United States, with no disruption or downtime on the Bitcoin network (a remarkable demonstration of the network’s resilience to resist attacks). But claims that Bitcoin miners are now straining U.S. networks, or that coal-fired power stations are being lit to power the miners, are simply unfounded. Actual data from the Bitcoin Mining Council (a voluntary global forum that ensures transparency of data on the mining industry) from October 2021 estimates the global energy mix for Bitcoin miners to be 57.5% from energy sources sustainable – higher than any other major industry or network.
As we illustrated in our own article, Bitcoin mining will transform the energy industry, dramatically increasing our ability to monetize renewable energy sources, regardless of their location or distance from load centers. CoinShares research explains in detail how opponents of Bitcoin mining for environmental reasons have it “exactly upside down” and that the proof of work mining presents the “An incredible opportunity for us to increase the share of intermittent renewable production in our electricity networks. “Or maybe Nic Carter puts it better: “… Bitcoin mining is converging with the energy sector with astonishing speed, producing an explosion of innovations that will both decarbonize bitcoin in the medium term and significantly benefit increasingly renewable networks.”
To reflect Mr. Westly’s five suggestions on what the United States can do about Bitcoin mining, we’re also offering five things solar (and other renewables) can do with it. bitcoin mining. The unique characteristics of Bitcoin mining allow, among others, the following solutions:
- Overbuilding solar capacity in projects that were deemed financially too small / uneconomical or far from grid / load center capacity.
- Use mining to serve as the buyer of last resort for excess electricity in the face of reduction orders.
- Allow solar energy owners to hedge against market risk (low / negative wholesale prices during production hours).
- Offer an option to solar operators to mitigate the basis risk (price differences between the electricity injection point and the load centers).
- Building resilient and economically feasible ‘solar plus storage’ microgrids in developing countries by leveraging Bitcoin mining as a variable economic burden.
Referring to the call by Swedish financial regulators to ban proof-of-work mining, Mr Westly fails to mention that Swedish state-backed electricity company Vattenfall immediately and completely rejected the proposed ban, stating instead that minors are an effective tool. for the management of the network load and the absorption of surplus renewable energy. The recurring theme here is that those who understand the energy system recognize that “Bitcoin is the key to a clean and abundant energy future. “Those who dwell on primitive false-environmentalism and ‘energy use = bad’ level thinking cannot see the forest for the trees.
Mr. Westly’s claims that proof-of-stake blockchain consensus mechanisms are a panacea demonstrate a deep misunderstanding of Bitcoin. As Gigi eloquently explained (@dergigi) in this Twitter feed, Proof of Work is Bitcoin’s main innovation, allowing us to mine a trustless digital currency that is not controlled by anyone. Lyn Alden presents a strong thesis that proof-of-stake consensus mechanisms have a “Greater amount of complexity, confidence and attack surfaces” and are subject to centralization. Proof of stake may have uses in non-critical applications, but it does not suit Bitcoin’s radical mission to be a healthy global neutral and censorship-resistant currency. Bitcoin is energy-based by design; you cannot bend, rig or cheat the laws of thermodynamics.
“Proof of work = trust physics to determine what happened.
Proof of stake = trusting humans to determine what happened.
Where Westly is not wrong is that decision makers will have decisions to make. Their choices will determine which jurisdictions will take advantage of Bitcoin’s proof-of-work mining to increase the resilience of their networks, reduce carbon intensity, bolster local economic development, and harness new, previously unprofitable sources of energy. . Based on the realities of our energy system and the facts about Bitcoin mining, the decision will be easy.
This is a guest article by Nima Tabatabai. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.