34
FEATURE Crypto Weekly
DOES BITCOIN HAVE AN ENERGY ‘PROBLEM’? I
think we should instead focus on Bitcoin's emissions instead of Bitcoin's energy use. Before we get into the details, let's clarify what Bitcoin (BTC) mining is, and why it needs so much energy. Mining is the mechanism that provides the Bitcoin network with its financial infrastructure, and it is energyintensive by design to ensure security.
This graphic is intended to demonstrate that playing a comparison game is usually a waste of time. A lot of bitcoiners do this unproductively, comparing Bitcoin mining energy consumption to Christmas lights and the like, and just leaving it at that (Christmas lights do use quite a bit of energy, however). I compared it with video games in my report last April.
Bitcoins. (The shortest short answer is "antispam.") To successfully decentralize trust in a network, you need to ward off attackers. The mining process is energy-intensive, making it prohibitively expensive to attack Bitcoin. Mines do not use energy to validate transactions; energy consumption is the price for securing the entire network.
The comparison game.
In that report, I probably made a cardinal sin by trying to justify Bitcoin's energy consumption because it is a "global, trusted, permissionless payment settlement network and a digital, aspirational store of value." Let's leave the morality lecture for another time and assume Bitcoin is worthwhile for argument's sake.
Energy consumption of Bitcoin networks.
The best way to demonstrate that Bitcoin's energy use "doesn't matter" is to append Bitcoin's energy use to the United States' energy consumption and ask whether it looks like Bitcoin is using too much energy. Since China consumes 79% more energy than the U.S., China has an even bigger energy problem than the U.S. Cryptocurrencies, like Bitcoin, consume less energy than China and the U.S. combined, just 1.9% and 3.5% respectively. The rest of the conversation follows a similar pattern.
March 2022 | Volume 20
What is the purpose of Bitcoin mining? There is no shorter answer than, Satoshi Nakamoto thought the best way to fairly distribute Bitcoins was to share them between miners who exchanged something valuable - energy - in exchange for the right to claim the
Bitcoin's energy density is interesting to compare with something like Visa, because that is how transactions are validated. There are only seven Bitcoin transactions per second compared to 24,000+ Visa transactions per second. However, Bitcoin doesn't use energy when it validates transactions. Miners add blocks of data to the chain, secure the network, and win Bitcoin in return. They do that to earn Bitcoin. The transactions are not their primary concern. Bitcoin full nodes, who do not mine Bitcoin, are primarily tasked with
www.cryptoweeklymag.com
