Bitcoin (BTC) is often used to criticize all blockchain-based projects . This is understandable, since Bitcoin was the first project to use a blockchain, it is arguably the most recognizable, and it is the largest cryptocurrency by market capitalization.
In the first half of this article, I will use Bitcoin as a substitute for all blockchain-based projects because most people associate blockchain with Bitcoin . Anything environmentally positive that can be said about Bitcoin will be doubly true for the vast majority of new blockchain-based projects, as Bitcoin uses the oldest version of blockchain technology.
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Power consumption of Blockchain
Bitcoin has been attacked for its high power consumption . Headlines that Bitcoin’s electricity use is comparable to a country’s total consumption is a popular criticism. Comparisons are useful, but they can have a misleading structuring effect. For example, the statistics most cited in these attention-grabbing headlines come from the Cambridge Center for Alternative Finance (CCAF). This same organization points out that electricity losses in transmission and distribution in the United States could power the entire Bitcoin network 2.2 times . Always-on electrical devices in the United States consume 12.1 times more energy than the Bitcoin network .
Therefore, the The Bitcoin network uses as much electricity as a small country or much less than a portion of the United States’ energy budget . Is that a lot? It depends on how you look at it.
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Another criticism often used is that Bitcoin’s electricity consumption is growing so rapidly that Bitcoin’s emissions alone could drive global warming above 2 ° C, or consume the equivalent of all world energy in 2020 . The latter has not happened. Why? First, like most network-based technologies, Bitcoin is following an adoption curve defined by the theory of diffusion of innovations: an “S-curve”.
The explosive and exponential growth of the first half of the curve slows down considerably in the second half. Second, large and predictable improvements in computer efficiency will continue to lower the energy cost of computing even as Bitcoin’s growth slows . Third, these predictions do not take into account the evolution of Bitcoin’s energy mix.
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Energy mix of the Blockchain
Almost all the energy consumed by blockchain projects comes from the electricity used by the computers that secure the network. Bitcoin calls them “miners”, but new blockchain projects can use much more efficient “validators” . Electricity is produced from many different sources, such as coal, natural gas, and renewable energies such as solar and hydroelectric. These sources can create very different levels of carbon emissions, which largely determines their environmental impact. The two most prominent estimates of Bitcoin’s energy from renewables range from 39% in this report to 74% in this other. Either of these estimates is “cleaner” than the US energy mix, which only comes from 12% renewables .
There is evidence that the public scrutiny that Bitcoin has undergone has most likely guaranteed that energy from renewables will only increase in the future .
Blockchain is worth it
Bitcoin’s energy consumption and composition are not perfect, nor are they as dire as is often reported. What is often lost in the Bitcoin energy usage conversation is whether Bitcoin’s energy usage is worth it . Many industries require energy or produce large amounts of waste, but most people find the environmental costs worth it. The agricultural industry requires a massive expenditure of fossil fuels for fertilizers and to power equipment in the field, not to mention the production of harmful spills. However, despite the negative aspects for the environment, we recognize the enormous importance of growing food. Instead of ruling out agriculture, we strive to improve it from an environmental point of view.
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Whether allowing the 1.7 billion unbanked people to gain financial inclusion or offering an alternative to predatory international remittance services, it seems clear to me that Bitcoin deserves the use of energy . It is even clearer that the enterprise blockchain is an uncompromising public good.
The newer alternative blockchain technology uses at least 99.95% less energy than the older ones . The enterprise blockchain can use even less energy , as it can be adapted to specific use cases. In addition to using much less energy, enterprise blockchain helps organizations achieve their sustainability goals.