Bitcoin Climate Debate: Overblown FUD or genuine threat? | Cointelegraph Crypto Duel

the bitcoin network is currently consuming over 130 terawatts in electricity per year that's more than ukraine or argentina the majority of bitcoin mining operations are located in china where 65 of bitcoin's hash power is produced a study says that this could prevent the world's largest polluter from reaching its emission reduction goals in the next decade according to critics bitcoin risks becoming an environmental disaster i fear that you know this will quickly get completely out of control if adoption increases a lot more but crypto advocates disagree with these forecasts for catastrophe they are confident that bitcoin can become sustainable and even contribute to the green economy there is an aspect of miners seeking cleaner for cost we can drive real impact onto the ground in communities that can install renewable energy join our latest coin telegraph crypto duel with alex de vries data scientist and founder of digi economies and joseph palance ceo and founder of blockchain for climate first of all let's put things into perspective bitcoin's global share of annual emissions is around 48 million tons of carbon dioxide per year that's only 0.15 of the global annual total of around 31 billion tons so looking at these numbers doesn't bitcoin's environmental problem look a little bit overblown why should we be so concerned about it maybe alex wants to start sure and you know the number you mentioned is the current estimate but that doesn't yet include the expected increase in the network's energy consumption and there's also the carbon footprint so you have to consider the bitcoin price went up by a lot very recently but that doesn't immediately increase the energy consumption of the network you have a very long lead time in the production of new devices the good thing is we can calculate or estimate where the energy consumption of the network and the carbon equipment is going to end up at so you could say we can expect this number to at least double or triple for bitcoin alone and then of course you have to consider the other cryptocurrencies that run on proof of work as well which tend to add 50 on top of what bitcoin is doing so all together uh factoring in the latest price increase and you know assuming these machines are delivered somewhere in the next year you could be talking maybe half a percent of our global emissions related to bitcoin mining now you could still say okay that's not uh had the biggest thing in the world are probably things that have a bigger carbon footprint but at the same time the bitcoin system is also still very small we had we don't we haven't achieved mass adoption yet there's only been one s p 500 company that has so far invested in bitcoin being tesla and i think most bitcoiners will agree that there is a lot of upside to the bitcoin price as a result which also means that the carbon emissions related to mining could go up by a lot by substantial factor as well um because those things are inherently related so yeah apparently bitcoin's energy consumption is increasing and it looks like it will continue doing so uh what do you think uh joseph about alex estimations of bitcoin's future energy consumption does it look an estimation that you agree with well i think that the the baseline numbers and the current numbers um i believe come from a lot of alex's really well researched work so i think that that um i'd say that that's technically accurate to be projecting that growth looking at 48 million tons of co2e per year or let's say 75 if we're adding the other coins but let's maybe stick with 48 i would say it is a lot and it is a little at the same time and really want to couch this all in that addressing climate change is really one of the major challenges of our time and so the opportunity to dig into this um is actually one we need to take um if we are cryptocurrency fans if we are bitcoin fans um we do better by leaning into this issue and solving it rather than leaning out and saying it's not our problem 48 million tons um it's sort of difficult to put in perspective of you know well how much carbon is that well canada's emissions right now are 750 megatons per year um the state says is around 5200 i believe and so for example that 48 megatons canada has committed to commit um cut about five times that between now and 2030 for its emissions targets so it's you know it's a lot and it's a little a lot of critics about bitcoin's carbon emission also compare it not to countries but but to alternative payment systems so uh bitcoin is a arguably uh payment system and it should be compared to other payment system in terms of energy consumption so um according to research conducted by digi economists the carbon footprint of a single bitcoin transaction equals to the carbon footprint of roughly a million visa transactions however those numbers have been widely criticized as they don't take into account the energy costs of the wider financial infrastructure that visa needs in order to perform a transaction so on the contrary bitcoin is a self-sufficient system which doesn't require any more energy in order to work so alex you uh are the founder of digi economist so you produced those uh criticism so how would you respond to that counter argument well you know it's it's very hard to you know make a proper comparison with the regular financial system uh especially considering that you know bitcoin has other issues then it's energy consumption one of them being scalability so you could say that you could not compare bitcoin to a payment system simply because a payment system like visa can handle 65 000 transactions if they need to and bitcoin doesn't get any further than five transactions per second so is it really fair to compare the two difficult very difficult question um now let's stick with the payment systems we know that all had the whole financial world together processes around 700 billion uh electronic transactions per year if you look at bitcoin bitcoin is doing not even a fraction of that it's doing 120 million now if you were to scale them up to the same level you need a very large factor if if you would if you were to increase bitcoin energy consumption by that much it would exceed our total global energy need at the moment so we can be pretty certain that the financial system is to some level more efficient than bitcoin even if you can't perfectly compare it to visa or any anything else okay so now i would like to know what joseph thinks about this what about this specific comparison with the visa system do you think it's uh it's a comparison that fits once again i'd say yes and no um i think that it's unlikely maybe in a deep maximalist sense might people might think that we would do all of the transactions um on the bitcoin mainnet um or maybe it goes to lightning or maybe it goes to another um cryptocurrency um to do that work so i don't think it's a really it's not apples to apples coinbase brushed off criticism about bitcoin being bad for the environment defining them as myth so in a recent blog post they said that bitcoin miners will be increasingly incentivized to use renewable energy which are becoming the cheapest form of energy available thus according to the article bitcoin mining will help driving sustainable energy innovation so what do you think about this argument alex the thing is uh when people say bitcoin will use renewables i i don't see what type of renewables because i see people saying okay bitcoin can be used to for example uses excesses of solar power and we turn our bitcoin miners on when we have an excess of solar power production which sounds like great idea until you realize that you know that means that those mines will be shut down for the rest of the day when there isn't an excess so there is not there's no incentive for miners to just you know enroll themselves into a scheme where they can only get power for an hour a day because it's a massive opportunity because they would rather run their machines 24 7 and get power cheap power all the time because that maximizes their potential returns so in that sense i don't see the compatibility there i do see that in this energy transition uh the thing that's slowly starting to become obsolete is actually fossil fuels and if there is one thing that bitcoin miners love it is very cheap obsolete energy sources and we have seen for example reports about the state of new york where bitcoin miners are now getting involved with obsolete natural gas plants trying to save those so they can repurpose them for mining and we also saw very recently in kentucky that a clean energy subsidy was converted into a tax break for bitcoin miners because the state believes that these miners can play a role in saving their obsolete coal industry now that is something i see as a very realistic scenario for bitcoin miners to increasingly take advantage of these fossil fuel sources that are becoming obsolete um but that is obviously not going to be the trend that you know hey you you are mentioning just now it's actually the opposite i i see the future of bitcoin mining in obsolete fossil fuels rather than in renewables because we need those renewables to clean up our grid and meet our climate agreement goals that's interesting point of view joseph what do you think are you as skeptical as alex regarding the possible um importance of you of renewables to solve this problem of bitcoin i i think that saying that the environmental impact brushing it off as a myth um is i i i don't think that that's accurate i think that's a little bit too pat of an answer but overall i believe that the climate scrutiny of ethereum and bitcoin can actually have a really positive effect we can get to net zero emissions um of these blockchains um through reducing emissions where we can and offsetting the rest and i think that if the communities want to if bitcoin wants to if ethereum wants to they can absolutely take the network's carbon neutral i've been working for the last 16 years developing projects that get or keep carbon out of the atmosphere and economic and policy tools to make sure that this can be done at blockchain for climate foundation we're working on building the bitmo platform to connect national carbon accounts of the world and enable cross-border collaboration on emissions reductions under the paris agreement we can do wild stuff with crypto um we can build amazing things on the blockchain and um we do this of course so that we can drive real impact onto the ground in communities that can install renewable energy um if we're looking in an offset point of view that communities can manage their forests according to their priorities that people can cap landfills take that methane um use it for something useful um so i believe that leaning in rather than brushing it off as a myth is ultimately going to be the way we get through this discussion you i would like to get into your main field of expertise which is ethereum so the ethereum community has pledged to switch from a proof of work to a more sustainable proof-of-stake system alex you are very skeptical that such transition will ever take place why are you so skeptical well i i don't know if if it will never take place i just know that it's challenging but that's inherently to to making changes on a public blockchain network with a lot of different stakeholders and if you want to make a change like this where you replace the mining with an alternative like proof of stake you need to on board at least all the stakeholders that aren't miners because otherwise you risk that you know there will be there will be another split in the network how we know for sure that miners are not going to make the change and they will argue that you'll you'll have to keep running on proof of work ethereum to be certain that you have enough security because they will say proof of stake is not secure and they might be able to convince a part of the community to go along with that and then hey you might you might end up with a split like this so it's it's it's a it's a very challenging thing to make it happen like it's not even the software because we know proof of stake solutions have been used for years and are used in various other cryptocurrencies but you know getting it implemented in what is currently running as a proof of work blockchain is it's possible but it's just very hard and that's why you've seen ethereum promising for the past few years they'll be doing this but still probably not succeeding this year okay and uh joseph what do you think how can we solve these obstacles that stand in between the transition towards a proof of stake system for ethereum i've seen the ethereum community do amazing things and so i have a lot of faith in what they say and their ability to pull tricky stuff off um i know that proof-of-stake has always been part of the plan since the beginning of ethereum and one could say well then that kind of invalidates the argument that it's going to happen because they've been saying it's going to happen for years on the flip side i think it's beneficial that the concept has been baked in and they're working towards it with the launch of the beacon chain last december in 2020 that's really the start of ethereum 2.0 that's sort of a chain that's going to organize the transactions and the merge of proof of work and proof of stake and um i see you know i know amazing people who are on the core 2.0 teams um that i have all the faith in the world for so i believe that the process is ongoing i believe that the ethereum community has you know the nerve and the steel to make that happen and so i'm absolutely comfortable that we'll be moving to proof of stake in the next year or so so while the ethereum network is going to switch to a proof-of-stake system there are not such plans in sight for bitcoin so what are the other ways to reduce the carbon footprint of bitcoin according to you i do see two key pathways um and i think of supply side opportunities and demand side opportunities around greening bitcoin if you will so supply side opportunities include the world grid just gets cleaner um so hopefully um there is a shift going on that has other drivers sort of outside of the bitcoin realm that we move to a lower carbon state and that some of that affects bitcoin mining and that we're able to accurately reflect and quantify that um there is an aspect of miners seeking cleaner for cost so in the case where we can be putting in renewable energy in places where it's a great fit we do know that in a lot of places solar and wind power is the lowest cost um and if there's a way to have miners be seeking that and being able to communicate that they're on renewable energy this becomes part of the equation alex what you what you think about this perspective that joseph just explained does it sound too optimistic to you uh well my my most optimistic uh view would be that ethereum first of all succeeds in implementing proof of stake and that bitcoin were to then follow the same example because if that were to be the case then you have solved all issues um and by the way how we have seen again i mentioned earlier the the power outage over the weekend in xinjiang which showed that we have a pretty big concentration of computational power in a single county in the northern province of china which is also from a security perspective not so great and the risk of having a lot of equipment at the same location is that equipment gets confiscated and used against bitcoin and if a majority of the network is up for grabs in a single country uh in this case around a quarter or more in a single uh county of that province then yeah that's that's that's a major security risk too so you have more reason than just the environment to actually consider moving away from proof of work um now if you don't do that then the solutions become more challenging because you want to get this network on green energy then or specifically excesses of green energy that you don't need elsewhere because otherwise you get displacement and how are you going to uh get that done ah then you have to come up with clean energy tax breaks for maybe bitcoin miners so they use that green energy um but you know like i said before i don't see that as a a likely path forward given that it's actually uh fossil fuels that are becoming obsolete and very cheap well in that sense perfect for bitcoin mining or proof of work mining in general joseph do you have any other possible solutions to mention how can bitcoin become greener without switching to a proof of sex system so i mentioned a little bit about supply side opportunities where the grid gets cleaner miners mine cleaner um different ways to reduce emissions there the other aspect is demand side so if mining pools maybe you set up a mining pool where they um source green power minted um bitcoin maybe this is an attestation simply that the miners you know are saying yeah in this pool we're gonna do it maybe you have some verification pathway that i'm not exactly clear how you would do um and then they sell this to institutional buyers um for example so i know that there's people in canada that say oh we only want green bitcoin i also think that you can simply offset the emissions from a specific number of bitcoins so if you have supply coming on the market through a pool um you could be estimating the carbon emissions and then offsetting that rest now what of course is necessary for any of these to really hold water is a durable tracking of that green bitcoin a way to tie these better environmental outcomes anywhere along the spectrum to that bitcoin um have done some people have done a bit of thinking about this i think one straightforward way is to um wrap that bitcoin as an erc20 token and put it on the ethereum network i think some people will vibe with this others won't um but you could also attach an offset um or really the carbon inventory and offset into that token um i don't know if you could do that as erc20 you could definitely do it if you made it an nft so you could have a bitcoin wrapped nft and have information about the emission reductions the baseline footprint and all of that um and so i think that there are some really neat pathways there those were alex devries founder at digieconomist and joseph palant director of the blockchain for climate foundation i'm giovanni your host if you enjoyed the conversation don't forget to smash the like button and subscribe to our channel

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