Energy consumption

Much has been said of late

The energy consumed in the process of mining for Bitcoin and other digital assets that utilize the proof-of-work (PoW) approach is significant, and this issue has certainly been in the spotlight given various actions taken by the Chinese government to limit mining in the country, as a potential catalyst for the market adjustment that happened in May, and due to a number of statements from everyone’s favourite celebrity CEO, including this one:

The issue is complex & poorly understood

The Financial Times has taken a strong position on the topic, reinforcing the 'dirty currency' narrative. Many of the arguments that cover this issue have focused on electricity consumption, which is different from the carbon footprint generated by Bitcoin mining. Harvard Business Review offered a good breakdown of this here.

The HBR article points out a relatively unique characteristic about the energy needs of Bitcoin mining - that it can be mined far from where it is ultimately used. In most cases, energy consumption and generation need to be relatively close from a geographical standpoint. The opportunity here is that we could optimize energy that is currently wasted for uses such as Bitcoin mining, creating value from something that yields zero-to-negative value today:

"Just imagine all the unused energy that is being wasted every single day, and being able to get energy and converting it into a secure, sound money system for the planet..." - Jack Dorsey @ The ₿ Word

What is clear is that identifying the right points of comparison is critical in any argument about Bitcoin’s energy consumption. Salient views are also emerging - here's one from Nic Carter:

Motivation to do better is a good thing

As we look at all available information, attaching the 'dirty currency' narrative to the industry seems premature and inherently unfair, but misconceptions will continue to circulate.

There is an important and sometimes overlooked point made in the video above - the digital asset space should have a valid claim on some of society’s resources if it creates value for society. Dan Morehead of Pantera Capital provided a deep analysis of blockchains & ESG in his most recent shareholder letter in a long but worthwhile read:

ESG Is The Little Bighorn Of Bitcoin Skeptics | Pantera

Pantera

All in all, the recent dialogue has been great for forcing the issue - the digital asset industry can and should continue to decrease its associated carbon footprint - as should all industries on the planet, given what humanity is facing on the climate front. Debates will proliferate, but the fact that this discussion is now front and center is a very good thing for the future of digital assets.