Nov 21

Nov 21 Lesson Fifty-Eight: Bitcoin

I’ve been really looking forward to this lesson because despite the hype around crypto, it’s got a dirty secret - which is how much energy it demands and how terrible it is for the planet.

You might not think about it often, but data in the “cloud” is stored on servers - servers which need LOTS of energy to be powered. Cryptocurrency like bitcoin is no different and in fact demands more power than you can imagine - more than most countries use.

While this is an intricate and complicated topic, we’re going to tackle it by trying to answer these questions:
1️⃣ What is crypto, blockchain, and mining?
2️⃣ How does it impact the environment?
3️⃣ What can you do about it?

WHAT IS BITCOIN?

Bitcoin is a cryptocurrency (a virtual medium of exchange) that has gained wide popularity. Like all cryptocurrencies, it relies on blockchain technology.

But what does that even mean?

WHAT IS BLOCKCHAIN?

I personally like how Wealthsimple put it: "blockchain is a big database that records transactions. It’s maintained by everyone who uses the network, can’t be tampered with, and all transactions are recorded on it are public, for anyone to see.”

This is the basis of mining… 👇

WHAT IS MINING?

Bitcoin mining is how bitcoin is both created and accounted for. When a bitcoin is successfully “mined”, the miner receives a predetermined amount of bitcoin.

To mine bitcoin, you need to use sophisticated hardware to solve extremely complex computational math problems. The first computer to find the solution is awarded the next block of bitcoins and the process begins again.

IS MINING HARMFUL?

In order to sustain blockchain servers and use the mining hardware, massive amounts of energy are needed.

The University of Cambridge estimated that bitcoin mining consumes 121.36 terawatt hours a year.

This is more than the consumption of Google, Apple, Facebook and Microsoft combined. Similarly, if Bitcoin was a country, it would be in the top 30 energy users world wide.

Between 2015 and March of 2021, Bitcoin energy consumption increased almost 62x - putting a large demand on energy.

Bitcoin miners take advantage of cheap electricity from hydropower and dirty coal power plants. So much so, that when China cracked down on mining in 2021, miners tried to move operations to other countries, like Kazakhstan, which relies mainly on fossil fuels for electricity, and the U.S.

Unfortunately, the impacts of bitcoin have far-reaching environmental consequences.

One study warned that bitcoin alone could produce enough CO2 emissions to push warming above 2°C within less than three decades.

WHAT CAN BE DONE?

If bitcoin servers and mining were powered by renewable energy, that could significantly reduce these impacts.

If you do invest in crypto, there are increasingly more and more carbon-neutral/planet conscious options like IOTA, XRP, and Chia.

But ultimately, this needs to be regulated at a policy level. If you want more info, send me a note!

I personally found this lesson fascinating because I was pretty unaware of it all before really digging in. Hope you learn something new! Much eco love, Annie 🌱