Crypto is harmful to the environment

Evaluating the claim that crypto is harmful to the environment.

Claim Steel-Manned

Crypto is harmful to the environment because crypto mining has a huge environmental footprint. The design of the Proof of Work (PoW) consensus algorithm is energy wasteful as part of its design.

Evidence of claim being made

Diehl, S. (2021) ‘The Crypto Chernobyl’, 10 February. Available at: https://www.stephendiehl.com/blog/chernobyl.html (Accessed: 25 February 2022).

It is an enormously power-hungry and wasteful system that involves doing massive number of trial computations (a process called mining) in parallel across the world in a form of lottery in which computers race to confirm transactions. The more power you can waste, the more bitcoins you can probabilistically win in exchange for your energy waste... The protocol itself is a runway environmental disaster that incentives an ever increasing amount of waste that can only increase with time. Increasing energy waste is an central and irremovable part of the design.

Elon Musk [@elonmusk]. ‘Tesla & Bitcoin Https://T.Co/YSswJmVZhP’. Tweet. Twitter, 12 May 2021. https://twitter.com/elonmusk/status/1392602041025843203.

Tesla has suspended vehicle purchases using Bitcoin. We are concerened about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, espeically coal, which has the worst emissions of any fuel.

Igini, M. (2022) 8 Bitcoin Facts: Why is This Cryptocurrency Bad for The Environment?, Earth.Org. Available at: https://earth.org/bitcoin-facts/ (Accessed: 20 September 2022).

Bitcoin’s energy consumption is off the charts and each transaction consumes more energy than countries like Sweden or the Netherlands.

Martin, Katie, and Billy Nauman. ‘Bitcoin’s Growing Energy Problem: “It’s a Dirty Currency”’. Financial Times, 20 May 2021.

Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.

Evaluation

Bitcoin mining is enormously harmful to the environment. There are three factors that give rise to its inordinate environmental footprint which is incommensurate with its generated utility.

  1. E-waste from discarded or broken ASIC mining equipment, graphics cards and servers.
  2. Carbon release from fossil fuels used to power mining data centres.
  3. Opportunity cost of the energy used to run consensus algorithm compared to more efficient real time gross settlement systems and traditional payment rails such as SWIFT, SEPA, Visa and ACH.

BItcoin mining has the equivalent power consumption of the state of Argentina, a country with a population of 45 million people. Bitcoin mining has an e-waste footprint comparable to that of entire population of Germany.

Bitcoin mining collectively consumes more power than all data centres run by Google, Amazon, Microsoft, Apple, Netflix, Facebook and YouTube put together.

Bitcoin is simply one of thousands of crypto assets which use PoW algorithm, including the second largest asset Ethereum, which together with all other assets sum to an even larger and difficult to calculate environmental footprint.

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