Bitcoin & Energy, Part 4: A beneficial tool for society
This is the fourth and final part of the Bitcoin & Energy series, four articles dedicated to Bitcoin and its electricity consumption. The goal: that you can make up your own mind on its environmental impact, and on Bitcoin’s potential for society’s future.
Good reading 👇
Introduction
The third article was about how bitcoin could help the development of new renewable projects. In the previous ones, it was about the natural tendency of Bitcoin to move towards energy “surpluses”.
We already understand that its real impact on the environment is in fact much less important than its electricity consumption may lead to believe.
This fourth and final part covers:
- The source of the electricity used for Bitcoin mining.
- The context behind this consumption: the value of Bitcoin
- The alignment between the current challenges of society and the solutions provided by Bitcoin
Figures on its electric mix
A study was carried out with a group of voluntary minors representing approximately one third of the network. She concluded that more than 65% of the electricity consumption of these miners came from renewable energy. The study estimates the share of renewable energy among all miners at 55%.
This electricity mix improves over time, the reasons mentioned in the previous sections pushing miners to move towards renewables.
Bitcoin, a beneficial tool for society
Despite its good electrical mix, Bitcoin still consumes a large amount of energy. But what good is it? What is the added value of Bitcoin for society? To answer this question, we have to go back to the basics of Bitcoin.
At its core, Bitcoin is a peer-to-peer transaction network. It allows us to exchange value on the internet, in the form of bitcoin, directly from one person to another without going through a centralized intermediary. Its decentralized and open aspects make it a common good: everyone can use it around the world, without any distinction.
Andreas Antononopoulos aptly titled one of his excellent books “The Internet of Money”. After the development of the Internet as a global means of communication, Bitcoin appears to be the global monetary tool par excellence. It allows everyone to carry out transactions anywhere on the planet, almost instantly, and at low cost.
These are some of the reasons that make Bitcoin an undeniable asset to our society. In my opinion, its impact can go even further by shifting our economic and financial model towards something more sustainable.
Bitcoin as an engine of social change
Since the 1970s, our unbridled growth has been the main factor in the degradation of our environment. This is mainly due to two causes. The first is the large-scale exploitation of hydrocarbons. This exploitation has been made possible by the second cause of our growth: the steady increase in the amount of money issued by central banks.
Even gradually, this increase causes the “cost” or value of the currency to fall over time. If, as there will be more, €1 will be worth less tomorrow than today, it is better to spend or invest it now rather than keeping it for later.
This mechanism pushes all economic actors (governments, companies, consumers) to produce and consume more, without any particular need. It is this phenomenon that has maintained a mostly artificial growth, and accelerated the exploitation of hydrocarbons on a large scale.
Bitcoin reverses this mechanism. The cost or value of a bitcoin used as currency increases over time, by a decrease in the amount issued. It is therefore better to think twice before spending a bitcoin, whether it is to consume, produce, or invest. Bitcoin is a finite monetary system, like the resources of our planet and unlike the current financial system.
These reasons lead me to believe that basing our economic system on a currency like bitcoin would force us to reconsider our habits of (over)consumption. This would reduce society’s unbridled pace of growth causing the degradation of our environment.
A finite monetary system in a finite world would lead to more rational and reasonable growth, slowing down the impact on our environment at the same time.
Conclusion
Through these four articles, we discovered where Bitcoin network’s need for electricity comes from.
Its delocalized aspect shows us that it can consume energy no matter where it is, and that miners tend to move towards electricity grids or renewable sources with an imbalance of supply and demand.
In this context, Bitcoin mining can even help with to push the realization of renewable projects by providing additional income.
Finally, Bitcoin appears to be a particularly suitable tool for the social transformation of the years to come in two respects. First, Bitcoin mining brings benefits to the efficiency of our energy exploitation. Second it is a finite monetary system, consistent with the resources of our planet.
Bitcoin is a fascinating subject, encompassing various themes: economics, finance, computer science, energy, game theory, philosophy, … My articles are only a tiny part of the subject, and I greatly invite you to go and learn more about it. If you want other resources or have any questions, don’t hesitate to contact me on Telegram @gustave12!
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