The real reason for the discussion about the climate balance of Bitcoin
A case for Bitcoin
We all know them, the discussions about the energy balance of Bitcoin. One group’s claim is that Bitcoin is destroying our environment, while the other says that Bitcoin is promoting renewable energy.
In principle, we need to have this discussion, but also need it for many other assets in life. For instance, in the same way, we could ask ourselves whether streaming services consume far too much energy while consumers don’t learn anything from them, except from documentaries.
In the beginning, I went along with these discussions and principally it would be interesting to know what the exact carbon footprint of Bitcoin looks like. But over time, the discussion no longer felt purposeful, almost manipulated.
According to the BMC (Bitcoin Mining Council), bitcoin mining accounts for 253 TWh. This corresponds to 0.15% of global energy consumption. If we look at the CO2 emissions, we even come to only 0.086% of the global CO2 emissions.
Let’s take a look at the carbon footprint of bitcoin compared to other industrial sectors.
It makes the most sense to compare Bitcoin to other commodities. Firstly, because in my opinion Bitcoin makes less sense as a means of payment than if it is considered like a commodity. Furthermore, it is important that the CO2 emissions are calculated on a common basis. That means that you still need a monetary basis on which the CO2 emission is calculated. For example, for 1 ton of CO2 I get x bitcoin at a value of x euros and in comparison, to that x kilograms of gold at a value of x euros. Unfortunately, I could not find such statistics, among other things probably because asset prices are subject to fluctuations.
In addition, with the technological advancement of renewable energy, the mining of both assets becomes more climate neutral. Another counterargument would be that the green energy produced could be used elsewhere. However, this argument does not only apply to Bitcoin mining, but also to all other assets. At this point, a further discussion could now be started as to which assets have more use cases, so that it is more justifiable to use the energy for these assets. Likewise, especially for the future, with better storage options and more renewable energy sources, the overproduced energy can be stored and therefore there will most likely be enough energy for mining and other energy consumption.
So, there are very many aspects that I have not even listed now that could be included in the discussion, but the arguments listed alone show that an exact statement and exact facts do not exist.
Why is there such a focus on bitcoin’s carbon footprint?
This got me thinking why it is that Bitcoin is looked at so closely in terms of its carbon footprint, while this is not the case with other assets. There is also the accusation that Bitcoin is a financial trap for the “average consumer”. In contrast, however, are the many financial advisors who sell you much less lucrative assets that have at least as high a risk of default. Just think of the subprime crisis and CDOs (collateralized dept obligations).
Based on the fiasco of 2007 and 2008, Satoshi Nakamoto had published his white paper. It presents an idea for a new financial system. One in which we no longer rely on banks. That is, Bitcoin is a threat to the existing bank-based system.
Another reason is that Bitcoin means freedom for many. Not only financial freedom, but also the freedom to gain a foothold in almost any country. That is a good that cannot be matched with a monetary value.
Equally, however, Bitcoin also stands for the fact that we are moving into a future that dares to be more decentralized, a world that stands for more openness and transparency. No one can take my Bitcoins away from me as long as I keep them safe on a wallet.
My final point is that we shouldn’t get too caught up in the Bitcoin climate discussion. Sure, we need to make mining more efficient and climate neutral. However, all industrial sectors in the world must do that. Therefore, we should rather think about how we can implement this.
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Disclaimer: The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial, legal or tax advice. The content of this text is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. The author does not guarantee any particular outcome.
