Green energy and Bitcoin

Knut Svanholm


There’s a lot of concern about the environmental impact of Bitcoin in general and Bitcoin mining in particular. The most common critique is that Bitcoin mining requires massive amounts of power. A single Bitcoin transaction can use up electricity equivalent to what a normal sized villa uses in a week. It certainly seems like an enormous waste. Is it? Is there another way of looking at this? Let’s examine the issue.

First of all, let’s remember what triggered the Bitcoin revolution in the first place — the destructiveness of our current monetary system. Almost every fiat currency on earth is no longer attached to a gold standard and therefore they’re all losing a bit of value every day due to the phenomenon of inflation. This incentivises spending. A lot of spending. Citizens and nation states across the globe seem equally eager to drown themselves in debt in an attempt to hoard as much frivolous bullshit stuff as possible before the race to the bottom is over. This has proven disastrous to the planet. As we all crave higher and higher standards of living, regardless of whether we can afford them or not, energy consumption increases and CO2 levels rise.

Bitcoin, on the other hand, incentivizes saving your wealth and investing it in something useful. It does this by having a controlled, predictable and deaccelerating inflation rate. This can be likened to a new gold standard. Quite recently a subset of the Bitcoin community “forked off”. They did so because they believed that the network fees had become too high and that Bitcoin couldn’t work without being a cheap medium of exchange and they were willing to sacrifice some of its decentralization mechanics in order to lower transaction fees on the network. In doing so they literally doubled the amount of tradable tokens in order for businesses to continue accepting crypto as a viable alternative to fiat currencies, but…

This is not Bitcoin.

The Bitcoin, the original chain, with its high fees, its slow confirmation times and its huge energy consumption is what counts here. This is the token that acts as a new gold standard and this is the technology that has the potential to challenge the way we view, and interact with, the global economy. The altcoins, the fork-coins and fintech buzzword bull-chain tokens are not. The point is that Bitcoin does not incentivize frivolous spending.

When the opponents of Bitcoin liken the purchase of a cup of coffee in Bitcoin to warming a villa for a week they’re missing several points. First of all — Bitcoins primary use case is not to provide the world with a new means of buying coffee. It may have been advertised as this in the past but all metrics point so something else — that Bitcoin is mainly a store of value. As prices and fees rise the scenarios in which using Bitcoin serves as a viable alternative become fewer and fewer. A more accurate metaphor than the coffee would be the amount of energy required in sending a gold bar from Scandinavia to Australia, safely, in less than an hour. This is what Bitcoin does and it requires a lot of energy no matter how you try to accomplish it.

Renewable energy sources such as wind, solar and water have a big disadvantage in comparison to traditional power plants. They’re not as predictable. Sometimes they produce too little and sometimes they produce too much electricity. When there’s a surplus, there are limited ways of storing the energy. But now there’s a new way of monetizing the excess power. Mining. Whenever your windmill or solar panel produces too much you could have it connected to a mining rig and thereby evening out your profit margins. Furthermore, if your solar panels are mounted on the roof of your villa, you could use the heat from your mining rig warm your house, your water or whatever else that might need heating.

The main point here is that all of these technologies combined might be the tipping point for completely self-sustaining homes. If you profit by making your home completely disconnected from every grid except the internet there’s no reason not to do so. All we need to do is make the user interfaces a little friendlier. Politicians use big words and try to force people into using renewables but the only thing that can really change people’s behaviour on a larger scale is if technology makes it truly economically viable to do so.