How do you feel about Bitcoin?
I asked this question on our Elephant Journal Twitter account. I wasn’t surprised that concerns about energy consumption were raised.
How do you feel about Bitcoin? #Bitcoin
— Waylon Lewis & Elephant Journal (@elephantjournal) November 7, 2021
It is undeniable that Bitcoin and other cryptocurrencies use a lot of energy. But before we condemn this technology, let’s take a look at the bigger picture.
Did you know that streaming videos also uses a lot of energy?
When the hit “Despacito” set a record with five billion clicks in 2018, it used the amount of energy that 40,000 households consume in one year.
And a music clip is only a few minutes long. Imagine how much energy is used worldwide to stream a global hit like “Squid Game” for weeks.
Let’s take a look at the banking sector. Every bank on this planet needs a server to store all the data of clients. On top of that, these banks need to exchange data every time a transaction is done. Being able to withdraw money with a credit card at any location on this planet is extremely energy-consuming.
Some advocates of cryptocurrencies claim that shifting toward digital currencies and away from the traditional monetary system could save incredible amounts of energy.
Earlier this year, I wrote an article on the energy consumption of air-conditioning. There is no doubt that this technology also uses incredible amounts of energy worldwide, but most of us are still using it.
But let’s not slip into too much what-aboutism. Just because other sectors also use far too much energy doesn’t make it right for Bitcoin to do the same.
So, let’s take a look at the effect on the renewable energy sector. The main goal of so-called Bitcoin miners is to make money. Therefore it is in their interest to use the cheapest energy available—and that’s where renewable energy enters the game.
Renewable energy is not only better for our planet, it is actually also cheaper than burning fossil fuels. It makes far more sense for miners around the world to shift toward renewable energy. As of now, the cryptocurrency sector runs on 60 percent renewables.
After Elon Musk expressed his concerns on Bitcoin’s energy consumption, the entire sector tried to shift even more toward renewables. I feel that it’s a good thing to focus on the problematic use of energy when it comes to cryptocurrencies. At the same time, I am quite optimistic that these new technologies will become a natural partner of the renewable energy sector over time.
It’s easy to demonize Bitcoin because it uses more energy than a small country like the Netherlands, but we shouldn’t forget that the Gross Domestic Product (GDP) of this country is only a small fraction of how much money is already circulating in Bitcoin. If we compare the worldwide energy consumption of air-conditioning, eating meat, or driving cars to small countries, the results would be even more shocking.
Again, this is not about what-aboutism. My goal is to put things into context.
There is a lot to talk about when it comes to Bitcoin and other cryptocurrencies. We need to make sure that it is not used for money laundering, we need to regulate markets to prevent tax evasion, and we have to make it more accessible to everyone around the world—but focusing only on the energy usage doesn’t tell us the full story behind this technology.
Why would anyone support the evolution of cryptocurrencies? Here are three reasons why Bitcoin might be of benefit in the future:
1. Less advertisement, more independent media and content creators.
Jack Dorsey, the CEO of Twitter, is a huge supporter of Bitcoin. Twitter just implemented the option to send a tip to content creators—and one of the options is sending Bitcoin. Dorsey believes that Bitcoin can be used to enable folks around the world to make money on the internet without relying on money from advertisements.
The moment users can support content creators directly, we might see a revolution on social media.
2. Enabling developing countries to participate in a global economy.
Many countries do not have functioning currencies. Inflation is a problem in almost every developing nation on this planet. The danger of money losing its worth overnight forces people to spend their money directly and makes it impossible to build up savings.
El Salvador just took the risk and integrated Bitcoin into its economy. We don’t know how this will turn out, but it sounds promising to me that citizens of El Salvador are now able to receive money from relatives abroad without paying high transaction fees on platforms like Western Union. Many other developing nations are watching this real-time experiment and thinking about taking the same route as El Salvador.
3. Subsidizing the renewable energy sector.
As mentioned earlier, energy consumption is the main challenge. The growth of cryptocurrencies is directly connected to the evolution of renewables. Using fossil fuels is not only bad for the environment but also bad for profits.
If cryptocurrencies are able to efficiently use leftover energy from the renewable sector, it would make it far more profitable to invest in green energy. Instead of looking at Bitcoin as the biggest consumer of energy, we could also see it as the most reliable partner of the renewable energy sector.
I am not saying that we should stubbornly support Bitcoin and other cryptocurrencies, but I want to encourage everyone to take a closer look at this topic.
Are you old enough to remember the time when folks claimed that “the internet” would never become something that could be used by an average person? Maybe we find ourselves at the same point in history when it comes to cryptocurrencies.
Nothing is perfect, and a lot needs to get done, but the hope that this technology could support independent media, developing nations, and green energy makes it more interesting than most of us want to believe.
So, after reading this, I am asking again:
How do you feel about Bitcoin?