Bitcoin is much ‘greener’ than other investment sources like gold

Bitcoin image

Anyone who follows Bitcoin will be aware of the arguments against the cryptocurrency. Issues such as tax issues, lack of usage, and potential for misuse come up all the time. Indeed, these arguments against digital currency are so common that various sources have declared it dead nearly 400 times over the years. And yet, Bitcoin continues to grow. 

Perhaps the most prominent argument against Bitcoin at the moment is the amount of energy that it uses, an argument that was circulated widely following Elon Musk’s decision to remove Bitcoin as an accepted currency at Tesla. However, just because many people say that Bitcoin is too energy-intensive to take off, that doesn’t make it true. 

As with all things related to Bitcoin and blockchain technology in general, it’s important to dive a little deeper, beyond what’s repeated on Twitter and in newspaper columns. Once you do, you’ll find that the energy issue isn’t quite what people say it is. In fact, Bitcoin may be a lot “greener” than people have given it credit for. 

In this blog, we’ll take a look at Bitcoin’s energy usage and why it might not be as bad as many people say it is.

Renewable Sources

To begin, let’s think about what it really means to say that Bitcoin is energy-intensive. For one thing, that something uses a lot of energy isn’t necessarily bad. There’s no doubt that Bitcoin does require a lot of energy. But it’s important to note where that energy comes from. A significant portion of the energy used to mine Bitcoin comes from renewable sources; indeed, depending on who you ask, this sustainable form of energy could account for up to 73% of Bitcoin’s energy usage. That’s much higher than virtually every other industry.

There’s also a big difference between energy usage and carbon emissions too. Energy in itself isn’t a problem. It’s the volume of emissions that matters. So it’s important to look beyond the amount of energy consumption and instead look at where the energy is coming from and the emissions process.

How It Compares With Gold

There aren’t too many people suggesting that we shut down the gold industry. But studies have shown that Bitcoin uses less than half the energy and produces half the amount of emissions than the gold industry. That calculation was made on figures from 2020. During that year, 3500 tons of gold was mined, and 1300 tons of gold was recycled. Each kilogram of gold creates 20 tons of C02. In total, the gold industry used 265 TWh of energy and produced 145 Mt of CO2. On the other hand, Bitcoin uses 113 TWh of energy per year and produces 70 Mt of CO2.

How It Compared With Traditional Banking

It’s one to compare Bitcoin with gold. But it’s also valuable to compare it with the traditional banking system. After all, it’s that system that Bitcoin aims to one day replace. In that head-to-head battle, Bitcoin performs exceptionally well. Though it’s only a rough estimate, research suggests that the industry uses some 700 TWh of energy each year and produces around 400 Mt of C02. This figure is based on a 2014 study, in which it was found the banking system (including branches, ATMs, cards, and so forth) used 660 TWh of energy each year. 

If those figures are correct, then Bitcoin uses less than one-fifth of the energy of the regular banking system.

Negative Carbon Emissions

As we said earlier, it’s not just the volume of energy that Bitcoin — or anything — uses that’s important. It’s the overall carbon footprint that matters. And in fact, Bitcoin actually has a negative carbon footprint in some areas. That’s because they use energy that would otherwise be going to waste. That’s the case with hydroelectric energy; miners often use excess energy from this source that otherwise would not be used. The decentralized nature of Bitcoin also means that it uses energy sources that other industries cannot. Miners can simply position themselves close to areas that have excess power and mine using energy that would be otherwise lost.

Final Thoughts

As we’ve seen, the energy question surrounding Bitcoin has probably been overblown. While there is an energy cost surrounding the cryptocurrency, it’s maybe not as bad as people think. 

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