Recently, the New York Times published a column claiming that global Bitcoin mining consumes 91 terawatt-hours of electricity per year – more than the entire nation of Finland. The revelation was the latest in a litany of allegations against the cryptocurrency which, despite being digital, is widely accused of being unsustainable.
But now though, with Christmas on the horizon, fans of the digital currency are hitting back. They’re pointing out that bitcoin mining uses no more electricity than Christmas lights – a discretionary energy hog if ever there was one!
Christmas Lights Probably Consume More Energy Than Bitcoin
According to a recent post by the Center for Global Development, Christmas lights consume a whopping 6.63 terawatt-hours in the US alone, with the global figure being substantially higher across the rest of the world. The tiny state of El Salvador, for instance, consumes 5.35 terawatts for Christmas lights, and the African nation of Tanzania stands at 4.81 terawatts. Add these figures up all over the globe and you soon discover that bitcoin isn’t the energy consumer that many environmentalists lead people to believe – at least not compared to Christmas lights.
What’s more, the absolute magnitude of energy consumption is remarkably low. US Christmas lights and Bitcoin mining each consume around 0.2 percent of overall annual energy production. That’s just 20 percent of the energy that goes into server farms (which consume around 1 percent of total energy output).
In general, environmentalists do not have a problem with Christmas lights going up, but they do with Bitcoin. Arguably, though, cryptocurrency is a far more important use of energy. It offers people a stable store of value and cuts down on security costs, thanks to blockchain technology. It also provides a means for the unbanked to store their assets. In many parts of the world, it is becoming essential, particularly in countries with corrupt regimes where personal property is not safe.
Moreover, if the debt bubble pops and fiat currencies go into freefall, people will need a stable form of money to continue carrying out transactions. Regular money might not cut it.
Putting Bitcoin Energy Use Into Context
By counting up the number of transactions officially reported on data amalgamation sites and then comparing that to the per-coin energy usage, you can calculate that the Bitcoin network uses around 56 million kilowatt hours of energy per day. That might sound like a lot, but according to Alejandro de la Torre, vice president of business operations at Bitmain’s largest mining pool, people need to put the figure into context.
He says that mining isn’t just raw overhead. It’s also creating jobs. And, like any other industry, that requires some energy.
The technology, he continues, is also helping to make the world more financially secure. Bitcoin is an essential feature of the economic landscape that can provide an external check to government power. Central banks must behave prudently with Bitcoin waiting in the wings.
In summary, environmentalists are complaining too soon about Bitcoin. The energy impact is negligible – similar to that of Christmas lights – and nobody has a problem with them.