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FAQs Frequently Asked Questions

Crypto Report
Bitcoin's energy consumption (updated 5-15-21)
I've received numerous questions across multiple platforms.

Taking the 50,000 foot view, Elon is wrong but is probably intentionally wrong on bitcoin's energy consumption/carbon footprint since he just applied to the EPA so has to take a 'green' position. Tesla is seeking entry into the U.S. renewable fuel credit market. Elon is great at playing politics.

That said, a number of coal plants have gone back online to mine bitcoin which will increase bitcoin's carbon footprint. This naturally concerns Elon. Nevertheless, this would still be a small increase in the carbon footprint when taking into account the whole picture.

Bitcoin gives all human beings property rights while offsetting global inflation and currency devaluation. This not only decimates the tens of trillions of dollars in damage done each year by central banks, but the productivity gains are massive. The fossil fuel consumption issue is minuscule by comparison. And bitcoin wins there too.

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Energy expenditure on bitcoin mining, gold mining and Banking Systems

I discussed this more fully in a piece I wrote in October 2020:

https://www.virtueofselfishinvesting.com/reports/view/crypto-report-10-10-19-bitcoins-energy-consumption-vs-fossil-fuels-vs-nuclear-power

and

https://www.virtueofselfishinvesting.com/faqs/answer/issues-with-decentralized-technologies-1-will-it-overtake-centralized-systems-2-bitcoins-energy-consumption

A recent article cited, "In December 2019, one report suggested that 73% of Bitcoin’s energy consumption was carbon neutral, largely due to the abundance of hydro power in major mining hubs such as Southwest China and Scandinavia. On the other hand, the CCAF estimated in September 2020 that the figure is closer to 39%. But even if the lower number is correct, that’s still almost twice as much as the U.S. grid, suggesting that looking at energy consumption alone is hardly a reliable method for determining Bitcoin’s carbon emissions." and "To be fair, the monetization of excess natural gas with Bitcoin does still create emissions, and some have argued that the practice even acts as a subsidy to the fossil fuel industry, incentivizing energy companies to invest more in oil extraction than they otherwise might. But income from Bitcoin miners is a drop in the bucket compared to demand from other industries that rely on fossil fuels." and "Many journalists and academics talk about Bitcoin’s high “per-transaction energy cost,” but this metric is misleading. The vast majority of Bitcoin’s energy consumption happens during the mining process. Once coins have been issued, the energy required to validate transactions is minimal. As such, simply looking at Bitcoin’s total energy draw to date and dividing that by the number of transactions doesn’t make sense — most of that energy was used to mine Bitcoins, not to support transactions. And that leads us to the final critical misconception: that the energy costs associated with mining Bitcoin will continue to grow exponentially."

So anyone who agrees with Elon needs to look at the bigger picture by using hard data to arrive at the truth.

Here are some great recent summaries of why bitcoin's energy consumption actually creates less waste and a smaller carbon footprint compared to conventional methods. The first link below is the most recent and arguably relevantly detailed post:

https://twitter.com/PeterMcCormack/status/1393971202738302986?s=20 

100trillionUSD (@PlanB) Tweeted: Study this chart! Transportation is 20% efficient and "wastes" 80% on heat etc. Electricity wastes 65% on transport etc. Should we stop using or ban cars, TV, computers, #bitcoin? Of course not. Don't let media or state (funded companies) fool you.
Source: https://t.co/aYhw7JDjsa https://twitter.com/100trillionusd/status/1394612445952585728?s=27 

https://twitter.com/dergigi/status/1392826448017346561?s=20 

https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume (from the quote above)

https://twitter.com/SBF_Alameda/status/1392724490933575683?s=20 




First published: 13 May 2021
Last updated: 31 May 2021