Renewable energy still won’t decrease Bitcoin’s energy footprint
Alex de Vries, a researcher, senior consultant, and blockchain specialist from the Netherlands’ PricewaterhouseCoopers (PwC), says that Bitcoin, the cryptocurrency with a huge energy footprint, cannot rely on renewable hydropower production to run the machinery used to keep the currency alive. As de Vries writes in commentary published in Joule, Bitcoin’s environmental impact and waste production must be thwarted via alternative strategies other than the use of renewable energies.
De Vries, founder of Digiconomist, estimates that in 2018, Bitcoin consumed as much electrical energy as the entire country of Hungary.
“Proponents of this digital currency have argued that, even if Bitcoin is using a lot of energy, it’s not that harmful because they claim Bitcoin mining facilities use mostly excess renewable energy,” de Vries said. “I decided to deep dive into this claim.”
It’s this “mining” activity that uses high-powered tech. By mining, Bitcoin users find “valid numerical signatures” that allow records of Bitcoin transactions, called Bitcoin blocks, to join the “blockchain,” which is the growing list of all Bitcoin transactions. The “miners” who find the blocks are usually compensated in Bitcoin.
Looking into public information about Bitcoin’s power and efficiency, de Vries found a major kink in Bitcoin’s reliance on renewable energy for mining. Bitcoin machines remain running until they fail to profit, therefore they demand a constant stream of energy. But although the machines are in constant demand, the hydropower used to fuel them fluctuates. When hydropower fluctuates — which will only become more common due to climate change — coal-based energy is usually used to compensate for the uneven stream of power.
“Based on these findings, the renewable energy currently going into Bitcoin mining cannot be considered ‘green,’ and this challenge of combining a constant energy requirement with variable renewable production will always exist,” de Vries continued. “It might even provide an incentive for the construction of new coal-based power plants in order to meet the higher base demand.”
And if Bitcoin could be run on renewable energy alone, de Vries argues that the devices would then be discarded as electronic waste and end their life in a landfill. Most Bitcoin machines cannot be repurposed due to the hardwiring. Currently, Bitcoin is creating as much electronic waste as the city of Luxembourg.
“[Bitcoin’s] energy consumption and electronic waste generation are certainly not negligible at the moment, and they will likely escalate quickly to even more extreme amounts if Bitcoin manages to become widely used,” de Vries said. He notes, however, that Bitcoin’s footprint can be curbed by using an alternative “proof-of-stake” mechanism which doesn’t need computing power to build a blockchain. Using this machine would cut Bitcoin’s energy consumption by a whopping 99.99%.
“Ultimately, Bitcoin is just software,” de Vries concluded. “The mining mechanism can be replaced. The challenge is that the entire network needs to agree to this change.”
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