Bitcoin has enjoyed a rally since this year, but this ascent has also renewed public attention on the environmental concerns surrounding the world’s most popular cryptocurrency. Bitcoin proponents argued that it was held to an unfair standard, arguing that the vast financial systems that build fiat currencies consume far more resources than cryptocurrencies do.
Ripple co-founder Chris Larsen, in a recent blog post, addressed climate crisis as a priority. He stated:
“Let’s encourage and work with the people who build and contribute to Bitcoin’s code — the key miners, exchanges, and core developers — to consider a move away from PoW.”
He addressed the problem in today’s cryptocurrency market. He stated that many newer cryptocurrencies have already low consumers of energy or even carbon-neutral. However, he drew attention to early protocols such as Bitcoin which uses Proof-of-Work (PoW) to validate transactions, which “is not only a huge and growing source of CO2 emissions but also uses massive amounts of energy, both from fossil fuels and green sources. “
University of Cambridge placed Bitcoin’s current annual energy consumption at 130TWh, a continuous draw of 15 gigawatts of electricity. If Bitcoin were a country, its annual energy consumption would place it between the mid-sized countries of Ukraine and Argentina. Tezos network is probably in the range of 60MWh, a continuous draw of perhaps 7 kilowatts.
“As Bitcoin’s price goes up, the energy consumption, the carbon footprint of PoW mining that happens to validate transactions, continues to scale aggressively. 1 Bitcoin transaction is equivalent to 75G of gasoline being burnt.”
It’s worth noting, Larsen lauded Ethereum developers’ “forward-looking” approach with respect to the transition to a more power-efficient technology. He further added:
“Today, non-PoW-based coins (including Ethereum’s anticipated switch) made up to 43% of all cryptocurrencies by market cap, and the majority of new cryptocurrencies introduced today chose to eschew PoW. It’s clear which way the trend is moving.”
He argued that such a change (Moving away from PoW) was critically important for Bitcoin to remain the world’s dominant cryptocurrency.
Major Bitcoin maximalists were actually focused on debunking the myth that the flagship cryptocurrency was damaging to the environment instead of caving in to pressure. Cathie Wood’s asset manager Ark Invest and Jack Dorsey’s digital payments company Square jointly published a white paper about Bitcoin being a major driver of renewable energy. The report stated:
“With real-world data, we (ARK Invest) demonstrate that bitcoin mining could encourage investment in solar systems (solar grids + batteries), enabling renewables to generate a higher percentage of grid power with potentially no change in the cost of electricity.”