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Bitcoin energy consumption a feature, not a bug, says crypto-miner
But it's OK because we use non-carbon energy, argues CEO
Conspicuous energy consumption is a feature of the Bitcoin model, rather than a flaw, according to a crypto-miner defending the power-guzzling activity.
Zach Bradford, chief executive of publicly traded Bitcoin miner CleanSpark, waded into the debate sparked by the Ethereum Merge, the shift from proof of work to proof of stake, which could see an order of magnitude reduction in the power consumed by the rival cryptocurrency network.
"Proof of work, and the energy it uses, is a feature and not a flaw. There is no CEO of Bitcoin, it is fully decentralized and really proof of work is the only good way to truly secure the blockchain without an overseer. That has value because Bitcoin is used worldwide as a currency without somebody changing the mechanism," he said.
While power consumption is central to Bitcoin, Bradford argued, the carbon emissions resulting from power generation are not such a problem for ClearSpark as the crypto-miner uses 90 percent carbon-free power. Nuclear power made up a large chunk of that, he said.
Bradford also contends that even though there was an energy shortage globally, his company's consumption was justified in that ClearSpark's facilities are located in "grid edge areas" where there is excess electricity, such as the US state of Georgia.
All this seems reasonable enough until it meets a nasty tussle with evidence. Claims that Bitcoin, and the blockchain on which it relies, is fully decentralized were brought into question by a report commissioned by the Defense Advanced Research Projects Agency (DARPA).
Published in June, the report found the low-level protocols – or cryptographic primitives – underpinning distributed ledger technology security were sound, but implementation decisions mean the claim of immutability is open to question. "We show that a subset of participants can garner excessive, centralized control over the entire system," the researchers said.
The study points out that Bitcoin traffic is unencrypted, meaning any third party on the network route between nodes, including ISPs, Wi-Fi access point operators, or governments could observe and drop any messages they wished. "Of all Bitcoin traffic, 60 percent traverses just three ISPs."
While ClearSpark may feel it is off the hook in terms of carbon emissions, it is hardly reassuring when one considers the scale of the environmental impact of Bitcoin mining against the tiny contribution it makes to global financial transactions.
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In September, a study by researchers at the University of New Mexico found that in 2020 Bitcoin mining used 75.4 terawatt hours per year (TWhyear-1) – higher energy usage than Austria (69.9 TWhyear-1) or Portugal (48.4 TWhyear-1).
The team also found the energy emissions for Bitcoin mining had grown 126 times from 0.9 tons of emissions per coin in 2016 to 113 tons per coin in 2021. A Bitcoin mined in 2021 created $11,314 in climate damages, with total global damages exceeding $12 billion or 25 percent of market prices. Damages peaked at 156 percent of coin price in May 2020, such that each $1 of Bitcoin market value led to $1.56 global climate damages. The relative damage was slightly greater than the relative damage of beef production (at 33 percent) and much more than gold mining (at 4 percent).
Alex de Vries, the founder of Digiconomist, pointed out that Bitcoin handles 100 million transactions per year. "That is completely negligible when you look at the regular world of finance. Traditional financial institutions are responsible for handling more than 700 billion digital payments every year and that is still growing."
Bradford counters that Bitcoin was not subject to the whims of central banking policy like conventional currency. Only 21 million will ever be made, where central banks tend to print money when it suits the economic circumstances. Bitcoin is set to hit its ceiling in 2140, a moment ClearSpark is not yet planning for, Bradford said.
"We'll all be in the metaverse [by then]," said Bloomberg TV host Katie Greifeld.
"… and everyone will be using Bitcoin there," rejoined Bradford, demonstrating if nothing else that the media and tech industries can engage in circlejerk groupthink while the planet on which they rely has lost 70 percent of its wildlife since 1970. ®