“It’s a way to both hide dirty money and destroy the environment at the same time,” says Daily Show host Trevor Noah.
Such environmentalist attacks on bitcoin are best understood as a strategy by economic, media, and political elites to undermine a powerful new form of money that they can’t control.
One of the starkest arguments against bitcoin is based on a logically flawed argument that its energy use will increase in a linear fashion as it becomes more widely used.
But this analysis is fundamentally wrong, says Nic Carter, a partner at Castle Island Ventures who has written a series of influential articles about bitcoin and energy.
In fact, as the bitcoin network grows to support more transactions, it doesn’t require additional energy, just as the Federal Reserve Building’s electricity bill doesn’t increase with every ATM withdrawal.
But the media’s claims are simply outlandish and provably false.
The Cambridge Centre estimates bitcoin uses just over 100 terawatt hours per year, which is less than gold mining and many other residential and industrial activities.
More importantly, bitcoin’s critics tend to ignore that miners are incentivized to use energy that would otherwise go to waste.
They bring their equipment and plug into systems when the price is right and stop when the price goes up beyond the level at which they can make a profit.
Bitcoin miners can only afford to pay 2 cents to 5 cents per kilowatt for the energy, says Gladstein, who notes that in advanced economies consumers pay 10 cents to 15 cents per kilowatt.
In the western U.S., mobile bitcoin miners are already running on electricity derived from unused natural gas from oil wells that can’t be captured because there are no pipelines to carry it.
A recent industry survey put bitcoin mining’s sustainable energy use at around 56 percent, a figure that will likely grow, especially since China, once the location for a majority of miners, has banned the practice.
She has said that the rule-bound computation involved in bitcoin is “useless.” The claim that mining is useless is the essence of the government’s attack on bitcoin because it’s this component of the system that most directly challenges state power.
Carter stresses that bitcoin is based not just on a non-inflationary monetary rule but on one that is non-discretionary, meaning no central bankers or elected officials can monkey with the supply.