Home » Is Bitcoin Bad for the Planet? Conio replies to Musk and explains the real energy consumption of the cryptocurrency

Is Bitcoin Bad for the Planet? Conio replies to Musk and explains the real energy consumption of the cryptocurrency

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Elon Musk’s clear stance that he will no longer accept bitcoin payments to buy Tesla cars is controversial. The billionaire histrionic motivated this choice with environmental reasons. “We are concerned about the increasing use of fossil fuels in mining and in transactions (of cryptocurrency), especially coal, which causes the worst emission of any other fuel. Cryptocurrency is a good idea in many ways and we believe it has a promising future, but this cannot come at a great cost to the environment. Tesla will not sell any Bitcoins and intends to use it as there is a transition from mining to a more sustainable form of energy. We are also looking at other cryptocurrencies that use less than 1% of Bitcoin’s energy, ”Musk tweeted Wednesday.

To counter Musk is Conio, a wallet made in Italy to buy and sell bitcoins, which points out that the numbers instead say that miners opportunistically use low-cost energy that would otherwise be wasted (like that of Chinese hydroelectric jumps). And therefore, on the contrary, crypto mining goes in the direction of energy sustainability

Here is an excerpt from Conio’s analysis that tries to dispel some prejudices about bitcoin.

The truth about Bitcoin’s energy consumption

And so? Therefore Musk has fallen into the most classic of prejudices around Bitcoin, that of excessive consumption – e harmful to the environmentof electricity.

Prejudices that culminated in the publication in the magazine in 2018 Nature Climate Change of one studio taken up obsessively in the international press, according to which Bitcoin alone will be responsible for rising global temperatures by more than 2 degrees by 2033.

Attention, we are not arguing that bitcoin is not an energy-intensive industry: it is (like other industries even in far more traditional sectors). We are claiming that there is no evidence that he is a consumer of fossil fuels, indeed there is evidence to the contrary.

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According to the Cambrigde Center for Alternative Finance, the annualized energy consumption of bitcoin is about 150 terawatt hours: or 0.6% of global production and 0.69% of total consumption. More or less a similar amount to what is used by all of Egypt or Poland.
While consumption is relatively easy to estimate because it depends on the hashrate (i.e., the total combined computing power used to mine the coins), carbon emissions can only be calculated if you know the mix of energy sources used.

Several studies have shown that the share of electricity originating from renewable sources is increasing such as hydro, solar and wind power: the estimates on the energy mix, however, are very variable (from 20 to 70%).

But even if we wanted to consider a median value between these two extremes, therefore around 45%, it would be an incidence equal to double that of the US energy network.

Bitcoin harnesses energy that would otherwise be wasted or untapped

Bitcoin mining is extremely competitive and incentivizes constant search for energy at the lowest possible cost. But more importantly, it is a mobile industry and therefore can be located around the cheapest energy sources in the world.

The energy that is cheap is typically that produced in excess that otherwise would not be exploited and that is therefore wasted or that produced from renewable energy sources, which is cheaper and more competitive than the generation of energy powered by fossil fuels (Adnan Z. Amin, “How Renewable Energy Can Be Cost-Competitive” – ​​International Renewable Energy Agency – United Nations)

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Fossil fuels can be easily transported allowing the construction of plants in the immediate vicinity of the end user – something that is often noted for the processing industries – while dams, wind and geothermal plants must be built where the resource is present.

Mining farms can be located anywhere, therefore even near geothermal plants, wind farms or dams.

The crowding near the Chinese water jumps

Geolocation confirms the opportunistic use of energy that miners make. Although most of them are located in China, in fact, where electricity is generated mainly from coal, in reality, even in that countries they mainly use renewable sources.
Huge amounts of renewable hydropower are wasted every year in the Sichuan and Yunnan regions, as production capacity far exceeds local demand and there are no batteries to store and transport excess. It is estimated that in 2017, compared to 250 TWh produced by the Yunnan dams, only 155 TWh were used (Darrin Magee and Thomas Hennig, “Hydropower boom in China and along Asia’s rivers outpaces regional electricity demand” – The Third Pole).
In these areas, according to an article in the Harvard Business Review, “nearly 10% of global Bitcoin mining occurs in the dry season and 50% in the wet season.” All alternatives to the possible use of this blocked energy are either too expensive or technologically unsupported.

Renewable Curtailment e Bitcoin

In general all of them alternative energy sources suffermoreover, of what is called “Renewable Curtailment”, which is embodied in the fact that the energy produced is at a certain point rejected by the electricity grid to avoid overloads. According to National Renewable Energy Lab (NREL), the yields decrease as the quantity of alternative energy produced increases.

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The solutions usually proposed to reduce the excess production of renewable energy to maintain the balance between supply and demand and thus avoid negative electricity prices are to shift demand, for example by pushing customer behavior, by building transmission cables for a long time. radius and optimizing energy storage. This second option, however, is very expensive and is often a bureaucratic nightmare, while the accumulation is still extremely expensive and inefficient.
Bitcoin may be the solution to the problem (Shan, Rui and Sun, Yaojin, “Bitcoin Mining to Reduce the Renewable Curtailment: A Case Study of CAISO” – SSRN) miners can provide consistent and reliable demand as their mining networks work 24/7 with no downtime. Providing energy to miners, or becoming them themselves, could help renewables suppliers to have more economically viable businesses.

Bitcoin helps energy industry efficiency (and decarbonization)

In short, Bitcoin mining can allow you to avoid wasting energy and play an invaluable role as a constituent element of a decarbonised future. In fact, it represents an incredible opportunity to increase the share of renewable energy in our electricity grids.

The same crypto world aims at 100% green transition, with the Crypto Climate Accord inspired by the Paris Climate Agreement.

So the right question is not whether “Bitcoin is worth its environmental impact” (much less alarming than is still believed today) but rather: is the value that Bitcoin represents, is it worth the consumption of resources it requires? It is a question that, on closer inspection, is valid for every productive and creative activity of value. In the present case, for what Bitcoin stands for, the answer is undoubtedly yes.

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