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We need to have an honest conversation about crypto trading and environmental impact.

Increasing attention and headlines about energy consumption required to support the explosive uptake of trading cryptocurrencies represents a significant threat to the future of cryptocurrencies.

Governments and regulators uncomfortable with the idea of [unchecked energy consumption](https://cbeci.org/cbeci/comparisons) may see this as an avenue to introduce regulation, and make a political show of ensuring energy consumption is under control, in order to meet international obligations related to climate change (i.e. Paris agreement). As an industry and community, we need to have an honest conversation about what energy consumption means for the future of crypto: if the technology needs to iterate in order to reduce environmental impact, if the scaling of the space should be artificially slowed to reduce impact, or if other mitigation opportunities exist to make crypto more “green”.

I’d love to hear about people‘s ideas for where this space is moving, and have a real dialogue about what we as a community and market should be expecting from innovators going forward.

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Edit: One issue to point out is that most conversations around environmental impact are geared towards [individual impact](https://www.vox.com/the-goods/2018/10/12/17967738/climate-change-consumer-choices-green-renewable-energy), framing climate change as a problem we should address individually. This does nothing towards recognising that [industries and individual companies](https://www.fastcompany.com/90290795/focusing-on-how-individuals-can-stop-climate-change-is-very-convenient-for-corporations) are responsible either directly or indirectly for the vast majority of climate change. The crypto industry has the potential to reverse this trend if the right demand exists from consumers and the community.



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23 Comments

  1. Unfortunately, this community doesn’t really want to talk about the environmental impact of Bitcoin, and it’s impact is absolutely massive.

    The fact that Bitcoin accounts for 0.63% of total worldwide electricity consumption is a disaster. The times are changing and the whole world is moving to a more sustainable future.

    Now just think about what is going to happen when mainstream media starts to hammer BTC daily about it’s impact on climate change. It could lead to another crash. Something needs to be done about it before it’s too late.

  2. I’m interested in this debate and think it’s important to hear where the environmental narrative gets it wrong for spicy headlines: https://medium.com/@nic__carter/on-bitcoin-the-gray-lady-embraces-climate-lysenkoism-a2d31e465ec0

    Edit: just looked again at your link and it seems the most recent data figures they are using come from 2016. Important to be critical about how crypto affects the environment, but equally important to understand the source material for these arguments. As the article I linked argues, a lot of the environmental criticisms for Bitcoin and crypto in general rely on a small set of academically published papers that use, at best, questionable prediction models for the math of energy consumption and waste.

    Second edit: looking again at the Cambridge website that uses statistics from the IEA in 2016. If you look at publications from IEA since this time, they also explain the different methods and shortcomings for calculating Bitcoin energy usage:

    https://www.iea.org/commentaries/bitcoin-energy-use-mined-the-gap

    From the section, “Comparing Methodologies”

    > By far, the most frequently cited estimate in news media is the Bitcoin Energy Consumption Index (BECI), which uses a top-down approach that assumes miners spend (on average) 60% of their revenues on electricity at a rate of 0.05 USD/kWh. These key assumptions have been criticised to overestimate electricity consumption; indeed, BECI estimates represent the high range of published estimates to date.

    > Bendiksen, Gibbons (2018; 2019) & Lim (2018) also use a top-down approach, but undertake significant data collection efforts on existing mining hardware and mining locations to inform their assumptions and analysis. They also conduct sensitivity analyses around key uncertainties, including electricity costs and capital depreciation schedules. Under their central assumptions, they estimate that the bitcoin network consumes between 35 TWh (May 2018) and 41 TWh (November 2018; June 2019) per year.

    > Other researchers have calculated lower-bound estimates using a bottom-up approach (e.g. Deetman, 2016; Morgan Stanley, 2018; Valfells & Egilsson, 2016). This approach assumes that all miners are using the most efficient mining hardware to achieve the network’s hashrates (TH/s). The Bitmain Antminer S9 series (0.1 J/GH), used by two-thirds of miners worldwide, is typically used as a benchmark.

    > Using this approach, we can estimate that thebitcoin network (excluding cooling) consumed 31 TWh in 2018. Based on data collected from mining facilities in China, cooling and other ancillary demands accounts for 30% of electricity use overall, thereby adding another 42% to the lower-bound estimate. Therefore, we estimate that bitcoin mining consumed around 45 TWh in 2018, which aligns well with the latest peer-reviewed estimate of 45.8 TWh as of November 2018 (Stoll et al., 2019).

    > With the recent run up in price and hashrate, energy consumption is expected to be much higher in 2019. Through the first six months of 2019, bitcoin mining has already consumed an estimated 29 TWh.

    > While these early estimates provide a rough indication of bitcoin energy use today, it is clear that researchers need more data, in particular from mining facilities, to develop more rigorous methodologies and accurate estimates.

    All of this is important for getting an accurate reading on energy consumption of crypto, and, crucially, to keep in mind how much crypto mining has changed in terms of scale and energy resources since these time periods

  3. The trend towards proof of stake and away from proof of work is already clearly visible, but generally speaking I think there is no way around accepting that crypto uses up a good amount of electricity. Our modern world is full of energy wasting ideas, and comparisons to how much energy watching stupid little videos on youtube, or online stock exchange trading, uses up, can definitely be made. In the end, the most important argument ist not that crypto uses a lot of resources, but that we don’t get that much use out of it at the moment, with most coins being primarily used as a way to gamble/invest basically. I think that this will change in the future, which is why we might have to accept that we are still at the beginning of crypto, and that more concrete use cases are still being developed.

  4. When renewable energies become the dominant energy source in countries like the US and China, energy consumption of BTC will be a footnote in history. I’ve always viewed this issue as a technological problem rather than an environmental problem.

  5. >if the scaling of the space should be artificially slowed to reduce impact,

    omg NO, not scaling is the reason why BTC is so wasteful. With bigger blocks the energy efficiency is vastly better. Bitcoin Cash did the right thing.

  6. We do have some very energy efficient coins like Nano and a few others, and then some that are the opposite. I think pressure will come on big time in the future when we see mass adoption just like every other industry hit with restrictions as to energy allowances with fines for breeching in each country (in the EU).

  7. Bitcoin mining is kind of like energy arbitrage, it goes to wherever is cheaper. It just so happens that China is playing the excuse that developed countries have burned a lot of fossil fuels in the past so they should be allowed to burn fossil fuels to “catch up” in terms of carbon emissions.

    Mining bitcoin in developed countries that price in the negative externalities of fossil fuels would hence be a lot less profitable than mining bitcoin in say China.

    So on one hand you could blame bitcoin for being bad for the environment but you can and probably should also blame these regions for not pricing in the externalities of fossil fuels.

    On a more positive note, you have energy generation sources that are difficult to store that you could instead use to mine bitcoin which would effectively erase the electricity cost in mining considering the generated electricity would have been lost anyway. You can see this in the form of natural gas flares. Obviously using electricity that you don’t have to pay for would offset a lot of costs in Bitcoin mining and when you include this into arbitraging the global energy costs, this would actually be a positive.

    So what’s my point here?
    I think electricity generation from bad sources is a problem. Be it Bitcoin mining, the guy playing video games, or the large servers and databases used in every existing system in the world, the source of electricity in that region is what matters here. It just so happens that Bitcoin mining is international and goes wherever is most profitable. You could say this is a market inefficiency.
    I personally don’t think it’s very fair to blame the users of that electricity but rather we should instead be critical of the sources of that electricity.

  8. **Do you think governments and regulators will begin to take an interest in addressing the energy consumption / impact of crypto trading? Will this have a positive, negative or no impact on the crypto space?**

  9. Just move the miners to a geothermal source. Location is irrelevant for crypto mining. There, problem solved. Have then mining all the crypto in a small mall in Iceland, Japan, New Zealand or somewhere. Decentralize to other countries, if you must.

    Not eating fish and destroying the ocean ecology with waste and fishing nets, would have a bigger impact on climate change, than you not driving the price of crypto up by buying some crypto with the same money. Most of the carbon capture on Earth is done by the ocean species. So if you are worried about CO2 emmisions look there.

  10. The amount of energy needed is worth it.

    Also, every year, better and more efficient, cheaper, as well as greener energy productions are introduced into the energy sector.

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