IN this fascinating THINKING ALLOWED, Herald journo DAVID BELL reveals the hidden environmental cost of Bitcoin.
FREMANTLE should steer well clear of Bitcoin and becoming a “crypto town” if it wants to keep its green credentials.
The push for Freo traders to start accepting Bitcoin comes at a time when a lot of business are trying to cut down on their environmental footprint.
Many cryptocurrencies – digital ‘coins’ transferred online – are tremendous electricity hogs because the “blockchain” ledger keeping track of accounts isn’t stored in one central database, but copied on millions of devices across the world churning away (“mining”) to run the transactions and keep it secure.
Plenty of crypto-fans have good intentions and dream of a better world where currency isn’t controlled by banks and governments, and poor people without access to banks can use Bitcoin instead.
But it comes at a horrendous electricity cost.
“Miners” who use their hardware to prop up Bitcoin (and almost all popular cryptocurrencies) are rewarded for their efforts with cryptocurrency payouts.
The more computing power you throw at it, the bigger your share of the payout.
Regular computers were long ago replaced by high-powered mining devices stored in vast warehouses wherever electricity is cheap or subsidised, with major centres in China, Canada, the US and Iran.
The exact amount of electricity Bitcoin uses is hard to quantify. A mid-range estimate from Cambridge University’s Centre for Alternative Finance found Bitcoin currently uses more electricity than Switzerland. One Bitcoin critic examined a large crypto-mining operation in Mongolia run by cheap coal power, and estimated that each hour it runs it produces as much CO2 as an average car would driving about 200,000km. If he’s wrong and that’s exaggerated 10 times over, it’s still extreme.
Even the low estimates offered by Bitcoin fans are still staggering, and if it only uses as much electricity as Ireland rather than Switzerland, that’s cold comfort in a warming climate.
Cryptovangelists have a slew of arguments as to why it’s not so bad, but they’re not convincing.
They say crypto is often mined using renewable energy.
The most recent Cambridge research estimates 28 per cent of mining uses renewable energy, but renewable doesn’t mean free: In many cases crypto is competing with other uses. It’s not green to run Bitcoin miners on solar if that’s pushing other uses back onto fossil fuels.
Bitcoiners point out that there are hydro power plants in China which produce an excess of energy, as they’re not properly hooked up to the national power grid yet. But even when Bitcoin is mined on those grids it’s not ‘free’ for the environment: The millions of units of specialised hardware aren’t manufactured for free.
The energy use and toxic pollution from mining rare earth minerals and manufacturing electronics is a booming ecological disaster that’s poisoning large sections of the planet (and, in some countries, fuelling war and slave labour. Our demand for electronics has made these ‘conflict minerals’ the new blood diamonds).
If we feel guilty about contributing to that, we need to do anything we can to reduce churning through electronic devices, whether that’s holding onto your phone for one more year instead of updating with every new model, repairing a device instead of dumping it, or not buying things you don’t need.
E-waste recycling only recovers a fraction of the resources from an old device, and is also energy-intensive and potentially toxic, so minimising is always best.
Coiners will argue that traditional banking uses far more energy than Bitcoin, to run the ATMs, keep the banks’ lights and airconditioning on, to fuel the armoured cars that ferry physical money about.
That’s true, and that makes sense that banking uses more power. Only a few million people use cryptocurrency as money, but a few billion people use banks. Broken down on a per-transaction level, Bitcoin is astronomically more power-hungry.
Lots of things waste electricity. But at a time when many people are thinking about whether they should catch the train instead of driving to work so they don’t produce as many fumes, or trying to eat locally-produced food to cut down on carbon miles, or switching heaters off, taking shorter showers and buying more efficient lightbulbs, all that careful conservation you could do across a lifetime is undone by one hour running this currency.
Freo should have nothing to do with it.