Self-described “bitcoin skeptic” Bill Gates has made his views clear on the cryptocurrency, calling it “not a great climate thing”. The billionaire Microsoft founder made his remarks in a recent New York Times interview, and recent data revealing the enormous energy usage of bitcoin mining seems to back that up. But proponents of digital currencies, which are quickly being adopted by the mainstream, believe that the industry could be a force for good – if it eventually makes a total switch to renewables.
“Bitcoin uses more electricity per transaction than any other method known to mankind,” said Gates. Describing himself as a skeptic of the famous cryptocurrency, which has continually made headlines over recent weeks as it soars to all-time highs, Gates, who has been a vocal proponent for climate action, believes that simply, “it’s not a great climate thing”.
The billionaire Microsoft founder, who is equally focused on Covax, the global initiative to get Covid-19 vaccines to the world’s poorest countries, has a point. Recent studies have highlighted the enormous toll that mining bitcoin, the most well known of all cryptocurrencies, has on the planet. An analysis undertaken by Cambridge researchers, for example, estimates that bitcoin uses up more electricity than the whole of Argentina.
“Mining is a process that makes Bitcoin extremely energy-hungry by design, as the currency requires a huge amount of…calculations for its ultimate goal of processing financial transactions without intermediaries,” explained Alex de Vries, data scientist at the Dutch Central Bank and the creator of bitcoin energy consumption tracker Digiconomist, in conversation with Forbes.
It’s something that environmentalists have held against Elon Musk, founder of electric car company Tesla, who has invested huge sums into bitcoin, a move that appears to contradict its public image as climate solutions firm.
But proponents of cryptocurrency point out that Gates’ critique might not age well. Fellow influential tech figure Jack Dorsey, the co-founder and CEO of Twitter, is one of them.
“We believe that cryptocurrency will eventually be powered completely by clean power, eliminating its carbon footprint and driving adoption of renewables globally,” said Dorsey, who is also founder and CEO of financial payments firm Square, who recently launched a US$10 million Bitcoin Clean Energy Investment Initiative fund aimed at making bitcoin mining energy-efficient.
Some have also suggested that we still don’t know exactly how much energy bitcoin mining actually uses, and whether current estimative figures are accurate, given the lack of data tracking the source of electricity powering bitcoin miners in China, where mining is by far most concentrated in the world.
While two-thirds of China’s electricity grid remains coal powered, the country has made bold claims to reach carbon neutrality by 2060, and has made huge strides in dramatically scaling up solar energy – to the point where the renewable energy source is cheaper than the national grid in 300 cities.
Researchers from Oxford University and Our World in Data believe that these prices will continue to drop too, simply because building solar farms has become so efficient that it actually costs on average 177% less than the same electricity produced by a new coal plant.
Plus, there’s some evidence that though it’s improbable that all bitcoin miners in China are using renewable energy, lots of them seem to be switching to carbon neutral sources part-time. This is because they chase wherever energy is cheapest, so some opportunistic mining operations will move their operations seasonally, to areas like Sichuan where there is low-cost hydropower in the summer months.
Outside of China, bitcoin miners are also gradually moving to cleaner energy. Drawing on data from 280 organisations across 59 countries globally, a 2019 Cambridge study found that at the time, 39% were already being powered by renewable energy sources.
It’s also worth noting that while the world now seems transfixed on the energy usage of bitcoin, much of our other activities deserve scrutiny too in fuelling the climate crisis. According to the same Cambridge study that said bitcoin mining uses up more energy than Argentina, the “vampire” electricity wasted by inactive, but plugged-in home devices in the U.S. alone is enough to power the entire global bitcoin mining network for 1.8 years.
Whether the cryptocurrency world will become a force to drive the green energy revolution or not remains to be seen. But one thing’s clear: this topic isn’t going anywhere, anytime soon.
Lead image courtesy of Wikimedia Commons.