- The Washington Times - Tuesday, December 19, 2017

Greenpeace, perhaps the world’s most iconic environmental organization, is standing by bitcoin, even as others in the conservation community worry about catastrophic effects, saying the energy it takes to “mine” the cryptocurrency could be hastening climate change.

With its price up by roughly 1,500 percent this year, economists this week said bitcoin’s meteoric rise is causing “hysteria on all fronts” with warnings continuing to grow that the world is watching a massive speculation bubble in real time. That hysteria also has reached the energy realm, with headlines proclaiming that bitcoin could destroy the planet.

But Greenpeace has taken a calmer approach. Since 2014, it has accepted bitcoin as a valid form of currency for making donations. The group has brushed aside a growing set of environmental complaints, saying the energy use issues aren’t as bad as critics have made them out to be. Instead, the group says, the problems with bitcoin are no different from any other energy-gulping activity that relies on greenhouse-gas-spewing fossil fuels.

“The huge and ever-growing amount of energy needed to run bitcoin, which was launched in 2009, is largely down to the particular technology used to maintain this digital currency, but it also points to a wider challenge for the future of the internet. As web services grow and become more complex, the demand for computing power is bound to go up over the next few years, and that will require more energy,” said Gary Cook, a senior information technology specialist at Greenpeace.

“The internet has the potential to serve as a critical foundation for sustainable economic growth, but its expansion needs to be powered by clean energy sources that help, not hinder, the crucial challenge of tackling climate change,” he said.

Greenpeace’s seemingly enthusiastic backing of bitcoin — its website lists the currency as a way to give money alongside traditional forms such as dollars and euros — may be even more surprising when viewed alongside data showing that it burns up more energy than most countries.

Indeed, there is little debate about whether bitcoin uses mind-blowing amounts of electricity. Research from the International Energy Agency, the University of Cambridge and a host of other reputable sources confirm as much.

Bitcoin “mining” is not mining in the traditional sense of digging up minerals, such as the gold, nickel and other metals used to make coins for millennia. Instead, because the currency is entirely electronic, bitcoin “mining” refers to the use of computer calculations to solve complex mathematical problems — successfully solving equation results in bitcoin earnings.

The more users who dabble in the currency, the more complicated the equations become and the harder it gets to obtain bitcoins. That means the amount of computing power needed — and the energy necessary to fuel those computers — continues to grow.

The website Digiconomist.net, for example, tracks bitcoin energy use in detail. As of Monday, bitcoin “mining” this year is projected to hit 34.86 terawatt hours.

If bitcoin were a country, it would rank No. 60 in the world in energy usage, directly between Belarus and Bulgaria. And that’s not even the most eye-catching statistic.

Roughly 3.2 million U.S. households could be powered by the amount of energy used to mine bitcoin in a single year. At least eight households could be powered for a whole day by the electricity used for a single bitcoin transaction.

Each transaction also accounts for about 118 kilograms of carbon pollution, according to estimates.

But specialists say the raw figures, which have led to the litany of dire headlines over the past several weeks, and claims the currency is helping to prop up dirty fossil fuels, need to be put in the right context. They say that merely casting bitcoin as a technological monster that is sucking energy away from people’s homes and businesses is simplistic and misleading.

Some bitcoin mining centers — particularly in China, where huge facilities are packed with computer equipment dedicated solely to mining — take advantage of cheap, clean energy sources.

In some cases, the energy otherwise may go unused, leading some analysts to conclude that all hard facts about bitcoin’s energy use should be viewed with skepticism.

“Nobody really knows how much energy is consumed,” said David Yermack, a finance professor at New York University who studies bitcoin and lectures on alternative currencies.

“All of this is based on guesswork, and there is no way to validate it. In reality, many bitcoin miners locate near cheap sources of electricity,” he said.

“In the long run, this problem can be solved by the forces of supply and demand. If cryptocurrencies really require a lot of energy, the price of energy will rise to the point that it becomes too costly to continue mining at the current level. There is not much evidence that I can see of worldwide increases in energy prices that might be attributable to bitcoin mining,” he said.

Roughly 58 percent of bitcoin mining worldwide takes place in China, followed by about 16 percent in the U.S. The remaining 26 percent is mined elsewhere, including Canada, Europe and Venezuela. Much of the computing power in China comes from coal-fired plants, lending credence to fears that bitcoin is perpetuating the use of fossil fuels.

But in some parts of China, analysts say, bitcoin mining is fueled by clean power that doesn’t contribute to climate change. There are instances in China, for example, of large-scale mining facilities specifically locating in places where they can access clean power.

“A significant concentration can be observed in the Sichuan province, where miners have struck deals with local hydroelectric power stations to access cheap electricity,” Cambridge University researchers Garrick Hileman and Michel Rauchs wrote in a study this year that took a detailed look at bitcoin energy use around the globe.

For bitcoin miners, energy use is an issue — but a small one.

“Small and large miners alike have commented that they are thinking about ways to reduce mining’s significant carbon footprint, although for now most agree that this is a minor concern compared to other challenges that cryptocurrency systems currently face,” the Cambridge researchers wrote.

Those challenges include European governments this week making a renewed push to regulate the cryptocurrency after this weekend’s launch of bitcoin futures trading on the Chicago Mercantile Exchange, which only fueled more reports that Russia is using it to bypass U.S. and European government sanctions.

North Koreans, meanwhile, are suspected of trying to steal bitcoins from cryptocurrency exchanges in South Korea.

Dan Boylan contributed to this report.

• Ben Wolfgang can be reached at bwolfgang@washingtontimes.com.

Copyright © 2023 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.

Click to Read More and View Comments

Click to Hide