Bitcoin Is Bad for Earth

As the world struggles to shift from polluting forms of combustible fuel to cleaner
alternatives, attention has to be paid to how we use the power

we generate. Power generation is inherently consumptive and our planet pays the price of that consumption, so we have to insure we are using power wisely. Which brings us to the case of bitcoin. Anyone willing to put the cryptocurrency into an objective perspective should concede that the digital construct is wildly power hungry. Analysis by Cambridge University shows that mining for bitcoin requires massive amounts of computer power to perform vast calculations used to verify bitcoin transactions. Mining for bitcoin in the digital realm means adding blocks of transactions to the block chain for which the "miner" earns bitcoin. Currently trading at around $46,000 a token, their is plenty of incentive to use more and more computing power to add to the block chain which is used to prevent "double spending" Real money can only be spent once since a transaction involves a physical exchange; absent counterfeiting a real money exchange is self-validating.

Since bitcoin is virtual, another method is needed to confirm that a bitcoin transaction has taken place and cannot be repeated--double spending. That is where the miners come in. They act as system auditors, verifying bitcoin transactions and add verified transaction to the bitcoin database--the block chain. Two limitations exist on earning bitcoins by mining: a miner has to verify 1MB of transactions, and be the first to correctly identify a 64 digit hexadecimal or "hash" associated with a block of transactions to be awarded bitcoin. Instead of staking a gold claim first and striking a bonanza, bitcoin miners are using enormous amounts of computer power to essentially make a guess about a hash. Without them, new bitcoin cannot be released into the cryptosphere.

Right now about 18.5 million bitcoins are circulating. Without mining, the bitcoin currency would not expand. Mining willl eventually come to end under the protocol established by founder Satoshi Nakamoto around 2140, when the last bitcoin will be circulated. Until then, mining and its huge power consumption will continue. Verifying one block earns a miner 6.25 bitcoins--at $50,000 per coin that is $312,500. Before you run out and invest in a mining rig, you should know that the difficulty of getting a hexadecimal estimate correct is about 17.59 trillion to one (2020). Because of the difficulty and the amount of computing power required, most miners join mining pools comparable to Powerball pools where participants buy large numbers of lottery tickets to increase their chance of winning by agreeing to share payouts. 

Sounds like gambling, right? Commentator Wolf Richter agrees with this assessment: "This [bitcoin] has nothing to do with monetary anything, but is a form of gambling that relies on ever more new gamblers entering the casino and bidding up the price, with more and more gamblers selling each other the bitcoin, all united in the singular purpose of driving up its price so that everyone could get rich...No one can ever say bitcoin is overvalued or undervalued. It doesn’t have a value. It just has a price, and what the price is from one moment to the next is determined by gamblers trying to drive it higher by hook or crook, and by some of those gamblers cashing out while they can." One noted economist derogatorily refers to bitcoins as "sh_tcoins".

So it is, and a lot of computing power is needed to generate 64 bit guesses, or useless "nonces". The more nonces you generate, greater the chances you have of being first to submit a correct lower estimate of the actual 256 bit hexadecimal number and hit the big casino. Electric power consumption is therefore built into the cryptocurrency system. Cambridge researchers say bitcoin mining consumes around 121.36 terawatt-hours (TWh) a year, or more than consumed by the country of Argentina, and is unlikely to reduce unless the value of the currency slumps. Most bitcoin is speculative and exchanged for fiat money, but the crytocurrency is beginning to achieve traction in the real world. The electric car company, Tesla, recently made a $1.5 billion 'investment' in bitcoin and announced that it plans to accept bitcoin in exchange for one of its electric cars in the future. Tesla got $1.5bn in environmental subsidies in 2020, funded by taxpayers. After Elon Musk bet on bitcoin, the price accelerated to a record $48,000. The token also has rising popularity in conflict zones where cash is difficult to access or poses unusual risks from regulators and thieves.

Mining is inherently inefficient. Miners hook up more and more computing power in networks--some the size of a warehouse--constantly churning to solve the hellishly difficult hexadecimal problem. This mass churning requires more and more electricity, which produces more carbon dioxide and destroyed ecosystems. China has already taken the unprecedented step of banning bitcoin mining in Inner Mongolia, a coal producing region that accounts for 8% of the world's bitcoin mining operations.The bitcoin casino is literally a planet killer.