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You might have already heard, but Bitcoin hit $50,000 this week. A lot of anarcho-nerds are very rich right now.
What you might not have heard – and what I wrote about a couple of times (1, 2) the last time Bitcoin’s price surged three years ago – is that the massive computer network that created and maintains the Bitcoin system uses an incredibly huge amount of energy.
Nothing fundamental has really changed since then. In fact, Bitcoin’s environmental footprint has gotten a whole lot worse.
In 2021, most Bitcoin is produced – mined – in China by massive computer servers solving unnecessarily complex math problems where subsidized coal-fired power plants produce some of the cheapest energy in the world. It’s a not-unlikely coincidence that a huge amount of Bitcoin is mined in Xinjiang province, the same place where Uighur Muslim minorities have been inflicted with horrific human rights abuses mining the very same coal used to create Bitcoin.
Not unlike the California Gold Rush craze of 1849, Bitcoin is deeply colonial, deeply extractive, and deeply damaging to the environment and marginalized people around the world. This privileged crypto-colonialism almost exclusively benefits white men and it’s happening at a moment when the escalating climate emergency is causing escalating chaos that better deserves our electricity and our attention.
The most recent data, current as of February 17 from the University of Cambridge shows that Bitcoin is drawing about 13.62 Gigawatts of electricity, an annualized consumption of 124 Terawatt-hours – about a half-percent of the entire world’s total – or about as much as the entire country of Pakistan. Since most electricity used to mine Bitcoin comes from fossil fuels, Bitcoin produces a whopping 37 million tons of carbon dioxide annually, about the same amount as Switzerland does by simply existing.
“It is really by design that Bitcoin consumes that much electricity,” Michel Rauchs, a Cambridge researcher told BBC’s Tech Tent podcast. “This is not something that will change in the future unless the Bitcoin price is going to significantly go down."
By coincidence, this is also roughly the same amount of electricity currently offline in Texas creating one of the worst blackouts in US history and a humanitarian crisis.
So… we can have a lottery ticket experiment in predatory capitalism, or we can literally have the electricity embodied in the entire annual activities of the 200 million person nation of Pakistan. So far, the nerds are choosing Bitcoin.
The incredible hubris of converting cheap electricity into pretend digital money during the middle of a climate emergency is simply not justified by its theoretical benefits. When I pointed this out recently on Twitter, the tech bros pounced with all sorts of strange arguments like: BUT THE MILITARY USES ELECTRICITY TOO!! Like, duh.
Bitcoin evangelists point to its potential for seamless and secure financial transactions at an incredibly low cost – essentially destroying the centralized banking industry and government control over money – paving the way for everything from stabilizing the economies of historically marginalized countries to digital voting.
But Bitcoin is currently doing none of those things, and won’t be any time soon.
Just the transaction fee alone for a Bitcoin transaction spiked as high as $30 last week, about the same as an antiquated wire transfer fee. That pretty much eliminates its use for anything other than moving massive sums of money by Bitcoin super users.
At its current consumption rates, Bitcoin could never replace the global financial system. Right now, with its high transaction fees, Bitcoin only can handle about 350,000 transactions a day. At that rate, Bitcoin would require 14x the world's total electricity just to process the 1 billion credit card transactions that take place every day. Bitcoin is not just inefficient, it's actively anti-efficient. It makes the world worse in exactly the opposite ways it’s trying to help.
Elon Musk – the wannabe space cowboy and now Bitcoin shill-in-chief – embodied this relentlessly selfish ethos while denigrating secular saint Carl Sagan’s legacy this week. Days earlier, Musk singlehandedly helped fuel Bitcoin’s current surge by announcing a $1.5 billion investment in the cryptocurrency on behalf of Tesla shareholders.
In a bit of irony, Tesla has made more money on its Bitcoin investment in two weeks than it did selling electric cars for three months.
Tesla’s investment has helped push Bitcoin to a market cap of $1 trillion, which means it’s now one of the most “valuable” assets in the world, right alongside Apple, Google, and Saudi Aramco – the world’s largest fossil fuel company.
This is the definition of a bubble.
There is no physical, economic, or social justification for something like this.
What’s worse: There are decent alternatives to Bitcoin for people still convinced by the potential social benefits of cryptocurrencies. Ethereum, the world’s number two cryptocurrency, is currently in the process of converting its algorithm from one that’s fundamentally competitive (proof-of-work, like Bitcoin uses) to one that’s collaborative (proof-of-stake), a move that will conserve more than 99% of its electricity use. Another currency, Celo, which also uses proof-of-stake, recently voted to become the first major cryptocurrency to go entirely carbon neutral.
I was convinced years ago, but I’m even more convinced now: In the middle of a climate emergency, using electricity to create Bitcoin is unforgivable.