Neither Tesla or Bitcoin are ever too far from the news headlines in recent years but at the start of February 2021 they made them together as the electric car maker bought $1.5 billion of the cryptocurrency. It pushed the value of Bitcoin, which was already going rapidly upwards, to a new all time high. You might not notice any immediate problem with this, especially if you have a few Bitcoin of your own, but if you take a look a little bit deeper at the sustainability cost of Bitcoin and the idea that Tesla is a company that makes sustainable electric cars and solar roofs then the problem starts to become clearer. Most people don’t think at all about where Bitcoins come from, but the reality is that they do have a cost, and that they are very far from eco-friendly. I’m not going to go too deeply into the blockchain and the process of ‘mining’ new Bitcoin, the checks and balances involved, or the complex maths puzzles and huge amounts of processing power involved, partially because it’s not important to the point I want to make, and partially because I am not an expert at all. What we do need to look at is how much power is used every year by Bitcoin mining and transactions, and it is immense. I’m going to throw this out there as a few statistics and comparisons… According to Digiconomist, Bitcoin produces 39.65 megaons of CO2 annually, which is about equal to New Zealand, using 77.78 TWh of electricity, which is about the same as Chile. Those might be conservative estimates though, researchers at Cambridge University put the power consumption figure at 110.53 TWh, just a little more than the annual energy consumption of the Netherlands, or about 0.5% of the total globally. Whichever of those figures is correct or whether it is somewhere in the middle, that’s an incredible amount of energy, or an “unfathomable amount” if you would like to quote Charles Hoskinson, co-founder of Ethereum. Having created the worlds’ second most valuable digital currency, he is biased, but it is also true that Ether and most other cryptocurrencies do use a lot less power than Bitcoin does. Bitcoin enthusiasts present the argument that focusing on the environmental impact is missing the point, and that using massive amounts of energy is not really bad, that we just need to change how that power is generated. It’s almost a convincing argument but not quite. The reality is that most Bitcoin miners are making very little effort to ensure that the vast amount of power they consume comes from renewable source, many of the biggest Bitcoin mining facilities are based in China, a country that is still very heavily reliant on coal as a source or electricity generation. The problem extends beyond just mining and into the way that Bitcoin is used and the computational cost of each transaction, Bitcoin is much more a way of storing funds than an efficient payment solution. Coming back to Tesla, their updated investment policy states that they want to invest in “reserve assets such as digital currencies, gold bullion or gold exchange-traded funds”. Once it does come time for anyone to spend it though, Digiconomist estimates that the energy footprint of just one Bitcoin transaction is about the same as 453,000 transactions made using Visa. The demand for Bitcoin, and along with it the amount of power that is needed to mine and maintain is only going in one direction at the moment, and the system underpinning Bitcoin can never be changed at this point, so it is never going to be more energy efficient. Changing the way that power is generated is the only option to improve the environmental footprint and that’s just not happening right now. The head of IT at Greenpeace UK, Andrew Hatton, sums it up with one simple observation, that “we’re powering 21st century technology with 19th century energy sources.” He goes on to say that “as online services become bigger and more complex, the demand for computing power is bound to go up over the next few years, and that will require more energy. The problem is that only about a fifth of the electricity used in the world’s data centres comes from renewable sources, and that’s not good enough.” There is no doubt that he’s right, it’s not enough and we should be aiming for all of the world’s data centres to be fully powered by renewable energy but reducing the amount of that energy that is needed would also hardly be a bad thing. I know that Bitcoin isn’t going away but it’s hard to ethically justify investing in a cryptocurrency that is as power consuming as a country. We first published this article in the Platforma EKO newsletter Towards Sustainability : Issue 8 - February 2021 .

The huge environmental cost of Bitcoin

Arvīds

It is really bad from Tesla. It seems strange as well, now this kind of story is all around the internet in the last week and they must have been able to see that would happen and it would be bad for their image.

Treebeard

Arvīds Yep, Elon dropped the ball on that one.

Piri

Treebeard I guess they never claimed so much to be super green attitude.... Anyway still is not enough the awareness about data centers and that to use internet is not always so green as people think.

Mushroom-King

I do not really understand the point of the crypto currencies, why does any person need them when all of your money is digital in the bank now anyway?

John

Mushroom-King

I think for many people the attraction is that it is not tied to a specific national government or central bank.

People who make transactions of questionable legality like it because of the anonymity.

Others just see it as a good investment.

Ash

Mushroom-King

At this point, most people use Bitcoin as an investment rather than as an actual currency. People have seen how much it has risen over the past few years and want to make more money.

Vilte

Mushroom-King I do not really understand the point of the crypto currencies, why does any person need them when all of your money is digital in the bank now anyway?

Oh, I agree with you. Why do we keep on looking for ways to make things even more complicated than they already are or need to be.

Why can't we all just have the same currency, it doesn't matter if it is called dollars or euro or yen, it would just be simple but we are determined to make things increasingly complex by adding tens of extra not real currencies.

Vilte

Mushroom-King I do not really understand the point of the crypto currencies, why does any person need them when all of your money is digital in the bank now anyway?

Exactly, why make things more difficult for yourself than you need to. If you are in the US then use dollars, if you are in Europe use Euros, etc.

Stasys-Girskis

Vilte Ash

I can't see any technical reason that it isn't possible, only that sovereign governments want to retain more control over their individual economies.

But the Euro shows that it can work across multiple countries, is it 19 in the eurozone now, there is absolutely no reason that couldn't work across a bigger number.

Ash

Now that is a very interesting point. I wonder if we will ever get to a point in the future where we move towards one central currency that can be used everywhere. Doubt its possible but you never know I guess.

Piri

Stasys-Girskis But the Euro shows that it can work across multiple countries, is

Yes it works and in some point is very handy, but why some economically strong countries didn't join Euro zone? In some point they won for example Denmark. Visiting country you still can pay but euro and get a change in local currency.

Julie Brooks-Girskiene

Stasys-Girskis I can't see any technical reason that it isn't possible, only that sovereign governments want to retain more control over their individual economies.

Don't some other countries use the US Dollar as their official currency as well. I think that Ecuador and El Salvador do for sure, and I think maybe some others in South America and Africa.

I really don't see why we can't have one or two world currencies, it would be so so much easier.

Ash

Julie Brooks-Girskiene

Apparently a little over 65 countries in the world use the US Dollar as their official currency which is actually a lot more than I expected it to be.

Julie Brooks-Girskiene

Ash Apparently a little over 65 countries in the world use the US Dollar as their official currency which is actually a lot more than I expected it to be.

That's not quite right, that number includes countries that use the dollar as a second official or unofficial currency or as a de facto currency.

Apart from the US itself there are five US territories and eight sovereign nations use the dollar as their official currency, but still it's a lot more than I realized.

Ash

Julie Brooks-Girskiene

Yep, just looked again and you're absolutely right. Looks like I read that completely wrong the first time around.

Mushroom-King

Thanks for the explanations, I don't think crypto currencies is something that I have any interest in at all.

Stasys-Girskis

If you want to use them as an investment, they could go up A LOT but they can also crash, or if you want to buy things that can't be traced back to you, then they can be useful. If you don't need either of those things then don't worry about it.

Ash

Thinking about it, it's actually not too bad of an investment if it crashes a lot. It has a huge loyal following so you can be confident most of the time that it will rise again.

Piri

Good or bad Investment it depends from the market if you win or lose. In most of cases it does not depend on us. But forcing any crypto currency to go for green mining kind of does.

Ash

Vilte I guess it kind of appeals to some of the conspiracy theorists out there because the government doesn't have control over it (yet anyway).

Mushroom-King

Vilte Exactly, why make things more difficult for yourself than you need to. If you are in the US then use dollars, if you are in Europe use Euros, etc.

Yes, sounds more like my speed.

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