Somewhat un-related, but while I'm bashing on bitcoin...
I saw a really interesting fact that Tesla's bitcoin purchase required 1.5x the amount of CO2 to mine it than has been "saved" from the sale of ALL of their "eco-friendly" cars. This article does not contain these numbers but discusses the at odds position of the purchase.
https://www.theverge.com/2021/2/9/22275243/teslas-bitcoin-purchase-clashes-climate-change-mission
Probably more than any other topic, I see more misinformation about bitcoin's carbon footprint and its impact on climate change than any other. I'm going to address a few things here. I am someone who is deeply concerned about climate change. I drive an electric vehicle (2014 Nissan Leaf), I am a vegan, my wife and I have decided to have 1 child primarily because of the environmental costs of more, I live frugally and avoid frivolous purchases, and live in a 1000sqft house. But yes, I use bitcoin and I think it has become a scapegoat in environmental/emissions discussions simply because of how easy it is to calculate its energy use compared with the energy use of other things today. For example, dryers in the US alone use about as much energy as bitcoin today and there is little incentive to have dryers use greener forms of energy unlike with bitcoin (which I'll discuss later). Watching videos on Youtube or playing video games uses a lot more energy than bitcoin consumes. I think it is an ineffective game for people to play to start scapegoating the ways humans use energy that is subjective to everyone when in reality all that does is shift focus away from where the blame really lies and where the focus needs to be put: the fossil fuel industry.
Claiming that Tesla's bitcoin purchase offsets the CO2 saved from all their cars is an inaccurate statement. First, with bitcoin's supply schedule, a vast majority of bitcoin in circulation today were mined back when CPUs and GPUs were used and thus the carbon footprint of bitcoin was much lower than it is today. Claiming that Tesla's bitcoin acquisition offsets the CO2 saved from their vehicles is inherently using a flawed approach that takes the amount of bitcoin in their purchase and uses today's carbon footprint of the network.
So then it comes down to the transactions being performed today, which don't equate to how much CO2 the network releases or how much energy it uses. A transaction can consist of any number of bitcoin or any amount of value. To further complicate things, the amount of energy used doesn't equate to how many transactions were processed by the network either. This is probably the most widely spread bit of misinformation out there. I constantly see articles equating the carbon footprint of a VISA transaction compared with a bitcoin transaction and that is a flawed comparison. Bitcoin's energy use isn't equal or dependent on how many transactions it processes.
Also, a single bitcoin transaction can be settling millions of transactions within it because it is more of a settlement layer than it is a payment layer (see lightning network, liquid-btc, batched transactions, transaction pools, etc). For example, I have a small Raspberry Pi at my house than uses about 1KWh of electricity in an entire year that runs a lightning network node on it. This lightning network node of mine has processed thousands of transactions for both myself and others. It did this while only needing a handful of on-chain bitcoin transactions. So in reality, bitcoin's energy use per transaction can scale incredibly well compared with other technology that
must increase their energy use in inefficient ways (large datacenters) in order to process more transactions.
As I discussed in the first paragraph, energy is used by almost everything we do and use in our daily lives. A lot of it is much more difficult to calculate than the more transparent energy costs of mining bitcoin. So it goes unnoticed or is not in the forefront of the concerned mind of people who are rightfully worried about climate change. I think arguing about what uses of energy people choose for themselves is a fatal approach to tackling climate. Michael Mann, one of my favorite climate scientists explains it well in this article he wrote back in 2019. None of us are without carbon sin:
https://time.com/5669071/lifestyle-changes-climate-change/Pointing to those sins distracts from the bigger picture that ultimately where the sin lies is in the energy grid where the true costs of fossil fuels is externalized in the economy. Bitcoin mining isn't inherently dirty. If bitcoin mining uses clean energy, then its carbon footprint is minimal. Therefore it is imperative that our energy grid gets cleaned up. As Michael Mann explains in his article, the best way to do this is to put a price on carbon (through a carbon tax) that internalizes those once externalized costs of carbon. If this were done, then bitcoin would quickly find that mining with fossil fuels would be uneconomical.
That leads us to what type of energy is used with bitcoin and where its incentives lie. Bitcoin mining is inherently incentivized to use the cheapest electricity out there. The bitcoin mining market is also a globally competitive market, so it doesn't matter whether your energy location is relatively cheap locally, what matters is whether your energy is relatively cheap globally. So it levels the playing field in an energy market that has virtually zero arbitrage (electricity can't be transported to new markets).
The problem here then, and one of the biggest reasons why bitcoin's carbon footprint isn't lower than it is, is that China subsidizes a lot of dirty coal power. Much of the bitcoin mining that takes place in China uses cheap hydropower during the rainy season, but miners migrate back and forth between clean hydro during the wet season and dirty coal during the dry season. These miners would not be performing this costly migration if it weren't for the subsidies that are given to the dirty coal industry that makes their coal power so cheap compared with the rest of the global energy market. To further illustrate this, here is Cambridge's study on bitcoin's energy mix:
https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/publications/3rd-global-cryptoasset-benchmarking-study/In it, they found that in the US, bitcoin's total energy use was made up of 63% renewables. Meanwhile, in the US renewable energy only makes up about 20% of the energy production/supply. This is direct evidence that shows in the absence of large subsidies for dirty forms of energy, bitcoin will be incentivized to use clean sources of energy and that is without requiring the use of carbon offsets that can be dangerous excuses for large industries to continue to use dirty forms of energy. In fact, with a large push for renewable power in the world, bitcoin mining would likely be one of the first industries to become powered by 100% clean renewable energy without requiring the use of offsets simply because the network is economically incentivized to use the cheapest form of electricity regardless of where it is located. It isn't inherently tied to regional grid compositions unlike the daily use of energy that makes up typical residential, commercial and industrial uses. Bitcoin mining just moves to where ever the cheapest electricity is. For anyone concerned about climate change, putting a cost on carbon should be our number one concern, not scapegoating what subjective uses people like to use the world's energy on.
To further complicate bitcoin's carbon footprint, bitcoin mining can also be used to lower emissions. Bitcoin mining is being used to cut gas flaring that emits dangerous methane into the atmosphere. By stopping gas flares/venting and instead using that stranded and wasted energy to mine bitcoin, it both helps lower emissions that would've otherwise been put into the atmosphere while at the same time creating economic value instead of waste:
https://www.coindesk.com/energy-giant-equinor-to-cut-gas-flaring-with-bitcoin-mining-tie-up-reportYou must also consider the alternative in discussions like these. The petrodollar is a far dirtier money than is bitcoin when it comes to emissions. This article is a good breakdown of the true costs of the petrodollar.
https://climatemoney.substack.com/p/carbon-cost-of-dollarsThe same is true of gold. The emissions cost of gold mining is far more dirty than mining bitcoin (more than twice as dirty). Yet you don't see scapegoating and harassing of those people who choose to hold gold in their portfolio. So any portion of these markets that bitcoin siphones away will be a net-win when it comes to emissions costs. The financial industry as a whole uses vastly more sums of energy than does bitcoin mining. Considering the fact that bitcoin and currency in general tend to be a zero-sum game (you can only hold value in one at any given time), then it stands to reason that whatever value bitcoin siphons away from these other far dirtier commodities and systems, then the greener as a whole we'll be.
That isn't to say there are environmental costs with bitcoin mining. E-waste, as with any digital industry is a big concern. Thankfully, the lifecycle of ASIC mining equipment has been getting longer and longer lately, but e-waste is still a big concern in this process.
In the end, almost everything we do consumes energy and I don't think it is a valuable argument to claim that some subjective uses are more valuable than others (Christmas lights anyone?). Millions around the world are finding value in bitcoin as it helps them escape strangleholds place on them by authoritarian regimes and fiat's borders. Who am I to judge differently the value in that without being in their shoes? What we should instead really be focused on is cleaning up our energy grid, getting rid of dirty subsidies, and putting a price on carbon.