Bitcoin Mining does not consume enough energy!

Bitcoin is the discovery of absolute, verifiable scarcity. Everything in the world is forever worth a part of 21,000,000 Bitcoin. Absolute scarcity is still an abstract concept for the vast majority of people. I wouldn't know how to explain the benefits of fire to someone who has never seen fire before. The same counts for electricity, mathematics or the wheel. These discoveries are hard to grasp at first, because they challenge learned patterns of thought and behavior. In the case of Bitcoin, this is further complicated by the fact that knowledge of monetary theory (what makes a good money?) is hardly common. People just use the Euro or Dollar, because they are told to do so. "Understanding" Bitcoin took me thousands of hours. Therefore, I can completely understand why there is unfortunately still so much misinformation circulating on this subject. Again and again you read or hear the same baseless or out of context criticisms: Bitcoin has no "intrinsic value", Bitcoin is too volatile, You can't pay anything with Bitcoin, It's only used by criminals, Bitcoin is an outdated technology,...

But one criticism I think is particularly dangerous is "Bitcoin is bad for the environment." This also sounds very logical at first, because Bitcoin consumes a lot of energy due to Bitcoin mining. In order to establish a link with the real world, Bitcoin is mined in a similar way to a raw material, such as gold. Bitcoin is decentralized. No central party issues the coins. Everyone must follow the same rules and do real work to earn their share of the 21,000,000 BTC. However, to "mine" Bitcoin, you don't need a gold mine. You need specialized computer hardware, also called ASIC miners. These ASIC miners simply play the lottery. Bitcoin miners consume energy in the form of electricity to perform very simple arithmetic operations. They try to guess a number and the winner gets Bitcoin as a reward. The more and better hardware you use for mining, the more often you can guess and thus increase your chances of winning. Bitcoin mining also works without technology. We only use computers because they work much more efficiently than a human brain.

Very important: Bitcoin mining is only used to secure the network from manipulation. The amount of Bitcoin or the number of maximum transactions per second are completely independent of the energy used. Only if one party controls 51% of the total computing power (hashrate), this entity can double-spend coins for a limited period of time or block new transactions. If the attacker loses the majority of the hashrate, Bitcoin continues to function like normal.?

The game theory behind mining is that no single entity can control 51% of the energy in the real world for a long period of time or even at all. The organizational overhead required to do so would be far too high, which is why smaller miners would be more cost-efficient. Even today, the cost of such an attack would be so immense that a 51% attack on Bitcoin can be said to be out of the question. Since the network cannot be destroyed, it would make much more sense for a powerful entity to peacefully acquire Bitcoin and protect the network and therefore their wealth.

Everything written to the Bitcoin Blockchain about 5 blocks ago (about 50 minutes) is immutable for all eternity. Each Bitcoin Full Node (Bitcoin Bank) stores every transactions that ever happened. To change the past, one would have to manipulate or destroy over 100,000 of such partially anonymous Bitcoin banks spread all over the world. This is impossible.

So to ensure true decentralization, we absolutely need a proof of work in the real world in the form of electricity consumption. You can't just create energy out of thin air. The higher the electricity consumption, the better. Nevertheless, Bitcoin mining consumes relatively little electricity so far. In 2017, the World Economic Forum (WEF) assumed, based on misconceptions, that Bitcoin would consume more energy by 2020 than the entire world. The most meaningful estimates of Bitcoin mining's electricity consumption comes from the Bitcoin Mining Council. In late 2022, Bitcoin mining was estimated to account for ~0.17% of global electricity consumption. Either the WEF grossly miscalculated or global electricity consumption has multiplied tremendously since 2017 (it's the former). This plain wrong article from the WEF is still available on their website without a comment.

Of course, if you don't see any benefit in Bitcoin, all the electricity that is used for it is wasted. Everyone now has access to an incorruptible savings technology, as well as the possibility to send value in real time, free of charge and anonymously to the other side of the world. The current banking crisis underscores the importance of a decentralized money that is not centrally controlled, but bound by the laws of physics. Bitcoin is not an investment, it's a discovery and a tool for human rights.

Bitcoin today uses as much energy as video games or holiday lights. Someone who claims that Bitcoin consumes too much electricity should consequently also not use washing machines, play video games, stream videos in HD and despise "green" electric cars. Whether electricity is used wisely is a purely subjective opinion. Do you think an open, decentralized, incorruptible and limited monetary system is useful? I certainly do.

Because high power consumption is often associated with high CO2 emissions, many critics think Bitcoin is environmentally harmful. Especially software companies that issue illegal securities (colloquially called cryptocurrencies) are very happy to jump on this bandwagon. "Bitcoin is bad for the planet. Better buy my green Bitcoin 2. I swear it's totally decentralized and secure!".

A prominent example are the people behind one of the most successful illegal securities Ripple (XRP). Ripple co-founder Chris Larsen donated $5 million to Greenpeace USA to launch the smear campaign "Change The Code" and remove mining from Bitcoin. This campaign makes absolutely no sense for a number of reasons. It's just a marketing stunt. Bitcoin is open source. There is nothing stopping Greenpeace USA from changing the Bitcoin code. Whether anyone wants to use their software is an entirely different question. I certainly won't.

But never mind, Ripple's XRP is 57,000 times more energy efficient than Bitcoin. Wow, what a specific number! I'm sure that was calculated pretty soundly. Sending your money by carrier pigeon would use even less electricity than a XRP transfer. Little fun fact: the Ripple company is currently in a lawsuit with the US Securities and Exchange Commission for violating US securities laws. The ruling is expected in June 2023.

The kind of electricity used is much more interesting than how much electricity is used. According to the Bitcoin Mining Council and other institutions, the share of renewable energy in the Bitcoin power mix is estimated to be between 50 and 60%. The trend is clearly upward. And that's without any government intervention. This makes Bitcoin probably the greenest industry in the world. Since Bitcoin is completely decentralized, no miner can gain an unfair advantage. Everyone has to play by the same rules. So every miner is competing for the cheapest electricity. If you were to run a Bitcoin miner at home and plug it in your wall socket, your electricity price would be many times higher than the break-even point for mining.

And where do you get cheap electricity? Supply and demand is the magic word. So miners need electricity that no one wants. That's surplus electricity from renewable energy sources. Unlike fossil fuels like coal, we can hardly plan for electricity production from wind and solar plants. We have no control over how much sun shines or how hard the wind blows. As a result, especially on sunny and windy days, so much electricity is produced that no buyer can be found for it. To date, there is no efficient way to store this electricity. Since there are negative electricity prices on the electricity exchange, renewable energies are shut down when there is excess production, while fossil power sources continue to operate. Shutting down causes more wear and tear on components and the overproduction makes it less attractive for power producers to expand green energy sources. Overproduction is waste that must be avoided.

Particularly in power grids with little government intervention, such as Texas, Bitcoin mining is playing an increasingly important role. Miners act as energy buyers of last resort. Within seconds, ASIC miners can be powered up and instantly convert excess electricity into a portion of 21 million Bitcoin. This simplifies power management and prevents negative electricity prices. We can now overproduce electricity anywhere in the world. Even though Bitcoin mining is banned in China, it is estimated that 20% of the world's mining continues to be done there. Simply because Bitcoin miners are extremely flexible and use surplus electricity that the government does not notice.

Bitcoin Mining doesn't take away anyone's electricity. The reason why Bitcoin mining is not already powered 100% by green electricity is mainly due to government subsidies on unprofitable fossil fuels. Because the use of fossil fuels is artificially discounted by taxpayers, mining with coal power can be profitable under such circumstances, as happening in Kazakhstan. In the long run, however, miners that use fossil fuels will be displaced over time by more cost-efficient green Bitcoin miners.

ASIC miners are designed to be as recycling-friendly as possible, so the amount of e-waste generated is no higher than in other industries. In addition, modular mining devices are currently being developed in which obsolete parts can be replaced. Then there is no need to replace the entire device. There is also an incentive to use old mining equipment as well. The yield is lower than with a newer miner, but overproduced electricity accrues anyway. It's better to have low earnings than no earnings at all. This applies to energy companies, as well as private households that use their own solar panels.

TLDR: Bitcoin mining is key to the energy transition. Miners act as energy buyers of last resort, subsidizing renewable energy. This makes it more profitable for power producers to expand solar, wind and hydro power. We can now overproduce electricity anywhere in the world at any time. Electricity operators are no longer stuck with the high costs of waste electricity. These inevitable costs are currently still subsidized by states (taxpayers). In the long term, mining can ensure a stable power grid worldwide and even equalize the global price of electricity. Public figures or institution like the European Central Bank calling for a bitcoin ban because of Bitcoin's bad impact on the environment are either ill-informed or dishonest. In a distant future, the absolute majority of electricity production would be used for Bitcoin. And that's a good thing.