The exponential rise in Bitcoin’s price and hash rate is driving critics to once again question the largest blockchain’s energy efficiency — with calls for “green hackers” to band together to mount an attack on the network.
Total world production and consumption vs. Bitcoin. Source: CBECI
A self styled “developer and ecologist” who goes by the name of Franck Leroy created Twitter and Medium accounts this month to advocate the destruction of the Bitcoin network through “ethical hacking.”
In a post titled “Green hackers around the world, let’s destroy Bitcoin” Leroy states that Bitcoin is an “irrational and destructive financial bubble” that is hugely damaging to the climate due to its exorbitant use of electricity.
A third of the article calls on hackers to “destroy Bitcoin,” stating that the network can be undermined by mounting something similar to a DDOS attack with fake transactions to clog the network, and linking to three other sources for other attack ideas, adding:
“It is not even necessary that a computer attack actually take place, but that speculators fear it. If a group of hackers (real or fake) announced an impending attack, the price of Bitcoin would likely collapse.”
But it’s not just fringe Medium posts attacking Bitcoin’s power consumption, the mainstream media has embraced the narrative too. A recent article by Bloomberg “Bitcoin is an incredibly dirty business” suggested that the majority of Bitcoin’s energy use comes from coal and other non-renewable sources, comparing the network’s carbon footprint to that of New Zealand.
And Wall Street Journal columnist Jason Zweig wrote today that “Bitcoin mining is on track to consume almost as much electricity in 2021 as all the world’s transportation systems combined did in 2018.”
If I understand this correctly, bitcoin mining is on track to consume almost as much electricity in 2021 as all the world’s transportation systems combined did in 2018 https://t.co/z7rWPzwSOM.
Tesla will need to sell a lot of cars to offset that. pic.twitter.com/wmIuioZCqj
— Jason Zweig (@jasonzweigwsj) February 9, 2021
Looking behind the figures used by Zweig paints a different picture. In the Tweet, he references a graph on Bitcoin’s electricity consumption by the University of Cambridge. The three lines refer to the upper (grey) and lower bound (light yellow), and the actual estimated consumption (Yellow).
Zweig has used the upper bound currently sitting at 290 TWh, stating that this figure is on track to reach the 2018 global transportation systems consumption (390 TWh). However, if one were to take the actual estimate of 120 TWh, the Bitcoin network is on track to account for around 30% of the energy used by the transportation industry in 2018.
Many critics refer the Bitcoin Energy Consumption Index, or BECI, on the Digiconomist website. The BECI states that Bitcoin’s annualized carbon footprint, electrical energy consumption, and electronic waste compares to that of New Zealand, Chile, and Luxembourg respectively.
However, Bitcoin proponents such as Marty Bent point out that much of the electricity used to power the Bitcoin network is excess and otherwise unused . In a post today he wrote:
The ruthlessly competitive Bitcoin mining industry forces miners to seek out the lowest cost of power production that they can possibly find, which leads them to energy sources that are completely stranded or wasted.”
Other proponents note the power used in mining is frequently renewable. Up to half of mining activity occurs in China’s Sichuan region and these miners use the region’s hydroelectric power stations where possible. However, these plants rely on seasonal rains and when there isn’t enough to power them, Sichuan turns to coal.
A study shared by Head of Growth at Kraken Dan Held, suggests that mining in the Sichuan region is more than 90% renewable, resulting in Bitcoin’s entire network being almost 78% renewable.
Bitcoin uses 78% renewable energy. Source: Twitter
But figures vary and the University of Cambridge suggests the actual figure is much lower. Although the university states that 76% of cryptocurrency miners use electricity from renewable energy sources, it found that only 39% of the total energy consumption by Proof-of-Work cryptocurrencies comes from renewable energy.