Bitcoin Be Dammed — The Energy Is Dirty

By Skylar on ALTCOIN MAGAZINE

Greenwashing comes to Bitcoin.

The past few weeks, Bitcoin has been getting a makeover. Thanks to new research from Christopher Bendiksen and his team at CoinShares, users online are suddenly claiming Bitcoin is the cleanest technology on the planet. Apparently, everyone has been wrong for all these years and Bitcoin is powering a “renewable energy revolution” right before our eyes. Let’s take a look at what the team found and why the outcomes of their research must not be taken at face value.

Before diving in, there is no denying the team at CoinShares put a significant amount of time, energy, and resources into developing this report. They deserve some minor appreciation for this work.

Their research is also dangerously incomplete.

“Bitcoin Uses Clean Energy”

In making the case for Bitcoin’s clean energy image, Christopher and his team at Coinshares identified a crucial concept in energy management — stranded energy. They learned that when a dam or other power generator is in too remote of a location, a percent of that energy is “stranded” or not used, because it is not possible to transmit this energy in a cost-efficient manner. Given dams generate incredible amounts of electricity and are generally located in more remote areas, it makes sense that over the past 10 years, the team identified that Bitcoin miners have targeted these facilities to set up cheap, on-sight mining operations to use up that “extra” power.

Xiaojin Dam, China

It all sounds great, but the problem here is that we are taking hydropower at face value without considering any of the externalities of the technology itself.

Isn’t that the issue this study was supposed to be addressing — the externalities of Bitcoin? So where is the question on the externalities of the power sources that were identified?

Dams are Not Clean Energy

Studies over the past 10 years have consistently shown that our understanding of hydropower has been misguided. The world’s largest dams emit a combined 104 million metric tonnes of methane annually. For those of you who don’t understand the science of greenhouse gases, methane is actually more than 30x worse for climate change than carbon dioxide (CO2).

Even Science Magazine put out a direct warning in 2016 that the growing number of dams in China could signal trouble for the global climate.

By that logic, Bitcoin using up “extra” energy is increasing demand for these dams and making them more cost effective, which has a net negative environmental impact.

Now, I understand existing energy accounting models do not account for these types of externalities and therefore you can technically still call hydropower “clean” or “renewable” energy; however, this is a problem with how states define clean energy. The term is being misused by governments and that does not make it ok to perpetuate this myth — particularly in a high-tech field that supposedly holds itself to the principles of transparency and accountability. It is particularly misleading when you consider public networks using proof of stake instead of proof of work, like Ardor, need only a 10W solar panel to run full nodes.

If you are going to make the claim that Bitcoin is powering a renewable energy revolution, then you had best have a solid grasp on what real renewable and clean energy looks like; otherwise, you are just putting out biased, half-baked research that misleads consumers.