The great Bitcoin divide

A few years ago, when I first started working on addressing the environmental impact of Bitcoin, I wrote about the polarised nature of the debate and the crucial need for a common understanding to drive meaningful change.

Writing now in 2023, while so much has indeed changed – and I’m glad to say for the better – some things remain reliably the same. 

Bitcoin and its electricity usage remain in the headlines: one week environmental blight, one week global saviour. The only constant: a narrative that continues to be characterised by extremes of opinion – even at the risk of subject matter inaccuracy – over fact-based examination and real-world action.

As an environmental specialist working in this industry on the practical solutions to decarbonise Bitcoin as fast as possible, here are five things I wish people would consider about the Bitcoin environmental debate.

Be careful what you compare

Context is crucial in helping people understand abstract challenges. Yet still, framing is everything. You can compare Bitcoin’s electricity consumption with a small-sized country, or you can compare it against tumble-dryer use. Comparisons in isolation can sensationalise or trivialise in equal part. 

The problem is, so many popular comparisons risk making apples and oranges comparisons, or failing to convey important nuances. Is it fair or sensible to compare Bitcoin against cash, or the traditional financial system – and if such comparisons are made, how are boundaries drawn? Not to mention the fact that the terms energy use and electricity use are often used so interchangeably – and misleadingly. Electricity is just one (albeit important) component of the world’s much bigger energy usage that also encompasses transportation, industrial processes, homes and buildings. It’s easy to see how this conversation can quickly get quite confused. 

All in all, it’s best to avoid isolated, mismatched or deliberately leading comparisons. And better still to focus on the task at hand. The fact is, we have established data models to quantify Bitcoin’s electricity consumption, and it’s in our power to take action to decarbonise it. This is where we should be focusing our attention to make quantifiable progress as fast as we can.

Standards are key

Unfortunately, flawed and misrepresented features falling on both ends of the Bitcoin debate are an all-too-common part of online news and conversation.

A month ago, Bitcoin was reported to be devastating the planet, with the claim that 431.6 million trees would need to be planted to offset Bitcoin’s CO2 emissions for 2022 alone. The work was subsequently shown to rely on an unclearly communicated methodology that put CO2 emissions at around double those published by the most widely used, independently collated data set (86.3 million tonnes CO2 reported as against the 47.99 million tonnes estimate displayed by the Greenhouse Gas Emissions Tracker of the Cambridge Bitcoin Electricity Consumption Index as of 5 January 2023).

A few weeks later, a different article appeared discounting the ‘FUD’ of ‘inconsequential’ Bitcoin energy usage and describing ‘how Bitcoin could be key to saving the environment’. Amidst a number of problematic claims, including an unsourced estimation of proportion of global energy use, it in turn relied on the sustainable energy mix (including nuclear) reported by the Bitcoin Mining Council, which again differs significantly from other, open-source estimates (59.5% versus 37.6% by the Cambridge Bitcoin Electricity Consumption Index), with the exact figure remaining a source of contested debate.

Misinformation and misrepresentation may exist on both sides (look only to the headlines of the past). What is important moving forwards is that we have the common reference points as an industry that we can all agree provide a standardised, transparently presented and open sourced view to form the bedrock of scrutinised methodologies and solutions, not cherry-picked and obscurely referenced data points.

Through cross-sector initiatives, including the Crypto Climate Accord, GBBC Digital Finance and the World Economic Forum, I see these guidelines and standards being put into place. However, it’s essential to continue working towards advancing, formalising and communicating these standards to ensure a positive outcome for the entire blockchain industry.

Consider your claims

In this era of greenwashing risk and environmental disclosures, it’s more important than ever that the claims we make and the terminology we use accurately reflect the reality of our operations. 

A case in point has been the recent public excitement around Bitcoin’s ‘green credentials’, and claims of ‘carbon-negative’ mining operations, which tap into excess methane reserves and therefore go some way, depending on whether the methane gas in question is vented or flared, to mitigating the emission of methane gas (one tonne of methane being estimated by the IPCC to be equivalent to 30 tonnes of CO2 in terms of global warming potential over a 100-year period).

Still, the term ‘carbon negative’ has a clear definition in environmental science: the net effect of removing carbon dioxide from the atmosphere by a specific entity. While methane-linked Bitcoin mining is an exploratory – though promising – avenue to reduce the very real problem of overall methane emissions, achieving a less carbon intensive outcome by combusting that methane for electricity (still at a carbon cost) rather than allowing it to be released into the atmosphere cannot be described as a net carbon negative. Rather, it’s a case of avoided emissions (still valuable, but more precise in description and claim). These may appear like technicalities, but are vital to ensuring we are accurately reflecting and communicating the progress we are making in the overall decarbonisation imperative.

In my view, we need to be applying similar scrutiny and evaluation to the wide range of potential synergies that Bitcoin mining may in fact support over time, from the use of stranded renewables through to load balancing functions on increasingly clean-energy reliant grids – not detracting from the fact that the Bitcoin network is, and remains, a significant electricity consumer.

Know the opportunity

Continuing on the subject of electricity consumption, it’s been my position for some time that the direct line of sight we have in the digital asset industry to electricity consumption as the single predominant source of environmental impact is its greatest asset and driver of progress in the near term. Crucially, electricity consumption is relatively easy to decarbonise using established methods, and that puts the digital sector at a significant advantage.

Zumo and others have done significant work to develop frameworks and solutions to procure renewable energy certificates (RECs) that directly decarbonise blockchain-linked electricity consumption based on tested and scrutinised methodologies. As a result, there is now a unique opportunity to demonstrate what sector decarbonisation looks like at speed and at scale – and to come together to signal an industry demand for clean electricity worldwide.

Given that today the digital asset sector is estimated to use 120 TWh annually, against global voluntary REC issuance of 1,200 TWh, the industry is at a size where it can have a meaningful impact on clean energy markets worldwide. This is an opportunity – and necessity – we should do everything possible to seize.

…But let’s keep a level head

Finally, amidst all the optimism and opportunity about the digital asset future, it’s important to acknowledge where we are, and what still lies ahead.

For all the promise of Bitcoin leading a renewables renaissance and energy infrastructure revolution, there are also examples of coal power plants being brought back online to power Bitcoin mining operations. For every undeniable innovation and step forwards, we still lack, and may always lack, data – and influence – at the global miner level to be able to reach, say, the coal-powered Bitcoin miner at an unknown location in Kazakhstan.

Let’s be honest, we’re still figuring this out and it’s an imperfect situation. That’s why we need to address the problem as it is and take action based on what’s possible now, not what we hope it will be. The urgency of climate change requires immediate action wherever we can take it.

In the context of the greater environmental debate, Bitcoin and its electricity usage is no more ‘inconsequential’ or a ’rounding error’ than it is ‘devastating the planet’. When we move away from polarising and sensationalist perspectives is when we can see the opportunity and challenge for what it is. Outside of the headlines, the practical progress within this industry is faster and more determined than ever. Let’s work together to make sure the action we take is as pragmatic, as informed and as open and transparent as possible.