Bitcoin and the Environment
Some evangelists in the bitcoin community point to the promise of bitcoin mining profits to push energy development into regions with untapped renewable energy sources. The idea is, there’s a lot of wind up on the mountain- put a turbine up there and run an ASIC on it and start mining bitcoin. Now there’s a wind turbine on the mountain, a source of “renewable energy” for people to use to do good stuff in the future.
There are a number of potential issues with this reasoning. Some have been discussed extensively, but others haven’t received the attention I think they deserve. Here’s a list of 6 challenges to the narrative around bitcoin mining’s environmental impact, and the downstream systemic effects of that energy usage.
1) wind turbines aren’t made out of thin air, they are made from mined, refined, manufactured, transported materials and they do not last forever. A hydroelectric dam is a massive cement structure. The ingredients for cement take a lot of energy to mine, cook at extreme temperatures, and transport. Most estimates for co2 release from cement from the mine to full calcination are around 1:1, meaning that for every ton of dry cement laid out, there is roughly a ton of co2 released into the atmosphere.
2) This one perhaps gets more attention than it deserves in the grand scheme: wind turbines kill birds. As sad as a giant pinwheel smashing a wandering albatross is, hydroelectric dams have a more profound impact than wind turbines on wildlife and their key role in nutrient transport with massive implications for agriculture and ecology. River systems around the earth use the ability of fish like eels, salmon, and shad to defy gravity to reach spawning waters hundreds of miles inland and thousands of meters up into the highlands. The ocean is filled with fertility and dissolved minerals. Phosphorous is especially critical. As was nitrogen, but we humans have done a pretty good job of increasing baseline nitrogen. Phosphorous is a major limiting factor in crop production. Phosphorous and these other building blocks of life move from the oceans up into the forested mountains via these massive fish runs. They spawn and die, get eaten by bears, eagles, vultures, who in turn pee, poop, die and decompose in the forest. phosphorous gets absorbed into the soil matrix and lifeforms like mycelium take in phosphorous, and in the case of mycorrhizal fungi, deliver phosphorous directly into the root of the tree just when it needs phosphorus to flower. The flower falls and decomposes and phosphorous re-enters the soil sponge. A flash thunderstorm causes a landslide and phosphorous flows downriver back to the ocean. But that’s fine, because there are plenty of fish in the sea, and they are already packing on muscle for the next sexcapade. When you dam a river, you are doing more than holding water upstream to spin a flywheel. Hydroelectic can be renewable. But it is not renewable by default, and we need to consider many downstream and upstream effects of damming our planets arteries.
Because in reality, we aren’t talking about a rare landslide in an old growth forest. We are talking about a land management system of industrialized agriculture, agrofeorestry that causes significant erosion with every rain event. We are forced to dump chemical phoroshporous fertilizers onto dead soils that cannot act as sponges. This assures that scarce phosphorous will flow back into rivers, acting as a poison rather than fertility, causing dead zones downstream in the ocean. We could also say, “look wer’re being renewable: we’re using this remote hydroelectric dam to power a fertilizer factory that supplies local farmers with the fertilizer they need to grow crops more efficiently.” 99% of intelligent people would read this and think that this is a triump of renewable energy and a step in the right direction for people and environoment. And that it all started with a clever bitcoin miner.
4) If bitcoin mining is so lucrative, why would the builder of the turbine or the dam ever turn off their ASICS and free up power for other activities? What could be a more profitable activity to do with that energy instead? And what’s to assure that the acivity that replaces it is net neutral or net positive for sustainability?
5) As far as I can see it, it’s mostly about heat. All that computing work manifests as heat. Heat is useful, heat is energy. Or it’s a byproduct that needs to be pumped out or mitigated with active cooling. I would hope that the Council of Bitcoin Miners would consider the heat-production side of the equation in addition to the energy input question. Setting up bitcoin miners in a cold region during the winter, integrated with indoor air sytems that would need to be heated anyway is a no-brainer. And because there are many such places, apartment buildings, etc, this could be a great way of distributing mining power and helping to decentralize the network.
6) Here’s the elephant in the room for PoW proponents. We now have alternatives to proof of work that are provably secure and are currently running. Proof of stake derives security from a network of business owners (stake pool operators) who enable individuals to earn interest on their savings. With several orders of magnitude less energy usage.
Are Michael Saylor, Elon Musk and the people in the Bitcoin Mining Council asking these hard questions? What incentive do they have to apply systems thinking to these issues- to get perspectives from domain experts in energy, ecology who are able to see the big picture and put together a balance sheet for environmental factors? I don’t discount the need for hard currency and, if there weren’t alternatives to PoW, I would personally except the current level of environmental destruction as a necessary cost of doing business for having a sound monetary alternative to central banks that turn energy into untold environmental and humanitarian destruction. But as the value of BTC goes up, so does the energy required to secure the network.
The environmental downside grows with the price. Maybe in a few years we’ll have fusion reactors everywhere made from recycled materials. but we aren’t there. And in a world like that, you have more problems to worry about- as that power can be used by those adversaries to attack the network. What if- what if, for example, China is close to the event horizon for fusion power technology. What if they kept it under wraps, stockpiled Asics, and one day flip a switch and concentrate 51% of the hash power in their miners and start mining shitty blocks. I have no idea if this hypothetical even makes sense. But there’s clever people out there and a lot of interest in controlling and attacking bitcoin.
The debate over bitcoin and the environment is getting interesting. Bitcoin maxis are telling us that this is old news, that we laid this question to rest years ago. Whether the facts are settled or not, thanks to some bipolar tweets from Elon Musk, the debate rages on. There are battle lines crossing with battle lines. There are those who don’t see the problem and those who see a real problem and those who just see a PR problem. And with those who see a PR problem, there’s those who think the Council on Bitcoin Mining is a positive step and those whoe think it stinks of centralization of authority. There are those who want to see the problem solved or mitigated, and those who want the problem to go move out of view. Those who want to see freshly mined bitcoins come with a stamp of renewabilty and there are institutions that want to buy bitcoin who want to show this stamp to save face. Then there are open minded folks who see bitcoin as a major gift to humanity but who also think that things can be done better, and that we are not married to one chain. Bitcoin can continue to build network effect, but simultaneously PoS chains like Cardano can take a bigger portion of market share, assuring that we don’t live in a world that sound money relies on increasing amounts of energy.
It feels like we’ve arrived at a brand new moment of reckoning for bitcoin governance. Will we see new bitcoin hard forks: will there be bitcoin hydro, bitcoin solar? Or will the Council for Bitcoin Miners step up, get 51% of mining power to prove renewability and keep BTC as the trusted renewable chain? It feels like this battle, like Segwit did, is going to uncover more vulnerabilities, and might even derail progress on things like Taproot in order to rally troops one way or the other on the environmental story. There may be more bitcoin developers than cardano developers, but there is a major drag on the evolution of bitcoin, while Cardano has built the tooling to minimize friction in the process of improving itself in a decentralized fashion.
I don’t think this debate is going to go away any time soon, and if it does, it wil be thanks to a failure of a decentralized network of stakeholders to take an honest look at the pros and cons of the system they are part of.