Are Cryptos Harmful for the Environment?
Over the past several years, there has been a debate over what to do with the U.S. Postal Service.
It’s expected to show a loss of $9.7 billion for 2021.
People use this loss figure to make two very different arguments.
The first is that the USPS should go private and be free of all government obligations.
That way it has more control over its operations and can become profitable.
The second is that taxpayers should subsidize its losses.
That loss is a drop in the bucket compared to the trillions the government spent in 2021.
This example shows that framing data different ways can lead to different conclusions.
This is also the case with the facts around the energy use of cryptos.
How Much Energy Does Bitcoin Use?
Here are some scary facts about crypto energy use you may have heard before:
- Bitcoin consumes more electricity per year than Malaysia or Sweden.
- Bitcoin uses seven times more energy than Google.
- One bitcoin transaction consumes enough energy to power a home for six weeks.
All of these facts are based on the estimates that bitcoin uses around 110 terawatt-hours per year.
Now here are some facts that paint the energy use in a positive light using the same figures:
- Bitcoin uses just 10% more energy than holiday lights per year.
- Bitcoin only uses 0.55% of the world’s energy to secure nearly $1 trillion in value.
- Bitcoin uses around 50% less electricity than the state of New York.
Both sets of comparisons are true even though they may seem contradictory.
And now we have a dilemma similar to the example of the Postal Service.
So how are we supposed to interpret this data?
Ask the Right Question
The way to gain clarity on this issue is to figure out the right question to ask.
In the case of the USPS, the question is, “Is it a crucial government service or just another delivery service?”
And when it comes to bitcoin, the question is, “How much energy should it consume?”
This question lets us compare bitcoin’s energy use to other types of money.
As you can see, bitcoin uses less than half the energy of the banking system and the gold industry.
But what’s more encouraging is that things are getting greener in the crypto world.
Renewable energy is a growing part of the energy mix for bitcoin.
According to the Bitcoin Mining Council, renewables power 66% of the bitcoin network.
But there are plenty of cryptos out there that are more energy-efficient than bitcoin.
And there are several more in the works.
Check out some of these more sustainable cryptos in Ian King’s Next Wave Crypto Fortunes service.
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