Why Bitcoin is so bad for the planet

00:00:01 means there’s a huge motivation if you’re a bitcoin miner to burn an awful lot of electricity and that’s the problem you don’t just burn a norway’s worst amount of electricity and have no carbon footprint bitcoin is an attempt to build in in a decentralized way without any central bank any authority saying who owns what or how a digital internet first replacement for money can anything slow down the surge we have seen in bitcoin at a record high on this news that elon musk and tesla have invested one and a half billion

00:00:39 dollars into the cryptocurrency certainly bitcoin is in the mainstream now well and truly it works based on this process called mining effectively what bitcoin does is every 10 minutes the entire network holds a lottery you enter by doing on a computer a very hard and completely useless calculation the only reason why you’re doing this calculation is to prove that you’ve wasted some electricity doing it and the fact that you can prove you’ve wasted that electricity means that you’ve created something

00:01:12 scarce proof of work it’s called in the bitcoin world the first prize is what most people think of when they talk about bitcoin mining it’s financial you get paid currently six bitcoin about 200 000 pounds if you win the 10 minute lottery the other prize though is the important one for the network you also win the ability to verify every transaction that’s happened in the last 10 minutes and so in practice what you have is the network works mostly the way it was intended to lots and lots of people are doing lots and lots of

00:01:44 bitcoin mining and random ones of them win roughly in proportion to how much electricity they burn and that’s the problem we’re talking about a system which is built from the ground up to encourage people to use about 200 000 pounds worth of electricity every 10 minutes that when you scale it up is about two and a half times the energy use per year of amazon apple facebook microsoft and google combined 120 terawatt hours of electricity it’s also around the same as norway bitcoin miners try and minimize this

00:02:19 cost to themselves they tend to congregate in areas that have very cheap electricity or they have very cold weather because it means they don’t have to spend much money cooling their computers that get very hot when they do this useless calculation but the network is always going to roughly balance out at using 29 million pounds worth of electricity every day and that’s always going to come out as an astronomically high energy usage bitcoin defenders have a few arguments that suggest it’s not as bad as it seems the first

00:02:54 and biggest defense is to argue that a lot of bitcoin’s electricity comes from renewable resources a recent study from cambridge university suggested that about 39 of the electricity used by the bitcoin network is renewable that’s impressive there are very few industries in the world that have hit that level of renewable use but there are still problems that’s still electricity that could be used by other things the other problem is it still leaves 61 that is fossil fuels and the fossil fuel industry actually

00:03:22 seems to quite like bitcoin there’s been proposals for instance to install generation for bitcoin mining rigs on the flares at methane gas wells the idea being that normally you just burn that fossil fuel well now you can make money from burning it that is effectively paying them to avoid finding other ways to avoid emitting that extremely damaging gas the second defense is something that bitcoin fans like to call stranded generation this is the idea that some of the renewable resources that bitcoin uses

00:03:55 wouldn’t be used by anything even if bitcoin wasn’t there there’s an example in china if you’re looking at sichuan province and yunnan province in those places there’s a lot of hydropower that was overbuilt over the last decade and that’s hydropower which would otherwise be curtailed and so you see that being put to use mining bitcoin what’s the problem there’s two problems one is we don’t actually know how much stranded generation there is but the other problem is that we want electricity generation to be connected

00:04:25 to the grid to be available for the most productive uses that society can put it towards if you’re paying someone for their stranded assets you’re effectively paying them to keep them stranded it’s hard to look at that and think this is great for the environment and then there’s a third defense the argument that sort of rejects this whole discussion and goes look it’s worth it and that we shouldn’t be talking about bitcoin wasting electricity at all after all lots of things use lots of electricity

00:04:52 but we don’t talk about it as wasting in the same way we accept that people can use electricity for leisure time people can use electricity for business bitcoin is a new transformative digital asset and we have to support that and the problem is because there is fundamentally a scale mismatch here bitcoin doesn’t just use electricity bitcoin uses about 0.1 percent of all of the electricity in the world and it does this for a novel financial system that handles about seven transactions a second just visa alone

00:05:23 one bank card provider will do easily a thousand times more than seven transactions a second unless there is some radical unforeseen change that wildly slashes the power usage of the bitcoin network or results in an unprecedented increase in the efficiency of that network to process transactions i can’t see it being the future of a sustainable financial system you

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In Groups, discuss the pros and cons, using evidence and examples from the transcript.

Considering the high energy consumption of Bitcoin, do you think its innovative potential justifies its environmental impact? Why or why not?

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• Task: In pairs, students write 3–4 sentences predicting how innovations in energy efficiency might change the future of cryptocurrencies.
  • You must use at least one conditional sentence.
  • Incorporate vocabulary from earlier.

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