There is an interesting human trait that causes people to grasp and believe any argument, no matter how asinine, when it criticises something they do not like. It is an odd bit of human nature that we see in everything that is tribal that causes a division in people, whether religion or politics or video games and sports. If a group of people dislike a person, event, or object, they will start picking apart everything they do not like about it and remain blissfully ignorant of any silver lining that may be present.
We see this with people every day. For example, if there is a disliked public figure, the opposing group will pick apart every little feature, trait or action of that person, considering them to be intolerable. Though if those same traits are present in someone a group likes, those flaws now become “quirks” and are now magically supported and tolerable.
If our favourite player scores a goal, it is because they are skilled and awesome, yet if an opposing player scores, how many fans will claim that the player somehow cheated, played dirty or got lucky? We see this habit play out, and we are all guilty of it to some degree. We want to back the things we support and can fall into the habit of ignoring any flaws associated with it and only choose to see things through rose coloured glasses that supports our bias.
Experts refer to this trait as denialism or confirmation bias, which is what causes humans to put their blinders up and reject facts and figures that oppose their already formed opinions and beliefs. Confirmation bias is the trait that leads people to claim that the Earth is flat despite being presented with mountains of evidence that suggests otherwise.
Though too often, these biases lead to criticisms that can be downright damaging and insultingly untrue, as we have seen with many Bitcoin stories from haters. There have been many FUD and blatantly untruthful narratives that have tarnished Bitcoin’s reputation over the years. Some of these criticisms and worries are legitimate, while some are downright ridiculous. I understand that not everyone loves Bitcoin, and there are a lot of worries that I understand, sympathise with, and some criticisms with which I even agree.
Once in a while, an argument will surface that is easy to dispel and downright ludicrous. Yet, people still believe it as there are so many out there who have a habit of forming opinions based on headlines without bothering to look into the topic.
The first narrative that got to me was that governments should ban Bitcoin because people use it for illegal purposes and terrorist funding. I still hear this argument today though it is pretty obvious that suitcases full of cash have been used for dirty deeds far more than Cryptocurrency ever has, yet nobody mentions banning cash. Not to mention that Bitcoin transactions are trackable, cash is not, so you wouldn’t be a very bright criminal if you used Bitcoin for nefarious acts.
To prove this point, a recent report from Chainalysis shows that criminal activity in 2019 only represented 2.1% of all crypto transactions, and in 2020 that figure dropped to 0.34%, so how are people paying criminal kingpins and their dealers? Good old-fashioned cash in hand just as it has always been. Can we please put this ridiculous argument to bed?
The other narrative that I would like to discuss here is that Bitcoin mining is bad for the environment. I’ll cover some stats, figures, and arguments that should hopefully help clarify any confusion and help you out the next time you need to defend Bitcoin’s honour after hearing someone say that Bitcoin is destroying the planet after they clearly did not bother doing any of their own research.
Disclaimer: I hold Bitcoin as part of my personal investment strategy.
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Lack of Understanding, or Intentionally Fuelled Hate?
It was early 2021, we were in a full bull market, moon bags were swelling, people were dancing following Bitcoin’s meteoric rise, we were all getting crypto wealthy, and times were good. Microstrategy, Tesla and Square had all added Bitcoin to their balance sheets, and we thought Bitcoin was going to the moon.
Little did we know that a war on Bitcoin mining was about to creep out of the shadows. Suspiciously coincidental, many traditional financial publications and mainstream media news outlets all at the same time would start spouting stories about how all of a sudden, Bitcoin is the worst thing that has ever happened to the planet.
This is pure opinion and speculation on my part, as we will never know for sure, but it seems like every time Bitcoin starts seeing a nice rally, a coordinated attack appears to come out of nowhere to stifle the growth of the asset. I believe there may be a few legitimate reasons why the “powers that be” would want to keep a leash around Bitcoin’s potential and keep the price low which I will go over.
I do not believe that this narrative was initially pushed due to a lack of understanding, though the mass sentiment that added fuel to the flames afterwards certainly was. So, as I always do when I hear an extreme opinion hitting mainstream news, I started researching these claims about Bitcoin mining being bad for the environment.
Within ten minutes, I could quite easily determine for myself that this claim was unsubstantiated, inaccurate and extremely exaggerated. Anyone who would have put a few minutes into looking into this themselves would have come to the same conclusion, which is why I believe the initial claim was not pushed due to lack of understanding but was pushed intentionally as contradicting evidence was easy to find.
Bitcoin mining indeed uses energy, but it is not nearly as severe as the media made it out to be. Unfortunately, many of the reports and articles were woefully negligent, seemingly purposefully so, leaving out many other factors and ignoring the 360-degree view of the issue, choosing to single Bitcoin mining out while excluding every other industry that uses any form of energy.
The reports also chose to blatantly ignore the fact that there are dozens of different types of energy used currently, which plays a critical role as each type of energy has a drastically different effect on the environment. The fact that average little old me was able to dispel this FUD myself within ten minutes, I am inclined to believe that this was an agenda spread intentionally, but why?
Why Keep Bitcoin Price on a Leash?
More speculation and opinion on my part, but there may be reasons why those who hold powerful positions might not want to see Bitcoin’s price fire straight to the moon too quickly. This could be why these damaging narratives seem to surface every time Bitcoin’s price rises significantly, why these articles and reports seem coordinated, all coming out by multiple outlets simultaneously, and why the SEC keeps rejecting Bitcoin ETFs, keeping the price down.
Bitcoin is Taking Market Share- Bitcoin is removing capital from traditional markets at an accelerated rate and has seen its market capitalization hit $1 trillion in a record amount of time. After Bitcoin has been declared the best performing asset class of the decade and one of the top-performing assets of all time, many investors want Bitcoin exposure.
We are seeing an exodus of capital leaving stock markets, bond markets, precious metals, and more as investors are cashing out their other investments in droves to gain Bitcoin exposure. Many wealthy and powerful people are invested heavily in the stock markets, bond markets, metals, etc. The last thing these people want is to see money start flowing out of their preferred markets or never entering in the first place as money finds a home in Bitcoin.
Sudden Bitcoin Adoption may destabilize the Economy-The more hype and adoption that surrounds Bitcoin, the faster investors FOMO in, resulting in money draining out of traditional markets, which is no good for anyone invested in them, nor the economy itself. The strength of a country’s economy is correlated with and dependent on the health and stability of the stock and bond markets. Too extreme of a sudden outflow from these markets could destabilize the economy, so the last thing that governments, corporations, and investors want is Bitcoin to become too popular too quickly.
One of the largest drivers behind Bitcoin hype and popularity is when prices are soaring to all-time highs and Bitcoin is in the headlines. That is when investors dive into Bitcoin like there is no tomorrow and dump other assets. There is a correlation between Bitcoin’s price and its popularity; keep the price suppressed and boring, and you can effectively suppress Bitcoin excitement and adoption rate.
The Investment Space is Tribal- I have a friend who invests in real estate who heard about Bitcoin in the early days, same as me. Like many people, he wrote it off as a fad (as did I for a while). To this day, he is still a hater, and I am all in. Every time Bitcoin has a dip, he messages me saying something along the lines of, “I’ll bet you regret buying Bitcoin now.” Yup, darn those dips, I sure regret holding Bitcoin.
No matter how many times I clearly show him that despite the dips, my BTC holdings have appreciated more than his real estate can ever come close to, he still holds onto his opinion that he made the right choice. Many people seem to take it personally if they did not have the foresight to get into an investment early or made a wrong call on it.
There are so many egos at stake in the investment game, and nobody wants to admit that they missed the boat or made a bad call. Many investors are annoyed that they never got into Bitcoin or get upset when it performs better than their investment, so they wish it harm and want to see it crash and burn simply because they bet on a different horse.
It seems silly, but tribalism can be venomous, and it certainly exists in the investment space. We see this with the likes of Warren Buffett as he repeatedly calls Bitcoin “rat poison.” Instead of simply saying Bitcoin isn’t for him or trying to understand it or wishing Bitcoin investors well and good luck, he, along with many others, flat out attack Bitcoin and insult it. Quite childish if you ask me.
Institutions Want to Buy Low- It takes a long time for institutions and companies to move vast amounts of money around. The process can be cumbersome, especially if shareholders and clients need convincing, and the regulatory and legal framework behind shifting asset allocation of company treasuries into Bitcoin can be a big hurdle.
Many institutions are holding off for governmental clarity around digital assets, so there is a good chance that some big players will need to wait as they are getting all their dominoes lined up and are waiting for the green light to be able to invest in Bitcoin. As a result, there may be a large, coordinated effort to keep BTC prices low as institutions wait patiently before being able to swoop in to buy at depressed levels.
Those are some of the reasons that I believe there could be a coordinated effort to suppress the price of Bitcoin, which is how narratives such as it being bad for the environment get started in the first place. But now, let’s cover some defensive arguments and look at some stats and figures.
Energy Consumption is Not Understood
Bitcoin’s energy consumption and environmental impact are continuously commented on and criticized but rarely understood. Many arguments stem from comparing Bitcoin mining’s energy use to an entire nation’s electricity use, comparing apples to oranges. Critics seem unable to comprehend that “energy use” is vastly different to “electricity use.”
If we look at the chart above, not all “energy” is utilized equally. Oil, coal, and gas are the primary forms of energy used by most industries and society. We see renewable energy makes up a tiny fraction of global energy use and the majority of Bitcoin mining uses renewable energy.
Over 1 billion people have no access to the electrical grid but still, have access to energy via fuels. Much of the world does not rely on electricity to survive as they utilize alternative forms of energy, as do Bitcoin miners. Many miners are now using gas flaring as an energy source that is about as eco-friendly as one can get. It utilizes energy that would have otherwise been wasted due to oil and gas production.
Of the 160,000 TWh of energy generated worldwide each year, 50,000 TWh is lost due to inefficiency, and electrical grids generate only 25,000 TWh. Bitcoin mining consumes around 120-190 TWh, a mere 0.1% of the total global energy production while utilizing 0.2-0.4% of the energy that would otherwise have been wasted. To put this into perspective, people playing video games uses more energy than Bitcoin mining, yet nobody is saying video games should be banned for that reason.
Bitcoin mining has been singled out unfairly over every other industry for its contribution to rising global carbon emissions. This has happened as a direct result of uninformed and biased news articles. Reports released highlighting comparisons between disconnected metrics such as energy vs electricity use, ignoring stats from other industries and leisure activities that use higher amounts of energy, cherry-picking figures and not looking at the entire picture in terms of industries that use fossil fuels vs renewable forms of energy.
This narrative was intentionally pushed to spread FUD or released by media agencies that are not adequately informed or conducting thorough research.
Another factor contributing to so many people jumping on the “ban Bitcoin mining” bandwagon stems from the fact that many people do not fully understand the positive impact on the world that Bitcoin has now and will continue to have in the future. Many people still consider Bitcoin “rainbow money” or a Ponzi scheme. It is easy to rally behind banning something when you feel it has no use or purpose.
Many people still lack a fundamental understanding of blockchain technology. They have already made up their minds, not realizing the promise and potential that this technology has, and therefore feel that it is not worth any energy consumption at all. As a Coin Bureau reader, I assume that you are fully aware of the humanity saving potential that blockchain technology has to make the world a better place.
Bitcoin’s potential to make life better for billions of global citizens is a good use of energy, I would say, and as Bitcoin education increases in tandem with Bitcoin mining becoming greener, I am confident this ban Bitcoin mining witch hunt will end.
Bitcoin Mining Uses Predominantly Sustainable Energy From Renewable Resources
We also cannot understate the vital fact that Bitcoin mining is not using the same fossil fuels and coal energy that are reportedly responsible for climate change. According to Deutsche Bank Research, the Chinese National Energy Agency, and Morgan Stanley Research, 78% of Bitcoin energy usage comes from renewable energy!
Going back to the ridiculous argument that Bitcoin mining uses more energy than entire countries, proven inaccurate, putting that argument deeper into the ground, we can see that Bitcoin mining uses the highest sustainable energy mix out of any nation.
I think another critical factor to mention here is understanding why Bitcoin mining uses mainly renewable energy, more than any other nation or industry. I wish I could say it is because Bitcoin miners care more about the environment and are more forward-thinking but let’s be realistic.
Bitcoin Miners are in it to make a profit, just like everyone else. One of the main reasons that they are utilizing eco-friendlier options is that they know they are coming under fire from this attack, so they are doing everything in their power to keep the masses happy so they can continue operating and not risk being shut down. The other major reason is the simple fact that Bitcoin miners chase the cheapest power source available, which is increasingly becoming renewable sources.
Bitcoin is Only Getting Greener
As the world becomes increasingly more concerned about protecting the planet’s health, Bitcoin mining is also experiencing a push to make it as eco-friendly as possible. Recently, several privately formed initiatives have emerged in the crypto ecosystem, such as the Bitcoin Mining Council and the Crypto Climate Accord, to address rising sustainability concerns, ensuring the efficiency and transparency around crypto energy consumption. As a result, we have seen El Salvador turning to volcanoes to power Bitcoin mining while hydroelectric plants in New York are also providing greener Bitcoin mining solutions.
As mentioned earlier, Bitcoin miners have also begun setting up on oil patches to take advantage of the wasted gas emissions from oil production, and institutions are feeling the pressure of ESG rules surrounding environmental compliant investments, further driving the push for green Bitcoin mining.
Technology is also advancing, with companies like Intel and NVIDIA now making energy-efficient Bitcoin mining chips that the average person can run in their home computer using little energy consumption. As technology becomes more energy-efficient, Bitcoin mining will continue its rise in sustainability. Is it likely that someday crypto mining may become completely carbon neutral, if not carbon negative.
I hope this article has helped shed some light on your research in trying to determine if Bitcoin mining is as bad for the environment as the media portrays or provided you with a link to share next time you find yourself in an argument with someone hating on Bitcoin who could use an alternative viewpoint.
Fortunately, since this misinformation has been spread, there have been a few organizations such as the Bitcoin Mining Council and the Crypto Climate Accord formed not only to ensure Bitcoin mining remains efficient but help dispel the myths while accurately informing society about Bitcoin mining energy consumption in an attempt to halt the false accusations that have been spreading like wildfire across mainstream news outlets.
There have also been notable figures such as Sam Bankman-Fried, the CEO of FTX, and Michael Saylor taking to social media and working to defend Bitcoin mining against these false accusations.
One of the most infuriating aspects about this entire narrative is that many of the people who are shouting about Bitcoin mining being harmful to the planet are ignorantly hypocritical as many of them are the same people who rely daily on the traditional financial system, which uses immeasurably more energy than Bitcoin mining while driving gas-guzzling SUVs, running clothes dryers and air conditioning units 24/7 while their kid is in the basement playing video games as every light is on in the house.
I’m not saying people shouldn’t use dryers or play video games, but it would be nice for people to realize when they are part of the problem before casting stones and criticizing what they do not understand. As the old saying goes, clean up your own mess first before complaining about someone else’s.
Thank you for taking the time to stick with me and read through this article. It can be difficult to decipher truth from fiction these days, and I have the utmost respect for anyone who takes the time to seek out additional sources of information and who are willing to consider alternative viewpoints.
I feel fortunate that I have been able to do my part in helping dispel a falsely spread narrative. My research has shown me that there are a lot of organizations, individuals, reports, and articles out there that are all collectively working in tandem to make Bitcoin mining energy usage more transparent, information that will hopefully find its way to the mainstream and educate the masses.