After the short-term drop in its price value at the end of February, the bitcoin price is back at it with a new rise towards record values. As the BTC token once again generates both price and market cap figures, the same is happening across the board for the cryptocurrency domain. Here, both major alternatives like ethereum and much smaller tokens are all building up momentum on the back of the bitcoin’s rise. However, one of the most prominent figures in the domain of business and technology recently shared his views on a negative element of the bitcoin network and overall the blockchain-based system of generating digital currencies.
That figure is none other than Bill Gates and he presented a scathing rebuttal of the entire existence of bitcoin in regards to the environmental damage that its network produces every day. But, what are his precise takes on this big crypto network and how do they fall into the wider problem of the exploitative nature of all types of businesses in the modern world and not only those related to cryptocurrencies and their digital token?
Bill Gates, a billionaire philanthropist who was the main force behind the incredible success of Microsoft and its Windows platform, recently sounded the alarm on the power consumption of crypto. More precisely, he drew attention to the enormously high carbon footprint. The same effect on the natural environment is bound to grow only further as bitcoin and other digital currencies find mainstream adoption. While this was always a simple matter of energy expenditure and is by no means a surprise, the recent sharp rise in users and investors made the same growth a lot faster than many expected only a couple of years ago.
The same rise should continue in the foreseeable future as more and more investors come on board, giving the network a lot of publicity. At the same time, others are noticing the same publicity and trying to get their hands on some tokens as well. In richer nations that includes simply opening up easily accessible digital wallets and buying some crypto. In other places where money might be less available and in smaller quantities, people are still recognizing the value and getting tokens through efforts like freelancing or even through humanitarian organizations that give out digital tokens in countries like Venezuela and other economically struggling regions.
Electricity Per Transactions
Gates provided in his exposition some precise data regarding the operational capacity and energy costs of the bitcoin network. He said that the BTC transaction uses more energy than any other movement of financial value known to mankind so far. The founder of Microsoft also clearly stated that is a deep bitcoin skeptic and that the damage that the network does to the natural environment and the climate as a whole is substantial, as well as often misrepresented.
A recent assessment from the Dutch Central Bank shows that every transaction on the bitcoin blockchain costs an average of around 300 kg of CO2. In comparison, the same carbon footprint is created after some 750,000 swipes of Visa cards. Of course, that energy consumption is not arbitrarily set by the network. Instead, it represents the very bedrock functionality of the bitcoin blockchain and the proof-of-work concept that makes it possible.
The reason for this massive caron cost is that all transactions made by cryptocurrencies are documented on its public ledger. That makes the same system fully protected from any tampering and makes sure that all of them are transparent and accessible to everyone else. That is why, even if all but one bitcoin network node went down, the same singular mining rig would still have the complete ledger at its local memory.
Furthermore, the individual blocks of bitcoin are created by miners who are awarded BTC tokens for their work. Their mining rigs run the same code every day, all day, using mining rigs. Presently, those rigs have a combined global power consumption that is equivalent to a country like Austria. This nation has a population of 8.8 million people and they all spend as much electrical power as the bitcoin network.
Sources of Power
There are bitcoin mining pools all over the world. More and more are created as far away as Siberia in the Russian Federation and the Nordic north. However, while these are cropping up across the globe, the majority of the computing power behind the bitcoin network remains in one country – China. Mining networks for bitcoin and every other digital currency are mainly based in China and this nation uses much of its electrical power from fossil fuels. That consists primarily of coal and thus, the amount of CO2 being pumped into the atmosphere in China for this purpose remains very high.
An additional problem for the carbon footprint remains the fact that most advanced mining rigs have a very short effective lifespan. Today, very few mining pools expect to see 18 months of work from their newest rigs. That includes an additional level of carbon waste that comes from constantly making new and new mining computers while the old ones get a year or two in the retail mining market. After those three to four years, they are simply discarded as junk by whoever might be using them.
The future of the crypto mining space is going to have to deal with the problem of energy consumption, especially those regions that use very damaging fuels. The critics of this line of thought are pointing out that any technology has some energy demands. For example, what is the carbon footprint of video calls (that could be audio calls just as easily) or esports tournament streaming?
It too comes with a CO2 emission cost that could – in theory – be completely avoided. However, even with that concept, the fact remains that mining needs to move to renewable sources, just like any other energy-consuming process. That is not going to be an easy transition, but if nothing happens in that domain, critics like Bill Gates will only become louder and more numerous.