By MICHAEL BASTASCH
Environmentalists are hyping a new paper on Bitcoin’s energy consumption, claiming the cryptocurrency could consume as much electricity as Austria by the end of the year.
If you’re a little skeptical, that’s alright. Environmentalists may be fretting that Bitcoin could exacerbate man-made global warming, but a close look at the figures they rely on suggests activists may be wrong.
“That’s a troubling trajectory, especially for a world that should be working overtime to root out energy waste and fight climate change,” Eric Holthaus, an activist and writer, wrote Thursday in Grist.
Holthaus, who’s sounded the alarm on Bitcoin before, is referring to a new paper by Digiconomist founder Alex de Vries that found “the Bitcoin network consumes at least 2.55 GW of electricity currently, and that it could reach a consumption of 7.67 GW in the future.”
De Vries published the same findings in 2017, which also caught the attention of liberals and environmentalists. Activists see Bitcoin as an environmental scourgethat could boost carbon dioxide emissions. (RELATED: Global Warming Policies Are Driving Bitcoin’s CO2 Emissions Higher)
“By late next year, bitcoin could be consuming more electricity than all the world’s solar panels currently produce — about 1.8 percent of global electricity, according to a simple extrapolation of the study’s predictions,” Holthaus wrote. “That would effectively erase decades of progress on renewable energy.”
Some experts criticized de Vries’ estimate of Bitcoin’s energy use, and there are reasons to be skeptical Bitcoin is on its way to consuming half a percent of the world’s electricity — especially since his math may be wrong.
Bjorn Lomborg, author of “The Skeptical Environmentalist,” said de Vries’ estimate didn’t match up with global electricity consumption data. Using International Energy Agency (IEA) data, Lomborg noted Bitcoin’s estimated current consumption was only 0.09 percent of global electricity.
However, de Vries’s article does not put Bitcoin in the context of global electricity consumption — that claim was made in the accompanying press release.
Bitcoins are generated by computers that process complicated algorithms. Those algorithms become more complex over time, meaning more time and energy is needed to mine coins.
China is home to nearly 60 percent of cryptocurrency mining operations, and the U.S. is home to another 16 percent, according to estimates. That means most Bitcoins are likely generated by coal-fired power.