Transition is always messy and often painful, whether we’re talking about the switch from the kind of horsepower with hooves to the kind with tires — or the birth of a profoundly transformational technology like Bitcoin.
For Bitcoin, one transitional pang is its gargantuan appetite for energy.
Electricity powers the computers that capture, verify and store the Bitcoin database at thousands of mining nodes around the world. Critics like to point out that those mining operations use as much energy as a small country.
They repeatedly point to a list of countries whose energy usage is roughly on par with what that of Bitcoin miners. And it’s true. According to Digiconomist, Bitcoin miners use as much electricity as individual countries like New Zealand, Hungary, Qatar and Peru.
It’s enough to draw heavy condemnation from environmentalists. But it’s an inaccurate assessment of what’s happening now and what will happen to Bitcoin mining and energy usage in the future, said Charlie Shrem, Bitcoin pioneer and principal at Crypto.IQ.
Never forget that this is an evolving technology that adapts in response to threats and tends toward greater efficiency because it brings the greatest return on investment. In fact, Shrem thinks Bitcoin and cryptocurrency in general are going to have a net positive effect on efficiency in energy usage and production.
Whatever is happening with Bitcoin energy use, it’s important to note that no one is looking at the massive energy consumption of the current financial system that would drop dramatically or go away completely, depending on how blockchain evolves.
We’re talking about the billions of plastic cards being created, the buildings that are heated and cooled, the millions of employees who drive to work in cities around the globe, the cars that sit in drive-through tellers, the servers and computers of banking and finance that, by themselves, are a colossal energy suck.
And, as we said earlier, these attacks also don’t acknowledge that mining is a moneymaking endeavor, so cost cutting will be a top priority.
“Miners always want to maximize profit and minimize costs,” Shrem said. “There’s an economic incentive to use renewable energy.”
Internally, miners will also be looking for more energy efficient hardware and algorithms to save on costs as well.
And Shrem pointed out that, while all this innovation is going on, nowhere in the world is anyone diverting electricity from schools or hospitals to Bitcoin mining.
“I would argue that Bitcoin and other mining is actually going to be leading the way for better renewable energy sources because there’s a demand for it,” Shrem said.