By dropping $1.5 billion into bitcoin, Tesla inadvertently rekindled the popular media narrative of criticizing Bitcoin’s energy consumption. Mainstream media chided the electric vehicle manufacturer for betraying its climate-friendly aspirations by investing in bitcoin.
Everyone from Reuters to The Verge to the Los Angeles Times wrote articles about the ostensible inconsistency between Tesla’s climate-friendly agenda and its bitcoin investment. (Cue a windmill brain wojak.)
But the facts haven’t changed in the past decade. If anything, bitcoin mining energy consumption has a hugely net positive effect on the environment, and outrage from activist naysayers is fueled by incredible ignorance.
Anecdotes from large-scale mining operations in Russia , Nordic countries, and elsewhere suggest that a significant portion of the Bitcoin network is powered by renewable sources. Recent estimates of how much total mining activity is powered by renewable energy range from 40% to over 70%.
There's also a growing number of miners who are making use of energy that would otherwise be stranded. Some miners have partnered with oil and gas companies to limit flaring and repurpose that fuel for mining. In these cases, the more energy bitcoin mining consumes, the better! Instead of mining bitcoin, would any serious environmentalist actually prefer the gas to be flared?
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Diligent students of Satoshi Nakamoto will remember that Satoshi referenced gold mining to contextualize the inevitable increase in energy consumption for digital gold mining. Here's what they wrote:
“Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.”
In other words (and with a bit of added snark), bitcoin mining only “wastes” energy because critics dislike bitcoin. The environmental critics are the product of a deep-seated anti-bitcoin bias, not from a preponderance of facts.
Bonus: For a short summary of bitcoin’s environmental effects, watch this six-minute interview of Castle Island Ventures co-founder Nic Carter on Bloomberg TV.