Energy use a feature not wrong in Bitcoin, says cryptominer • The Register

Conspicuous energy consumption is a feature of the Bitcoin model, rather than a flaw, according to a crypto miner who defends the power-guzzling activity.

Zach Bradford, CEO of publicly traded Bitcoin miner CleanSpark, waded into the debate sparked by the Ethereum merger, the shift from proof-of-work to proof-of-stake, which could see an order-of-magnitude reduction in the power consumed by the rival cryptocurrency network.

“Proof of work, and the energy it consumes, is a feature and not a bug. There is no CEO of Bitcoin, it is completely decentralized and true proof of work is the only good way to truly secure the blockchain without an overseer. It has value because Bitcoin is used all over the world as a currency without anyone changing the mechanism,” he said.

While power consumption is central to Bitcoin, Bradford argued, the carbon emissions resulting from power generation are not such an issue for ClearSpark as the cryptominer uses 90 percent carbon-free power. Nuclear power was a big part of that, he said.

Bradford also claims that although there was a global energy shortage, the company’s consumption was justified by the fact that ClearSpark’s facilities are located in “grid-edge areas” where there is a surplus of electricity, such as the US state of Georgia.

All of this seems reasonable enough until it faces a nasty battle with evidence. Claims that Bitcoin, and the blockchain it relies on, are fully decentralized were questioned by a report commissioned by the Defense Advanced Research Projects Agency (DARPA).

Published in June, the report found that the low-level protocols – or cryptographic primitives – underlying distributed ledger technology security were sound, but implementation decisions mean the claim of immutability is open to question. “We show that a subset of participants can gain excessive, centralized control over the entire system,” the researchers said.

The study points out that Bitcoin traffic is unencrypted, meaning that any third party on the network route between nodes, including ISPs, Wi-Fi access point operators or governments, can observe and drop any message they want. “Of all Bitcoin traffic, 60 percent passes through just three ISPs.”

While ClearSpark may feel like it’s off the hook when it comes to carbon emissions, that’s hardly reassuring when you consider the magnitude of the environmental impact of Bitcoin mining against the small contribution it makes to global financial transactions.

In September, a study by researchers at the University of New Mexico found that in 2020 Bitcoin mining used 75.4 terawatt hours per year (TWhyear-1) – higher energy use than Austria (69.9 TWhyear-1) or Portugal (48.4 TWhyear -1).

The team also found that energy emissions for Bitcoin mining had grown 126-fold from 0.9 tons of emissions per coin in 2016 to 113 tons per coin in 2021. One Bitcoin mined in 2021 created $11,314 in climate damage, with total global damage exceeding 12 billion dollars or 25 percent of market prices. The damage peaked at 156 percent of the coin price in May 2020, so that every $1 Bitcoin market cap led to $1.56 of global climate damage. The relative damage was slightly greater than the relative damage to beef production (33 percent) and much more than gold mining (4 percent).

Alex de Vries, the founder of Digiconomist, pointed out that Bitcoin handles 100 million transactions per year. “It’s completely insignificant when you look at the mainstream financial world. Traditional financial institutions are responsible for handling more than 700 billion digital payments every year, and it’s still growing.”

Bradford counters that Bitcoin was not subject to the whims of central bank policy like conventional currency. Only 21 million will ever be made, where central banks tend to print money when it suits the economic circumstances. Bitcoin is set to hit the ceiling in 2140, a moment ClearSpark is not yet planning for, Bradford said.

“We will all be in the metaverse [by then],” Bloomberg TV host Katie Greifeld said.

“… and everyone’s going to use Bitcoin there,” Bradford rejoined, demonstrating if nothing else that the media and tech industry can engage in groupthink while the planet they depend on has lost 70 percent of its wildlife since 1970. ®