Should nations try to ban bitcoin because of its environmental impact?


Skull of Satoshi, a sculpture by Benjamin Von Wong highlighting the environmental impact of bitcoin

VonWong/Skull Of Satoshi/Greenpeace blog.vonwong.com/skull/

The amount of electricity used to mine and trade bitcoin climbed to 121 terawatt-hours in 2023, 27 per cent more than the previous year. While other cryptocurrencies in the same position have made bold changes to cut their impact, bitcoin’s decentralised community of developers, miners and investors are showing little interest in changing course. If bitcoin cannot clean up its own house, should governments step in to shut it down?

The latest data from the University of Cambridge shows that bitcoin currently accounts for 0.69 per cent of all electricity consumption worldwide. It also requires vast amounts of water, both for electricity production and for cooling at data centres. A study last year found that a single bitcoin transaction uses enough water to fill a swimming pool.

To dispense with centralised control but to ensure security and reliability, bitcoin traders register transactions in a permanent record called the blockchain by carrying out vast numbers of calculations.

This protects the network because hackers would need to control more than half of that computer power to fake or undo a transaction. But it also sucks up resources and pumps carbon into the atmosphere – it is estimated that bitcoin accounts for 0.16 per cent of global greenhouse gas emissions.

Alex de Vries at VU Amsterdam in the Netherlands has studied bitcoin’s impact for years and believes it is indefensible. “The whole system is built to incentivise participants to waste as much resources as they can possibly afford on making computations of which the result is immediately discarded,” he says.

In 2022, another cryptocurrency, Ethereum, ditched this wasteful “proof-of-work” system altogether and replaced it with one where those who own currency control the network, rather than those who own and operate computing power. This slashed the network’s energy consumption overnight by more than 99.99 per cent. More than a year on, the experiment has proved successful, and Ethereum remains secure.

De Vries says the bitcoin community – a loose collection of miners, investors and companies – refuses to take the same step and remains wedded to proof of work despite its environmental impact.

“Such a system is just totally inappropriate at a time where human-induced climate change is making it more and more urgent to be more mindful about the way we use resources,” he says. “We would instantly reduce global electricity consumption by half a per cent and worldwide carbon emissions by a quarter per cent [if bitcoin ditched proof of work]. This may not sound like a lot, but this result would be achieved overnight. I don’t know of any other way to cut greenhouse gas emissions faster than this.”

New Scientist approached several of the world’s leading bitcoin mining companies for an interview on the issue. Argo, TeraWulf, Hut 8, Riot, Block Mining, Frontier Mining and HIVE Digital Technologies didn’t respond. The email address of the Bitcoin Mining Council, a members’ body set up to speak on behalf of mining companies, appeared to be no longer valid. A statement on the group’s website says: “The BMC believes that Bitcoin’s energy usage is a feature, not a bug, and provides tremendous network security.”

A campaign called Clean Up Bitcoin, backed by the US non-profit organisation Environmental Working Group and Greenpeace USA, aims to pressure the industry to reduce its environmental footprint, pointing out that the rapid turnover of powerful machines designed and built specifically to mine bitcoins also adds significantly to global e-waste, sending 30,000 tonnes of machines to landfill annually. The problem was highlighted last year by an art installation called the Skull of Satoshi, created by art activist Benjamin Von Wong.

“The growing climate and community impact of bitcoin mining is stark and heavily documented through scientific journals, investigative journalism and research by government and independent scientists,” says Erik Kojola at Greenpeace USA. “Even with this knowledge, bitcoin miners and investors continue to forge forward, growing their industry, showing a clear lack of concern for CO2 emissions, large water usage, support for fossil fuels and negative community impacts.”

Kojola says financial firms like BlackRock, Fidelity and JPMorgan Chase are looking to push mainstream adoption of bitcoin by creating new financial instruments that allow people to indirectly invest in it. “Our concern is that this will drive up bitcoin’s price, creating an explosion in the environmental and social footprint of this cryptocurrency,” he says.

BlackRock says it was unable to discuss its bitcoin fund because of US Securities and Exchange Commission rules on products being reviewed. The other companies highlighted by Kojola didn’t respond to a request for an interview from New Scientist.

With no sign of the bitcoin community or the finance industry working to fix the problems themselves, Rachael Orr at the charity Climate Outreach says governments will need to force changes through. “It’s really important that people are made aware of the environmental cost of trading in these currencies, so they can make informed choices,” she says. “Our research shows that people are willing to change their behaviours, but they need strong leadership from governments. This is why we need a proper government strategy on how everyone can be involved in successfully tackling climate change.”

However, bitcoin’s decentralised nature makes it next to impossible to enforce changes and the same is true of dismantling the technology. Countries can take individual stances to ban bitcoin mining, as China did in 2021 – but without global consensus, that is likely to lead to a game of whack-a-mole where miners hop from state to state to evade bans.

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This article was originally published by a www.newscientist.com . Read the Original article here. .