Is Bitcoin more environmental-friendly than many think?

Bitcoin and other cryptocurrencies have received a lot of negative attention in recent months and years because of their absolutely staggering energy consumption. Bitcoin alone uses roughly the same amount of energy as the Netherlands, thanks to the extremely energy-intensive "mining" process in which miners plug in computers - in some cases entire warehouses full of them - to solve complex math puzzles to make transactions (a process that known as the "Proof of Work") in the public blockchain ledger on which the cryptocurrency system depends - a task for which they are rewarded with small amounts of Bitcoin. The more computers work on the blockchain, the more (crypto) money is produced, which is an incentive for ever larger amounts of power-guzzling computing power, while the price of Bitcoin skyrockets. This considerable downside to what many believe is the beginning of the cryptocurrency era has spawned some extremely outspoken opponents and critics of Bitcoin and other e-currency companies. One of those pessimists is none other than Bill Gates, who publicly warned that Bitcoin is bad for climate change. "Bitcoin uses more electricity per transaction than any other method known to man," Gates was quoted as saying by the New York Times last month before calling himself a "Bitcoin skeptic". Gates isn't the only high-profile Bitcoin skeptic. Analysts representing Bank of America wrote in a note on Wednesday that the cryptocurrency "is not good news for the environment" before detailing that "Bitcoin's estimated energy consumption has increased more than 200 over the past two years %, which poses major environmental risks, "not least thanks to the fact that a large part of Bitcoin mining takes place in China, where coal is still a large part of the domestic energy mix. According to the latest data from the IEA, most of China's energy comes from coal, which makes up around 58% of the total energy mix. However, proponents of Bitcoin say that Bitcoin is much more environmentally friendly than these numbers suggest. A September 2020 report from Cambridge University found that an estimated 39% of the proof-of-work mining in the crypto asset industry is actually powered by renewable energy, mostly hydropower. (We also have China to thank for much of this hydropower). While this is certainly comforting to many climate activists-cum-Bitcoin skeptics, it is actually a huge step down from an earlier study that Bitcoin defenders had previously turned to the claim that 76% of mining is with renewable energy and which has since been debunked. Still, 39% is nothing to sneeze at, and some Bitcoin proponents say the cryptocurrency may actually help catalyze the development of new renewable energy technologies in the future by enabling quick returns for climate-conscious investments. Mike Coyler, CEO of Foundry, one of North America's largest cryptocurrency mining companies, told Markets Insider that he believes Bitcoin can serve as "a bridge between our current energy production and this future world of renewable energy production." He bases this argument on the fact that the rise of renewable energies, which are inherently variable depending on weather patterns and other environmental factors, sometimes leads to an excess of energy. Placing a bitcoin mining operation next to renewable energy production facilities can provide a use for this excess energy and thereby create an incentive for the further development of clean energy technologies and infrastructures. "It allows for faster amortization of those solar or wind projects, which means that more of them can be built faster in regions where it was previously not attractive because they would produce too much power for the grid in that area," was said Coyler quotes. If this theory proves true, it could have a huge impact as a way to reduce the massive and growing carbon footprint of cryptocurrencies escalates as the cryptocurrency industry continues to go gangbusters. Just this week cryptocurrency Coinbase went public in an IPO that pushed the total cryptoasset exchange market value to a staggering $ 85.8 billion.