The effects of climate change and global warming are becoming more evident than ever. Rising temperatures, strong storms, severe droughts, huge wildfires, and extreme flooding are just some of their more notable consequences. And human activity that has drastically increased the concentration of greenhouse gasses in the atmosphere is the principal cause.
According to an article published by the National Aeronautics and Space Administration (NASA) on August 14, July marked “the hottest month on record since 1880” in the United States. CNN reported that 147 heat-related deaths were recorded in the past couple of months in just five counties. This is a peek of how bad it is going to get if the temperature continues to increase.
“The science is clear, this isn’t normal. Alarming warming around the world is driven primarily by human-caused greenhouse gas emissions. And that rise in average temperatures is fueling dangerous extreme heat that people are experiencing here at home and worldwide,” Gavin Schmidt, director of NASA’s Goddard Institute for Space Studies (GISS), said.
And this is why the U.S. is more vigilant than ever, even treating climate change as the “existential threat” of this generation and enacting policies that serve to reduce greenhouse gas emissions and ultimately become carbon neutral by 2050.
Climate change awareness is also at an all-time high, with a recent Pew Research Center survey stating that two-thirds of American adults believe that the government should prioritize the development of renewable energy. Attention is now focused on reducing the carbon footprint of any kind of activity, especially that of big businesses.
Bitcoin Mining and Proof-of-Work
In May 2021, Elon Musk, the CEO of electric car manufacturer Tesla and owner of social media giant Twitter, lambasted Bitcoin mining for its high energy consumption and announced that Tesla would stop accepting Bitcoin as payment for its car sales.
“We are concerned about the rapidly increasing use of fossil fuels in Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot come at a great cost to the environment,” Musk wrote in his tweet.
Musk’s announcement quickly gained traction and was reported on major news sites. It became the talk of the town and directly led to the cryptocurrency market losing about $365 billion, with the price of Bitcoin Core (BTC) falling 10.6% to $48,500. This spurred governments and other environment-related agencies all over the world to investigate cryptocurrencies’ carbon footprint and enact policies to control it.
Musk definitely had a point when he declared Bitcoin mining as bad for the environment due to its high consumption of energy. However, his statement was not completely correct. To better understand why, it is important to briefly delve into some blockchain basics.
Bitcoin is the first functional implementation of blockchain technology, and other digital currencies that were created afterward also use it as a base layer. The way it works is that every action on the blockchain (the buying and selling of crypto, for instance) is processed as a transaction. Each transaction is then compiled into a data block.
Once a data block is full, it is linked to another completed block to form a chain; hence, the term “blockchain.” Nodes or miners on the network are the ones who process each transaction, and they are paid transaction fees and a block reward. This refers to the newly minted coin that is awarded every time a block is successfully added to the chain.
Bitcoin uses a Proof-of-Work mechanism where a miner must compete with other miners in solving a highly complex mathematical problem before they can win the right to add a block onto the chain. This necessitates a supercomputer and other specialized equipment in a temperature-controlled facility. And this is what consumes an insane amount of electricity, leaving an extremely high carbon footprint.
Bitcoin’s Energy Consumption
Now, before going back to Musk’s statement about Bitcoin’s energy inefficiency, it must be noted that the Bitcoin he is referring to is BTC. It is what a majority considers as the original Bitcoin created by Satoshi Nakamoto. However, this original Bitcoin actually split into three a while back: BTC, Bitcoin Cash (BCH), and Bitcoin Satoshi Vision (BSV).
In fact, BTC has changed the original Bitcoin protocol so that it cannot even be compared anymore to its original design. It only retained Bitcoin’s original ticker symbol. Because Musk is referring to BTC, he is correct in his assessment. BTC continues to refuse to scale and is stuck at the starting point of 1-4MB blocks at a throughput of a mere seven transactions per second (TPS).
According to the Bitcoin Energy Consumption Index published by Digiconomist last year, processing one BTC transaction roughly consumes 1,449 kilowatt hours (kWh), which is nearly two months’ worth of electricity an average American household uses up. A BTC block typically contains about 2,000 transactions.
Given this number—note that energy consumption is affected by the quality of equipment and size of the facility—it would take nearly 2.9 million kWh just to complete a single BTC block. This makes the BTC totally energy inefficient and, thus, bad for the environment. However, what Musk failed to consider in his statement is that BTC is not the original Bitcoin, not anymore.
Scalability, Energy Efficiency and Sustainability
Bitcoin creator Satoshi Nakamoto stated previously that the Bitcoin he invented was built to scale. The 1MB data blocks and seven TPS were just mere starting points, and they were meant to increase as market demand grows. Scalability was actually a major issue in the split of Bitcoin, as BTC did not want to scale.
BSV, on the other hand, was committed to scaling. After restoring the original Bitcoin protocol in November 2018, it has unleashed its blockchain’s ability to scale unbounded. This means that it will continue to scale according to market demand. At present, the BSV Blockchain has already scaled to 4GB blocks and 50,000 to 100,000 TPS, with each block containing a range of two to three million transactions.
BTC is processing only about one to three percent of BSV’s transactions per block, and this is what makes the former energy efficient and the latter environment-friendly. At present, BTC has a carbon footprint of 63.3957 kg CO2e/txn, while BSV’s is only at 0.0230 kg CO2e/txn. And as BSV continues to scale, its carbon footprint will also dramatically decrease.
Looking at these numbers, it is clear that there is a solution to Bitcoin’s high energy consumption. It is definitely not to change the Proof-of-Work mechanism that fosters healthy competition among the miners on the network. The solution simply lies in enabling blockchain scalability.
Because measuring the energy consumption and carbon footprint of a blockchain is based on the number of transactions it processes, the higher the number of transactions, the better it is for the environment. For instance, since BSV can innately scale, achieving terabyte-sized blocks and millions of TPS are real possibilities in the future.
The beauty of a scalable blockchain is that its energy efficiency increases the more it scales. So, to cap it off, yes, BTC is both energy-inefficient and unsustainable. But Bitcoin is not. The original Bitcoin revived in BSV is both eco-friendly and sustainable. Scaling is the solution that other blockchains should follow if they aim to be a part of the fight against climate change.
