Over the years detractors of Bitcoin have continued to lean on one major argument against its viability as either a store of value or currency – environmental impact.
Not only does BTC mining require short-lived specialized equipment to mine efficiently, it requires a significant amount of power to do so. Enough so that companies are beginning to structure financial products around the idea of ‘green BTC’.
In everyday use BTC requires a modest amount of power. It is the mining process which is the most power intensive portion of the network as a whole. As such, when most use the phrase ‘green BTC’, they are referring to the use of renewable-energy to power mining operations.
One of the more popular means of tapping in to renewable energy are hydroelectric dams – a practice which has been around for years now. Free energy is all around us though, and different means of tapping in to it are constantly in development. Whether this be tidal turbines, solar farms, or even piezoelectric polymers, innovative methods of harnessing power may yet solve Bitcoin’s energy problem.
With Bitcoin ETF’s only going live in North America months ago, they are currently a battle-ground for adoption. As such, companies are doing their best to set themselves apart from the pack by appealing to investors desires – one company looking to do this is Ninepoint. In conjunction with CarbonX, Ninepoint is offering ‘carbon neutral exposure to Bitcoin’ through its ETF.
What makes this offering extra-appealing, is the fact that ‘all costs of offsetting the carbon footprint of the Fund will be paid by the manager, Ninepoint, out of its management fee, and not unitholders of the Fund.’
To achieve the goal of being carbon-neutral, Ninepoint and CarbonX will support various conservation projects within the Amazon. The scope of support is based upon an analysis of the environmental impact of BTC held within the fund.
The aforementioned partnership between CarbonX and Ninepoint comes only weeks after popular business man Kevin O’Leary, spoke about ‘dirty’ Bitcoin and how it compares to perceived rivals like gold.
“There’s just no green gold at all. It takes a tremendous amount of carbon to extract it from the ground…The amount of carbon that you create mining, digging, scratching, blowing stuff up, processing the gold, taking out you know the other elements of it is just brutal in terms of a carbon footprint. It couldn’t be worse.”
He continued, highlighting how Bitcoin varies from its oft-compared rival, gold.
“There’s a whole new generation of miners emerging in the Nordic countries, in Northern Canada, in Sweden, in Switzerland, in France, where they are using hydroelectricity, sometimes excess hydroelectricity, and flaring off natural gas where it’s being burned already to create electricity…So they’re doing it on a carbon-neutral or reduced carbon footprint and creating an asset that doesn’t have as much, you know, sustainability issues as gold has.”
While not everyone may be a fan of O’Leary, his opinion holds sway among many as he remains a popular personality. He simply represents a growing group of high-profile investors being converted in to believers of Bitcoin and what it has to offer.
Despite attempts to foster and promote ‘green BTC’, the network may not be as harmful to the environment as most believe. Yes, there is a massive amount of power used to ensure the network remains operational. It is important to remember though, that the Bitcoin network operates on a global scale. Furthermore, the network provides more than just the capability to store value – one must take in to account the various service providers typically required to facilitate and settle transactions.
The Bitcoin network alone stands to replace our dependence on a plethora of companies – each with a carbon footprint of their own. When you consolidate debt, you are typically combining multiple high-interest debts in to one low interest account. The resulting interest paid may appear large, however it should be less than the sum of its original pieces. Bitcoin can be viewed in a similar fashion – the energy consumption is high, but it is the result of consolidating the impact of many service providers in to one network.
Another factor often overlooked is that despite the power-hungry nature of Bitcoin, there are many regions in the world that have a surplus of energy. This energy which may have otherwise been wasted, is now being given a purpose. Miners have recognized this, and flocked to areas with surpluses of power, such as Quebec, Canada.
Regardless of whether the environmental impact of Bitcoin is overstated or not, we are seeing an increased desire for green operations. This is nothing but a good thing.