Could Bitcoin Mining Melt the Polar Icecaps?
If you don’t believe in global warming, this article may not be of interest.
This article was originally published in Turkish in GQ Turkey’s Fall 2021 issue.
Those born after the year 2000 probably do not recall the critically panned film The Highlander 2, in which the sky was covered with a red-tinted technological barrier to protect people from UV radiation spilling through the hole in the Ozone layer. Nor would they recall Kevin Costner’s post-apocalyptic pirate adventure Waterworld in which the world is flooded due to melting polar icecaps. From the desolate dystopia of Mad Max to the dusty neon vistas of Blade Runner: 2049, climate catastrophes that bring about the end of the world as we know it, have often been portrayed in grand scale in movies. Although decidedly less fantastical than these disasters, the fires that engulfed the planet from California to the Aegean coast decimated forests, urban areas, and wildlife this past summer. They serve as a dire warning of things to come.
If you don’t believe in global warming, this article may not be of interest.
We have known for some years now that the increase in climate related disasters is a direct result of the vast amounts of carbon dioxide released into the atmosphere. But considering the fact that we have been burning fossil fuels that emit carbon dioxide since the Industrial Revolution, and the fact that we (theoretically) consumed less fossil fuels due to a global decrease in transportation during the pandemic, why was the summer of 2021 the hottest summer on record?
Coal is one of the biggest culprits
A combination of renewable sources of energy such as solar power and hydroelectric dams help generate the 250,000 Gigawatts of electricity Turkey consumes annually, but the country keeps the lights on largely thanks to the burning of 116,000,000 metric tons of coal. Since a mid-sized country like Turkey alone cannot consume enough coal to bring about the end of the world on its own, the main risk comes from the coal consumption of giants such as the United States, Russia, and China.
Having consumed 7,500,000 Gigawatts of electricity in 2020, China is the world leader in power consumption. As far as units of measurements go, a gigawatt may seem somewhat abstract. For reference, a typical household lightbulb consumes 0.000871 Gigawatts of electricity in a year. As far as calculating how many lightbulbs’ worth of electricy China consumes, I leave the math to you.
The significance this power consumption has on the planet, is due to the 4,000,000,000 metric tonnes of coal burned in order to keep up with the demand. That’s 34 times the amount of coal burned by a mid-sized country like Turkey. According to the findings of Rystad Energy, 57,000,000 tonnes of this coal, or roughly 1/5ths of it, is being consumed specifically to mine cryptocurrencies. In other words, China burns half of Turkey’s annual coal consumption just to mine Bitcoin.
But computers have been around for decades. So howcome Bitcoin is driving up electricity consumption so much?
Bitcoin requires computers to exist; computers require electricity
The cryptocurrency technology, which has taken the world by a storm during the pandemic and has made at least one of your friends rich overnight, is encrypted and sustained as a result of thousands of interconnected computers working together to resolve mathematical equations. This system, dubbed Proof of Work, is comprised of deeply complex math problems that cannot be solved by humans in a single sitting. Once the equations are resolved, the system releases a tiny amount of fresh Bitcoin into the stream, the way a government might print an additional amount of money. To avoid inflation or devaluation, the difficulty of these complex math problems changes constantly, in keeping with the cryptocurrency market, and this (ideally) ensures Bitcoin’s stability as a currency. And due to the sheer volume of computers required for this entire system to work, no individual computer hack or hardware issue can disrupt the currency, or allow for someone to go in and steal Bitcoin.
In order for these mathematical equations to be resolved quickly and efficiently, the system doesn’t just need your laptop. It needs every computer on the block, if not the entire neighborhood. Devoting the processing power of any computer towards resolving these equations is called Bitcoin mining.
If you happen to be in possession of a large amount of powerful computers that can handle complex algorithms, and if your particular computer farm resolves the equation before others, the system rewards you for being part of the mining process by giving you a small amount of Bitcoin. The tragedy is that this race to the mathematical finish line is what drives the rise in electricity consumption.
The way the system is designed, the more computers you devote to the process, the higher your chances are of resolving the math first, and thus, the higher your chances of earning Bitcoin. So what did China do? It devoted so many computers to Bitcoin mining that 2 out of every 3 Bitcoin mined in 2020 is mined in China. So while we may innocently think that there is a decrease in global carbon output due to less planes, cars, and trucks burning fossil fuel while people quarantined, an unforeseen amount of extra coal was consumed since 2020 specifically to meet the need created by these new computer farms mining digital currency.
In June of 2021, China cracked down on the majority of Bitcoin mining facilities in the country. The reason? Unlicensed coal mines attempting to capitalize on the moment by operating under unsafe and unregulated conditions in order to offer cheap electricity. Another reason was that China is deeply aware of its current position as an almost-villain in the war against climate change due to the sheer volume of its CO2 output.
The myth of decentralized currency
In April of 2021, a coal mine in Xinjiang was flooded. As a result, global Bitcoin mining slowed down by 30%. That a single coal mine could have such a significant impact on what is theoretically supposed to be a decentralized technological advancement, is an alarming piece of evidence that both the global coal supplies and the Chinese government may have a significant sway over cryptocurrencies.
Meanwhile in America, companies are racing to take over shut down coal mines and placing computer farms directly into the facilities that would provide them with electricity, seeking to compete with China. American companies drilling for oil sometimes encounter pockets of methane gas, but often these pockets are too small to warrant the construction of a new methane pipeline since the profit margin is low, or nonexistent. So, despite the catastrophic environment implications, in order to continue drilling, the gas found in these pockets is burned and released into the atmosphere.
Thanks to the new demand for cheap electricity, some of these companies are now building Bitcoin mining facilities next to the drilling sites, using the methane gas as local fuel for their generators. In an ironic twist, due to the locally sourced fuel, the Bitcoin mining activities of these oil giants renders them more environmentally-friendly than ever before.
Know that wherever it will be cheaper to plug in hundreds of computers to a power outlet, that place is now probably a Bitcoin mining facility.
A group of concerned denizens of the web have created a Crypto Climate Accord, based on the Paris Climate Accord, to make crypto-mining carbon-neutral by 2030. This Accord posits that ensuring crypto-mining is environmentally-friendly should be a common goal for all of humanity. As an accord it is based not on punishing those who violate its clauses, but rather constructively, on encouraging all of its participants to share their best practices and embrace a mentality that is rooted in environmental consciousness.
The simplest mechanism that will ensure Bitcoin mining consumes less power, is the Proof of Stake method that Ethereum, which NFTs are traded on, will soon embrace. Just as Bitcoin relies on the math-based Proof of Work method, Ethereum, possibly due to environmental concerns or due to the electric bill, will be transitioning over to the Proof of Stake method which requires a lot less computer power. The security principle underlying this method is much more simple: Just as a bank might block of some portion of your funds when you take out a new loan or line of credit, the system blocks off a portion of your Ethereum. This way, the reliability of the Blockchain, and thus, the reliability of the entire crypto-system, is directly tied to the value of the Ethereum you hold. The system prefers to rely on human nature, rather than an algorithm, and as such its longevity is debatable. And those who might not have any Ethereum to stake to begin with but still want to enter the crypto-mining game might opt for Bitcoin and its ilk instead.
Despite anticipating a green transition in December, it is important to remember that NFT technology is just as harmful for the environment today as Bitcoin. Ironically, because of the transparency it provides in terms of supply chains, NFTs initially were hailed as revolutionary in the worlds of art and fashion, since they would demonstrate the sustainability of the sourced materials and the logistics involved.
It might be valuable to demonstrate that your shoes were not made in a sweatshop, and even priceless in terms of human rights. But if the moral verification of fashion imports requires the burning of additional coal in power plants, perhaps blockchain technology doesn’t solve all of our problems just yet.
