Key Takeaways
- The popular cryptocurrency exchange Coinbase has commented on Bitcoin’s ecological impact and energy consumption.
- It says that although Bitcoin mining is energy-intensive, the process is largely based on renewable energy.
- It also says that cryptocurrency firms are promoting the use of renewable energy in Bitcoin mining.
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Coinbase has published a statement on Bitcoin mining’s energy consumption, arguing the process has a minimal ecological impact.
Bitcoin Relies on Renewable Energy
“Bitcoin mining is an energy-intensive process,” Coinbase wrote. “There’s no debate about that.” However, the firm says it is a myth that Bitcoin is a “significant contributor to climate change.”
To argue this point, Coinbase noted that mining companies are incentivized to find cheap energy, which usually means that they utilize renewable energy sources and excess power sources.
It noted that half of all Bitcoin mining power originates from Sichuan, China, which makes heavy use of excess hydroelectric power.
Finally, Coinbase noted the crypto industry is addressing energy consumption. Companies like Square, Greenridge, and Argo Blockchain are leading efforts to promote clean Bitcoin mining.
Other Sources Also Use Energy
Coinbase conceded that Bitcoin uses as much energy as Norway. However, it contextualized this by noting that Bitcoin secures more than twice as much economic value as Norway.
“Consider this: Norway’s GDP is around $400 billion, [but Bitcoin’s market cap] has been as high as $1 trillion,” Coinbase wrote. “It’s not easy to make a direct comparison, but the important thing to remember is that everything uses energy.”
The company also noted that wasted energy from inactive home devices is equivalent to 1.5 years of Bitcoin mining. It added that Bitcoin consumes less energy than gold mining, banks, and ATMs.
Coinbase also contested the claim that Bitcoin would use 14 times more energy than a traditional payment network to process 1 billion transactions. Because energy is spent per block, not per transaction, transaction aggregation can increase Bitcoin’s efficiency.
Bitcoin Mining Generates Controversy
Coinbase’s comments come weeks after Tesla announced its decision to temporarily suspend Bitcoin transactions over energy consumption and seek out a less-intensive alternative.
That decision generated widespread discussion over mining. and Coinbase is not the only organization to respond to the controversy. The Ethereum Foundation also responded to Tesla’s decision, noting that Ethereum 2.0 will cut energy consumption by 99%.
Meanwhile, FTX and BitMEX have committed to becoming carbon neutral by making donations to offset emisions.
Critics will likely continue to maintain that Bitcoin’s reliance on renewable energy is overblown. Conservative estimates suggest that 39% of Bitcoin’s mining hashrate makes use of renewable energy.
Disclaimer: At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins.
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