The high market volatility of Bitcoin and the devastating impact of mining the pioneer cryptocurrency on the environment are the primary facts used by Bitcoin critics to make a case against it. The chief executive of Square, Jack Dorsey has come up with counterarguments in a recent whitepaper regarding the energy consumption in Bitcoin mining. As per the whitepaper, Bitcoin mining could actually provide the renewables energy sector with some incentive. Dorsey has put forth a controversial and bold argument. Earlier, Elon Musk, the chief executive at Tesla, had agreed with Dorsey’s ideas in a tweet.
However, the eccentric billionaire retracted his statement later on and decided to part ways with Bitcoin. Even though Tesla still has the cryptocurrency in its treasury, the company announced that it wouldn’t be accepting it for payment purposes because its detrimental mining process is harmful for the environment. Almost 78 Terawatt hours of energy is consumed by Bitcoin, the equivalent of which is used by millions of households in the US. In fact, BBC also published a report, which said that the power consumption of Bitcoin in 2019 was equivalent to Switzerland’s energy output. Moreover, most of the Bitcoin is mined in China, where coal is used for deriving almost two-thirds of the energy.
According to the whitepaper by Square, the high energy consumption of Bitcoin during mining makes it the perfect activity for using renewable energy. Considering how they function, Bitcoin miners can be categorized as one of the best buyers of energy. First, as they consume high quantities of energy, Bitcoin miners can provide a revenue stream to companies in the renewable energy sector in the form of a global cryptocurrency. Furthermore, as Bitcoin miners aren’t specific to a location, they can prove to be dynamic buyers that can be switched on and off whenever you want, regardless of their global location.
While flexibility may be great in the renewables energy sector, there are a number of other things that have to be taken into account before Bitcoin mining makes the transition to more sustainable sources of energy. Energy transmission and storage are primary issues because miners don’t really operate around the clock, which means leveraging the offerings of the renewable energy sector can be harder. Dorsey has put forward an interesting argument, but the recent sentiments of Musk on this matter have prompted people to wonder who is right.
However, when it comes to Dorsey’s argument, there is one prominent flaw; if the output of the renewable is colonized by Bitcoin mining, it could end up displacing others. For instance, is it better to use renewable energy to run clean public transport or use it for Bitcoin mining? For now, the only thing which remains certain is that cryptocurrencies and Bitcoin are here to stay and they will remain a part of payment systems in the future. Now, the overall crypto industry, especially the participants of the Bitcoin ecosystem are using their collective minds to figure out how the industry can work in a clean manner and not harm the environment.