Speaker 1: Cryptocurrency mining has become a hot issue. Environmentally in may Tesla suspended, accepting Bitcoin as payment for vehicles citing environmental concerns in July democratic Senator Elizabeth Warren called for a crackdown on environmentally wasteful cryptocurrencies, but Bitcoin proponents point to the use of renewables for mining also traditional banking is not exactly green. So what's going on here
Speaker 1: [00:00:30] In really simple terms to create cryptocurrency. It takes electricity. According to the Bitcoin energy consumption index, a dig economist, Bitcoin uses as much energy per year as the country of Argentina, its carbon footprint is equivalent to that of BEUs and it generates as much e-waste as Luxemburg. The university of Cambridge says that the amount of energy consumed by the Bitcoin network in a single year would satisfy the total electricity needs [00:01:00] of the university of Cambridge for 573 years. The university of Cambridge is behind the Cambridge Bitcoin electricity consumption index, which provides an UpToDate estimate of the Bitcoin networks, daily electricity load. But why so much energy to answer that question, let's talk about how Bitcoin works. When Bitcoins are traded computer across the world, race to complete a computation. Think of it as guessing a random number. This number goes into a public ledger, so anyone [00:01:30] can confirm the transaction for that particular Bitcoin happened. The computer that solves the computation first gets a reward of Bitcoins, which can be a lot of money. This is what's called proof of work mining, and it is key to having a decentralized and safe system, but solving this problem requires great computer power and the more mins join this race, the more difficult this problem becomes. We talked to Alex de Reese. He's a blockchain specialist and the founder of dig economist. He has been studying this issue [00:02:00] for years and he developed the Bitcoin energy consumption index.
Speaker 2: Bitcoin mining used to be something that anyone could do. Anyone could participate their computer and, you know, make new block for the Bitcoin blockchain. But the thing is, this is a highly competitive process. The primary cost components for this are well actually primarily electricity. And what we you see is that you have professional miners that just load up large facilities, which highly specialized [00:02:30] equipment that's really good at doing specifically Bitcoin mining and also take advantage of the lowest rates of electricity all around the world. As a, as a normal consumer, you can no longer compete with that. So that's how has professionalized because you have professional institutions taking advantage of economies of skill, and just looking all around the world for the cheaper sources of electricity.
Speaker 1: This is the Greenwich generation plant. It used to be a cold fired one, but that's changed [00:03:00] after being purchased. It moved to natural gas in 2020, it launched its data center for blockchain mining. That data center is fueled by the gas power plant. According to the environmental group, the Sierra club Greenwich is one of nearly 30 power plants in New York with potential to be convert to full time operation for Bitcoin mining. The Sierra club has alerted the state about the possible environmental consequences should this industry grow. This is quite the business, affordable energy [00:03:30] to power, very lucrative machines. Another factor is the location in upstate New York. The cool weather also helps to keep the machines cool. That's why Greenwich is working very hard to convince its neighbors that its project will be positive by purchasing carbon offsets and by creating jobs. Still many neighbors are not convinced in a recent interview with NBC news and area resident said that the lake is so warm. You feel like you're in a hot tub when it comes to figuring out the true environmental packed of [00:04:00] Bitcoin mining, you need to factor in the kind of energy source used to mine. It, the impact of solar is different than coal is different than hydro. They all have different carbon emissions, but mining gets even more murky. We talked to Nick Carter, he's a general partner at castle island ventures, which is a seed stage crypto fund. Carter is also one of the founders of coin metrics, a provider of crypto asset market data.
Speaker 3: Bitcoin's energy emissions. You can triangulate them just by basically looking at, um, the [00:04:30] hash rate data. So the number of hashes Bitcoin performs per second, and then making basic assumptions about the kinds of machines that are active on the Bitcoin network. But moving from that to a carbon's emissions estimate is really non-trivial because in order to do that, we have to determine what kind of electricity those minors are actually using. And minors tend to be pretty secretive. They're really not that forthcoming about the sort of energy inputs that they're using because mining is a very competitive [00:05:00] game
Speaker 1: Sides that there's something unique about Bitcoin, and that is its flexibility. It can take advantage of sources that would otherwise not be used. For example, the natural gas flared from oil extraction, according to the university of Cambridge center for alternative finance, this source could have the potential to power the entire Bitcoin network several times.
Speaker 3: So this is a net neutral from a emissions perspective because that gas was going to be flared off anyway. Uh, and [00:05:30] the quantities of natural gas that are flared or vented in the us in particular in North Dakota and Texas are astronomical.
Speaker 1: Of course, none of this is the ultimate answer using these byproduct still generates emissions and can serve as an incentive to not move away from polluting industries. The question then becomes, is it worth it? The number of Bitcoin transactions per second is somewhere between three and seven, compare that with the more than 1500 transactions per [00:06:00] second of visa for Nick Carter, that depends who
Speaker 3: You ask. There's tons of industries that, and, uh, other applications that consume lots and lots of energy, but we tend to think that that's sort of okay, because they provide value. If you have access to a nice functioning financial system and, uh, a legal and political system where your property rights, you know, you can trust that those are gonna be implemented and protected and safeguarded. Then you may have no need whatsoever for [00:06:30] Bitcoin, but if that's not the case, you might actually think that it offers you something pretty interesting will
Speaker 1: The environmental Bitcoin cause people to turn away from it. This is something the market will decide that is unless regulators make some decisions. First also keep in mind that Bitcoin is not the only cryptocurrency in the game. There are alternatives that take the environment into account like nano or Cardon nano does not rely on mining. The cardon.org site says that Cardon can be up to 4 million [00:07:00] times the energy efficiency of Bitcoin. We will do our best to keep you posted on the future of cryptocurrency. I'm Maya, Zach tire. I'll see you online.