5 Misconceptions about Bitcoin's Energy Usage
You’ve probably seen headlines such as, “Bitcoin boils the oceans,” or comparisons like, “Bitcoin uses as much energy as Greece.”
Time to address these common misconceptions… (Source: SwanBitcoin.com)
1. Bitcoin doesn’t do anything useful, therefore its energy use is not worth it!
Most people critiquing Bitcoin for energy consumption assume Bitcoin doesn’t provide any value. For example, clothes dryers consume way more energy than Bitcoin but no one complains about it because we agree they add value.
There is a reason a decentralized protocol with no marketing budget went from zero to $1T market cap in 12 years. The roughly 100M Bitcoin users value it.
Now, the critics might say, “well, the only use case for Bitcoin is speculation, which is bad.” In a recent video, Alex Gladstein explains how Bitcoin is protecting human rights, and Yan Pritzker lists a wide range of non-speculative uses for Bitcoin.
2. Each Bitcoin transaction is responsible for (large number) CO2 emissions!
This argument simply divides the total energy consumption of Bitcoin by the 300,000 final transactions per day settled by the network. This approach results in very high “energy cost per transaction.” Let’s break this down …
Each final Bitcoin transaction can represent thousands, or even millions, of transactions in total. Many transactions happen off the network, on exchanges, or payment layers like the Lightning Network, for instance. When users want to finalize transactions they do so on the Bitcoin network. The economic density per transaction is increasing all the time as the ecosystem supporting the network evolves.