Blockchain myths — Environment
The biggest myth
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Blockchain and cryptocurrencies have cumulated a great amount of devoted and haters being at the center of an acid debate. As a newbie in this space, it is easy to be captured by the “propaganda” that both sides are putting on.
I’m not a hater but I’m also quite skeptical about the magic properties that blockchain evangelists and Web3 entrepreneurs are spreading on the internet. Blockchain cannot solve all your problems, and that’s the reason why I believe it is needed to debunk a couple of interesting myths in a series of articles.
Bitcoin is bad for the environment
This sentence is one of the most spread claims about blockchain and in particular Bitcoin. It is easy to assume this is true because the data is very hard to collect and verify. A quick overview of how blockchain works, in particular the one based on mining, makes it easy to believe the claim. In the end, miners are consuming energy to produce new coins and it does not matter how much energy they use, the difficulty of the network will adjust to produce a block at a constant rate.
This means, even if difficult to verify, that the numbers calculated by the Cambridge Centre for Alternative Finance, are most likely in the right order of magnitude. By taking these numbers, the Bitcoin network is consuming an amount of energy annually that resembles the annual consumption of a small country.
This is probably true but there are many counterarguments to this claim. First and foremost Bitcoin miners have all the incentives to use clean energy such as wind, geothermal, and solar. This is for a simple but highly misunderstood reason:
Clean energy coming from natural sources cannot be controlled and therefore if not used cannot be turned down thus, it is wasted.
Miners can instead transform this energy into monetary value at all times becoming a very useful tool for power plants that produce more than what the network is asking for. Miners do not need complex starting procedures or long cooldowns, you can switch them on and off in a matter of seconds!
Mining also makes it possible to start producing energy in places where the cost of energy transport is more than the actual energy provided. Converting energy to monetary value on the spot could be another reason to think about the proof of work in a different light.
However, must be stated that having a huge amount of computers around the work doing redundant calculations is not ideal as once the winner of the block is found then everyone should put all the effort (= energy consumed) done so far in the trash and start again from zero. This is a quite problematic fact about PoW that is very hard to solve. Let’s monitor companies, such as MintGreen, to see where the innovation will go.
I invite you to dive deep and explore ideas from both sides and share them with me so I can learn even more!
Blockchain are cities
As much as people are fighting on the points stated above, I believe we always forget that the proof of work is at the base of something quite unique such as consensus. The energy is not wasted, but it is used to generate consensus over the network. Don’t tell me PoW chains are transaction systems that need to crunch transactions as fast as possible. If you are in the team “All this energy used just for 7 transactions per second” you better review the literature around the whole mining and blockchain.
I strongly believe that we can consider blockchains like social and political organizations such as countries nowadays. Having miners consuming all that energy is needed to keep a layer of real distributed and secure consensus. If are not fully convinced by this claim I strongly invite you to spend some time understanding the governance on the blockchain and how similar it is to how we manage countries.
Bitcoin and PoW blockchain are probably consuming a lot of energy and I really hope the innovation will try to minimize the waste, however, they are able to provide us with a strong trustless network of nodes that act as a country.
Blockchains consume like a small country because they are countries of nodes!
That is the main message this small piece of text tries to convey. Saying that blockchains consume too much energy and therefore are bad for the environment is clearly false and a myth. Blockchains are distributed ledgers but once you combine them with a cryptocurrency they have the power to create a very strong and democratic open layer upon which new applications can be run and deliver value to the people.
