The Bitcoin network uses less energy than Google, YouTube, or Facebook.
For the analyst, the media give sensational reports due to her ignorance of Bitcoin.
Financial analyst and strategist Lyn Alden takes a new step forward against criticism of Bitcoin, presenting a report in which she estimates that cryptocurrency mining uses less than 0.1% of global energy
For Lyn, who is also an electrical engineer, this figure means that Bitcoin’s energy expenditure is not as high as it is thought, so it does not represent any global problem.
He also indicates that – in his opinion – by design the blockchain “cannot use more energy than the utility it provides to users”, which number around 100 million people.
In the report published this week on his blog Alden determines the percentage of spending cbased on the same data presented by the University of Cambridge, which have also been used to criticize the energy consumption of the network.
Researchers at the English House of Studies calculate the maximum annualized rate of Bitcoin spending at less than 95 TWh, according to the data seen at the time of writing.
Given that the world uses more than 170,000 TWh of energy per year, that means that the entire Bitcoin network, at its estimated maximum consumption level, uses less than 0.1% of the world’s energy consumption. That’s for a network with over 100 million estimated users.
Lyn Alden, analyst and financial strategist.
The percentage of global energy consumption of the blockchain, estimated by the analyst, does not differ much from the calculations presented by some other figures and firms within the ecosystem.
In this regard, Nic Carter, co-founder and president of the Board of Directors of Coin Metrics, recently affirmed that miners annually use around 0.26% of the world’s electricity, and 0.11% of the world’s energy production.
Even the University of Cambridge itself pointed out in 2019 that Bitcoin only represented 0.27% of the planet’s electricity consumption. CriptoNoticias also reported the statements of Galaxy Digital, which point out that banks and gold production systems consume twice as much energy as Bitcoin.
However, whatever the level of electricity consumption of Bitcoin, Lyn considers that it is a totally necessary expense that results in greater security. This is so because the more energy the blockchain uses, the more secure it is against most different types of attacks.
Many of the small non-Bitcoin blockchains have fallen victim to 51% attacks, where a single entity gains temporary or permanent control of more than 51% of the processing power on the network, and uses that majority of the processing power to reorganize blocks and perform double-spend transactions.
The benefits of Bitcoin outweigh the energy cost
Taking into account the security that the network gains thanks to its energy consumption, Alden also evaluates the incidences of this expense. This, depending on the growth of Bitcoin and the benefits that its use would bring in the longer term.
So think that, if the network is successful and exceeds 100 million users (doubling or tripling its current market capitalization), energy consumption should only reach several tenths above 1% of global energy use. On the contrary, if the grid does not grow much compared to current levels, its energy use will stagnate and will drop to almost 0%.
In this way, for Alden, Bitcoin’s energy consumption will never exceed its long-term utility (no matter how high or low that utility ends up being).
He also mentions the comparison that has been taken as a reference to question the energy expenditure of the blockchain, according to which Bitcoin uses more energy than some countries.
“That’s true,” says Lyn, “but so is Google, YouTube, Netflix, Facebook, Amazon, the cruise industry, Christmas lights, household dryers, private jets, the zinc industry, and basically every other. platform or considerable industry ”.
Tabloid campaign and the ignorance of Bitcoin
Throughout her article, the analyst rebuts the opinion matrix according to which Bitcoin uses too much energy, it does not make efficient use of it, or it can cause a climatic disaster, as is believed in extreme cases.
Lyn contradicts these ideas by pointing out that all the criticisms are part of a tabloid media campaign, which takes advantage of the ignorance of both the public and many journalists.
Shows apocalyptic news cases predicting that Bitcoin’s energy consumption will wipe out the planet’s energy.
The graph below, for example, shows a screenshot of a publication in the Tech & Science newspaper, which in November 2017 announced that “Bitcoin would consume all the energy in the world by 2020.” Something that “well, here in 2021, we obviously know it didn’t happen,” says Lyn.
Alden adds in his writing that, although Bitcoin’s energy use is almost irrelevant globally, these miscalculations continue to be published in the media. How can journalists make such big mistakes? He wonders.
The answer, according to Lyn, is that it often comes down to people not understanding the growth process the web is going through, and it’s easier to “sensationalize” things for page views or political gains.
In that sense, he claims that Bitcoin it’s not trying to be the network cheapest payment, “Although in many contexts it can be”, but is trying to be a payment network with a decentralized asset that makes it easy for people to exchange money between peers, without custody, without censorship and without geographical borders. “And for 13 years he has succeeded.”
From an engineering perspective, Bitcoin’s energy use is not an issue when you actually run the numbers, but you need to understand how it works to calculate it correctly and understand what the tradeoffs are if a different approach is used than Bitcoin uses.
Lyn Alden, analyst and financial strategist.