In recent history the mining, petroleum, and nuclear industries have all had their share of environmental disasters. These are household names that every school child learns: Chernobyl. Fukushima. Deepwater. Kingston. Valdez. However you may not know that as you read this, the tech industry is having its own environmental disaster moment and you may have heard its name: Bitcoin.
For those of you living in a monastery for the last decade, bitcoin is a computer protocol that provides a speculative digital pseudo-asset that is traded between individuals around the world. It is a system that aims to transcend borders, banks and laws. It’s notoriously difficult to frame bitcoin in traditional concepts because it defies many traditional terms. It’s not a currency, it’s not a payment system, it’s barely used to transact, it doesn’t support an economy, it’s not correlated to anything, and it’s unclear if there is any meaningful way to value it.
Rather than use traditional economic terms, I prefer to discuss it purely in more conceptual parlance. Cryptocurrency is an intentionally ambiguous term about a set of technologies which aim to reinvent money from first principles independent of existing power structures. Many writers, including myself, have written that the only meaningful way to describe bitcoin is as an investment bubble built around the narrative of populist rage at economic inequality and the broken state of our economy.
However, behind the philosophical ambiguities of the investment narrative there is a very concrete piece of software that is running on servers across the world. It is an enormously power-hungry and wasteful system that involves doing massive number of trial computations (a process called mining) in parallel across the world in a form of lottery in which computers race to confirm transactions. The more power you can waste, the more bitcoins you can probabilistically win in exchange for your energy waste.
Over the past ten years people have set up thousands of warehouses of computer hardware dedicated to run 24/7 consuming power and performing the trial computations required by the protocol. Left unregulated and uncontrolled this now consumes the equivalent power of several medium-sized nation states to keep it all running. Today it just passed the energy consumption of Argentina, a country of 45 million people.
The protocol itself is a runway environmental disaster that incentives an ever increasing amount of waste that can only increase with time. Increasing energy waste is an central and irremovable part of the design. Projections about this energy waste paint a bleak future.
The Cambridge Centre for Alternative Finance estimates the current annualised energy consumption of bitcoin at 121.36 terrawatt hours. The dimensionality of this number is a little difficult to wrap your head around because of its enormity. For comparison 121.36 TWh is equivalent to:
In more economic terms, the power consumption of bitcoin is 160% times the energy use of Amazon, Google, Microsoft, Facebook and Apple all combined. These are some of the largest companies in the world and serve billions of customers and provide thousands of products across the world. This includes the entirety of Amazon Web Services which runs a significant percentage of the entire internet. The International Energy Agency estimates global data centre power usage at 250 TWh for all global IT activity. At 121.36 TWh annualised consumption, bitcoin now represents 48% of the world’s data centre power consumption.
And what is there to show for all this waste?
Whataboutism arguments regarding traditional currencies and the financial sector are a completely absurd response. Yes, a real currency like the Euro and by proxy the Eurozone absolutely emits more CO2 than bitcoin. But the Euro sustains the livelihood of 342 million people and an entire economy of €15 trillion. It’s actually used as an effective medium of exchange that enables millions of Europeans to live their lives. What can bitcoin do? A pitiful 7 transactions per second for some unclear speculative purpose. The ratio of utility to waste of bitcoin mining is a singularly wasteful human activity that serves only to enrich a tiny set of colluding insiders in advanced economies.
It is also completely wrong to claim society doesn’t have the moral authority to judge others energy consumption. If a petrochemical company is dumping carcinogens in a river downstream from a school we absolutely have the collective authority to demand it stop. There is a complete moral equivalence between those two scenarios and the only difference is the time frame involved.
Climate change is not some abstract threat happening elsewhere, it is real, and is happening everywhere we chose to engage in unsustainable and wasteful technology. Bitcoin is simultaneously both an environmental and a moral disaster that does nothing but enable the same kind of reckless speculation and gambling that created the global financial crisis. For those of us in the tech sector we have to ask ourselves a fundamental question. What possible explanation are we going to tell to our children about why our generation did this?
The story will have to go like this: We were angry at the financial status quo and instead of finding the answers and strength of purpose within ourselves to build a more fair, democratic and just society we instead decided to put our faith in an anarchist technical fantasy that solved nothing and only escalated irreversible damage to our climate. And now it’s your generation’s problem.
I don’t want to tell my children that story. We don’t need to repeat the mistakes of our parent’s generation. Buying bitcoin isn’t buying “digital gold”. It’s investing in a futures contract on the gullibility of your fellow man, a debit on our children’s lives and a stake in climate change nihilism. It is long past time for us in the tech sector to get on the right side of history and stop enabling this madness.