Influential tech enterpreneur again moves crypto markets by revealing discussions about ‘potentially promising’ answers to climate threat posed by sector’s rampant energy use
Tesla and SpaceX entrepreneur Elon Musk has once again shaken up the cryptocurrency world with a hopeful tweet about the future of bitcoin mining, addressing growing concerns about the high energy usage of the process and its cost to the environment.
“Spoke with North American bitcoin miners,” he wrote on Monday evening. “They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.”
Musk recently caused upheaval in the volatile digital currency markets by joking during a guest appearance on Saturday Night Live that dogecoin was “a hustle” and declaring on 12 May that Tesla had suspended vehicle purchases using bitcoin.
“We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, which has the worst emissions of any fuel,” he explained in a tweeted statement.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.
“Tesla will not be selling any bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy/transaction.”
His latest pronouncement has been met with an exasperated response from cryptocurrency investors like Magnetic managing director William Quigley, who implored people to ignore Musk’s contradictory pronouncements on the subject, which have veered far from his previously wild enthusiasm for the likes of dogecoin.
But there is no question that the Tesla boss is right to voice his concern about the unsustainable environmental impact of bitcoin mining, which climate scientists have warned could push global warming above 2C in just two decades.
The business of verifying crypto transactions is taken on by “miners”, who effectively act as auditors updating a ledger (known as adding a block to the blockchain).
To do this, miners race to guess a random number, one of which is released approximately every 10 minutes, a chase that involves huge quantities of computer processing power as their machines strive to solve complex but arbitrary mathematical equations in the hope of getting there first and being rewarded with a highly lucrative coin.
As the blockchain becomes ever longer, these “proof-of-work” calculations become ever more complicated, requiring the use of supercomputers to carry out the trial-and-error hunt for the solution.
More than 150 quintillion attempts at guessing the number are now carried out every second of the day all around the world, with sprawling aircraft hangars filled with computers working 24-hours a day far from uncommon.
These cryptocurrency farms require vast amounts of electricity to operate, given that a single bitcoin transaction leaves a carbon footprint of 360kg, compared to 500mg from an average Visa transaction, according to Digiconomist founder Alex de Vries.
“Bitcoin is essentially the monetisation of energy,” researcher Hass McCook told The Independent. “It turns energy into hard money, meaning bitcoin miners are chasing the cheapest power in the world, not the cleanest. Unfortunately for the environment, that means most mining machines are in China, where the coal-generated electricity is cheap.”
China accounts for 65 per cent of the told global electricity use from cryptomining, with the northwestern Xinjiang Province where coal is abundant serving as its heartland.
Chinese bitcoin mines are not only reliant on such finite resources but their huge electricity usage results in carbon emissions that are said to be accelerating so rapidly, according to one new study, that they will soon exceed the energy consumption of Italy and Saudi Arabia if urgent action is not taken to rein them in.
Beijing has recently made moves towards cracking down on the practice but, unchecked, the annual power consumption of the country’s bitcoin industry is forecast to peak at 297 terawatt-hours (Twh) by 2024, surpassing the carbon emissions output of the Czech Republic and Qatar.
For the planet as a whole, the computing power required to support bitcoin’s underlying network now requires nearly as much energy as the whole of Argentina.
Analysis by the University of Cambridge’s Centre for Alternative Finance goes even further to suggest that bitcoin mining uses more than 121 Twh annually, which would place it in the top 30 electricity consumers worldwide if it were a country.
Another knock-on environmental impact from bitcoin mining stems from the fact that the technology is still dependent on short-lived hardware to process its calculations, which inevitably burns out and needs to be replaced, prompting a spike in demand for microprocessing chips and further emissions from their mass production.
But the “potentially promising” green solutions alluded to by Elon Musk to address the problem of bitcoin’s impact may already be out there.
The establishment of crypto farms in cooler countries like Iceland and Norway whose power supplies largely come from renewable energy sources, such as the hydropowered subterranean Lefdal Mine Datacenter on the Norwegian fjords, is a positive step, as is the example set by Inner Mongolia, which has moved to ban bitcoin mining outright for the sake of the natural world.
More eco-friendly altcoins like Cardano (ada) are also springing up, the latter claiming to be 4m times more energy efficient than bitcoin thanks to its “proof-of-stake” blockchain, which validates transactions based on how many coins are held by a network participant, not the amount of computational processing power they possess.
Cardano enjoyed a bounce in the aftermath of Musk’s tweet announcing Telsa’s revised stance on bitcoin and the Cardano Foundation even posted a tweet suggesting it was “an obvious match” with his company in light of its climate concerns.
But Cardano has a number of competitors like Litecoin making similar moves and others that have gone even further by not only minimising their energy usage but actively promoting cleaner ways of generating it.
SolarCoin, for instance, is intended to reward solar power installations and works by passing out new coins as a reward for producing energy, with every MWh of solar production rewarded with one SolarCoin.
“Electric gluttony matters because the majority of the world’s power is generated using fossil fuels, and doing so creates humanity-wrecking greenhouse gas emissions,” science writer Ketan Joshi wrote in his recent blog essay ‘Bitcoin is a Mouth Hungry for Fossil Fuels’.
Describing cryptomining as “the computery equivalent of burning single-use plastic in incinerators to generate electricity,” Joshi says there is “no worse time in history for an energy-hungry, low-benefit industry that has a specific thirst for fossil fuels, underneath layers of greenwashing. Tomorrow will be an even worse time, as will the day after.”
He argues that “instead of constantly travelling the world hunting for and monetising bad grid design and fossil fuel waste”, bitcoin miners must behave “like every other energy intensive industry and participate in the complicated social, political and economic process of finding a place in a zero carbon, energy constrained world”.
However, Joshi says this would require a significant cultural shift in a community currently dominated by “a bunch of bros with laser-eye profile pictures” among whom the climate debate frequently becomes poisonous and overrun with disingenuous arguments.
“The libertarian-leaning bitcoin community is not equipped to deal with a threat that requires global government intervention, collective action and a calm, level-headed engagement with experts, science and complexity.
“They react either with confused pleas (‘Bitcoin will incentivise renewable energy!’), outright antagonism towards wind and solar, or just old school denialism. They close ranks and simmer in a puddle of outgroup hostility. They search for keywords on Twitter and dogpile doubters.”
While Elon Musk’s flipflopping on cryptocurrencies might have alienated some of his most devout supporters, his influence will surely be crucial if bitcoin is to adapt to survive.