According to many headlines seen and repeated in many media, bitcoin mining would be a highly polluting activity, considering that it requires a lot of electrical energy.
So, the question would be: Is consuming electricity the same as polluting? With that first question, one could already question the intention of several of those headlines, which seem to focus on Bitcoin as the culprit of much contamination, when such a direct accusation can be very inaccurate.
Those articles often assume that if an activity consumes a lot of electricity, then the carbon footprint is high.
Every so often a headline is published that says “Bitcoin consumes more electricity than in this or that country”. Curiously, the holders do not do the same with the traditional banking system (which consumes a lot of electricity, paper, and build enormous glass buildings to give an image of solvency), nor with other activities, such as video games.
So, many people who do not know about the subject, and do not continue to investigate, may be left with the impression that the problem is the Bitcoin network. But, to be realistic, the problem is not so much the energy consumption, but the source of that energy. And in fact, many do not know that part of the energy that Bitcoin consumes comes from renewable sources.
The CEO of Koibanx Leo Elduayén – a leading company in financial tokenization using blockchain technology – details how networks like Bitcoin and Ethereum work: “Both Bitcoin and Ethereum work under the consensus algorithm known as Proof of Work ( proof of work), which means that at the moment of making a transaction all the nodes compete to verify a block of the chain. This requires the nodes to consume a certain amount of energy.”
He then adds: “In the case of Bitcoin, for example, it consumes more energy than some entire countries.”
“There are other technologies that have been created such as blockchains 2.0, that is, it is a new generation of blockchain protocols, each with its own cryptocurrency, which seek to take advantage of their “last mover advantage” to solve these “problems” from their conception. Among them, Algorand, Avalanche, Solana, Polygon, etc. ”, he adds.
Although Elduayén does not believe that bitcoin or ether can be dethroned from the place of market leaders that they bring, he is convinced that highly performing, efficient and secure technologies such as Algorand’s blockchain, for example, will begin to occupy without doubts a preponderant space in some aspects for which Bitcoin and Ethereum are not so efficient today, for example: micro-payments or micro-finance.
“However, it is just as true that many people highlight the energy consumption of blockchain protocols as something negative, but it is in relative terms of what we compare it with or what we use it for. If we understand that blockchain protocols are the new infrastructure of the financial system, we could compare it, for example, with how much banks or governments spend today”, says Elduayén.
“There the results do not seem excessive at all, on the contrary. Like any type of technology, you are always looking for the most efficient. The key to the question is whether we will analyze it as something completely secondary for a few to speculate and that consumes X amount of energy, or how the technology that will financially include the entire region and that today consumes less than its existing alternatives”, indicates the Koibax CEO.
For him, there is a more philosophical question that is never easy to analyze.
“Today the nodes only work (that is, they are profitable) if they have access to cheap electricity. Cheap electricity is only produced in places where the network has some idle capacity, not in places where more production is demanded from the network than it already brings or is capable of producing. So if that electricity is idle, the talk of whether that electricity should go to feed a small town in the suburbs or be bought by mining companies, in a market where electricity is partially managed by the private sector, has many edges to consider. ”, he reflects.
According to Ulises Alzogaray, Country Manager of Bitwage in Argentina – the pioneer platform in payment of fees in cryptocurrencies most chosen by workers, freelancers and service exporters -, Neither bitcoin, nor ether, nor any other cryptocurrency pollutes.
“What pollutes are non-renewable energies. And in that sense, we believe that the discussion should be focused on the forms of energy that we use. 58% of the energy used to mine Bitcoin is renewable, and there are economic incentives for that percentage to continue increasing”, Alzogaray remarks.
And why not focus on what contaminates the traditional banking system? According to Alzogaray, there would be two reasons: “We are used to the existence of banks, physical money and other parts of the traditional financial system, so we do not tend to question something that has always been present so much. And then I think that the leaders of the traditional financial system have been adept at minimizing their environmental impact.”
Eduardo Erlo, Marketing Manager of Status Network -one of the most robust and initial projects that runs on the Ethereum blockchain- also thinks about cryptocurrencies and the use of renewable energies to mine: “Using renewable energies is a good idea for everyone, not just for cryptocurrencies.”
“The use of renewable energy is just one of the things that the crypto market is trying to do to reduce the damage. There are also other initiatives, such as the implementation of different mining algorithms (Proof of Stake), which do not depend on great computing power and massive energy use (Proof of Work)”, he adds.
“No one denies the fact that cryptocurrencies currently use electrical energy to function. It is very sad how people focus on the little bad things about a growing technology, which has a lot to offer to society”, he pointed out afterwards.
“I hope that people really understand how traditional banks currently have custody and use our money for their own purposes, and we are victims of this system, and then understand how cryptocurrencies are changing this,” he concludes.