As Bitcoin’s popularity surges, critics and naysayers seem to surge in equal measure. One recent angle of critique has been to claim that the process of Bitcoin mining is harmful to the environment.
In reality, the impact of Bitcoin on the environment is minimal, while its potential for global wealth creation far outweighs its environmental risks.
Bitcoin, Explained
Before considering accusations of environmental harm, let’s take a moment to orient ourselves to the broader context of Bitcoin.
Launched in 2008 by the pseudonymous Satoshi Nakamoto, Bitcoin is a decentralized digital currency based on blockchain technology.
The power of Bitcoin stems from the fact that it is not a traditional fiat currency — that is, a currency controlled by nations and governments. (Fiat means “force” in Latin; so “fiat currency” is therefore a currency whose use is compelled by force.)
While a nation can simply choose to print more money (and often does so, as seen in the inflationary cycle sparked by the United State’s massive stimulus spending during the Covid era), the supply of Bitcoin is permanently set. This arrangement takes power out of the hands of bureaucrats and places it firmly in the hands of consumers.
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By 2021, Bitcoin’s market cap had soared to $1.2 trillion, posing a serious challenge to traditional global fiat currencies. This challenge has led politicians to raise alarms, often spreading fear, uncertainty, and doubt (FUD) about Bitcoin’s legitimacy — starting with a smear campaign against its alleged environmental impact.
From Environmental Accusation …
Just as mining for gold requires physical energy, Bitcoin mining involves solving complex problems with powerful computers, which also consumes substantial energy. However, comparisons suggesting Bitcoin uses more energy than entire countries are misleading.
A significant portion of the energy used by Bitcoin miners is renewable, with one recent analysis reporting 54.5%. Moreover, Bitcoin mining often utilizes otherwise wasted energy, such as excess energy from hydroelectric dams or other renewable sources.
… to Climate Opportunity
Beyond environmental considerations, Bitcoin offers significant societal benefits. For one, it provides a decentralized, finite currency that prevents governments from devaluing money through excessive printing.
Fan of Hayek? Check out this video about him and Bitcoin.
Additionally, Bitcoin empowers individuals, especially in developing countries, by providing financial services to unbanked and underbanked populations, promoting economic freedom and stability.
Indeed, the data support Bitcoin as a blessing to the world’s poorest countries. Asian, African, and South American countries occupy seventeen of the top twenty spots in crypto adoption:
As Wolf Von Laer, CEO of Students For Liberty, said in the video embedded above: “We should also think about the 2 billion people around the world that don’t have access to banks. What people only understand once they start using Bitcoins is, you are not only holding a currency; you also are your own bank.”
For those concerned about climate change, a different opportunity for environmental progress emerges. The more people have access to reliable currency such as Bitcoin, the more they’ll be lifted out of poverty, which in turn will speed up environmental progress and innovation in their contexts. The wealthier people are, the more they can afford to care about their environments.In other words: More digital currency leads to better environmental outcomes, not worse.
Come on, Politicians
Politicians’ attempts to regulate Bitcoin stem from a desire to maintain control over the monetary system. Given the typical modus operandi of governments, which is to preserve their own power, such a reaction should not surprise us.
In truth, the evidence suggests that Bitcoin’s environmental impact is negligible compared to its benefits. So, instead of hindering Bitcoin’s growth, politicians — if they really have the public’s interests at heart, which is not a sure thing — should support its adoption.
Want to learn more about Bitcoin? Check out the recording of a recent Live Event that Students For Liberty hosted with Bitcoin expert Alex Gladstein.
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This piece solely expresses the opinion of the author and not necessarily the organization as a whole. Students For Liberty is committed to facilitating a broad dialogue for liberty, representing a variety of opinions.
