Fewer and fewer people are using bitcoin for digital payments. Nevertheless, bitcoin transactions are consuming more energy than ever before – the same amount as the whole of Thailand. With a carbon footprint equivalent to the Czech Republic’s (around 114 million tonnes per year), bitcoin is canceling out other climate wins.
The global take-up of electric vehicles, for example, is estimated to have prevented 50 million tonnes of CO₂ so far. That’s less than half of bitcoin’s emissions for a single year. And the problem’s getting worse. The growth of bitcoin “mining” powered by fossil fuels is outpacing greener alternatives, causing bitcoin’s carbon footprint to swell five-fold in just two years.
But, according to campaign groups Greenpeace and the Environmental Working Group, all this can be easily fixed with a simple update to bitcoin’s software. Their campaign, called Change the Code Not the Climate, launched recently and calls on bitcoin software developers to switch the network from its currently wasteful system for verifying transactions to a more climate-friendly alternative.
The switch, they claim, would reduce bitcoin’s carbon footprint by 99.9%. But it’s unlikely to happen soon – and here’s why.
Proof of waste to proof of stake?
Bitcoiners don’t trust bankers, taxmen and other meddling middlemen. Because there are no banks with bitcoin, the job of keeping the books straight is given to a global network of specialist computers. The owners of these computers compete for bookkeeping tasks in return for the transaction fees paid by network users. They also get a few newly minted bitcoins as a thank you.
This competition is known as Proof of Work (PoW) mining. It works like an ever-expanding game of hungry hippos. The more players that join the contest, the more work each hippo needs to do in order to win anything. If a new hippo with green intentions joins the game, everyone at the table has to work harder. Players powered by coal in Kazakhstan, or fossil gas in Texas, then belch out extra smog.
The higher the bitcoin price, the more the dirty hippos are prepared to waste on coal and gas until their costs for doing so are equal to their reward. And so, Proof of Work is proof of waste. And this is waste by design: Bitcoiners call this inefficiency “the feature, not the bug”.
Greenpeace hopes the bitcoin community could learn to love Proof of Stake (PoS) instead. With the network running on PoS, bitcoin’s bookkeepers would need to stake a prescribed minimum number of bitcoins as a security deposit. If they validate fraudulent transactions, they lose their stake. This disincentive keeps the network secure…Read more>>