Putting Bitcoin’s climate impact in perspective

There’s a tongue in cheek method of comparing the cost of living between different places, by looking at the cost of a Big Mac. In Egypt, it takes you $1.75 to buy a Big Mac. In Switzerland, it takes $6.57. The Big Mac index has also been expanded, to show the time a worker needs to work to afford a Big Mac. In Hong Kong it takes 8 minutes of work to buy a Big Mac. In Nairobi it takes 172.6 minutes. These types of comparisons are very useful, in the sense that it allows us to illustrate abstract principles like purchasing power differences that are otherwise difficult to grasp.

A similarly useful type of comparison is the Bitcoin transaction equivalence index. The Bitcoin transaction equivalence index tries to answer the following question: If I want to take care of the environment and reduce my carbon footprint, how much do my actions reduce my carbon footprint compared to the CO2 emissions required to verify one Bitcoin transaction?

We’re going to use the number calculated by the Digiconomist, to arrive at the CO2 output of one Bitcoin transaction. The CO2 output differs daily, based on the amount of active Bitcoin mining devices and the number of transactions taking place on the network. The figure is 435 kilogram today. The number is of course controversial and may be higher or lower. However, we know a lower limit to Bitcoin’s overall energy use and we know where most of the Bitcoin mining takes place. The figure is a good estimate and I’ve seen no credible arguments to suggest the actual figure is much lower.

We’re going to take the average Bitcoin enthusiast, a Hodler, who carries out ten Bitcoin transactions per year. Our Hodler mostly holds onto the Bitcoins he bought years ago, but occasionally uses Bitcoin to order food on the Internet, rent a VPS and similar purchases that Bitcoin was intended for. Our hypothetical Hodler recently became concerned about climate change and wants to know what he can do to reduce his own carbon footprint. Below you will find a list of measures he can take. In brackets after them, you find out how many Bitcoin transactions worth of CO2 he is saving, by making these lifestyle changes.

-Strangling an average Cambodian citizen with his bare hands (One Bitcoin transaction)

-Transitioning from an average American diet to a vegan diet. (Two Bitcoin transactions)

-Canceling a flight from San Francisco to New York, to visit his family (Three Bitcoin transactions)

-Buying a plot of unforested land in the UK and planting sixteen oak trees on it (Four bitcoin transactions)

-Strangling his own cat with his bare hands (Five Bitcoin transactions)

-Living car-free, start bicycling everywhere and using public transport (Six Bitcoin transactions)

Blackmailing neckbeards might save the planet

Now let’s take a different way of looking at Bitcoin’s climate impact. The developers of Bitcoin have a huge amount of control over the protocol and a huge influence on our climate, compared to most people. Ethereum developers are developing Casper, a protocol meant to reduce the cost of securing the Ethereum network. On the other hand, Bitcoin developers want to keep wasting electricity forever, to secure the Bitcoin protocol. If Bitcoin developers developed a method of securing the Bitcoin protocol without needing any mining any longer, the amount of CO2 emissions saved by eliminating Bitcoin mining through this move would be 35,830 kiloton of CO2.

The Dutch government wants to reduce CO2 emissions by 56.000 kiloton per year by 2030, compared to 1990. That’s great of course, but it’s also costly. It’s believed that it’s going to cost 2-3 billion dollar per year by 2030. It’s estimated that it’s going to cost us 108 billion Euro, just to transition 2.1 million houses from natural gas to electrical heating and cooking. The whole transition may cost 178 billion euro until 2030.

Here’s a solution the Dutch government could implement today, to offset all of its annual CO2 emissions. The Dutch Prime Minister could instruct his secret service personnel, to blackmail the developers of the following five cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Monero. His secret service personnel would send the following anonymous letter to basements around the world:

Dear developer. If you don’t change the code in your currency to adopt a Proof of Stake model, we’re going to destroy your Anime hug pillow, delete your League of Legends account and tell your mom you stole your sister’s My Little Pony figurines.

 

What would the annual CO2 reduction be? It would be equivalent to the current CO2 output of the Netherlands. How much would it cost? I estimate we’d need to send fifty letters. Assuming it takes 15 euro to send a letter to the United States, we’d need to spend 750 euro to send the letters. So that’s 750 euro to bring our CO2 emissions down to zero, versus 178 billion dollar to reduce our impact by half. I’m not exactly a Nobel Prize winning economist, but I think there’s some low-hanging fruit out there that we’re overlooking.

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