Bitcoin has been facing tremendous criticism about its carbon footprint for a long time, but now a campaign led by Greenpeace USA and Ripple chairman Chris Larsen is bolstering said critique. But not everyone agrees with the campaign’s premise — particularly many bitcoin miners and investors — and the bitcoin community has been quick to react.
The “Change The Code, Not The Climate” campaign is aiming to change bitcoin’s software code to use far less energy, according to a statement on Greenpeace’s website — and now, activists are battling mining facilities in their communities, decrying bitcoin’s growing contribution to greenhouse gas pollution.
According to the campaign’s manifesto, a software code change would reduce bitcoin’s energy consumption by 99.9%.
“Switching to a low-energy protocol has proven effective and uses a fraction of the energy. Ethereum is changing its code. Many others use less energy. Why isn’t bitcoin?” the manifesto on the campaign website reads. The problem — according to the manifesto — is that bitcoin uses an outdated technology called proof-of-work to validate transactions. This proof-of-work method, at least as it currently operates, demands massive amounts of energy — and thus is a huge source of climate pollution.
As bitcoin’s price surges, so too does its energy use, the manifesto claims. According to the Cambridge Center for Alternative Finance (CCAF), bitcoin currently consumes around 137 terawatt-hours per year — more than the entire energy usage of some countries, such as Sweden.
“This campaign is not anti-bitcoin — it is anti-pollution,” Larsen said in the Greenpeace announcement. “We need to clean up our industry. And the issue is not, as some have suggested, powering bitcoin with clean energy. We need the limited supply of clean energy for other vital uses. The issue is changing the code to use far less energy. That’s the environmentally responsible way forward.”
Many Bitcoin Miners, Investors Remain Skeptical of Lobby Efforts
Jason Deane, chief bitcoin analyst at Quantum Economics and a bitcoin miner, told GOBankingRates that “the impact of this advertising effort and even the concept itself is easy to measure for miners. It is zero.”
“Miners fully understand the value of what they do and the fact that a large part of bitcoin’s underlying value is rooted in the linking of money with the laws of thermodynamics. Removing this aspect of the mechanism also removes its value as a truly independent network since the ‘low energy’ alternative isn’t really an alternative in terms of security and independence,” he said.
He explained that removing proof-of-work removes the very essence of bitcoin and renders it worthless.
“As a result, there are no miners who would consider moving to proof-of-stake, nor even would consider this to ever be a possibility, so it will be business as usual and all planned expansion will continue as before. Profits paid to investors will continue to be based on the exact same formulas as before.”
Legislation Could Enact Crypto Mining Moratorium Over Climate, Energy Concerns
Earlier in March, the Environmental Conservation Committee of the New York State Assembly advanced a bill that would establish a two-year moratorium on cryptocurrency mining operations to avoid environmental impacts in the state, as GOBankingRates previously reported.
“The continued and expanded operation of cryptocurrency mining operations running proof-of-work authentication methods to validate blockchain transactions will greatly increase the amount of energy usage in the state of New York, and impact compliance with the Climate Leadership and Community Protection Act,” the text of the legislation reads, in part.
Yvonne Taylor, vice president of environmental NGO Seneca Lake Guardian, said in the campaign’s announcement that “Governor Kathy Hochul must act now to curtail outside speculators from wreaking irreversible havoc on our communities and the planet by imposing a moratorium on proof-of-work crypto mining… With 20% of the nation’s climate-killing bitcoin mining, New York has become the wild west for a risky currency favored by authoritarian states and criminals, [and] that’s threatening our very real $3 billion/year agritourism industry including 60,000 jobs.”
According to The Block Research’s 2022 Digital Asset Outlook Report, bitcoin miners made more than $15 billion in revenue over the course of 2021, a staggering year-over-year increase of 206%.
Mikkel Mørch, executive director at crypto/digital asset hedge fund ARK36, told GOBankingRates that while environmental issues around investments shouldn’t be taken lightly, Ripple co-founder Chris Larsen’s efforts to change the code of bitcoin in the name of the climate are “misguided at best but disingenuous at worst.”
“Larsen knows that any change in the bitcoin code is unlikely to occur because it would require the support of the majority of bitcoin miners. The problem is that miners don’t have any incentive to choose a proof-of-stake bitcoin because it would make them obsolete and take their very lucrative source of income away from them,” Mørch said. “And even if that happened, a change in the code would really only cause a bitcoin hard fork — a new version of BTC would be born but the older would still exist. It wouldn’t change anything.”
Mørch explained that it is a false dilemma that we can either have a proof-of-work bitcoin or an environmentally sustainable bitcoin.
“Bitcoin miners are incentivized to seek the cheapest sources of energy and renewables are indeed much cheaper than fossil fuels. Additionally, there is a multitude of cryptocurrencies that already use alternative consensus mechanisms such as the proof-of-stake. Notably, ethereum will switch to proof-of-stake later this year. So far, however, bitcoin continues to be the largest cryptocurrency by market cap and one that is the most valued. In other words — the free market has already shown a clear preference for the proof-of-work bitcoin,” he said.