Bitcoin Emissions

If we step back for a minute from our cryptocurrency focus and look at a different picture, one in which our concern is survival of life on Earth,  then these recent headlies do provide an interesting turn of events in the dialog concerning climate change and predicting the course of the anthropocene era.

The bigger context in this picture is that not only do we have just one spaceship in which we can sustain life (lets hope dear reader you can see how this isn't optimal), but also we see that the conditions of the life support on this one remain poorly understood and are certainly under stress.  We are living now during a mass extinction which is taking place faster than any in the geological record.

If we turn our attention to these issues, loosely referred to as climate change, we can look at the scientific discourse and see many different factors discussed as reasons for this problem.  Some writers discuss overpopulation, economic inequality, poor governance, problems with educational systems, and various other things.  However until now we have not seen a direct blame or attention given to a currency token as a factor here.

But why not?  After all, what has caused 90% of the life in the oceans to die in less than a century?  Perhaps one of the bigger culprits is the Japanese Yen.  People are pulling the fish out of the ocean, killing them, and trading them for Yen.  Thus perhaps we should see some headlines such as:

"Yen to kill 95% of ocean life by 2050"

..

"Brazilian Real destroys Amazon Rainforest by 2100"

..

"Federal Reserve Dollar will desertify 50% of North America in this century"

 

For these are all at least as accurate as Nature's

"Bitcoin emissions alone could push global warming above 2 degrees C"

The idea that bitcoin has emissions is an interesting one, seeing as I have a bitcoin paper wallet here under a fume hood just in case, and it is not emitting anything.  However it is true that the network takes some energy to process blocks, and the minimum necessary energy to mine a block is in fact greater than zero.

What is the minimum energy required to mine a block of bitcoin?  Well we can use Landauer's thermodynamic argument as a basis for this calculation.  The validity of the Landauer principle is debated in the academic literature but it can give us a rough idea how much energy is truly required to process a block of transactions:

E = k T log(2)   per bit.

At standard temperature of 0C = 273K this works out to 2.65 E-21 Joules per bit.  Therefore to create a 1MB block, just to create the block here not including the hashing and signature verification or transmission costs, will cost us 2.65 E-15 Joules of energy.

If we use the same conversion of kWH to grams of Carbon emissions that the Nature article and the Digiconomist do (1 kg CO2 per kWH) this happens to work out to almost exactly 100 molecules of CO2.

100 molecules might not seem like a lot of CO2 but consider that there's a block every 10 minutes, which works out to 5.2 million CO2 molecules per year.  For 10,000 nodes that's approaching a femptogram of CO2 annually!  This is more substantial but still quite a bit less than the 70 million metric tons which miners of the currency apparently are producing according to the linked articles.

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Ok so while it's true that there's a minimum energy requiremennt for the processing of bitcoin transactions, and it's not true that there's a minimum amount of tuna killed to process Yen transactions or a minimum amount of rainforest burned to process Real payments, effectively this minimum is zero.  And the minimum doesn't matter here anyway because the fact is people are willing to throw a lot of energy and efforts into things that can make money, even if they appear stupid otherwise.  Why are people choosing to throw so much energy at bitcoin mining, when the network doesn't require it?  It's because they are competing, trying to stay ahead of inflation, trying to obtain the necessary tokens that enable them to obtain food, deal with the local authorities, purchase travel papers, etc.  The same reason others are overfishing, overdeveloping, and overmining.  It is the broader economic system of fiat feudalism that these people are living in which encourages them to make money desperately in any way they can.

This is where we begin to approach the problem in a practical manner, when we consider the economic incentives to individuals who wish to burn hydrocarbons to mine bitcoins, trawl oceans and sell fish to obtain yen, or destroy rainforest and plant sileage to obtain Real.  In all these cases, the predominant system in place regarding peoples economic systems is a privately issued currency or fiat.  People feel the need to obtain as much as possible quickly here for many reasons, but the fact that the issuers of the currency can at any time take all of the assets away from the individuals is not optimal for the strategy of conservation.  If you have no means to save financially, you will find it hard to stay ahead and will even consider drastic measures such as mountaintop removal and coal fired bitcoin mining to get that extra edge.  The issuance class will take all the valuables from the rest of the population, this is the heart of the fiat system, and the issuers will have no economic incentive at all to do anything useful with these valuables.  We are left with a desperate population struggling to survive.  This is not a system designed with conservation in mind.

OK, so it's not my purpose to lay it out precisely for you here.  Rather, the point is that the authors of this Nature article and others who are beginning to look towards a currency system as a source of destructive human behavior are just maybe on the right track.  Perhaps it's worth considering whether a reliance on a currency system might have some influence on the destructive behavior of its users.  What do you think?