Another Week, another fresh set of FUD for Bitcoin and cryptocurrencies. BTC is down about 2% to $6350 this week based on data from tradingview.com. The tether debacle has settled down and the spread between Coinbase pro and Bitfinex has been almost completely eliminated. Although the drop is likely due to tether regaining parity, it’s also interesting to note some peculiarly timed articles that permeated through social media yesterday as BTC was declining. Not trying to speculate that there is a connection, although the timing and sources of the articles is certainly convenient to say the least.
A well respected journalism outlet for nature and climate change, Nature.com, put out an article yesterday entitled “Bitcoin emissions alone could push global warming above 2 Degrees celsius” This is a pretty serious allegation from any point of view, a hypothesis that should require a strong degree of explanation based in facts. Unfortunately, this was not the case. Without exhausting the minute details, I will give a quick overview of their argument. To estimate Bitcoin’s total CO2 emissions, they took data from 2017 BTC mining companies and backtracked from there to find out the country where the miners were located. Using that data they took the average CO2 emissions for each country where mining was taking place and applied the number of blocks mined to that equation. This is a very linear way of analyzing new technology. Unfortunately for the authors, they put so much effort into understand Bitcoin’s energy consumption but they failed in considering some crucial external factors that makes this data inadmissible. For starters, their blanket assumption that the BTC miners are using the “average” energy consumption/emissions for any particular country is ridiculous. It’s widely known that BTC miners often seek to improve electricity costs by utilizing renewables in countries where its possible. While not all miners are using environmentally friendly electricity, it’s not a safe assumption to simply take the average of the countries CO2 emissions and slap it on a data set then extrapolate from there. The second issue with this hypothesis is their misunderstanding of Bitcoin’s development process. BTC protocol is in a constant state of improvement and change. This article completely overlooks the possibility of off chain transactions facilitated through the lightning network. They also fail to understand the evolving nature of block rewards and halvings, not considering the imminent reduction of block size from 12.5 to 6.25 in 2020. With all of these factors omitted from the data it is safe to say this was not an adequate scientific analysis. That certainly didn’t stop multiple news outlets such as: Forbes, MSM, The Washington Post and Bloomberg from jumping on the FUD opportunity and posting the article without properly understanding its implications. This all comes on a day when Bitcoin was declining in price, almost as if it were a coordinated attack! Needless to say, there are arguments to be made when considering the environmental impact of Bitcoin mining, although this “scientific” analysis fell short of meeting any prerequisites for a well constructed and fact based argument.
- Has little transactional volume; and those transactions that do take place are illicit
- Has the tendencies to fund terrorist activity as well as money laundering
- “Is anything but useful” and cannot be considered as a stable source of value
- Is not an efficient means for processing payments
- Has difficulties because of its decentralized nature
- Little to no enthusiasm within the central banking system to implement digital currency