In this article, published in “Le Monde” on December 02, 2018, Sébastien Gouspillou (BigBlock Datacenter, CEO), refutes the accusations of overapproval of the energy that makes the bitcoin industry.
« Le bitcoin répondant à un besoin majeur et étant là pour durer, il apparaît plus pertinent de tirer avantage de cette demande électrique nouvelle que de se faire peur avec des études catastrophistes. » NYIMAS LAULA / REUTERS
Two studies published in Nature Climate Change at the end of October and in Nature Sustainability on November 5th are chilling. The first one announces a global warming due to only bitcoin. The second merely asserts that bitcoin produces three times more CO2 than gold extraction. Fortunately, these two exercises do not stand up to a deep scrutiny.
The first study makes an inappropriate extrapolation, ridiculous for anyone who knows anything about how bitcoin works. Indeed, it determines a consumption per transaction at a time T and estimates that if the number of these transactions multiplies, the power consumption of the network will increase in proportion. That is like to say that the consumption of the lighting of a road on which pass 100 cars per hour will be multiplied by 10 if it is 1,000 cars per hour that pass tomorrow. Since the starting hypothesis is erroneous, the conclusion of the study is false, unsurprisingly.
The second study tries to deny the obvious: extraction of gold consumes 130 terawatt hours (TWh), bitcoin less than 50 TWh. And the extraction of gold has consequences other than its only electrical consumption: acids, mercury, slavery, war, destruction of landscapes.
“Studies” denouncing the environmental impact of Bitcoin have multiplied since 2013, allowing sensational titles such as the ridiculous Newsweek of November 2017: “Bitcoin to consume all the world energy by 2020”.
In the discharge of the relays of these biased studies and readers who are indignant about this supposed energy waste, this considerable consumption, can appear as a blatant waste if the bitcoin is useless. Certainly, for us, the purpose of bitcoin is difficult to grasp: we have satisfactory means of payment, solid currencies and democratic institutions that we trust.
But we only represent a small part of the world’s population. To understand the interest of Bitcoin, You must know that nearly 40% of adults on this planet simply do not have a bank, no means of payment (only cash), no possibility of entering a globalization of which they perceive only the harmful effects. This hallucinating figure highlights the failure of microfinance and its attempts at financial inclusion. We must also know that 33% of the world’s population lives under the thumb of a dictator and its currency, manipulable, inflatable to infinity and above all, forfeitable.
Bitcoin makes sense
Finally, we must realize that our solid currencies are exceptions:
According to the president of the US Commodity Futures Trading Commission, Chris Giancarlo, two-thirds of the fiat currencies are not worth the paper they are printed on. So, for all these people without banks or out of democracy, for those who see their currency depreciate day after day, bitcoin makes sense, bitcoin is useless.
To go further, we must admit that if the “proof of work” – that is to say the use by “minors” of a high computing power to secure transactions – is energy intensive, it offers a total security that determines the value of the bitcoin asset; the infrastructure already built is practically enough for the blockchain of bitcoin to become the base of a new global finance, with its overlay networks and multiple sidechains (collateral chains, allowing microtransactions without encumbering the main blockchain).
In fact, consumption will not evolve in proportion to the adoption, bitcoin will not roast the planet. What has increased the computing power of the network so far is the bitcoin price, not the number of transactions, even if historically both are indirectly related. This is what we observe until now: the price increases, the reward of minors increases, they have the means to invest in more computing power to increase their turnover. So, the electrical power of the network increases.
Bitcoin network power multiplied by 10
This mechanics is presented to us as an immutable principle whereas it is not intended to be eternal, since it comes up against a physical reality: the availability of electricity for bitcoin is not extensible at infinity. Bitcoin does not impose its need of electricity on the world, it requires producing companies, often state, to be able to use kilowatt-hours (kWh) available or lost, so, cheap. These companies determine what it is reasonable to attribute to this large buyer of current discount prices, effectively prohibiting any development when the limit is reached: we are witnessing this phenomenon in Quebec or Georgia.
We have seen the power of the bitcoin network be multiplied by 10 in a little less than a year, because the electricity supply allowed it; but it could not happen today. To increase computing power in proportion to a sharp increase in prices, it will be necessary to resort to the improvement of the energy efficiency of machines and the creation of new sources of electricity production shared and co-financed by mining.
This activity can already bring a source of profitability to sustainable electricity production projects, by ensuring on-site, where
whatever its size, a “heel” – a guaranteed minimum base of consumption; no other industry can do that, so “mining” is positioned as a driver of the energy transition, as opposed to the destructive image that is given to it.
Since bitcoin responds to a major need and is there to last, it seems more relevant to take advantage of this new electrical demand than to be afraid with catastrophic studies or to wait for a miracle protocol supposed to replace the proven principle of “proof of work “. The importance of understanding a phenomenon before attempting to consider the consequences …
Sébastien Gouspillou (CEO of Big Block Data Center, blockchain calculation specialist)