Bitcoiners respond to Congress members' EPA letter
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Members of Congress wrote a letter to the Environmental Protection Agency (EPA) last month claiming that Bitcoin production is "poisoning" U.S. communities. The Bitcoin industry has now responded.
Why it matters: Nearly everyone now agrees that polluters should pay for the messes they make, and that greenhouse gas emissions are included as part of that mess. Bitcoin gets scrutinized in this context because, right now, it generates more hype than usage.
At issue, Bitcoin's consensus mechanism, colloquially known as mining. Computers compete to solve ever more difficult puzzles to win the right to add the next set of entries to Bitcoin's ledger and earn fresh new bitcoins.
- Bitcoin is weird because it prioritizes resilience over efficiency. If Bitcoin were efficient, instead, it would be easy to manipulate and no good as a currency or store-of-value.
Details: So 55 leaders in the Bitcoin industry, led by Microstrategy's Michael Saylor, Castle Island Ventures' Nic Carter and Core Scientific's Darin Feinstein, signed onto a letter that went point-by-point through the one from members of Congress (very worth reading directly).
Here are some of its more interesting arguments:
- Bitcoin miners and datacenters in general do not have emissions. Their electricity sources sometimes do, however.
- In its most recent survey of miners, the Bitcoin Mining Council found respondents used 64.6% emission-free energy sources.
- Bitcoin is a good way to make use of stranded energy, like waste gas or volcano heat, that's not good to anyone else.
Yes, but: The Congressional letter states that a single bitcoin transaction could power a U.S. household for a month.
- "Response: This is patently and provably false," the letter replies.
- This claim appears to be based on something like: estimating the total power use of the bitcoin network and then dividing that by the total number of transactions. The Bitcoin industry argues that this makes no sense.
- The main driver of participation in the network is value of the block reward, which is determined by the price per bitcoin, it explains.
- Demand for blocks can ebb and flow from block to block, but overall electricity use will stay fairly steady as long as the bitcoin price doesn't shift too much, because that's the real driver for miners.
Yes, but: Bitcoin could simply switch to a less demanding consensus mechanism, such as proof-of-stake.
- "Proof of Stake digital assets might share a common ancestor with Proof of Work systems like Bitcoin, but they should be understood as wholly taxonomically different, with different objectives and capabilities," the respondents write.
- It's been a long time since Bitcoin has had any service hiccups, but the leading proof-of-stake protocol in the wild right now, Solana, had its seventh outage so far in 2022 this weekend.
Thought bubble: Neither letter will be persuasive to the authors of the opposing letter.
Bottom line: That said, if every Bitcoin miner in the world shut down right now, forever, climate change would still be a huge problem. Ending its mining wouldn't move the needle meaningfully on emissions, but it would diminish demand for renewables.
