Is This The Solution To Bitcoin’s Massive Electricity Consumption Problem

Is This The Solution To Bitcoin’s Massive Electricity Consumption Problem

By Eric Peters, CIO of One River Asset Management, which has invested over $1 billion in cryptocurrencies.

“By shining light on this, we’ll draw people’s focus,” said Marcel, my head of research. “More accurate electricity generation and consumption data will naturally come to us – you’ll see. And with clean data, industry will push for faster progress.”

His idea was sparked when I shared info from my network about a Brazilian company that pioneered private carbon-offset-credit tokenization. We were brainstorming with Sebastian, my new digital president, about how to tackle Bitcoin’s ESG concerns.

We see Bitcoin’s social and governance score as a 10 out of 10 given that its decentralized protocol is governed by a remarkable form of democracy and transfers power from usurious financial institutions to individuals.

But miners who secure the network use lots of electricity. This is by design – a feature, not a bug.

Electricity secures the global Bitcoin network. The environmental impact is material. And as with any remarkable innovation in human history, it is rightly scrutinized and held to a higher standard than archaic incumbents — that’s how progress happens.

“We can already approximate the global electricity required to power the network, then through a range of geolocation estimations calculate the percentage produced by carbon-emitting generators, which allows us to calculate the carbon footprint,” explained Marcel, marching me through the math.

Bitcoin miners increasingly gravitate to the world’s lowest-cost electricity which is increasingly generated from renewables which create surpluses that can’t be stored (e.g. hydro-electric in a rainy season, gas flaring, wind turbines at night). The electricity they purchase supports the electrical grid, funding renewable infrastructure.

“We can conservatively estimate that 44% of the 144 terawatt-hours of annual electricity consumption that powers the network is still generated by carbon-emitting producers.”

That percentage will decline, approaching 0% as renewables gain dominance, in part funded by electricity consumed by Bitcoin miners.

“I’ve figured out how to purchase tokenized carbon-offset credits for our digital asset products, and also be the first to launch a Carbon-Neutral Bitcoin ETF – we can lead in our approach to regulation and ESG,” said Marcel. “Others will follow – that’s how we drive change.” Three months of quiet work later, we built it.

Here’s the carbon-neutral Bloomberg article:  Brevan Howard-Backed Firm Plans Carbon-Neutral Bitcoin Funds

Tyler Durden
Thu, 04/22/2021 – 05:00

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Author: Tyler Durden