The Single Most Important Truth About Bitcoin Mining, Energy and the Environment

As an environmentalist who has been studying bitcoin mining’s energy footprint since 2011, I have a radically divergent perspective. I think bitcoin holds tremendous promise as a tool for decarbonizing the grid, cleaning up waste methane and accelerating the electrification of heating. I see bitcoin mining’s emissions not as increasing, but steadily trending lower in the future. And I predict it will actually make energy cheaper, not more expensive.

This issuance rate drops by half every four years, in an event known as the halving. In April 2024, that supply of new bitcoin will drop to 450 BTC per day and stay there until 2028 when it drops to 225 BTC per day. First, the uniformity and availability of the means of bitcoin production – ASICs – and the fungibility of the product means there’s an extremely low barrier to entering this market. The bitcoins you produce will be as good as anyone else’s and you’ll use the same machines to produce them. So if it is possible to mine one bitcoin for less than one bitcoin then someone, somewhere in the world will do it, because people like money.

Fourth, the halving of bitcoin issuance, which will next happen in April 2024, violently shakes out less-efficient miners every four years. When the total amount of money bitcoin miners are expected to spend worldwide on energy decreasing by nearly 50% in nine months – which it will, absent a doubling in bitcoin’s price or a dramatic spike in the fee market – any miner with thin, or even moderate, margins will be forced to find cheaper energy or perish.

For a gas plant, if demand drops, one simply throttles back the gas. But when demand drops during some part of the day, or as heavy industry leaves a region, these non-fossil sources of power cannot drop their production as well, and consequently, prices fall. With ambitious plans for deploying renewable generation, such over-abundant pockets of electrical power will only expand in the coming decades.

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