Bitcoin mining as a prerequisite for a complete energy transition

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A Mandarin duck. The duck symbolises a chart important for the energy transition. Image by Mike’s Birds via Licence: Creative Commons
The payment provider Square puts forward a surprising, yet plausible thesis: Bitcoin is not only not harmful to the environment – but will help green energies to make a breakthrough.

The topic of Bitcoin and energy – and thus climate change – continues to excite minds, especially in Germany, and particularly against the backdrop of strong Green government participation. The general view of it usually simplifies the issue into the emotionally charged equation that Bitcoin consumes a lot of electricity and is therefore harmful to the climate. So it is evil.

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An example from France shows that this simplistic thinking also makes it into academic circles: Bitcoin is „a real environmental problem“, scientists at a technical research centre in Lille conclude, because the cryptocurrency consumes more electricity than Italy or Saudi Arabia. And even if Bitcoin uses green energy, this is „greenwashing“ – because the energy can be used for other purposes.

This argument, of course, is just a rehash of the old prejudice that Bitcoins are useless – at least more useless than all the other things you can use electricity for – which betrays a certain central-planning megalomania given the interest of the market. In our comments on the topic, we explore these and other arguments.

Bitcoin miners as unique energy buyers

Today we turn our attention to a recent paper by Square, a US payments service provider. This paper not only postulates that Bitcoin is harmless to the climate – but also that miners are driving the energy transition. The authors even go so far as to make miners a prerequisite for a successful energy transition – and they have surprisingly good reasons for doing so.

The paper was published as part of the Bitcoin Clean Energy Initiative founded by Square. It is intended to be the starting point to outline the company’s vision for a future of clean energy sources and to place Bitcoin within it.

The paper focuses on examining Bitcoin miners as „unique energy buyers“. Unique miners are because they „create highly flexible and easily interruptible consumption, pay out in a global and liquid cryptocurrency, are fully location agnostic, and require nothing but an internet connection.“