Liberal pundits and environmentalists have been increasingly sounding the alarm over Bitcoin’s energy use, claiming the cryptocurrency is on its way to becoming a major contributor to man-made global warming.
Vox and The New Republic published pieces worrying about the massive amounts of energy it takes to mine Bitcoins, most of which comes from coal power in China. Grist’s Eric Holthaus — who recently warned of an “ice apocalypse” — worries Bitcoin “is slowing the effort to achieve a rapid transition away from fossil fuels.”
Holthaus alarmingly predicts “the bitcoin network will require more electricity than the entire United States currently uses” and “will use as much electricity as the entire world does” in three short years.
Now, Holthaus is probably wrong on this, but even if he’s right, the main reason most Bitcoin miners are setting up shop in China and not green Europe is simple — cheap electricity.
Bitcoin has surged more than 2,000 percent in the past year alone, and more people are investing and using massive server farms to generate coins. But as more coins are created more computing power is needed to generate new ones, meaning more energy.
China is home to nearly 60 percent of cryptocurrency mining operations, and the U.S. is home to another 16 percent, according to Cambridge University.
China, the world’s largest coal consumer, gets about three-quarters of its electricity from coal-fired power plants, and the U.S. gets 30 percent of its electricity from coal and another 30 percent or so from natural gas.
European electricity prices are simply too high for the massive operations Bitcoin mining operations. Prices are high largely because of policies meant to curb global warming.
Green energy and climate taxes, for example, have basically doubled electricity prices in Germany. Denmark gets around 40 percent of it electricity from wind turbines, but they have some of the highest retail electricity rates in Europe — also a product of taxes used to prop up the wind industry.
“It is bad for bitcoin to have this news all the time about this dirty energy,” Michael Marcovici, an Austrian Bitcoin miner who put servers in hydroelectric power plants, told Bloomberg.
“People don’t want dirty energy to be used. But the problem is, in Europe, the energy is just too expensive,” Marcovici said.
Now, Bitcoin miners can still make money in Europe, but long-run planners see high electricity prices as an increasing threat to their profit margins.
“You’d be hard-pressed to find anywhere where it isn’t profitable to mine,” James Butterfill, a cryptocurrency analyst, told the UK Independent.
“But if you’re investing in a bitcoin rig, you have to look at the long term, and with the volatility as high as it is, it’s probably still doesn’t make sense to mine bitcoin in Europe,” Butterfill said.
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