Bitcoin Mining: Environmental Impact & Carbon Footprint

Environmental Concerns

• Biggest mining operations are moving toward renewable energy.
• 91% of the energy powering Gem's Bitcoin rigs is drawn from renewable sources.
• 71% of Foundry's energy is drawn from renewable resources, with the remainder from oil, natural gas, and coal.
• Greenidge Generation Holdings, TeraWulf Inc., and CleanSpark highlight their carbon neutral bitcoin mining operations.
• Bitcoin mining operations draw power during off-peak hours and use immersive cooling.

Carbon Emissions

• Bitcoin mining is responsible for less than 0.1% of global carbon emissions, according to CoinShares analysis.
• Another report states the the benefits far outweigh the costs.
• Bitcoin mining network accounts for less than 0.08% of global carbon emissions.

Gold vs. Crypto

• Gold is inconvenient because its difficult to use, particularly when transacting with untrusted parties.
• Gold has less adoption than crypto.
• Factors to consider with gold:
  • How is the gold verified as real?
  • Where will the gold and silver be stored?
  • What is involved in selling gold?
  • How safe is it to transport physical gold?

Limited Acceptance

• Bitcoin is not widely accepted as a form of payment, making it impractical for everyday use.
• Acceptance of Bitcoin is growing, with more merchants and businesses adopting it as a payment method.
• Bitcoin's primary use case may be as a store of value rather than a medium of exchange, similar to gold.

Volatility

• Bitcoin is too volatile to be a reliable store of value or medium of exchange.
• Bitcoin's volatility has decreased over time as the market matures, despite significant price fluctuations.
• Long-term investors see the volatility as an opportunity for potential gains.
• Bitcoin's limited supply of 21 million coins may lead to increased stability as adoption grows.

Lack of Intrinsic Value

• Bitcoin has no intrinsic value and is not backed by anything tangible
• Bitcoin's value comes from its properties as a scarce, decentralized, and secure digital asset.
• People trust and believe in Bitcoin, like fiat currencies.
• Limited supply and adoption contributes to Bitcoins perceived value.

Use in Illicit Activities

• Bitcoin is primarily used for illegal activities and money laundering.
• While Bitcoin has been used for illicit activities, this represents a small fraction of its transactions.
• Traditional fiat currencies are the primary means of illegal transactions.
• Bitcoin's transparent blockchain makes it easier to track illicit activities than cash.

Regulatory Concerns

• Governments may crack down on Bitcoin, making it illegal or heavily regulated.
• Many countries are developing regulatory frameworks for cryptocurrencies, recognizing their potential benefits.
• Bitcoin's decentralized nature makes it difficult for any single government to shut it down completely.

Technical Complexity

• Bitcoin is too complex for the average person to understand and use safely.
• There is a learning curve currently.
• User-friendly wallets and exchanges are making Bitcoin more accessible.
• Education and improved interfaces will lead to broader adoption over time.

Scalability Issues

• Bitcoin's network cannot handle many transactions quickly or cheaply.
• Layer 2 solutions, such as the Lightning Network, are being developed to address scalability issues.
• Faster and cheaper transactions are enabled while maintaining Bitcoin's security and decentralization.

Lightning Network Definition

• A Layer-2 payment protocol is built on top of the Bitcoin blockchain.
• Instant, low-cost bitcoin transactions are enabled without requiring every transaction to be recorded on the main blockchain.
• Key features are speed and cost.
  • Transactions occur in milliseconds to seconds
  • Low-to-no cost transactions compared to regular Bitcoin transactions are enabled
  • Able to process millions to billions of transactions per second
• Workings of the Lightning Network:
  • Users open payment channels by committing funds through an on-chain Bitcoin transaction.
  • Multiple transactions take occur privately between parties through these channels without broadcasting to the blockchain.

Overwhelming Complexity

• Cryptocurrencies are too complicated for average users to understand and use.
• User-friendly interfaces and educational resources are making crypto more accessible.
• Complexity is decreasing as the technology matures and becomes more mainstream.

Lack of Intrinsic Value

• Cryptocurrencies have no inherent value and are not backed by tangible assets.
• Value is derived from utility, scarcity, and network effects.
• Many fiat currencies also lack intrinsic value but are widely accepted.

Lack of Interoperability

• Different blockchain networks and cryptocurrencies lack the ability to work with each other.
• Cross-chain technologies and interoperability protocols are being developed.
• Standardization efforts are underway to improve compatibility between different systems.

Scalability Issues

• Cryptocurrency networks cannot handle high transaction volumes efficiently.
• Layer 2 solutions like Lightning Network are addressing scalability for Bitcoin.
• New blockchain technologies are being developed with improved scalability.
• Lightening Network is a layer-2 payment protocol built on the Bitcoin blockchain.
• Lightening Network is designed to address Bitcoin's scalability issues by enabling faster, cheaper, and more efficient transactions.

Bitcoin mining is increasingly powered by renewable energy. Mining operations are utilizing off-peak hours and advanced cooling techniques. Studies show Bitcoin mining accounts for a small percentage of global carbon emissions.