Earth Can't Afford Bitcoin
Earth Can't Afford Bitcoin
We need a ban, not weak regulation or greenwashing
The term late capitalism gets thrown around a lot nowadays, but we really have no idea whether we are living near the end of this system or not. Capitalism certainly seems headed toward collapsing under the weight of its contradictions, but many others have thought the same thing at various points over the years only to be proven spectacularly wrong. With that being said, it is hard to imagine stronger evidence of capitalism’s exhaustion than crypto. And when it comes to the environment, the most pressing and most alarming crypto-not-actually-currency is Bitcoin.
Bitcoin is based on blockchain technology, which is basically just a networked public transaction ledger. This technology has been around for decades and has not found any significant use case because it does not really solve any problems. As Dan Olson said in his excellent and thorough video on NFTs: “The claimed functionality and the actual functionality are both bad...the end goal is the financialization of everything.” Like all such scams and schemes, crypto produces evangelizing devotees because it requires more and more people to get in on the bottom so its value can go up and those at the top can cash out.
It is understandable for working class people to buy into crypto hype in the hope of escaping the precarity that our society produces by design, particularly given how obviously unjust our current financial system is. But Bitcoin is just a reinforcing mutation of this system rather than an alternative to it. It is not democratized: approximately 27% of Bitcoins are owned by the top 0.01% of holders, and just over 90% of mining power is controlled by the top eight mining groups. It does not change power relationships or reduce the incentives for exploitation or extraction.
Bitcoin is also not an alternative currency in any meaningful sense; even its proponents now seem to at least tacitly acknowledge that it is more akin to a speculative store of value like gold that has to be exchanged for dollars to be usable. Much like gold, Bitcoin is mostly “mined” for no reason other than profit. In other words, it does not have any meaningful socially beneficial function (unless you think extortion is good). While all capitalist production is driven by profit, much of it at least has some use value, even if unnecessary, exploitative, and wasteful.
Bitcoin mining is not actually mining; it is vast arrays of powerful computers running 24/7 to solve math problems and produce proof of work for the ledger. However, Bitcoin mining still requires real mining to function. All of those computers are made of various metals and minerals extracted from the earth, like silicon, aluminum, copper, cobalt, and nickel. Extracting these resources, assembling them into computers, and shipping them at each stage requires resources and energy, which at present is mostly generated by burning fossil fuels that are also extracted from the earth. And most famously, the Bitcoin mining process itself uses an enormous amount of energy.
Bitcoin presently uses 204.50 TWh of energy per year, which is approximately the energy consumption of Thailand, along with producing 34.59 kilotons of electronic waste. Bitcoin’s resource usage is correlated with its price, which is why it has increased so substantially in recent years. Since China banned Bitcoin last year, more of it has moved to the US and we now lead the world with 35% of Bitcoin mining. The huge profit potential is helping to keep fossil fuel plants open and providing an extra revenue stream to fossil fuel companies. These mining operations are often portrayed as economic revitalization for the communities they target, but they just provide profit for their owners and the energy companies that bill them along with a few menial jobs guarding and repairing the computers.
Bitcoin proponents like to say its enormous energy usage will incentivize adding more renewable energy generation, or offer up examples of Bitcoin mining operations that are currently powered by renewables as positive examples. But while that would obviously be less polluting than mining powered by burning fossil fuels, it is still bad. We desperately need to be reducing US energy usage and replacing fossil fuel generation with renewables for all the energy that powers our society’s functioning. So there is a significant opportunity cost for any wind, solar, or geothermal energy used for Bitcoin instead of necessary and useful things. All of those resources extracted from the earth at great social and ecological cost used to build renewable generation infrastructure are, from a societal perspective, being wasted on Bitcoin.
Unfortunately, there does not appear to be enough will in our dysfunctional federal government to ban Bitcoin. President Biden signed an executive order directing the government to study and regulate crypto in a legitimizing and friendly way, explicitly claiming that it offers potential benefits to society. Three Republican Senators (Cruz, Toomey, and Lummis) are invested in Bitcoin, and Sen. Booker recently said, “Cryptocurrency is an exciting innovation.” There is too much money being made for the government to be overtly adversarial to crypto without a countervailing power against it.
In a sense, Bitcoin is a pure manifestation of capitalism. It turns a tremendous amount of resources and waste into profit without any semblance of a product, directly exchanging life and the future of the planet for money. It is hard to begrudge working class people trying to win actual or metaphorical lotteries to secure a little freedom in our society, but this is a false hope as Bitcoin is just more of the same risk and exploitation in a funhouse mirror. We need to build collective support against crypto in order to effect policy change that protects our society from its effects.
The US should follow China’s lead and eliminate the expanding scourge of Bitcoin mining here, then they can work together through the UN on a global framework to stop it everywhere. Whether or not capitalism is indeed in something approximating a final form, we need a ban on Bitcoin to help keep our ecological crises from getting worse.