Green business owners interested in technology for a sustainable future may have looked into Bitcoin. This cryptocurrency provides greater cybersecurity than paying with a credit card, but it’s highly unsustainable when it comes to energy usage.
Businesses looking to lower their carbon footprint should stick to other online payment systems, cash and credit cards.
Why Is Bitcoin Unsustainable?
Mining Bitcoin, by its very nature, is energy intensive. Computers race each other to be the first to solve increasingly complicated math problems and, in return, receive Bitcoin.
The process is meant to be difficult. Thousands of mining machines validate Bitcoin transactions without the involvement of a third party, maintaining the security of blockchains on a proof-of-work consensus. In other words, Bitcoin is very secure, but it takes a lot of energy to keep it that way. The current digital currency system essentially rewards energy waste.
Bitcoin warehouses packed with rows of math-solving computers require immense amounts of electricity, both to run the computers and keep them cool. In fact, crypto mining uses up to 240 billion kilowatt-hours per year, exceeding the annual electricity use of Australia.
Where Does Bitcoin’s Energy Come From?
Unfortunately, it’s mainly from fossil fuels. As a result, the Bitcoin mining process releases up to 22.9 metric tons of carbon dioxide annually, comparable to the emissions from Sri Lanka or Jordan. Though it’s possible to mine Bitcoin using solar or wind power, miners must use the least expensive energy sources to stay profitable. It’s far from a technology for a sustainable future.
One issue is that Bitcoin-mining machines don’t switch off until they either break or can’t mine Bitcoin for a profit. The miners increase the energy grid’s baseload power demand and consume energy in both times of excess and energy production shortages.
Fossil fuels are a steadier source of power than wind or solar, both of which fluctuate according to weather patterns. That’s why coal, oil and natural gas are the energy sources of choice when it comes to producing Bitcoin.
They also contribute strongly to climate change. Along with pollution and natural resource management, climate change is one of the top three environmental concerns in the environmental, social and governance (ESG) criteria businesses must meet. That makes Bitcoin a poor choice for green business models.
Why Some Businesses Accept Bitcoin
In an effort to attract customers from different demographics, such as tech-savvy Gen Z consumers, some businesses have started allowing Bitcoin payments. Bitcoin meshes well with companies that already do business online, such as PayPal and Etsy, but some brick-and-mortar stores also accept crypto — Whole Foods and Starbucks are two prominent examples.
There’s another benefit for companies that accept cryptocurrency. Bitcoin transaction fees are typically lower than those of credit cards, meaning businesses can potentially save money by making the switch. And with over 10,000 cryptocurrencies to choose from, business owners can pick the ones that work best for them financially.
Still, there’s no getting around the fact that a single Bitcoin transaction uses as much energy as around 473,000 Visa card swipes. Is there any way to make Bitcoin sustainable?
Technology for a Sustainable Future
One Russian natural gas company also sells Bitcoin miners power generated by flare gas. This gas is a byproduct of drilling for oil and gas that manufacturers would normally burn. However, using a fossil-fuel-derived byproduct — even if it would normally go to waste — isn’t exactly green. Plus, creating a market for flare gas provides an incentive to drill even more and lines the pockets of oil and gas companies.
Instead, a better technology for a sustainable future is renewable energy. If solar or wind energy powered Bitcoin mining, the practice could be more environmentally friendly. Battery storage would be necessary to provide an unwavering power supply for the Bitcoin-mining computers.
There’s also a case for making Bitcoin mining more efficient. Couldn’t programmers rewrite the code or create more efficient computers? Unfortunately, there’s no way to accomplish that with current technology. Plus, making the mining process more energy efficient incentivizes greater energy use.
This phenomenon is called the rebound effect, and it’s a common problem for cities switching to LED street lights. When energy becomes cheaper and more environmentally friendly, many cities install excessive lights to match their previous level of spending. Having more money or using green energy can feel like a free pass — as a result, people scale up their consumption.
Bitcoin for Green Business Owners
Bitcoin — at least in its current, energy-hungry form — has no place in a green business model. Maybe someday, Bitcoin mining will employ the required technology for a sustainable future, such as by relying on wind and solar power rather than fossil fuels. As it stands, crypto is energy intensive and emits as much carbon as some developing countries. Green business owners should stick to credit cards and cash.
