Less talk, more action: A productive approach to decarbonizing Bitcoin

How Bitcoin Mining Can Apply Lessons From Other Industries to Promote Clean Energy and Align with a Net-Zero Future

In the early 2000’s a new digital system emerged that promised to revolutionize the way people interacted online. Though it started small, over the subsequent decade it was adopted by millions of people in nearly every country on Earth. As its popularity soared, so too did its value. But there was a hidden cost lurking beneath the surface: to enable its growth, it had to consume ever greater amounts of electricity. Between 2011 and 2021, its annual electricity consumption increased by 3500%. Today it consumes over 9,400 GWh each year — roughly the same amount as a small country like Costa Rica.

Of course, this is the story of Facebook. But it’s also largely the story of Google (18,287 GWh in 2021, on par with Iceland), and Amazon (30,880 GWh in 2021, on par with Serbia), and yes, Bitcoin. Fundamentally, all four do the same thing: convert electricity into bits of information. Indeed, whether it’s posts, search results, cloud services, or cryptocurrency, this is the core business model for the technology sector as a whole. Yet when it comes to energy use, Bitcoin attracts disproportionate scrutiny.

In recent months especially, the discourse surrounding Bitcoin’s energy consumption has reached a fever pitch, and mining has been singled out with punitive taxes, hand-wringing analysis, and even outright regulatory bans.

Why is there so much focus on the energy consumption of Bitcoin mining relative to that of mainstream technology firms?

The answer boils down to two factors: a philosophical argument over the social value of crypto, and a practical lack of transparency into the energy management practices of the mining sector. Too often the focus is on the former, but addressing the latter in a credible way is the key to overcoming the current hysteria.

Unfortunately the rancorous debate over the energy and climate impacts of Bitcoin is full of hyperbole and finger-pointing.

On the one hand are those who believe Bitcoin (and crypto more generally) has no social value, and therefore any and all electricity consumption is “bad” (even well-researched, nuanced analysis seemingly reflects this implicit assumption). A less extreme but common view is that because some Bitcoin mining operations demonstrably consume fossil-derived electricity, Bitcoin mining as a whole is an illegitimate end-use; even some degree of consumption of clean energy is not enough to justify its existence.

On the other side are Bitcoin proponents, many of whom make exaggerated or overly-simplistic claims about Bitcoin’s role as a clean energy solution, or deflect legitimate questions by highlighting the energy intensity of other industries and the traditional financial system.

Extending one’s worldview of crypto to either excoriate or glorify Bitcoin’s energy consumption is not productive. When it comes to real-world impact, attempts to shame or regulate Bitcoin out of existence are just as ineffective as defensive posturing and whataboutism. The reality is that Bitcoin does in fact consume a significant amount of electricity, and likely will for the foreseeable future. Like any energy-intensive industry it has the potential to hinder or advance the clean energy transition, depending on where, when, and how it is mined.

Asking whether the carbon footprint of Bitcoin — or other industries — is justified is the wrong question. A better way forward is to ask how Bitcoin can follow the trajectory of other established industries to become an active partner in the energy transition. In other words: What are the concrete actions that Bitcoin miners can take to promote clean energy and decarbonization?

Over the last twenty years, voluntary purchasing of clean energy by large corporate buyers was a catalyst that drove deployment and economies of scale for renewable electricity. Lessons learned and best practices are now socialized through established industry groups that provide decarbonization playbooks, procurement tools, and sustainability reporting mechanisms; as a result, it’s easy for companies to demonstrate climate leadership even if they consume significant amounts of electricity.

Unfortunately, no such thing exists for the Bitcoin community. Because Bitcoin lacks a shared framework to measure and recognize sustainability commitments and practices by miners, mining companies are left to fend for themselves and the industry cannot respond to criticisms about its climate impacts in a meaningful, data-driven way. What’s needed is an initiative to standardize clean energy procurement practices and drive collective action across the Bitcoin mining sector. That’s why we started Green Proofs for Bitcoin (GP4BTC).

GP4BTC is a solution to bring consistent metrics and much-needed transparency into the climate impacts of Bitcoin mining so industry stakeholders can make better decisions to align with a net-zero future. The GP4BTC certification spotlights climate-conscious miners who contribute to grid decarbonization through purchasing renewable energy, strategically locating mining operations in low-carbon grids, and participating in demand flexibility programs. Developed in partnership with over 35 miners, NGOs, governments, grid operators, and other energy and crypto market participants, GP4BTC criteria align (and will evolve) with best practices for sustainability leadership in other industries.

By showcasing miners operating sustainably, we aim to create a virtuous cycle where clean mining is easier to define, pursue, and monetize. Ultimately, our goal is to make sustainable Bitcoin mining ubiquitous and to make the Bitcoin industry an active supporter of the clean energy transition.

The notion that continued growth and adoption of Bitcoin automatically spells climate disaster is popular but false. Climate-conscious miners with sophisticated energy management strategies exist. Decarbonizing Bitcoin doesn’t require bans, taxes, or Proof-of Stake. By rolling up our sleeves and committing to transparency, we can scale these strategies, make carbon-free mining the new normal, and truly make Bitcoin a leader in the energy transition.