Bitcoiners long for the good old days of big debates with informed critics who rose to the intellectual challenge. It allowed the community to improve their thought processes, build knowledge and skills to broaden the debate and discussion, and generally strengthen our resolve and commitment to our investment thesis.
Unfortunately, we haven’t had any training for about seven years, and there is not a single new criticism of the Bitcoin surface that has not yet been objectively refuted. The old reviewers were a cold glass bottle of Classic Coke. Now we only get lukewarm, unbranded, generic cola.
And you, Elon? After all, did we go through together?
In order to keep this article readable in a reasonable amount of time, I will rely on the reader to examine the rebuttals of these arguments, which have been drawn up by industry experts based on hard data and computer science, and I will refer to their work in detail in this one Piece.
We’re going to go through the three paragraphs in Musk’s tweet in turn …
1. “Tesla has suspended Bitcoin vehicle purchases. We are concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. “
I have two words for you, Mr. Musk: “Prove it.” Prove that the use of fossil fuels for bitcoin mining is increasing. Unfortunately for everyone this is:
- Due to the decentralization of the industry and the impossibility of monitoring every single mining operation in the world, 100% accuracy is not possible.
- Not what has been said in the literature: A) The Cambridge Center for Alternative Finance estimates that 76% of all miners use renewable energy as part of their mix, with between 29% and 39% of all energy consumed coming from renewable energy based on industry data from the world’s largest miners and mining pools B) CoinShares estimates that the total share of renewable energies can be as high as 73%.
2. “Cryptocurrency is a good idea on many levels and we believe it has a bright future, but this cannot result in high costs for the environment.”
Here it seems that Musk is forcibly making this statement. Obviously, Musk clearly knows that methane has more than 50 times the greenhouse gas effect than carbon dioxide, and he certainly knows that there are now miners using waste methane to mine bitcoin, such as Upstream Data, Great American Mining, Giga Energy, Crusoe Energy and Wesco Operating, Inc, to name a few.
Perhaps he just doesn’t know that in the U.S. alone, 538 billion cubic feet (cf) of methane were vented and flamed in 2019. We know that 1 cf of methane equals 0.29 kilowatt hours (kWh) of energy (and 1 cubic meter equals 10.28 kWh), so we calculate that 156 terawatt hours (TWh) are wasted on flaring, more than enough to To supply Bitcoin with electricity for a year. Globally, the total number for flaring is 150 billion cubic meters, or 5.3 trillion cubic feet, resulting in a waste of 1,536 TWh, which is enough to power Bitcoin more than ten times.
Is Bitcoin actually to save the planet? Aker Group appears to believe so in its most recent letter to shareholders and through the creation of Seetee.io, a company dedicated to achieving these environmental goals. This can even be seen in several other industries. Bitcoin miners’ heat is used to increase greenhouse yields in arctic environments, build domestic kettles, brew whiskey, and even produce gourmet flake salt. The International Energy Agency (IEA) regularly pursues the reduction of flaring, with the “Scenario for Sustainable Development” (SDS) not surprisingly showing the current status “Not on track”.
“There are increasing numbers of voluntary government and industry commitments to prevent flaring by 2030,” the IEA said. “The safety data sheet is based on a rapid reduction in flaring, with government policies and industry commitment as good as eliminating it by 2025.”
I hate to break it, but the only way to get anywhere near a goal as lofty as eliminating all international torches by 2025 is with a quantity more bitcoin mining!
3. “Tesla will not sell Bitcoin and we intend to use it for transactions once mining moves to more sustainable energy. We also look at other cryptocurrencies that consume <1% of Bitcoin's energy / transaction. "
There are actually three statements that need to be addressed here, even though there are only two sentences in this paragraph! Obviously, Tesla doesn’t sell Bitcoin. but may buy more in the wake of Musk’s tweet that caused liquidations of $ 3.45 billion (https://archive.is/wjcb7), including $ 1.8 billion bitcoin, $ 120 million Dogecoin and, unsurprisingly, $ 60 million Shiba Inu coin. where 2.85 trillion (yes, trillion with a “t”) coins have been liquidated. Impressive.
On the second thought, Tesla’s announcement of additional purchases would likely trigger a visit from the authorities, as Musk’s ruthlessness has resulted in over $ 1 trillion in assets extinction in the weeks since his tweet, so doubling Tesla would not look like the best from the point of view of market manipulation. He has also done significant damage to Tesla shareholders with his antics. He may also need to answer questions from them about why he would decide to remove Bitcoin from orbit when his company holds more than $ 1.5 billion in it. But I digress …
Musk then goes on to say that they intend to use Bitcoin as transitions to more sustainable energy are mined. The US energy network consists of 20% renewable energies and 19% coal. Tesla’s second largest market, China, has a network that consists of 28% renewable energy sources and 64% coal. As mentioned earlier, Bitcoin is 29% renewable at worst and 73% at best, but probably closest to around 39%.
This is a better number than the US or Chinese networks. So if Musk is serious about sustainable networks, we invite him to stop selling his cars in the US or China, as the electricity that flows into his cars is dirtier than that in Bitcoin. Maybe he can resume sales when the network is 100% sustainable? He hasn’t yet given us his knowledge of what the ideal grid mix would have to look like before he feels good with Bitcoin.
Finally, he says he deals with cryptocurrencies, which contain less than 1% of Bitcoin’s energy per “transaction”. Well he’s lucky! There is a cryptocurrency that has been active for almost three years and uses only one octillionth of the Bitcoin power “per transaction” – it’s called Bitcoin! Yes, you heard that right – one octillionth or 0.0000000000000000000000001% of the energy per transaction!
Well, Musk may not have learned how bitcoin billing and transactions work before spending $ 1.5 billion on it, but how bitcoin works is that every 10 minutes or so, all of the world’s money is next to everyone Settlement in history is meticulously checked and checked, and up to a few thousand more settlements are stamped on the blockchain of the base layer of Bitcoin. This is as comprehensive and simple a description of the basic mechanisms of Bitcoin as possible. In addition, Bitcoin’s total energy consumption is more focused on checking and securing the money supply, with settlements effectively having zero marginal energy consumption.
Note the repeated deliberate and bold use of the word “settlement” that has led to this point, and I hope to convince you of the critical importance of differentiating settlements and transactions (this article by the legendary Nic Carter is a good start!). Every settlement is a transaction, but not every transaction is a settlement. This means that although Bitcoin can only execute around 3.5 settlements per second, the number of transactions within a single settlement can range from “one transaction” to several hundred transactions using techniques such as transaction stacking.
On the second levels of Bitcoin, such as the Lightning Network or the Liquid Sidechain, the number of transactions per second is theoretically infinite. New developments like Taproot, expected to be activated later this year, will make the base layer even more efficient, if not exponentially as Musk would have hoped.
Musk is great at math and analysis, and hopefully he understands the concept of limits. Therefore, he should note that if the denominator in a fraction tends toward infinity, the resulting answer tends to go to zero. For example, Bitcoin currently uses around 116 TWh per year. Let’s say there are about 3.5 settlements per second, or about 110 million settlements per year. Assuming that each bill contains only one transaction, Bitcoin would use 116,000,000 kWh / 110 million = ~ 1 MWh per transaction.
Given that the average US home consumed 77 million British thermal units (BTU) per year (equivalent to 22.5 MWh) of energy in 2015, one “transaction” could provide electricity to a US home for a little over two weeks . However, if you assume there are 10 transactions in one settlement, your “energy consumption per transaction”, although it is actually zero as explained above, may only be 100 kWh instead of 1 MWh. If you go further and learn more about the second tiers like the Lightning Network, you will find that the limit on transactions per settlement is theoretically infinite. Therefore, the average energy per transaction is 116 TWh per year divided by infinity, which is as close to zero as possible.
We’ll never know exactly why Musk said and did what he did. What we can all learn from this episode is that knowing and disseminating the facts is of the utmost importance to the growth of Bitcoin, as even a “brilliant billionaire” can easily get drawn into false stories and turn into trillions of dollars in value of damage.
This is a guest post by Hass McCook. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.