Clearing the Air on Bitcoin Mining
The Bitcoin Mining Council, a collection of mining companies and pro-bitcoin organizations dedicated to educating the world on Bitcoin's core principles and mining practices, published a detailed report to the Environmental Protection Agency (EPA). The document's goal was to address the misconceptions on Bitcoin mining commonly addressed in DC's realm of influence.
Bitcoin mining is the proof-of-work computational process in which new Bitcoin is issued, and the overall network is secured and verified.
I highly recommend you read the full report. I tried highlighting the best points in the letter but ended up showcasing almost the entire text of the document.
But to recap, here are some of the highlights I found noteworthy:
1) Bitcoin miners are just data centers. They are not power plants. Unlike traditional industrial centers, they're similar to the data centers you see at Google, Meta, Amazon, etc., which do not directly generate C02 emissions. They are entirely different from energy suppliers. Do not confuse energy use with energy production. Bitcoin miners use the energy available on the grid, whether solar, coal, nuclear, hydroelectric, etc. If the public wants the legislate clean energy, they should focus on the energy suppliers, not the energy users.
"Each is just a building in which electricity powers IT equipment to run computing workloads."
"If a datacenter is abiding by all laws and regulations, the content or type of computational workloads should be irrelevant."
2) 58.4% of Bitcoin miners are powered by sustainable energy (wind, solar, hydro, nuclear). This number is growing. The report gives the example of Marathon Digital Holdings, "which has declared their intention to shutter the coal-based Hardin facility in Montana and move to a fully sustainable model by 2022."
3) Bitcoin mining delivers growth to economically deprived areas. Miners are location agnostic. Companies can load up and send their mining rigs globally and "target stranded or abundant renewable energy sources." The ability for communities to monetize their energy sources will be a game-changer in fighting global poverty.
4) Proof-of-Stake is NOT a mining technology. Claiming that proof-of-stake (PoS) is a better, more efficient way to mine digital assets is incredibly misleading. Proof-of-Stake "is a technique to determine authority over a distributed ledger, but it does not achieve decentralized distribution." The report explains that in PoS, the largest digital asset owners get to decide the rules on the ledger, which dramatically increases the risk of corporate capture and centralization. Proof-of-Work is important because it allows anyone with energy and computational power to access the digital asset without requiring a central entity to determine who gets what.
"Put simply, Proof of Stake transforms these novel financial systems into pure plutocracies – an outcome that is incompatible for tools that are meant to be decentralized, global, and completely void of political barriers to entry."
"A bicycle uses less energy than a plane, but it achieves something different, and so cannot be considered more efficient."
The report also includes a heavy analysis of the over-exaggeration of mining e-waste and how most ASICs (mining hardware) are either sold or be almost entirely recyclable. I encourage everyone interested to read the full report for more details.
Citizens must understand the importance of Bitcoin's proof-of-work consensus method. Without it, we lose the ability to have a truly decentralized asset that delivers a global, secure, and immutable monetary network in which anyone can participate and communicate value to each other. Let me close with a final quote from the Bitcoin Mining Council, which reads:
"It is imperative that elected officials in the United States recognize that bitcoin, and the innovation of Proof of Work, is the most important financial, economic, and accounting innovation in the history of humanity."