In this episode, I speak with economist and cryptocurrency/blockchain specialist Alex de Vries. We discuss his research into the energy consumptive cryptocurrency Bitcoin, the most popular cryptocurrency in the world at the present moment. I ask Alex to elaborate on how Bitcoin and blockchain works (in particular how Bitcoin “mining” and transactions work), Alex's research into the disturbing amounts of energy required to keep Bitcoin functioning and growing, Bitcoin's growing environmental footprint, as well as what these trends mean for the future for Bitcoin and decentralized cryptocurrencies more generally.
I first became aware of Alex and his work after coming across several major publications that were reporting on his work, in particular an article published in Motherboard that examined the massive, and continuously rising, amount of energy required to "mine" and process Bitcoin transactions globally -- a trend that may, on its own, lead to a 2°C global temperature rise within two decades (it’s worth mentioning that we are well that path, regardless). To put the amount of energy required to maintain Bitcoin's global use as the dominant cryptocurrency in perspective: “[Alex] de Vries’ research has found that Bitcoin’s energy consumption [is] roughly equivalent to the energy needs of Austria and may be more resource intensive than mining gold.”* To put it another way, Bitcoin transactions and “mining” in 2018 alone globally used about 0.5% of the total electric energy produced. It’s worth noting that that percentage will likely increase as long as the underlying structure of Bitcoin remains the same. In order to understand why this is the case and how we got to this point, I ask Alex to explain how Bitcoin operates, and why the decentralized nature of cryptocurrencies, like Bitcoin, require so much energy to operate in the first place. I also ask Alex to discuss the possible ways Bitcoin, and other cryptocurrencies like Ethereum, can move away from being so energy consumptive, while still remaining decentralized in its structure. We discuss this and more in this episode.
Alex de Vries is a Senior Consultant and Blockchain Specialist at PwC, and is the founder of the blog Digiconomist -- an educative cryptocurrency/blockchain blog, featuring news roundups, risk assessments and in-depth analysis. Alex is the author of the paper ‘Bitcoin’s Growing Energy Problem’ published in Joule, the findings of which we discuss in this episode.
- Learn more about Alex’s work at his blog: https://digiconomist.net
- Alex’s research into the Bitcoin’s energy use can be found here: http://bit.ly/2UddcT2
- Read Motherboard’s article on Alex’s work ‘Bitcoin Mining Alone Could Raise Global Temperatures Above Critical Limit By 2033’: http://bit.ly/2GV1iui
- The songs featured in this episode are “Hatoa” and “Nightlite (feat. Bajka)” by Bonobo from the album Days To Come.