The issue about Bitcoin’s environmental impact has been made more relevant over the last few years through the rise of Bitcoin. Why do we care about the environmental impact of Bitcoin? Is it large enough that we should care? If it is that large, could it be different? Could it be smaller? Or is it unavoidable, a neccessary fact of life, and thusly not worth caring about? This article will aim to answer both of these questions – the size and the necissity of the environmantal impact - in a way that makes it clear what we disagree about, if we disagree. I do expect us to disagree about how large the impact is, and how unneccessary it is, and therefore I will make my reasoning about both these issues transparent enough that we can disagree on specific points with all the facts in hand. I do not expect us to disagree about the fact that there is such a thing as environmental impact, or that it is worth trying to minimize it. If you believe either of these things this article is not for you, Donald, because I will not be defending my stance on them.

How will we be defining, then how “large” and “unneccessary” the impact it? Both words are necessarily subjective but must be made more specific, to allow us to disagree in the constructive way mentioned above; the constructive way in which two people can disagree when both of them is not Donald Trump. For the purpouses of this article, large will be discussed in relation to other things. How does the environmental impact of Bitcoin compare to the environmental impact of these other things out there? Unneccessary will be defined as could have been avoided while still getting the same result, and so we will discuss ways in which this impact could have been lessened. Are there such ways? And what are the results we want to get out of Bitcoin, which might suffer from our avoiding ways? (Behold – another prospective point of disagreement on the horizon).

First and foremost: to discuss Bitcoin we must have an understanding of what Bitcoin is and how it works. I will keep it brief and focus on the neccessary point to understand when it comes to the discussion about the environment, because every discussion about Bitcoin could possible always get very long winded. Point one: What is Bitcoin? Bitcoin, says the community documentation [1] is “a distributed cryptocurrency”. Oh well. The “founder” (this parts is i quotes due to his evasive nature - does he exist? Is he a group of people? No one knows) of Bitcoin, Satoshi Nakamoto, called his article “A Peer-to-Peer Electronic Cash System”[2]. These two statements are much the same, except for the fact that Satoshi Nakamoto talks about the “crypto” part within his article instead of in the title of it. But what does it mean? Currency we know, that is when we exchange something for something else. Crypto means that cryptography – some sort of obscuring, encoding – is used to store, validate, and exchange information about these currency transactions. Peer-to-peer, or distributed, means that everyone is the owner of this information. There is no central agency in control. Bitcoin, boiled down and in essence, is a blockchain technology that are being used for currency-transactions. So how does the blockchain work? [3] This is of course a simplified explanation, but it explains the parts that we need to understand to discuss the energy consumption and the environmental impact of Bitcoin.

A block consists of a header – a unique idetifier for the block. Assume this is the blocks id, or title. In addition to this, the block has a body, which is some information, any information you want. In regards to Bitcoin, this is the information of which money are being moved into which accounts, basically. The third part of the block is a reference to the block before it, which is the header of the previous block. This reference makes the blocks into a chain – you can follow the reference of each block to find the header of the block that came before it.

The security consists of the fact that the header of the block is a hash of all the information in the block. This means that you take the body and the reference, and you hash it – scramble it into something else – and you put that as the header of the block. Then the next block references this header. This, in turn, means that you cannot change the information in a previous block (say, change it so that everyone gives you money instead), because if you do, the hash – which consists of all the information – changes, and then the reference from the next block is no longer valid, and the chain breaks.

The distrubuted part comes in in the fact that everyone that is a part of the Bitcoin network, which anyone is allowed to join by downloading a program on their computer, has a copy of this blockchain. To add a new block to the chain, in the case of Bitcoin, you validate all the transactions in the block, and you send the block out to everyone else that has a copy of the chain. The program automatically accepts the longest chain, which means that if you were the first to validate the transactions, your block gets accepted by the chain. You want your block to get accepted, because if it does, you get some new Bitcoins to yourself.

So, how to stop people from changing the transactions of the latest block, or changing transactions far back in time and then just rehashing all the references that leads to the latest block, and thus steal a lot of money? The solution lies in these two statements: the transactions have to be validated, and the peers always accepts the longest chain. A very, very simplified explanation of the first statement is that the money in the transactions cannot come from nowhere, which means that you cannot invent a transaction to yourself with money that does not exist at that point in the chain. What you can do is make everyone give the money to you instead of to someone else, but that would mean that you have to keep faking all following blocks in the chain, because where the money was at that point would conflict with the following block – i.e in your version you have 100 on you account, and in everyone elses version you have 20. This means that you would not be able to spend your 100, unless you keep your version of the chain the longest chain – the accepted chain – and thus you would have to keep adding blocks to your fake version of reality in a faster pace than everyone else is adding blocks to their version of reality. This is where proof-of-work comes in. So far, all the calculations needed to validate the transactions and hash the head has been very easy and quick, and does not take that much computational power.

At this stage, we introduce an artificial hardship, designed to make the hashing of the block head take longer – basically we say that you have to keep adding a random number to the hash until the hash looks a certain way, and so you all have to race to find the correct random number. This racing to find the correct number to be awarded with coins is calles mining Bitcoins. Every 2016th block the system will evaluate how fast the numbers were found on average, and up the difficulty if they were found quicker than ten minutes. This means that the more computational power that joins the network, the artificial difficulty to find numbers will be increased, to keep the time to ten minutes. It also means that to keep your chain the longest chain, you have to be able to keep finding the next correct hash quicker than everyone else can find the next hash, consistently, block after block, and the only way to do this is to have more than fifty percent of the computational power in the network. This ensures that the system can be trusted, since mathematically, the majority is always right.

So where is the main environmental impact? It is in the energy consumption that keeps this network of validating transactions and blocks in the blockchain.[4] And where is the main enery comsumption in this validating? It is in the artificially constructed proof-of-work needed to build the trust in the system, since there is no centralized unit that ensures that trust. [3, 4] We need to make the largest pool of computer power the most trusted one, to make a majority of the system users have control over the system.

As seen above, the main energy consumption needed comes more from the way trust in the blockchain technology is built than in Bitcoin itself. So why is Bitcoin at the forefront of the discussion and not any of the other blockchain-based technologies out there? For two reasons, working together – because Bitcoin is the most famous one, so it’s the one people know to discuss [5], and because Bitcoin is the most famous one, so it is the one that is the most lucrative to invest in since the price is going up [6], thus driving the use of energy up, as we saw above. When more people join the system, more energy is needed to mine the coins to keep equilibrium. The more people that join the system, the more the price of Bitcoin goes up at the market, because the demand goes up together with the difficulty of getting the coins, and so more people want to invest, drving the price and the energy use up. And so it goes.

Okay, so how large is this environmental impact of proof of work? According to a study from National University of Ireland [7], the energy consumption of Bitcoin in 2013 was comparable to that of Ireland. To have an energy consumption of a small country must at least qualify as potentially large, so presumably that is not the main part of the question.The focus must instead be if it is unneccessarily large.

Back to our original question then – can we avoid this amount of environmental impact while still getting the same result? Bitcoin in it itself seems to demand this exact setup – “a distributed cryptocurrency”[1]. The distribution demands the proof-of-work trust-system that builds on the cryptography, and the currency makes this a lucrative business to get into. Could this cycle be avoided, and what results might suffer as a cause of each technique? Let us look at a few ways:

avoicance by avoidance

It cannot be avoided within the system. The system has to be avoided, ergi: we have to not use Bitcoin. This is the point that most often get brought up [8], the point where Bitcoin is compared to the traditional banking system in a “one-or-the-other” type of argument [9]. This would clearly mean that the result of Bitcoin “to have Bitcoin as a currency” would get lost. The people arguing against in either refute the environmental angle by saying that the traditional banking system is as bad, or worse, for the environment [8], or refute it by arguing that the result is to important to be lost [9] – the environmental impact is needed, because Bitcoin as a currency is so important. In truth it is hard to know – there are no official statistics telling us how much energy “the banking system” uses, although we have some indicators in regards to Visa transactions [6]. In addition, at this point in time, Bitcoin is not mainly being used as a currency, it is being used as an investment opportunity [6]. This means that people are using both the banking system and Bitcoin. To hold on to the result argument, one would have to do it in a way that envisions a future where Bitcoin is a currency that replaces banks. On the other hand - if Bitcoin stableizes as a currency rather than an investment opportunity, it would be fair to assume it would have positive effects on the environmental impact. The people solely in it for the investment-opportunities would no longer find it worthwile to invest, because the price would not be fluctuating that much. The people using it as a currency would not find it worthwile to spend huge amounts of money and effort on mining Bitcoins, and the energy consumption would go down.

avoicance by energy-consumption management

It can be avoided by lessening the energy consumption. This would mean that either the energy consumption of proof-of-work would have to be less, or proof-of-work would have to be abandoned. It is not fesible to lessen the energy consumption needed for proof-of-work, due to the need for a constant rate of new blocks being added [ref]. If the energy consumption of the hardware would go down, people would add more hardware. Would it, then, be possible to abandon proof-of-work while still keeping the desired result of proof-of-work, the distributed trust in the system? The answer is a tentative yes. Etherium, another blockchain-based technology, has made the switch from proof-of-work to something called proof-of-stake.[10] The explanation of proof-of-stake falls beyond the scope of this article, but in essence – instead of proving that you worked on a problem for a certain amount of time for the chain to accept your block, you have to prove that you have a certain amount of stake in that the system keeps working. The one with the most stake is regarded as the one you can trust to want to keep the system working, and thus the one whose block you add to the chain.[11] It is, of course, more complex than this, but this is the essential point in the proof-of-stake philosophy. The discussion of wheter Bitcoin could adapt this proof-of-stake instead of proof-of-work would have to be made around the worth of proof-of-work as a desired result of, or part of, Bitcoin as such. Proof-of-work – by necissity – moves the power to those with resources outside the world of Bitcoin. It takes “real world” resources to drive a profitable mining system, but those resources are “invisible” within the Bitcoin system, which is thus, within itself, kept democratic. It does not matter to the system how much Bitcoin you have. Proof-of-stake moves these resources to within the system. In essence, resources within the system gives you more resources within the system. This makes the resource imbalance visible, making the system more likea mini-model of the world outside of it. Wheter this is a desired or undesired effect, or a moot point, is a question where we need the social science and psychology parts of the Web Science community to join us.

avoicance by environmental impact management

It can be avoided by lessening the environmental impact of the energy consumption. This would mean one of two things - changing the energy used, or preserving the energy lost. This is the path the “official Bitcoin documentation” seems to assume will win. [8]

Regardless of where we disagree on these points, it is clear that the answer to our original question - does Bitcoin have an unneccessary large environmental impact – is not unambiguous. Even so, there is quite a clear case for arguing that the impact is large, and there are more than one possible way of avoiding at least some of that impact. These ways could be boiled down to abandoning the system (1), changing the system (2), and changing the world around the system (3). The drawbacks of those strategies against the desired result of Bitcoin would have to be discussed further, if one wished to reach some sort of consesus. In addition, if we wanted to go with one of the strategies, the question of how would be the next step – to lessen the energy consumption by moving from proof-of-work to proof-of-stake would need a majority desicion amongst the users of the Bitcoin system. The problem with such a desicion is that the people profiting of the current prof-of-work system by making money of it would presumably not want to abandon it, and those people are by neccissity of the design of the blockchain system more than half of its participants. To lessen the environmental impact of the energy consumption would need either for the miners to decide to use renewable energy, as some have already done [12], or for them to conserve the heat the computers give of when mining [13].

The first alternative would be hoping for the environmental conciousness of the miners, and the second to hope to reach their inner Scrooge – it would be more profitable for them to not loose the heat made from the hardware, and thus they would make more money. To make any sort of outside political desicion about Bitcoin is hard, due to its distributed nature. It would take every country to independently make restrictions on energy consumption to have any sort of substantial impact, and that is a question that falls outside the scope of discussing Bitcoin specifically. In essence, to abandon or change the system would change the desired results and functionality of Bitcoin, whereas to change the world would require well, changing the world. Regardless of opinion of this it is clear that there is a discussion to be had, and that the field of Web Science is an arena apt for parts of that discussion to take place.

References

[1] Community, “FAQ - Bitcoin,” bitcoin.org, 2009-2018 [Online] Found at: https://bitcoin.org/en/faq#what-is-bitcoin. [Retrieved: Januari 25, 2018]. [2] S. Nakamoto, “A Peer-to-Peer Electronic Cash System,” 2009 [Online] Found at: Bitcoin.org, https://bitcoin.org/bitcoin.pdf. [Retrieved: January 22, 2018]. [3] Community, “FAQ - Bitcoin,” bitcoin.org, 2009-2018 [Online] Found at: https://bitcoin.org/en/vocabulary#mining. [Retrieved: January 27, 2018]. [4] K. O’Dwyer and D. Malone, “Bitcoin mining and its energy footprint,” The Economics of Information Security and Privacy.: Irish Signals & Systems Conference 2014 and 2014 China-Ireland International Conference on Information and Communications Technologies, vol. 25, June 2013 [Online] Found at: IEEExplore, http://ieeexplore.ieee.org/. [Retrieved: February 1, 2018]. [5] G. Hileman and M. Rauchs, “Global Cryptocurrency Benchmarking Study,” 2017 [Online] Found at: https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2017-global-cryptocurrency-benchmarking-study.pdf. [Retrieved: January 22, 2018]. [6] -, “Bitcoin price,” World Coin Index, 2018 [Online] Found at: https://www.worldcoinindex.com/coin/bitcoin. [Retrieved: Januari 29, 2018]. [7] E. Ou, “Bitcoin Is Greener Than Its Critics Think,” Bloomberg, december 2017 [Online] Found at: https://www.bloomberg.com/view/articles/2017-12-07/bitcoin-is-greener-than-its-critics-think. [Retrieved: Februari 2, 2018]. [8] Community, “FAQ - Bitcoin,” bitcoin.org, 2009-2018 [Online] Found at: https://bitcoin.org/en/faq#isnt-bitcoin-mining-a-waste-of-energy. [Hämtad: Januari 27, 2018]. [9] Becker J., Breuker D., Heide T., Holler J., Rauer H.P., Böhme R., “Can We Afford Integrity by Proof-of-Work? Scenarios Inspired by the Bitcoin Currency,” i The Economics of Information Security and Privacy, Böhme R. , Red. Berlin: Springer, 2013. s. 135-156. [10] A. Herrtig, “Ethereums Big Switch – The New Roadmap to Proof-of-Stake,” Coindesk, May 2017 [Online] Found at: https://www.coindesk.com/ethereums-big-switch-the-new-roadmap-to-proof-of-stake/. [Retrieved: Februari 3, 2018]. [11] J. Manning, “Proof-of-Work vs. Proof-of-Stake Explained,” Ethnews, November 2016 [Online] Found at: https://www.ethnews.com/proof-of-work-vs-proof-of-stake-explained [Retrieved: February 3, 2018]. [12] A. Pompliano, “The World’s First Waste-To-Energy Crypto Mine,” Noteworthy, November 2017 [Online] Found at: https://blog.usejournal.com/the-worlds-first-waste-to-energy-crypto-mine-2638a6728efa [Retrieved: February 2, 2018]. [13] T. Hunt, “Solar-Powered Bitcoin Mining Could Be a Very Profitable Business Model,” Green Tech Media, September 2017 [Online] Found at: https://www.greentechmedia.com/articles/read/solar-powered-bitcoin-mining-could-be-a-very-profitable-business-model#gs.7U3e3YA [Retrieved: Fabruary 2, 2018]. [14] A. Shoker, “Sustainable blockchain through proof of exercise,”  Network Computing and Applications (NCA), 2017 IEEE 16th International Symposium, November 2017 [Online] Found at: IEEExplore, http://ieeexplore.ieee.org/. [Retrieved: January 27 2018].