In this newsletter, we'll address a question that many of our readers are curious about: Do blockchain technologies consume as much energy as is commonly believed? Welcome to today's newsletter!
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Yes, Bitcoin and energy consumption are an important issue and naturally cause us concern. However, before jumping to conclusions, we need to understand this topic comprehensively. Let's start by remembering the times when Bitcoin was said to be a hoax. Then it was associated with crime, but we still know that most illegal activities are carried out with cash.
Now, the debate centers on the significant harm car consumption causes to the environment. This Coindesk article reminds us that emissions are generated by the use of fossil fuels, yet we haven't restricted car use. Instead of ending car use, the focus should be on obtaining this consumed energy through more sustainable and harmless methods. Yes, we might want to criticize Bitcoin, but if we hate it for that reason, it's like hating cars. Moreover, people like Bill Gates , Warren Buffett , and Charlie Munger have started giving statements supporting the old financial system; it's not hard to guess why they want the old financial system to continue. 😉
Does Bitcoin really consume a lot of energy?
Simply put, computers consume energy while they operate. Bitcoin, being a global, decentralized network, requires thousands of computers working simultaneously to function. This results in high electricity consumption. As Bitcoin and its derivatives appreciate in value, the amount of electricity used to secure this system will increase proportionally.
In light of this information, we can see that claims about Bitcoin being an environmentally unfriendly technology, that it should be banned immediately, and similar statements are actually based on distorted information. How so? Experts say that one Bitcoin transaction consumes the same amount of energy as 453,000 Visa transactions. But we must also remember that credit card payments still require traditional banking systems, which generate high emissions.
However, no matter what we do, claims like these will have a huge impact on people who are not knowledgeable about the subject. It's essentially a case of people who don't know much about a topic being more likely to believe conspiracy theories.
Another point to remember is that, since Bitcoin and its derivatives operate within a monetary system dominated by deflation, they indirectly reduce consumption. In most countries today, inflation prevails in fiat (government-issued) money, making consumption seem more logical. Because we may not be able to acquire the same goods at the same prices in the future, some unnecessary expenditures can appear as investments. Therefore, we can say that inflation increases consumption. Bitcoin, by its very nature, is not susceptible to inflation, thus providing no reason to spend our money unnecessarily, thereby reducing unnecessary consumption.
Meanwhile, for those who are curious:
Word of the Week
An airdrop is a token distribution method used to send cryptocurrency or tokens to wallet addresses. Airdrops are sometimes used to promote a token or project in exchange for simple tasks such as resharing, referrals, or app downloads.
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Originally published on Medium on February 21, 2022. English translation of “Merkezsiz Bülten: Enerji Tüketimi”.