The Bitcoin network is more efficient compared to our current financial system, so any concerns about its energy use are completely unfounded.
In this article, we are going to dive into Bitcoin’s impact on the environment.
Since the rise of Bitcoin, the media has relentlessly attacked it based on its energy consumption. A popular argument comes from The Guardian, “A single bitcoin transaction uses the same amount of power that the average American household consumes in a month.” Columbia University writes, “One study warned that Bitcoin could push global warming beyond 2°C.” And one Newsweek article even says, “Bitcoin mining is on track to consume all of the world’s energy by 2020.”
Considering that we are past 2020 and bitcoin mining has not burned up all of our resources, we have to ask ourselves, what is causing this false narrative about Bitcoin’s energy consumption? At its core, it stems from a misunderstanding of how Bitcoin uses energy and where the energy comes from.
First, let’s debunk the myth that Bitcoin is less efficient than our current financial system. An example of this popular misconception comes from Forbes, “A single bitcoin transaction is equivalent to roughly 750,000 Visa swipes.” The issue with this statement is that it is not measuring the same thing. To see how this is deceptive, let’s dive into this further.
In our current fiat system, there are three layers. The first layer is the “high retail performance” layer, which is incredibly efficient. This layer is where credit card and electronic transactions happen. However, this layer operates above the “banking and fintech” layer, which is less efficient. This second layer is made up of banks and financial technology companies. They provide security to our money, record how much money everyone has and manage the activity in the high retail performance layer. This layer also operates above another layer, the “government regulatory” layer, which is incredibly inefficient. This third layer is made up of government institutions like the Federal Reserve and the military.
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