Is the Ethereum Merge Bad News for Climate Change?
Aug 26, 2022 Marilyn Wilkinson reading time 5 MIN
Climate activists and crypto skeptics love to claim Bitcoin and Ethereum are terrible for the environment, but is that really true? According to climate tech investor, environmental campaigner, and Bitcoin analyst Daniel Batten, Bitcoin mining not only helps build out the renewable grid, but also plays a critical role when it comes to reducing methane. Daniel shares why we should be mining more Bitcoin, not less, to save the planet – and why that means that the Ethereum merge isn’t as great as it might seem.
This interview was a response to an opinion piece Daniel wrote for Bitcoin Magazine. Listen to the full interview on our podcast or read this transcript to discover Daniel’s perspective.
According to the University of Cambridge, Bitcoin currently uses as much electricity in a year as Greece, Sweden, or the Netherlands. So how can Bitcoin be a good thing for the planet?
It’s a great question. The first thing we have to understand is that not all users of energy are equal, and not all consumers of energy are equal. For example, if you are using energy, and that is coming from coal, then we want to do as little of that as possible. If we’re using energy and it’s coming from natural gas, we want to do a whole lot less of that. If we’re using renewable energy, hydro, solar, wind, well, that’s carbon-neutral. And we want to be doing more of that. That doesn’t have any long-term climate impact at all. If we’re using a carbon negative source of energy, we actually want more of that.
You might think, well, what’s a carbon negative source of energy? A carbon negative source of energy is something that’s even better than using solar and wind, because that’s only carbon neutral. That doesn’t help us to eliminate emissions from the air. It just stops us from putting new emissions into the air.
Right now, there are massive quantities of methane going into our atmosphere. And they’re going in from oil and gas fields, from landfills, from farms, from wastewater, from any number of different sources. It’s such a big problem that the United Nations environment program has now switched tack, and they’re saying that mitigating methane represents our strongest lever to reduce climate change in the next 25 years. And when you look at ways that you can do that, it turns out that there aren’t really a whole lot of solutions that stack up.
Bitcoin mining does a better job than anything else because it’s location agnostic. It can actually sit inside an oil field and mitigate methane. It can sit next to a landfill and draw that methane that’s leaching into the atmosphere, purify it, send it into a generator, use that generator to generate electricity, and use that electricity to power up Bitcoin mining. Now, what it’s done in that whole process is, it’s taken methane, which is 84 times more powerful as a greenhouse gas than carbon dioxide, and it’s removed it. That methane, that would have gone into the atmosphere, is no longer going into the atmosphere. It’s combusting it into carbon dioxide.
Of course, carbon dioxide is still a greenhouse gas, but the key thing here is, it’s 84 times less powerful than methane. So you’ve just removed more than 95% of the problem.
When you are increasingly using carbon negative and carbon neutral sources of that power, it flips everything on its head. Energy consumption is no longer a problem. It’s now the solution.
In fact, now the problem becomes that actually, Bitcoin mining doesn’t use enough energy because, as a network, it doesn’t draw nearly enough power to solve our methane problems. It actually needs to use more so we can mitigate more of those sources of methane that are leaching into the atmosphere right now. There are a whole lot of benefits in terms of facilitating the build-out of the renewable grid as well. But a lot of my research right now, because it’s such a major climate concern, is focused on how we can use Bitcoin to mitigate the methane from our atmosphere. And it does a better job than any other technology right now that exists.
Greenpeace has a huge campaign going right now saying that a software code change would reduce Bitcoin’s energy use by 99.9%. They say switching to a low-energy protocol has proven effective and uses a fraction of the energy. Ethereum is changing to a proof-of-stake protocol. What’s your take on that?
I look at it through an environmental lens, and I look at it through the lens of how we can solve our most urgent climate problems. And right now, the most urgent one is mitigating methane and building out the grid to replace carbon-based sources with renewable sources.
If you look at it purely in terms of methane mitigation, the merge of Ethereum and the migration to proof-of-stake is terrible for the environment. We’ve just lost our second best technology in the world that could have mitigated huge quantities of methane that are going unchecked into our atmosphere every single second.
The net impact of the Ethereum merge is equivalent to burning 1.5 billion trees every single year in terms of the potential we could have had to mitigate that methane we’ve just now lost.
Ethereum was running at about 70% of the energy capacity of Bitcoin, sometimes a bit more, sometimes a bit less. So we’ve now lost that. We’ve now lost the ability of what was a brilliant system which shared the location agnostic features, the interruptible features, the fact that it offered monetary incentives, the fact that it was flexible, and we’ve lost that. So environmentally, it’s a shocker, it has a devastating impact.
That’s really interesting because most sources say that the Ethereum merge will be a net positive for the environment. Where is this disconnect coming from?
The disconnect is that that’s only true if you look at energy consumption in a very one-dimensional lens, which is energy consumption is always bad. If you think energy consumption is bad per se, so less energy consumption is good, then yes, we need to reduce consumption, but remember, consuming energy where you are being net carbon negative, that’s a positive thing.
It’s devastating that we’ve lost the potential to combust methane, to use that methane to power up what could have been Ethereum-based crypto mining. Now that it’s migrated to proof of stake, it’s only going to be using a very fraction of the energy. So, it’s no longer a solution. You can no longer use those things in landfills, you can no longer use it for wastewater. Those sources of methane now have to find someone else. And it’s up to Bitcoin alone now as really the only real proof of work-based cryptocurrency of any significance to find sources of methane and mitigate them.
Let’s say I’m interested in crypto, I’m also interested in the environment, and I want to invest in a green way. What are some things that I, as a normal person, can look at?
There are some truly amazing things coming very soon. There are going to be opportunities for retail investors very soon to be involved in helping to sponsor green Bitcoin mining. I can’t say too much about what they are. All I can say is, in the next half year or so, you’re going to see some really exciting innovations.
The other thing is getting involved in specifically supporting or investing in mining operations that have committed to a 100% renewable vision. Marathon has committed to going 100% renewable.
The other thing I’d say is that simply buying Bitcoin itself is actually an investment in helping to build out the renewable grid. Every time you’re getting Bitcoin, it’s helping the network effect. Obviously, the more people who are using Bitcoin, the Bitcoin price goes up. That incentivizes more mining. And because the bulk of the new mining is occurring right now, new mining is renewable-based, and, of course, that’s helping to build out the grid. And because so much is again combusting methane, taking it out of the air permanently, then you’re actually supporting that movement. You’re supporting the carbon neutrality and the carbon negativity of that entire network.