What does Bitcoin have to do with climate change?
Estimated reading time: 6 minutes
It's no secret that taking action on climate change can feel like an uphill battle, especially when it comes to emerging technologies like cryptocurrency. Bitcoin, in particular, can be a bit of a head-scratcher for us commoners. But as we all know, the urgency of climate change demands that we stay informed on the environmental impacts of our financial decisions.
Here’s what we’ll cover step-by-step:
Follow along while we break down what you need to know about Bitcoin and cryptocurrency, and take a closer look at how it impacts our planet. It might seem intimidating, but understanding how Bitcoin and sustainability relate is essential for making informed choices that support a greener future. Let's jump in and unpack this complex issue together bit-by-bit!
🎯 Action step 1 of 4: READ — Let's start by looking at a few articles together.
What the heck is Bitcoin?
Bitcoin is a type of cryptocurrency. The basic idea is that it's a secure, verifiable, digital alternative to cash money. That "verifiable" part of crypto is what makes it relevant to sustainability.
Why does it matter to climate change?
You acquire Bitcoin by "mining" it digitally. Let's use gold as an example — gold miners had to expend time, money, and energy to find and extract hidden nuggets.
Now let's imagine that the tools used to mine and verify the legitimacy of the gold consumed more power than your house, and the more gold you mined, the harder your miners had to work, and the more energy they consumed.
Bitcoin matters to climate change because it consumes a huge amount of energy, and the energy per transaction will continue to increase.
How bad is it, really? Here are some quick facts:
Is it all bad?
The most compelling argument in favor of Bitcoin is that if people want to make money off of it, existing energy is too expensive. It incentivizes the production of solar energy.
Our take (for now) is that Bitcoin is net negative, but there are so many other types of cryptocurrency like Ethereum acknowledging the planetary impacts of crypto technology and surfacing solutions. It’s important to dive deeper into Bitcoin’s popularity and if there are “better” cryptos out there.
🏁 Checkpoint: This is the end of action step 1 of 4: READ.
🎯 Action step 2 of 4: LISTEN — we'll watch a short video or listen to a podcast to further expand on our topic.
Bitcoin is stored on the blockchain, so it is important to know what it is. Watch this video to learn more about the basics.
What is blockchain?
Blockchain basically describes a database where records are decentralized, distributed, and secure. Bundles of these records are called "blocks" and they're submitted in chronological "chains". Cryptocurrency is the most well-known application of this tech.
It theoretically powers an uncheatable system where records can be stored, facts can be verified by anyone, and security is guaranteed.
What makes it different?
Blockchains store info and records across a network of personal computers. No one company owns the system (e.g. unlike Amazon's AWS servers), so it's hard to corrupt.
Also, remember when we said verification is the reason that bitcoin is relevant to sustainability? Well, this video says otherwise.
TL,DR: Cryptocurrency (digital currency verified on the blockchain) can theoretically be verified in two ways: Proof of Work (PoW) and Proof of Stake (PoS).
What is PoW?
New Bitcoins can only be released through a process called mining, verified by PoW. When you mine Bitcoin, what you're actually doing is competing with other miners to solve complex mathematical puzzles to verify the legitimacy of the transaction. The puzzles require enormous computational power to solve, and the first person to successfully verify gets rewarded with $. The puzzles get harder and harder the longer Bitcoin is around, consequently consuming more energy. Verifying a single transaction with proof of work uses the same amount of energy as 1.5 American households do in a day. Yikes!
What is PoS?
Instead of using an energy-sucking puzzle, proof of stake decides that the creator of a new "block" is chosen from a pool of users who have staked some amount of $.
When it comes to Bitcoin and blockchain, there are many bits and pieces at play, aside from being a giant storage unit for data. Tackling these complexities with action can help us debunk the full story.
🏁 Checkpoint: This is the end of action step 2 of 4: LISTEN.
🎯 Action step 3 of 4: ACT — Now it's time to do something. Let's go!
You'll see the acronym "NFT" thrown around. It's a little different than Bitcoin (quick overview article here and 5-min video here), but the issues are the same.
Here are 3 actions you can take based on how familiar you are with blockchain/crypto/Bitcoin/NFTs. Choose a level and get started!
1. Share a resource on Bitcoin on social media/with your coworkers.
There isn't enough awareness about the planetary impact of Bitcoin. Share our Soapbox summary for something simple or this Earther article on "How to Fix Crypto Art NFT's Carbon Pollution Problem" if you have a more tech-oriented audience.
Copy/paste this into LinkedIn or Twitter (and tag us @soapboxproject_ so we can reshare):
Soapbox Project sends me weekly bite-sized climate action plans. This month, we've been learning about the ecological impact of Bitcoin which now consumes more electricity than Argentina! Read more about the problems/solutions of Bitcoin & crypto: [copy your chosen link]
2. Get involved with policy change.
Join your local Sunrise Movement chapter (USA) and/or join Climate Changemakers. If you're outside the US, get involved with Fridays for Future — they have a global map to guide you. Bitcoin is just a symptom of our fossil fuel reliance and we need to tackle the root of the problem via climate legislation.
3. Join the Clean-NFTs Developer Community.
Here is a spreadsheet of developers working on cleaner blockchain tech. Here is also a link to a Discord community at the top of the page. If you're really into crypto and want to make a planetary difference, this one's for you.
Bonus: If you're an energy researcher OR a developer creating open source solutions, you could win a bounty for researching/creating a more ecologically friendly token. What a time to be an eco-friendly bounty hunter.
We have the power to use technology as a force of good in many different ways, regardless of which action you take!
🏁 Checkpoint: This is the end of action step 3 of 4: ACT.
Before we go any further, it's time for you to pledge your commitment. It takes less than 30 seconds to pledge and we can bother you about it in a friendly way, so we can hold each other accountable. Pledge here!
🎯 Action step 4 of 4: REFLECT — what can you commit to? What fresh perspectives can we look at?
Blockchain technology isn’t just about Bitcoin. It’s a system that stores data in a giant storage unit, helping to improve transparency and traceability, especially when it comes to sustainability.
On the bright side, there are positive aspects of blockchain technology. This case study comes from Provenance, a platform empowering brands to make the sourcing and impact behind their products transparent. Their blockchain story takes place in the Indonesian fishing industry, where slavery and human rights abuses are rampant.
Quick note: if you're reading the case study, you might benefit from starting at the bottom — there's a glossary of definitions.
4 highlights on using blockchain for social & environmental sustainability:
Our biggest takeaway - Bitcoin's negative planetary impact could give blockchain tech a bad name. This case study has really powerful implications — imagine if we could do the same for fashion company supply chains, food, and more! We would finally be able to see what really goes on, prevent human rights abuses, and know which companies are truly radically transparent without relying on their word.
🏁 Checkpoint: This is the end of action step 4 of 4: REFLECT.
Check out our membership community for more resources like free weekly events with social justice experts, sustainable product discounts, pre-written email templates, a social impact job board, and in-person hangouts with new friends. Thanks for taking action with Soapbox Project!
Get our free bite-sized climate action plans before you go!