Two reasonably scary bits of statistical froth have made it over my bow this week. Both are so wrapped up in the Way Things Are and The Way Things Will Likely Be that it seems almost foolish to worry about them, but worry I do, and I think maybe you should too.
Both are related to bitcoin in the first instance and in the entire explosive growth of the “blockchain economy” in the second. If you don’t know what either of these are, don’t worry, you’re not alone. Both—and they are intimately related—are examples of high speculative, highly nerdy (both computer nerd and finance nerd) ways of communicating value and generating and maintaining ostensibly non-repudiable transaction information. They are all the rage now, and show no signs of fading away.
They are an example of technology and technology hype getting ahead of the rest of society…in this case, in huge, bounding, leaps. Because, here’s what brought me up short: one bitcoin transaction (that is Alice buying a teeshirt from Bob using bitcoins) requires the same amount of energy as does a standard American home for 10 days. A-N-D the energy required to mint (that is, to make a bitcoin) is equivalent to the energy requirements of 183 countries combined.
Now, the entire global production of energy from renewables (wind, water, solar, thermal, and maybe nuclear) is somewhere between 23% and 26%. The remaining comes, of course, from dead dinosaurs, ancient forests, and carbonized plants. And while everybody is sure that renewables will continue to grow, at the moment they face tough political, economic, and technological hurdles.
So, today, we are burning through 29.05 TWh of energy just to build a bitcoin, not to mention to actually spend them (some estimates, as I suggested above, have each transaction at 250kWh—enough to power a house for about 10 days—and there are some 300,000 transactions per day).
Clearly this is an enormous ethical problem, and one on at least two fronts. The first is simply in the availability of energy and its disproportionate utilization globally. They second—which is really an ah-shit moment—is in the carbon produced to generate that energy and its effect on global warming. One estimate on that latter point shows that a single bitcoin mining operation in Mongolia produces somewhere between 24 and 40 kg of CO2 an hour.
Bitcoins and the entire blockchain concept are fascinating experiments—one I’ve participated in, and profitably, but at a cost I now find unacceptable. How do we rationalize that cost in terms of human development, quality of life, and real world, wide spread economic potential, in both the immediate term and in the long term? Are we likely to see either technology imbuing the world overall with benefits that outweigh those costs, even in the long term?
I’d be hard pressed to say yes, and I’d very much like to see a case made that anyone would find convincing.
Just because we can do something—use an app to put taxi drivers out of business, or create a marketplace that destroys local craftwork, or any other number of examples—doesn’t mean we should. And while most of these ‘advances’ hurt individuals or groups of individuals, global energy reserves and capacities are an entirely different thing, creating damage at an entirely different scale.