Bitcoin doesn't use too much energy

Probably the single biggest point of confusion

Bitcoin uses too much energy

In one sentence

Bitcoin loves WASTE energy, and there’s tons of it - flared gas in oil fields and landfills, excess electric grid power needed to meet peak demand, and any number of dual use options like winter heating.

In one paragraph

The common objection that bitcoin uses too much energy ignores the fact that bitcoin mining thrives off wasted energy, because waste energy is cheap energy. Two main sources of waste are stranded energy like flare gas and the excess electric power capacity needed to support the grid during peak usage. Bitcoin mining is actively taking advantage of these opportunities due to its unique ability to convert energy into value independent of location, and the ability to have enormous energy demands that can nonetheless be turned off temporarily without significant revenue losses. Both of these are carbon neutral uses that confer additional benefits in terms of development and grid stabilization. However, bitcoin doesn’t need to justify itself as carbon neutral any more than refrigerators do. Preserving our food is worth the energy, and so is having a neutral source of money. The mainstream voices that only focus on energy use are a) clueless about bitcoin’s unique relationship with energy and b) uninterested in whether bitcoin is worth its energy usage.

Full length version

One of the most common objections to bitcoin is the energy usage. It turns out, this is one of the strongest arguments FOR bitcoin, and it's my favorite point of entry into the topic, because it helps show how bitcoin is unique, amazing, and also poorly understood by mainstream outlets. If they’re this wrong about energy, what else are they wrong about?

Bitcoin can run off energy that is otherwise unusable, or waste energy. Oil wells unearth lots of methane gas, but since methane is not energy-dense enough to be profitably packaged and shipped to a population center, it gets burned at the site (known as flaring) to prevent dangerous accumulations that could explode. Now, some oil companies use the methane to run computers that mine bitcoin. All that's required is a satellite internet connection, and waste energy anywhere in the world can earn money by mining bitcoin.

This is not a fringe use case - bitcoin mining is extremely competitive, so the only way to make money is to find a cheap energy source, and the cheapest energy is wasted energy. This drives bitcoin mining to remote parts of the world to use energy that would otherwise be lost. This decentralization also helps the bitcoin network become incredibly resilient, because it takes a big, big catastrophe to wipe out bitcoin miners in remote oil fields. But more on that later.

Other energy sources, like volcanoes and other geothermal sources, have not been harnessed in significant quantity due to engineering challenges. Bitcoin mining can incentivize their development by eliminating costs of transporting this energy to population centers, thereby opening the possibility that bitcoin could indirectly finance new energy sources.

Bitcoin mining can also be useful close to population centers. A major problem with electricity production is that much of the capacity is wasted. That's because the capacity at any given time needs to be able to match peak demand, not average demand. So, if a city is using 1 megawatt on average, but can spike to 2 megawatts on a hot day, the power plants need to be producing close to 2 megawatts of electricity throughout the whole summer. However, if there is a large bitcoin mining facility, it can soak up this unused capacity during average demand, and then can shut down during periods of peak demand. Unlike other networks like Facebook or Amazon, a bitcoin miner can shut off for a period of hours to days, forego any revenue from that time period, and power back on. This helps stabilize the grid without adding much to overall usage, because it runs off excess capacity.

However, these are not the strongest arguments in favor of bitcoin and energy. Quite simply, bitcoin is worth the energy it uses. Currently it uses more energy than some small countries, but so do all the refrigerators in the US. It would be strange if people constantly published articles worrying about refrigerators’ energy use without acknowledging their value.  Understanding whether bitcoin is worth it or not requires understanding what it is and what it does, it’s kinda dumb to say something is a waste if you don’t know anything about it. Bitcoin stands to eliminate the need for brick and mortar banks, as well as the political force required to maintain the international monetary order. It stands to become a lever of progress and economic growth.... but I'm getting ahead of myself.

Lastly, the march of human progress goes hand in hand with increased energy use. This should continue, and there is a simple solution to the carbon question - nuclear power. Bitcoin is just another argument for nuclear.