 The Bitcoin network is currently consuming over 130 terawatts in electricity per year. That's more than Ukraine or Argentina. The majority of Bitcoin mining operations are located in China, where 65% of Bitcoin's hash power is produced. A study says that this could prevent the world's largest polluter from reaching its emission reduction goals in the next decade. According to critics, Bitcoin risks becoming an environmental disaster. I fear that this will quickly get completely out of control if adoption increases a lot more. But crypto advocates disagree with these forecasts of catastrophe. They are confident that Bitcoin can become sustainable and even contribute to the green economy. There is an aspect of miners seeking cleaner for cost. We can drive real impact onto the ground in communities that can install renewable energy. Join our latest coin telegraph crypto duel with Alex De Vries, data scientist and founder of Digiconomist, and Josef Palant, CEO and founder of Blockchain for Climate. First of all, let's put things into perspective. Bitcoin's global share of annual emissions is around 48 million tons of carbon dioxide per year. That's only 0.15% of the global annual total of around 31 billion tons. So, looking at these numbers, doesn't Bitcoin's environmental problem look a little bit overblown? Why should we be so concerned about it? Maybe Alex wants to start. Sure. That number you mentioned is the current estimate, but that doesn't yet include the expected increase in the network's energy consumption and there's also the carbon footprint. So, you have to consider the Bitcoin price went up by a lot very recently. But that doesn't immediately increase the energy consumption of the network. You have a very long lead time in the production of new devices. The good thing is we can calculate or estimate where the energy consumption of the network and the carbon footprint is going to end up at. So, you could say that we can expect this number to at least double or triple for Bitcoin alone. And then, of course, you have to consider the other cryptocurrencies that run on proof of work as well, which tend to add 50% on top of what Bitcoin is doing. So, altogether, factoring in the latest price increase and assuming these machines are delivered. Somewhere in the next year, you could be talking maybe half a percent of our global emissions related to Bitcoin mining. Now, you could still say, OK, that's not the biggest thing in the world. There are probably things that have a bigger carbon footprint. But at the same time, the Bitcoin system is also still very small. We haven't achieved mass adoption yet. There's only been one S&P 500 company that has so far invested in Bitcoin, being Tesla. And I think most Bitcoiners will agree that there is a lot of upside to the Bitcoin price as a result, which also means that the carbon emissions related to mining could go up by a substantial factor as well. Because those things are inherently related. So, yeah, apparently, Bitcoin's energy consumption is increasing and it looks like it will continue doing so. What do you think, Joseph, about Alex's estimations of Bitcoin's future energy consumption? Does it look an estimation that you agree with? Well, I think that the baseline numbers and the current numbers, I believe, come from a lot of Alex's really well researched work. So I think that I'd say that that's technically accurate to be projecting that growth. Looking at 48 million tons of CO2 per year, or let's say 75 if we're adding the other coins, but let's maybe stick with 48, I would say it is a lot and it is a little at the same time. And I really want to couch this all in that addressing climate change is really one of the major challenges of our time. And so the opportunity to dig into this is actually one we need to take. If we are cryptocurrency fans, if we are Bitcoin fans, we do better by leaning into this issue and solving it rather than leaning out and saying it's not our problem. 48 million tons, it's sort of difficult to put in perspective of, well, how much carbon is that? Well, Canada's emissions right now are 750 megatons per year. And the States is around 5,200, I believe. And so, for example, that 48 megatons Canada has committed to cut about five times that between now and 2030 for its emissions targets. So it's, you know, it's a lot and it's a little. A lot of critics about Bitcoin's carbon emission also compare it not to countries but to alternative payment systems. So Bitcoin is a arguably payment system and it should be compared to other payment system in terms of energy consumption. So according to research conducted by the economists, the carbon footprint of a single Bitcoin transaction equals the carbon footprint of roughly a million visa transactions. However, those numbers have been widely criticized as they don't take into account the energy costs of the wider financial infrastructure that visa needs in order to perform a transaction. So on the contrary, Bitcoin is a self-sufficient system which doesn't require any more energy in order to work. So Alex, you are the founder of Digiconomist, so you produced those criticism. So how would you respond to that counter argument? Well, you know, it's very hard to, you know, make a proper comparison with the regular financial system, especially considering that, you know, Bitcoin has other issues than its energy consumption, one of them being scalability. So you could say that you could not compare Bitcoin to a payment system simply because a payment system like visa can handle 65,000 transactions if they need to and Bitcoin doesn't get any further than five transactions per second. So is it really fair to compare the two? Difficult, very difficult question. Now, let's stick with the payment systems. We know that all had the whole financial world together processes around 700 billion electronic transactions per year. If you look at Bitcoin, Bitcoin is doing not even a fraction of that. It's doing 120 million. Now, if you were to scale them up to the same level, you need a very large factor. If you were to increase Bitcoin's energy consumption by that much, it would exceed our total global energy need at the moment. So we can be pretty certain that the financial system is to some level more efficient than Bitcoin, even if you can't perfectly compare it to visa or anything else. OK, so now I would like to know what Joseph thinks about this. What about this specific comparison with the visa system? Do you think it's a comparison that fits? Once again, I'd say yes and no. I think that it's unlikely, maybe in a deep maximalist sense. People might think that we would do all of the transactions on the Bitcoin mainnet, or maybe it goes to Lightning or maybe it goes to another cryptocurrency to do that work. So I don't think it's a really... It's not apples to apples. Coinbase brushed off criticism about Bitcoin being bad for the environment, defining them as myth. So in a recent blog post, they said that Bitcoin miners will be increasingly incentivized to use renewable energy, which are becoming the cheapest form of energy available. Thus, according to the article, Bitcoin mining will help driving sustainable energy innovation. So what do you think about this argument, Alex? The thing is, when people say Bitcoin will use renewables, I don't see what type of renewables, because I see people saying, OK, Bitcoin can be used to, for example, use the excesses of solar power. We turn our Bitcoin miners on when we have an excess of solar power production, which sounds like a great idea until you realize that, you know, that means that those miners will be shut down for the rest of the day when there isn't an excess. So there is no incentive for miners to just, you know, enroll themselves into a scheme where they can only get power for an hour of day because it's a massive opportunity cost. They would rather run their machines 24-7 and get power, cheap power all the time, because that maximizes their potential returns. So in that sense, I don't see the compatibility there. I do see that in this energy transition, the thing that's slowly starting to become obsolete is actually fossil fuels. And if there is one thing that Bitcoin miners love, it is very cheap, obsolete energy sources. And we have seen, for example, reports about the state of New York, where Bitcoin miners are now getting involved with obsolete natural gas plants, trying to save those so they can repurpose them for mining. And we also saw very recently in Kentucky that a clean energy subsidy was converted into a tax break for Bitcoin miners because the state believes that these miners can play a role in saving their obsolete coal industry. Now, that is something I see as a very realistic scenario for Bitcoin miners to increasingly take advantage of these fossil fuel sources that are becoming obsolete. But that is obviously not going to be the trend that, you know, hey, you are mentioning just now. It's actually the opposite. I see the future of Bitcoin mining in obsolete fossil fuels rather than in renewables because we need those renewables to clean up our grid and meet our climate agreement goals. That's an interesting point of view. Joseph, what do you think? Are you as skeptical as Alex regarding the possible importance of renewables to solve this problem of Bitcoin? I think that saying that the environmental impact, brushing it off as a myth, I don't think that that's accurate. I think that's a little bit too pat of an answer. But overall, I believe that the climate scrutiny of Ethereum and Bitcoin can actually have a really positive effect. We can get to net zero emissions of these blockchains through reducing emissions where we can and offsetting the rest. And I think that if the communities want to, if Bitcoin wants to, if Ethereum wants to, they can absolutely take the network's carbon neutral. I've been working for the last 16 years developing projects that get or keep carbon out of the atmosphere and economic and policy tools to make sure that this can be done at Blockchain for Climate Foundation. We're working on building the Bitmo platform to connect national carbon accounts of the world and enable cross-border collaboration on emissions reductions under the Paris Agreement. We can do wild stuff with crypto. We can build amazing things on the blockchain. And we do this, of course, so that we can drive real impact onto the ground in communities that can install renewable energy. If we're looking at an offset point of view, that communities can manage their forests according to their priorities that people can cap landfills, take that methane, use it for something useful. So I believe that leaning in rather than brushing it off as a myth is ultimately going to be the way we get through this discussion. I would like to get into your main field of expertise, which is Ethereum. So the Ethereum community has pledged to switch from a proof of work to a more sustainable proof of stake system. Alex, you are very skeptical that such transition will ever take place. Why are you so skeptical? Well, I don't know if it will never take place. I just know that it's challenging. But that's inherently to making changes on a public blockchain network with a lot of different stakeholders. And if you want to make a change like this, where you replace the mining with an alternative like proof of stake, you need to onboard at least all the stakeholders that are in miners. Because otherwise you risk that there will be another split in the network. And we know for sure that the miners are not going to make the change. And they will argue that you will have to keep running on proof of work Ethereum to be certain that you have enough security because they will say proof of stake is not secure. And they might be able to convince a part of the community to go along with that. And then you might end up with a split like this. So it's a very challenging thing to make it happen. Like it's not even the software because we know proof of stake solutions have been used for years and they're used in various other cryptocurrencies. But getting it implemented in what is currently running as a proof of work blockchain it's possible, but it's just very hard. And that's why you see Ethereum promising for the past few years. They'll be doing this, but still probably not succeeding this year. Okay. And Joseph, what do you think? How can we solve these obstacles that stand in between the transition towards a proof of stake system for Ethereum? I've seen the Ethereum community do amazing things. And so I have a lot of faith in what they say and their ability to pull tricky stuff off. I know that proof of stake has always been part of the plan since the beginning of Ethereum. And one could say, well, then that kind of invalidates the argument that it's going to happen because they've been saying it's going to happen for years. On the flip side, I think it's beneficial that the concept has been baked in and they're working towards it. With the launch of the beacon chain last December in 2020, that's really the start of Ethereum 2.0. That's sort of a chain that's going to organize the transactions and the merge of proof of work and proof of stake. And I see amazing people who are on the core ETH 2.0 teams that I have all the faith in the world for. So I believe that the process is ongoing. I believe that the Ethereum community has the nerve and the steel to make that happen. And so I'm absolutely comfortable that we'll be moving to proof of stake in the next year or so. So while the Ethereum network is going to switch to a proof of stake system, there are not such plans inside for Bitcoin. So what are the other ways to reduce the carbon footprint of Bitcoin according to you? I do see two key pathways. And I think of supply side opportunities and demand side opportunities around greening Bitcoin, if you will. So supply side opportunities include the world grid just gets cleaner. So hopefully there is a shift going on that has other drivers sort of outside of the Bitcoin realm that we move to a lower carbon state and that some of that affects Bitcoin mining and that we're able to accurately reflect and quantify that. There is an aspect of miners seeking cleaner for cost. So in the case where we can be putting in renewable energy in places where it's a great fit, we do know that in a lot of places, solar and wind power is the lowest cost. And if there's a way to have miners be seeking that and being able to communicate that they're on renewable energy, this becomes part of the equation. Alex, what you what you think about this perspective that Joseph just explained, does it sound too optimistic to you? Well, my most optimistic view would be that Ethereum, first of all, succeeds in implementing proof of stake and that Bitcoin were to then follow the same example, because if that were to be the case, then you have solved all issues. And by the way, how we have seen again, I mentioned earlier the power outage over the weekend in Xinjiang, which showed that we have a pretty big concentration of computational power in a single county in the northern province of China, which is also from a security perspective, not so great. The risk of having a lot of equipment at the same location is that equipment gets confiscated and used against Bitcoin. And if the majority of the network is up for grabs in a single country, in this case around a quarter or more in a single county of that province, then that's a major security risk too. So you have more reason than just the environment to actually consider moving away from proof of work. Now, if you don't do that, then the solutions become more challenging, because you want to get this network on green energy then, or specifically excesses of green energy that you don't need elsewhere, because otherwise you get displacement. And how are you going to get that done? Then you have to come up with clean energy tax breaks for maybe Bitcoin minus, so they use that green energy. But like I said before, I don't see that as a likely path forward, given that it's actually fossil fuels that are becoming obsolete and very cheap. In that sense, perfect for Bitcoin mining or proof of work mining in general. Joseph, do you have any other possible solutions to mention? How can Bitcoin become greener without switching to a proof of sex system? So I mentioned a little bit about supply side opportunities where the grid gets cleaner, miners mine cleaner, different ways to reduce emissions there. The other aspect is demand side. So if mining pools, maybe you set up a mining pool where they source green power minted Bitcoin, maybe this is an attestation simply that the miners are saying, yeah, in this pool, we're going to do it. Maybe you have some verification pathway that I'm not exactly clear how you would do. And then they sell this to institutional buyers, for example. So I know that there's people in Canada that say, oh, we only want green Bitcoin. I also think that you can simply offset the emissions from a specific number of Bitcoin. So if you have supply coming on the market through a pool, you could be estimating the carbon emissions and then offsetting that rest. Now, what, of course, is necessary for any of these to really hold water is a durable tracking of that green Bitcoin, a way to tie these better environmental outcomes anywhere along the spectrum to that Bitcoin. Have done, so many people have done a bit of thinking about this. I think one straightforward way is to wrap that Bitcoin as in the RC20 token and put it on the Ethereum network. I think some people will vibe with this, others won't. But you could also attach an offset or really the carbon inventory and offset into that token. Don't know if you could do that as the RC20. You could definitely do it if you made it an NFT. So you could have a Bitcoin wrapped NFT and have information about the emission reductions, the baseline footprint and all of that. And so I think that there are some really neat pathways there. Those were Alex DeVries, founder at Digiconomist and Joseph Palant, director of the Blockchain for Climate Foundation. I'm Giovanni, your host. If you enjoyed the conversation, don't forget to smash the like button and subscribe to our channel.