Elaine Ou, occasional Bloomberg Opinion columnist and author of the appropriately named Elaine’s Idle Mind blog, has written a post about rejecting “nocoiner orthodoxy,” i.e. the agenda of those who don’t think bitcoin will solve everything. In her pro-libertarian, anti-government, and slightly-ok-with-neo-Nazis-using bitcoin post, she addresses the common complaint thrown at bitcoin lovers that the network “uses more electricity than all of Denmark!”
“Good!” writes Ou. “I sleep better at night knowing that my money is protected by obscene amounts of computational power. It’s a shame for Denmark; their GDP has been in steady decline for the last decade. I’m not sure it’s even fair to acknowledge them as a country anymore. The Danish krone? Total shitcoin.”
Ignoring the last part, which makes no sense, Ou’s essential point is that bitcoin’s hunger for energy makes it secure, which is worth it. This isn’t an outlandish point, and is probably the one that best serves bitcoin maximalists like Elaine.
Indeed, there’s an intuitive sort of sense to it. Consider it this way. Visa, the current top dog in paymentland, burns through 100 terawatts a year, by one (probably wrong) estimate. That’s three times more (!!!) than bitcoin’s estimated 27 terawatts to keep it secure. Yet we don’t harangue Visa with the energy issue, do we now? Double standards, etc.
Except it’s not. The difference is that every drop of power used to keep Visa running produces a tangible service. Lights stay on in Visa-supporting banks. CCTV functions properly. ATMs run smoothly. Electronic order books are maintained. The heaps of electricity used to secure the bitcoin network, meanwhile, aren’t vindicated by some greater social good; the enormous cost to keep the network going is the benefit—that’s what staves off the would-be hackers and cheats.
Moreover, Ou’s money…isn’t protected by those “obscene amounts of computational power.” Mining itself is a liability. Centralized forces can destroy networks at will (Bitcoin Cash dropped from $7.7 billion to $1.8 billion following November’s hard fork), and bitcoin—according to arewedecentralizedyet.com, a site that tracks the concentration of mining power—is largely divided between four such forces, most of which are based in China. Protected, eh?
The worst part of Ou’s argument, however, is its moral bankruptcy. As serious ecological catastrophe looms and electricity consumption choices take on increasing importance, Ou would rather bet Earth’s future on a power-draining payment rail with a patchy track-record.
Sure, maybe bitcoin’s Ayn Randian private-property-before-society brand of libertarianism will win the hearts and minds of the little guys before that 2040 global warming deadline, and maybe Visa will collapse, and perhaps mining will soon sustain the entire global financial system, but…we doubt it.
And to those, like Elaine, who might point out studies such as this one—in which 77 percent of bitcoin mining is reported to use renewable energy, making it fine —check the label. The independent, impartial body that commissioned that paper? Coinshares, a firm whose sole mission is to play down bitcoin’s dangers to seduce institutional investors.