Bitcoin is the largest cryptocurrency in terms of market capitalization and it is not surprising that environmental activists often talk about it. Activists criticize its industrial infrastructure based on the assumption that proof of work for building blocks requires a lot of electricity.
People like to focus on bitcoin’s consumption, but not Visa’s for instance. The bitcoin protocol is already more effective than Visa at a very fundamental level. So why aren’t people measuring its value per kilowatt? The reason is that BTC is the most famous implementation of a Bitcoin-style network. Obsolete protocols like ethereum occupy the rest of the mental bandwidth of the blockchain economy. Both networks are very inefficient, but they are popular due to the asymmetry in the information available in the market.
The current mainstream economy depends on massive data centers that are incredibly power-hungry too. They function as a product of the indirect incentives to keep internet infrastructure as the backbone of the modern economy. Such centers use the power which people just accept as a baseline to maintain their standard of living. They do this because electric consumption relative to economic output is difficult to gauge, and the incentive to be “greener” is something of a mixed bag.
Bitcoin and energy consumption
Some people might think that bitcoin is consuming a lot of electricity. The short answer is no, but BTC needs a lot of energy. Scammers are wasting SHA 256 (Bitcoin’s mining algorithm) hashing power as they are trying to make a profit. Under the auspices of increased security, hash power is around all-time highs and uses huge amounts of energy while the network can only handle six megabytes per hour.
Furthermore, the difficulty of BTC is a security concern! If a huge number of mining machines were to be suddenly turned off, the network would be unable to find a block- effectively grinding the network to halt. The connection between BTC nodes is weak and such an occurrence on BTC is plausible.
So, BTC is very inefficient as well as wasteful. But, Bitcoin SV (which shares global SHA256 availability) can handle limitless financial transactions and valuable data per hour. Thanks to its more competitive nature, it opens up more specialized transaction processing business models. It creates opportunities to use a small amount of hash rate while providing value-added services. So for a fraction of the cost bitcoin SV can process several orders of magnitude more payments and data across the world, that’s the main point.
Bitcoin SV can eliminate the need for unmeasurable power consumption. It can also put direct incentives in place to make sure that no arbitrary waste exists in the entire global economy.