Technological innovation and environmental sustainability: two elements that are increasingly intersecting and merging in various fields day by day. The revolutionary world of Bitcoin is no exception and has generated extensive debate over the years, leading to a clear polarization. On one side are those who believe it to be a harmful technology for the environment, and on the other side are those who argue the opposite.
Amidst this discussion, Daniel Batten, a 50-year-old New Zealand analyst specializing in Bitcoin and Blockchain, has taken a prominent position with his clear, linear, and concrete approach. Globally recognized by industry professionals and enthusiasts, Batten is also a passionate environmental activist who utilizes his in-depth technological knowledge to advocate for new approaches to combating climate change. He emphasizes the positive and active role that mining can play in favor of the environment.
Batten, who discussed these topics extensively during the Plan ₿ Forum held in Lugano on October 20 and 21 of this year, on the panel titled “Bitcoin Mining Misconceptions,” debunking myths and clarifying the actual environmental impact of Bitcoin generation and maintenance, kindly granted us an interview to bring these insights beyond the walls of the Congress Center.
Daniel, what are the most common misconceptions that emerge in mainstream media coverage regarding Bitcoin’s environmental impact?
“Bitcoin has often been criticized for reactivating decommissioned fossil fuel plants, relying on such energy sources at many nodes in its network, and having a high emission intensity that would further increase with its rising price. Many, if not all, of these arguments are false. With improved data analytics on mining and its energy usage, we can now demonstrate these claims to be largely untrue.”
What were the main limitations in the models that assessed Bitcoin’s environmental impact?
“The ‘Cambridge Model,’ long considered one of the best, excluded off-grid mining – which is mining powered by autonomous and non-traditional energy sources like solar panels. Moreover, it relied on data that is nearly two years old. These two factors result in a significant overestimation of Bitcoin generation based on fossil fuels (as 75% of off-grid miners use sustainable energy). For this reason, Bloomberg Intelligence has recently stopped using the Cambridge model and started using BEEST, a model I developed, which addresses both limitations of the Cambridge model.”
Is there a possibility to assess Bitcoin’s environmental impact more fairly and scientifically?
“In general, emerging technology like Bitcoin should be assessed objectively. However, it’s common for humans to fear the unknown and experience anxiety about what they don’t understand. New technologies, by definition, come with many uncertainties, which is why they are often attacked just as people are beginning to become familiar with them. During these phases, there’s a clear risk that rational thinking gives way to emotions and conjectures. On the other hand, claims of environmental and social benefit should not be taken at face value. They should instead be quantified, demonstrated, and supported by evidence so that a new technology, even if it is destined to be negative for the environment, doesn’t gain widespread adoption and get promoted through greenwashing techniques without data to back it up.”
And so, what could be the long-term implications if the European Commission were to label Bitcoin as an “environmentally harmful” asset?
“It could halt a healthy and intelligent debate and the principle that Bitcoin has the potential to be used as a technology to mitigate climate change. It could ultimately lead to banning Bitcoin mining activities in EU territories, causing a significant economic impact.”
How, then, can we address the issue of evaluating this technology, ensuring that its potential is clear to lawmakers?
“The ideal methodology for assessing a technology should take this principle into account: ‘If this had been applied to the solar industry in 1990, would we have labeled it as ‘environmentally harmful’? If the answer is ‘yes,’ then we can be fairly certain that there are fundamental flaws and gaps in the methodology’s completeness. A set of objective questions to evaluate the environmental impact of a new technology should start with inquiries like: What are the negative environmental externalities of this technology? Has this impact been quantified with objective parameters comparing it to existing technologies? How do we ensure that the methodologies and data underlying the models are accurate? Do we have a comprehensive list of these negative externalities? Are the metrics used for evaluation clear, devoid of misinterpretation risk, and suitable for that technology? What are the positive environmental externalities of this technology? Has this impact been objectively quantified and compared to existing technologies?”
Then, we should question the assumption: “Can the apparent negative externalities have a positive application?” For instance, if high energy consumption is an apparent negative impact, can this energy provide grid flexibility and enable operators to counterbalance renewable energy intermittency? Is the energy used renewable or not? Can it come from stranded or otherwise wasted sources? Even more crucially, can this energy be sourced from negative-emission sources like vented methane or flared methane, which directly contribute to reducing carbon dioxide emissions? Furthermore, what is the likely environmental trajectory of this technology?
We should also consider the context. When a technology comes into existence, it will always show more negative externalities than positive ones, and it will do so for many years, sometimes decades. For example, solar technology was invented in 1954, but it didn’t have a net positive externality (in terms of carbon credits) until 2010. In 1990, as previously mentioned, there was still a wide debate among environmentalists about whether this technology was a problem or a solution due to its high energy consumption and the carbon footprint associated with the ovens required to melt silicon for photovoltaics.
From there, we ask additional questions. If a technology has the potential to reduce emissions from other technologies, are we factoring this related variable into the evaluation of those other technologies? Are there other potential negative environmental consequences from the technology that provides energy, which could arise in the future? Can we quantify them? What is the current utility of the technology?
Returning to the last question, we need to look at the fact that many technologies (like the internet) have a considerable carbon footprint and may never be able to mitigate it. However, we justify their use by arguing that their positive societal impact is significant. In summary, while it is preferable for a technology to earn its ‘right of use’ purely based on its net environmental benefit, when evaluating its overall impact, we should also consider its current and potential future utility. Otherwise, there’s a risk of presuming, without data, that it is perceived as ‘useless’ or ‘energy-intensive.’
These kinds of adjectives have often been associated with Bitcoin; however, there is little data to support these allegations and a growing body of data supporting the argument that Bitcoin can be a value-improving force in the lives of millions of people, particularly in the global South, and the environment in which they live.”
How do you think reports funded by Central Banks and the Ripple Corporation can influence the perception of Bitcoin’s environmental impact?
“Every disruptive technology is attacked and discredited by those who could face economic repercussions due to its adoption. For example, print media attacked the internet, and prior to that, the horse-drawn carriage and wagon industry attacked the emerging automobile sector. Today, using the same approach, some Central Banks attack Bitcoin because it disintermediates the relationship between people, rendering certain institutions, including Central Banks themselves, less or even completely unnecessary. Bitcoin is also attacked by founders of well-funded alternative cryptocurrencies (altcoins), such as Chris Larsen, the Chairman of Ripple Corporation (which issues the XRP token). Larsen personally donated $5 million to Greenpeace in the United States to conduct an anti-Bitcoin environmental campaign.”
These attacks can influence the perception of Bitcoin’s environmental impact, especially when they are amplified by the media or prominent figures in the financial industry. However, it’s important to note that these attacks often lack concrete data and are more based on emotional arguments or personal interests.
Regarding Central Banks, it’s understandable that they view Bitcoin as a threat to their monopoly on money creation. Cryptocurrencies, including Bitcoin, have the potential to decentralize the financial system and take away Central Banks’ control over monetary policy. This can lead to resistance and opposition from Central Banks. However, it’s important to note that the debate over Bitcoin’s environmental impact should not be influenced by political or financial considerations. It should be based on accurate and objective scientific data.
In general, the debate over Bitcoin’s environmental impact should be guided by independent research and data transparency to ensure a fair and accurate assessment of the technology’s environmental implications.”
