Alex De Vries, a prominent Bitcoin (BTC) critic, has declared that each transaction on the Bitcoin network results in a consumption of over 16,000 liters of water, enough to fill a small swimming pool. De Vries published a research document on November 29 with his findings, asserting that the cooling systems of miners are responsible for this excessive consumption of the precious liquid.
A Controversial Study
The Dutch researcher is known for his criticisms of the most significant cryptocurrencies, all focused on the electricity usage for bitcoin mining. For example, his technological research site, Digiconomist, keeps a record of the footprint of every bitcoin transaction, equating it to “808,554 Visa transactions or 60,802 hours of YouTube viewing.” However, the validity of calculating Bitcoin’s energy cost per transaction has been criticized as irrelevant without further context. The University of Cambridge’s Center for Alternative Finance, for instance, emphasized that “transaction speed is independent of the network’s electricity consumption. Adding more mining equipment and thus increasing electricity consumption will have no impact on the number of transactions processed.”
The name Digiconomist is also associated with a 2017 prediction that Bitcoin would match the entire global energy consumption by 2020, a forecast that fell into a trap similar to early ’90s predictions about internet traffic and electricity usage.
De Vries’s research has been criticized by Daniel Batten, founder of CH4-Capital, a startup aiming to remove methane from the atmosphere, a task for which he believes Bitcoin mining could serve a purpose.
“Batten wrote on X (formerly Twitter), “Rather than acknowledging the error and moving forward, De Vries has simply shifted his attack to other areas,” Batten continued. “Now that it’s clear that Bitcoin’s primary energy source is not coal (as De Vries falsely claimed) but hydroelectric power, Bitcoin has suddenly become bad for using too much water.”
Why the @BBCNews article on Bitcoin and Water is a monument to journalistic lazinesshttps://t.co/BRGRXzAeBW— Daniel Batten (@DSBatten) November 29, 2023
The day after the Independent publish the results of a high quality independent study on Bitcoin, the BBC publish the junk-science of a known anti-Bitcoin lobbyist using…
Misleading BBC Article
De Vries’s latest research gained attention through a BBC article, which, after reporting the Dutch researcher’s findings, focused on the idea that many regions where Bitcoin mining occurs “struggle with a shortage of freshwater” and highlighted that “three billion people worldwide already suffer from water scarcity, a situation expected to worsen in the coming decades.”
According to De Vries, the heart of the problem lies in the “mining” process, known as “proof of work,” where computers compete to verify transactions. This competition, essential for network security, generates considerable energy waste. Water plays a crucial role in various aspects of the process, used to cool gas and coal plants that power most of the energy used in mining. Additionally, large amounts of water are lost due to evaporation from basins that feed hydroelectric power plants. A significant portion of the water is dedicated to cooling the millions of computers worldwide involved in Bitcoin transactions. De Vries argues that Bitcoin would not require such a massive amount of water if not for this intensive “guess the number” competition.
It’s worth noting that nowhere in the BBC article is there a reference to the research techniques used by De Vries to reach his conclusions. This point is emphasized by Daniel Batten, who wrote on X that the BBC article is a “monumental example of journalistic laziness,” arguing that the UK’s public broadcaster gave space to the study of a well-known anti-Bitcoin lobbyist, whose work has been inaccurate and controversial in the past. He stated that “the BBC did not do its homework,” citing the lobbyist’s conflict of interest, noting that “he is an employee of the DNB (the Dutch central bank), and central banks have a vested interest in spreading FUD (fear, uncertainty, and doubt) about Bitcoin for a very simple reason: Bitcoin disintermediates central bankers.” Batten also emphasized that Bitcoin primarily uses sustainable hydropower and suggested that the BBC may have aligned with a negative narrative on Bitcoin without adequately examining sources and positive facts emerging from other outlets, citing research by Bloomberg Intelligence, which showed that, unlike the banking and financial services sector, Bitcoin uses 53% sustainable energy.
Mining Supporting Renewable Energies
Batten concluded his remarks by noting that the BBC article came out the day after another article in The Independent that cited the study “From Mining to Mitigation: How Bitcoin Can Support Renewable Energy Development and Climate Action,” published on October 27 in the ACS Sustainable Chemistry & Engineering journal. Researchers, led by Ph.D. candidate Apoorv Lal and Professor Fengqi You, examined the profitable potential of Bitcoin mining in renewable energy projects in the United States.
According to the analysis, Texas emerges as the state with the greatest potential, with 32 renewable projects capable of generating combined profits of $47 million using Bitcoin mining during pre-commercial operations. Solar projects Aktina Solar and Roseland Solar in Texas, each with a capacity of 250 megawatts, were the most profitable, generating a maximum profit of $3.23 million. The Western Trail Wind project, with a capacity of 367 megawatts, recorded a profit of $2.65 million.
Even projects in California yielded significant profits, while states such as Colorado, Illinois, Iowa, Nevada, and Virginia showed profitability despite fewer installations. Experts highlighted the importance of strategically locating mining activities to maximize productivity, considering the variability of renewable sources. The research team proposed policy recommendations, including economic incentives for environmentally responsible cryptocurrency mining, such as carbon credits for avoided emissions. These measures could encourage miners to adopt clean energy sources, thus contributing to climate change mitigation and promoting additional profits during the pre-commercial phases of renewable energy projects.
Despite negative environmental aspects associated with cryptocurrency mining, such as resource depletion and hardware obsolescence, researchers highlighted opportunities to mitigate some of these environmental impacts and promote investments in renewable. The research was partially funded by the National Science Foundation