It’s a little long, but I thought that Adam Back’s take on Bitcoin’s energy usage from episode 175 of the “What is Money?” podcast was too good not to share.
“Bitcoin finds itself in a place where yes, it consumes energy, but it’s far more efficient than all alternatives because people are not good at realizing forgone alternatives in economics.
If someone gets interested in bitcoin and then they start buying bitcoin, well where did they get the money from? Well, they got it from working or earning it somehow, and there was an alternative, what they would have done with it before. And bitcoin tends to encourage people to save because it’s gone up in value historically, or to take a longer term outlook, giving you hope for the future let’s say. And so, they engage in longer term behaviors, and so actually they probably end up using less natural resources because they stop buying consumer gadgets that end up in landfills, they get more hesitant to spend money, or when they do spend money they want to spend it on things that are going to last a long time.
So you know, there are foregone alternatives to everything. A lot of the media reactions are not even good at capturing first order effects, but I think it is actually highly efficient and then it also comes to the point we discussed where with a fiat currency, which is a variant of proof of stake basically, the same energy is expended, it’s just expended in unproductive, and messy, and corruption prone ways. But, the game theory is there so the money is going to be spent on lobbying or corruption or violence, criminality, you name it, it’s all happening day to day. And everybody who’s got much real policy understanding of how the world works, realizes that this is the current state of the art which is pretty ugly and chaotic. So I think if bitcoin provides a tidy solution to that, the electrical cost is actually much cheaper than the alternative.”
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