Bitcoin OGs have long been hailed for their influence on the blockchain space, but now they find themselves embroiled in a debate regarding the environmental impact of their project: “Bitcoin OGs Battle Pollution Accusations: Proof of Work Vs. Proof of Stake – Who Will Win? With the recent release of a damning report by the Environmental Working Group (EWG), showcasing how Bitcoin mining is “polluting” communities across the USA, the future sustainability of Bitcoin has come into question. The EWG report outlined six case studies of mining operations that have damaged local air, water, and noise quality. It was through these case studies that the EWG highlighted the impact of Proof of Work (PoW) mining; an energy-intensive protocol used by Bitcoin to secure the network and issue new coins. Despite the accusations, prominent Bitcoin developers are doubling down on their belief in PoW, asserting that the energy costs associated with it is necessary for Bitcoin to function as money.

The argument against PoW has largely centered around what the EWG labels as its “high inefficiency”: the fact that vast amounts of “fossil fuel-generated electricity” is required to power Bitcoin’s network. To combat these inefficiencies, alternative protocols, such as Proof of Stake (PoS), have been proposed that could theoretically reduce Bitcoin’s environmental impact. PoS miners compete for the right to forge the next block of transactions by utilizing their cryptocurrency rather than energy, and PoS supporters contend that it is a superior consensus mechanism to PoW.

It is this debate that has been fueled by the release of the EWG report, as blockchain developers and environmentalist have come out in droves to support or oppose PoS or PoW. Blockstream CEO Adam Back has defended PoW by claiming that people are buying Bitcoin to protect against inflation and monetary erosion, similarly to how central banks are buying physical gold. “Gold is costly to mine analogously, and that’s also inherent to hard money,” Back said.

Meanwhile, long-time Bitcoin developer Luke Dash Jr. asserted that PoW is actually good for the environment, as it makes renewable energy sources like solar viable on their own. Dash also dismissed Proof of Stake as a “scam,” citing a 2015 essay that describes the system as “unworkable.”

Recently, the U.S. Senate is taking notice of Bitcoin’s energy use, with some critics calling for governments to clamp down on the energy-intensive protocol. Making the debate even more pressing is the fact that climate technology venture capitalist David Batten has argued that Bitcoin’s energy efficiency is actually improving, as evidenced by his and on-chain analyst Willy Woo’s finding that miner emissions have reversed since the Chinese ban.

Other solutions to Bitcoin’s energy woes can be found by looking to countries that already have existing infrastructure in place to support Bitcoin mining. For instance, Iceland and Norway have emerged as hubs for mining operations as both countries have a wealth of natural energy sources, such as hydropower and geothermal, that are renewable and cost-effective.

Whatever the outcome of the debate between PoW and PoS, the crypto space is certain to benefit if the arguments result in more innovative and sustainable sources of energy being developed. Although a protocol change may be required to lessen Bitcoin’s energy footprint, the U.S. Senate should be cognisant of the fact that Bitcoin may actually encourage energy and environmental innovation in the US.

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Filed under: Bitcoin - @ April 6, 2023 8:24 am