Popular Irish blog Slugger O’Toole has delivered a stinging criticism of bitcoin, describing its mining protocol as an “obscenely wasteful” process that is contributing in no small way to an impending global climate catastrophe. In a scathing article published on October 12, the blog calls for the “death” of bitcoin.
Referencing a recently released UN report that warns of an impending climate catastrophe requiring immediate mitigating action from global governments, the writer Andrew Gallagher argues that bitcoin and its underlying blockchain technology do not provide the same amount of contribution to the economy or to the environment.
According to Gallagher, while blockchain technology provides a genuine solution to nonfinancial real-world applications, the Proof-of-Work (PoW) mining protocol employed by the bitcoin blockchain dramatically increases global energy consumption and poses a threat to the environment. Going further, he criticises poW as an excessively wasteful protocol that consumes an enormous amount of power to put together what he calls “an infinite stream of mathematical garbage”.
In Gallagher’s opinion, the only advantage posed by bitcoin is its ease of implementation.
Proposing alternatives to PoW, the article then suggests the implementation of proof-of-stake algorithms, such as the dPoS system which ethereum is due to launch next year with its ‘Istanbul’ hard fork.
CryptoGlobe has previously reported that miners have moved in great numbers to Europe’s Scandinavian region which includes countries like Norway, Sweden and Iceland in search of cheap electricity made possible by the region’s excess geothermal power generation capacity and other renewable energy sources. It is unclear whether Gallagher factored this information into his bitcoin critique.
Expensive to Produce and Materially Unsustainable
The article further criticises bitcoin as too expensive to produce, in addition to containing no value at all outside of the bitcoin system, thus making it a unreliable store of value. Contrasting it with gold coinage and fiat currency, the article notes that even though gold is expensive to make, it provides an independent store of wealth, and even though fiat currency possesses no intrinsic value, its production cost is low, both of which bitcoin does not do.
Also mentioned is the fact that bitcoin does not obey the law of conservation of matter in the way that gold coinage and fiat currency do, which he argues makes it fundamentally more wasteful.
An excerpt from the article reads:
If you turn gold into a coin, the gold still exists. Resources have not been destroyed, just altered. If you turn paper into a banknote you spend some resources to get it printed, but many times less than its face value, and when the banking system collapses you can use the banknote for toilet paper – because that’s all it ever was. If you use electricity to solve a hashcash puzzle, the valuable (and polluting) ton of fuel that was burned to generate it is gone forever, yet the puzzle solution contains no value outside the Bitcoin system. It thereby combines the worst of both gold-backed and fiat currency.
Concluding its scathing assessment of bitcoin, the article states:
Bitcoin is made from ashes, and if ashes were legal tender, humanity would burn everything in sight and call it progress.