Robert Sharratt, CEO of Reassure Financial, has issued a scathing rebuke to arguments that the Bitcoin network is (or will be) a significant or outsized source of global pollution. Such arguments were most sharply crystallized in late 2018, when a report in the scientific journal Nature claimed that “Bitcoin emissions alone could push global warming above 2°C.”
Sharratt’s takedown of the widely reported Nature article’s sources and methodology add to other criticisms of the article that have come since then - namely the recent CoinShares report retorting that nearly 80% of Bitcoin power consumption comes from renewable energy.
Drawing on what he says is an extensive background and knowledge in electrical system distribution from his years as an investment banker, Sharratt’s criticisms go even further than those of CoinShares. He identifies and focuses on the one particular - and in his view extremely amateurish - source that ended up being the main reference for not only the Nature article, but an article in Joule - another scientific journal - as well as articles in Forbes, Bloomberg, The Economist, The Times, Vox, The Independent, The Guardian, The New York Times, et cetera.
The flaws in the Nature article are mostly traced to one Alex de Vries, a Netherlands-based “Data Consultant & Blockchain Specialist,” who penned the original article in Joule. The data that both of these scientific articles rely on are, according to Sharratt, “about as unscientific and unethical as you can get.”
The problem is that de Vries derives his power output data - the same data used by two scientific journals and sundry respectable mainstream news outlets - not from direct sources, but assumes the figures from a guestimate of how much of their mining rewards miners use to keep up their operations. Or, as Sharratt puts it, quoted at length:
[de Vries'] power consumption index starts with the financial output (i.e. the income and costs for the miners who maintain the Bitcoin architecture) and then backs out the technical inputs to these financial statements (i.e. the amount of electricity consumed). So, he has these financial outputs, right, and makes them available? Well, no again. He doesn’t have this information either. So, his methodology, if you can call it that, is to make assumptions for financial information that he doesn’t have, to then derive the technical volume. The derivation method is also completely based on his assumptions. Which he just makes up out of thin air; they are not at all based on any empirical data whatsoever.
Sharratt also speaks of the lazy assumption, reproduced in media, that most Bitcoin mining occurs in China using energy produced by dirty coal power plants. He joins CoinShares in pushing back on this assertion, citing a former colleague who called the notion “obviously made up by someone who doesn’t know [the power industry in] China at all.”
CoinShares in fact found that 95% of Chinese mining occurred in Sichuan province, where policies of “curtailment” are in effect. In past years, the Chinese government has invested so much in renewable energy that some regions produce far more power than they can consume - owing, as Sharratt writes, to the fact that “transmission line losses often make it unfeasible to transport the electricity supply to where it is demanded.”
For this reason, miners have gravitated to such regions of renewable energy production. And in fact, CoinShares also found that Bitcoin mining is quickly spreading to other countries because of a “combination of cheap abundant electricity, friendlier regulation, fast internet connections and, to a lesser degree, cooler climates.”
Sharratt ultimately concludes that, typically, “low-quality speculative blogs written from home by completely biased people who know nothing about the industry they are talking about [...] would just be ignored.” But this standard of truth-finding, he thinks, just doesn’t apply to the crypto industry.