The climate debate about Bitcoin mining is not new, but heated. High time for the fact check: What is the truth of the myth “climate killer Bitcoin”?
It is probably due to the imagery, which is difficult to convey, which is why the largest crypto currency cannot get rid of its image of the “climate killer” and “energy guzzler”. Huge industrial halls in which thousands of high-performance chips solve mathematical tasks and in the process emit as much CO₂ as the Netherlands in order to ultimately produce something that cannot be touched, cannot be seen: This puts our understanding of value creation to the test .
Whether Bitcoin is seen as an extremely efficient form of energy use or as an absolute waste of resources is a matter of belief and ultimately depends on a question of distribution: Which industry has a right to social resources? In times of the undeniable climate emergency, this question is more urgent than ever – and everyone is talking about Bitcoin energy consumption with its energy-hungry proof of work mining as a suspect. Mining is not a wasteful process, but an ingenious solution to a complex problem.
What mining does for Bitcoin
The climate debate about Bitcoin shows time and again: Prejudices are based on simple comprehension difficulties and often begin at the beginning of the value chain – in the case of Bitcoin, in mining. That is not surprising either. The process is not exactly intuitive and requires a certain technical affinity. Basically, mining is already a trick, because nothing is actually mined in the Bitcoin network. Miners are only special network nodes, so-called nodes, which take a certain number of transactions from the pool of recently completed transactions and bundle them into a data block (candidate block).
The mining nodes compete to find a valid hash of the block header that is smaller than the current difficulty target. The result is a hash that has been proven to be difficult to generate (proof of work), but which is trivial to verify. In this way, every network participant can be sure that resource-intensive work has actually been performed. Whoever manages to generate the hash they are looking for first is paid princely by the network with the Subsidy block of currently 6.25 BTC.
Miners: inside therefore use scarce resources in the form of energy and are rewarded for this expenditure. Since theoretically anyone can take part in the competition, Proof of Work (PoW) is the fairest and most well-known mechanism to bring a new form of money into circulation in a decentralized manner – the saying “There is no free lunch” fits like a fist with Bitcoin .