Mainstream Media Gets Bitcoin’s Energy Use All Wrong

You may have come across this viral image of the Statue of Liberty over the last year.

If not, it did the rounds in March this year on X (formerly Twitter). The text with the image exclaimed, “This is what catastrophic sea level rise actually looks like.”

The post compares images taken of the world-famous landmark in 1898 and 2017.

According to climatologists, the average global sea level has risen about 6–10 inches between 1901 and 2018 due to “human caused” climate change.

Of course, the image went viral because it appears the sea levels around the statue haven’t risen much (if at all) in 100-plus years.

The mainstream media was quick to debunk the images. If you Google the images, you’ll find a lot of commentary remarking how ridiculous they are.

But are they that ridiculous?

Whichever side of the climate change debate you fall on, you can’t deny it’s a hot topic (pun unintended). It’s why images like the above go viral, and why the mainstream media loves to shoot them down and spin their own agendas.

And they routinely get it wrong… particularly when it relates to new technologies like artificial intelligence (AI) and bitcoin.

Will AI and Bitcoin Set the World on Fire?

I read an article in the BBC recently. The headline read, “Warning: AI industry could use as much energy as the Netherlands.”

Now, I understand the basic logic here. More AI power means more AI chips, which require a lot of energy to meet the huge demand for AI processing power.

On the face of it, it seems like AI tech is going to drain power and energy that we don’t have. And to meet that demand, the energy must come from sources that are dirty and destructive to the environment.

Except that headline was remarkably similar to something I’d read only a few years ago, which was eventually debunked.

In 2021, I read a headline on the BBC saying, “Bitcoin consumes ‘more electricity than Argentina.’”

Around the same time, the New York Times ran a similar headline, “Bitcoin uses more energy than many countries. How is that possible?”

What’s interesting about the Times piece in 2021 is that it cited a “Paris-based economist” named Alex de Vries.

He wrote a 2020 research paper that “conservatively” estimated bitcoin’s energy usage to equal that of Belgium.

And it just so happens the AI “warning” and the bitcoin “warning” the mainstream media was gobbling up came from the same researcher, Alex de Vries.

(De Vries is still up to his old tricks. On Tuesday, the BBC quoted him saying, “Every bitcoin transaction uses enough water to fill up a backyard swimming pool.”)

So which is it? Bitcoin mining consuming the energy of several countries, or AI? Or both?

And if so… Where are the rolling blackouts? Why isn’t the Atlantic flooding into the Hudson and lapping around the neck of Lady Liberty?

Bitcoin Will Help AI Become More Energy Efficient

The truth is – which the mainstream media rarely tells you about – is that bitcoin mining is incredibly beneficial to energy grids.

And I would expect the way in which AI is used that it too ends up being better for energy consumption than worse.

We also know compared to other industries bitcoin mining barely registers on the scale.

Research from 2021 (at the peak of the crypto market, when energy usage also peaked) estimated bitcoin mining used 79 terawatt-hours (TWh) per year.

Now, let’s put that in perspective. It also estimated that…

• The construction industry used 5,833 TWh per year.

• Air transportation used 4,046 TWh per year.

• Road freight vehicles used 2,406 TWh per year.

• Gold mining used 265 TWh per year.

Furthermore, bitcoin is estimated to receive over 56% of its energy from renewable sources.

More recently, bitcoin mining has even helped the AI industry become more energy efficient.

Several bitcoin miners have turned their computing power from bitcoin mining to AI and high-performance computing (HPC) infrastructure.

Hut 8 Mining, Hive Digital Technologies, and Iris Energy are just some of the bitcoin miners that are using their mining infrastructure for AI.

AI is, after all, just a lot of very good hardware processing lots of data – so it makes sense if you’ve got a lot of processing power for bitcoin, perhaps there’s some money to be made using it for AI.

Hive Digital, for instance, says, “HPC and AI business is currently generating 15x more revenue than bitcoin on a per-megawatt basis.”

In short, bitcoin miners help AI be more energy efficient.

We also know for a fact that in times of great demand, bitcoin miners can help balance energy grids by throttling back their mining operations.

This was what happened in September this year, in Texas.

A heat wave put incredible stress and demand on the energy grid. Bitcoin miner Riot Platforms ended up providing over 84,000 megawatt-hours to the market to reduce that demand and stabilize the grid.

For reference, just one megawatt-hour would power the average American home for around 1.2 months. This kind of grid balancing helps to avoid blackouts when people need electricity the most.

But you’d never hear the mainstream media applaud this.

Instead, they took a shot at Riot, saying it was paid $31 million to shut down operations. They inferred that Riot was profiteering from energy demand.

The reality was quite the opposite.

It’s again another example of how the mainstream media not only gets it wrong, but they also subsequently refuse to admit they were wrong and instead double down on their biases and agendas.

They’re wrong about bitcoin and crypto all the time. This is just one example of many over the years, and no doubt over the years to come.

And if they’re that far off the mark on bitcoin, it stands to reason they’re also way off the mark about the energy demands of AI.

Bitcoin has proven to be good for energy and for AI. I think, in time, AI will repay the favor.

Until next time,

Sam Volkering
Analyst, Palm Beach Daily

P.S. According to consultant firm PwC Global, AI is the largest megatrend of our generation… And it estimates it will create $15.7 trillion in new wealth.

That’s why Daily editor Teeka Tiwari is paying close attention to a new breed of cryptos called AI tokens.

So if you haven’t already, I encourage you to upgrade to VIP status for Teeka’s strategy session on Wednesday, December 6, at 8 p.m. ET.

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