The True Cost of Bitcoin

If America’s enemies wanted to bury this country under energy costs, it could do worse than to have invented Bitcoin.

Greed has made Bitcoin the world’s energy sink. Bitcoin uses as much energy as the country of Argentina. Most of this new Bitcoin is being produced in China, leaving most of the country dependent on coal. It’s not just China being hurt. A Bitcoin miner in Montana, a former patent troll, is keeping a local coal-fired power plant operating. 

The waste doesn’t stop there. It costs about $25 million of electricity per day to run the Bitcoin network.  The current estimate for Bitcoin energy consumption this year is over 100 Terawatts.  And it’s not just Bitcoin. Every cryptocurrency is an energy hog. 

Some cryptocoin advocates, like Ethereum inventor Vitalik Buterin, admit the truth. He wants to change Ethereum’s algorithm so it uses less electricity.

But Buterin is in the minority. Most Bitcoin advocates claim what I just wrote is a myth. It’s supposed to use a lot of energy, at first, they claim. The existing transaction networks also use energy. Bitcoin’s use will drop once it replaces every other currency. Oh, and if you’re using hydropower or “excess” power from otherwise unused sources, what’s the harm? 

This is bullshit. Bitcoin isn’t a currency. Currency values remain relatively stable during a trade, otherwise they’re useless. Bitcoin is an asset, a global index of fear and greed.

Bitcoin is proof that there’s a lot of stupid money running around, looking for a return. As a result, all assets are too expensive. Amazon stock is too high. Houses are too expensive. Give us more worthwhile investments, more real things that can guarantee a return, and asset prices will decline.

That’s why you won’t hear a Bitcoin bug saying anything nice about the American Jobs Plan. The plan would put trillions of dollars in assets to work. That work will generate a return. The attraction of that return will attract more assets to the companies doing the work. That means asset values will move toward long-term norms. Bankers will even be able to sell money at a profit, something they can’t do right now.

The assets that will fall hardest will be those that exist for no good reason other than speculation.

Like Bitcoin.