Bitcoin is as Legitimate as Ice Cream
I increasingly hear that bitcoin should be banned because it is environmentally harmful. I argue that this is equivalent to saying that ice cream should be banned. As I don’t hear anyone saying that ice cream should be banned, I think there is an obvious flaw in the original argument.
The argument to ban bitcoin
Bitcoin causes carbon emissions and high-demand for certain hardware because bitcoin miners buy hardware that consumes electricity to generate a new block of transactions between people on the blockchain.
The electricity used to power the mining hardware often comes from fossil fuels which are all polluting because this is still the most dominant—cheapest—form of energy worldwide.
Miners earn money to pay for the hardware, electricity and other running costs from the mining reward for each new block and from the fee people pay to have their transaction included in the next block.
There are much more efficient ways of transferring money, for example the VISA network. Therefore, the argument is that since each bitcoin transaction is so inefficient and causes so much pollution, it should just be banned.
It’s usually supplemented by other negative aspects of bitcoin which I won’t go into, but are fair to consider in the overall assessment of bitcoin.
Why it doesn’t make sense
I note that the mining reward is tending to zero by design, and so miners will increasingly earn money solely from transaction fees. The crux of my counter-argument is that individuals pay directly for the environmental harm caused by the miners.
There are good reasons to stop people from doing something. Generally, we impose restrictions when other people are harmed. An obvious example is violence. Another example, might be the indirect and unequal harm to everyone from the impending climate catastrophe.
The latter argument is applied here, but there are other things that are bad for the environment too. Like eating ice cream. I don’t personally value eating ice cream. Does that mean it should be banned?
I believe you will, like me, ultimately answer “no”, whether you care for ice cream or not. This is a discrepancy; what’s the cause? It must surely be for non-environmental reasons or because we feel that “some carbon emissions are worse than others”.
However, objectively, all carbon emissions are equal and I don’t think it’s fair that some polluters are punished more than others. In a free and fair society, we must accept that different people value different things. Punishing some polluters over others is enforcing one measure of value onto everyone.
The fairer solution
I propose an alternative that is fairer and certainly harder to implement: introduce a carbon charge on all sources of carbon from the ground. As in, for every kilogram of coal mined or every litre of oil extracted, charge the company a fixed amount. The charge will be passed along the supply chain until it ultimately reaches the consumer as the aggregate of all polluting energy used to supply that good or service.
Each consumer will ultimately pay the charge while still deciding for themselves what they value. The amount of environmental harm can be tuned by modifying the charge.
I’ve hardly outlined the full implementation and I’m not saying this is easier to implement or that it can be done perfectly. We must do the right thing, not the easy thing. But more than this, I’m reminded of JFK’s quote which inspired me when I first heard it, and inspires me more as I get older. It is the hard things that make life worthwhile, not the easy things.
Ultimately, banning things is easy, but I don’t think it is right. This includes banning incandescent light bulbs (UK, 2012) or petrol cars (UK, 2030). I absolutely want to see both of these out of the mainstream economy as soon as possible, but I don’t agree with targeting them individually nor having a cliff-edge.
The outcome might be the same, or maybe, there is someone out there who wants to spend 25% of their income to repair and fuel a petrol car when no one else wants to. That’s their prerogative and society can spend the money from the charge administering the scheme and offsetting the harm.
What’s really wrong here
Satoshi Nakamoto didn’t create bitcoin because he wanted to “destroy the planet”. Bitcoin destroying the planet isn’t even a side-effect of bitcoin. That, I believe, is the heart of the difference of opinion here.
The harm is caused by the current and deliberate economic rules in place. The rules that favour using fossil fuels over cleaner sources of energy. The rules that favour mining for resources over reusing what we have already taken. The rules that favour disposing of our garbage in landfills, the oceans, and less-developed countries over recycling it. The rules that favour disposable products over those that are long-lasting, repairable, and recyclable.
Bitcoin is not the cause, it’s a symptom.