Why Bill Gates Is Wrong About Bitcoin

Amanda Heckman|March 27, 2021

Bill Gates wants to save the world… from Bitcoin.

The software-engineer-turned-global-savior recently said that he’s not a fan of Bitcoin… because it uses too much energy.

When pressed, he said… “Bitcoin uses more electricity per transaction than any other method known to mankind… It’s not a great climate thing.”

It’s true Bitcoin and its brethren use a lot of energy… but as Manward loves to prove… there’s always more to the story.

Bitcoin mining – the process of verifying transactions on the blockchain – by its design consumes a lot of energy. It involves a lot of users and a lot of computing power to do complicated math problems.

And that’s on purpose… to make transactions safe and secure and anonymous on the blockchain – one of cryptocurrency’s unique selling points.

So naturally, when we see headlines protesting that Bitcoin uses as much energy as the entire country of Argentina… it’s sure to grab eyeballs and cause a stir.

But let’s dig deeper, shall we?

Two Sides of the Same Coin

Let’s start with this… Mr. Gates of all people should appreciate the parallel between Microsoft and crypto.

Lest we forget his early vision of Microsoft:

Early on, Paul Allen and I set the goal of a computer on every desk and in every home. It was a bold idea, and a lot of people thought we were out of our minds to imagine it was possible. It is amazing to think about how far computing has come since then, and we can all be proud of the role Microsoft played in that revolution.

After the year crypto has had… you can imagine similar words coming out of the mouths of early crypto adopters in just a few short years.

Much like Mr. Gates in the ’70s, crypto diehards want to set the world on fire. They see a revolution in the making.

But the similarities continue… Computers also have a big environmental impact.

The average PC lasts around five years. Laptops even less. It’s far easier and cheaper to replace an electronic device than to fix it. Manufacturing requires a lot of fossil fuels and chemicals. Computer batteries contain toxic chemicals that end up in landfills…

You get the picture.

Perhaps Mr. Gates – and his crypto mining machine, er, um, computer-on-every-desk mentality – shouldn’t cast the first stone.

The crypto industry is still in its early stages. And crypto developers have acknowledged the environmental impact the industry has.

There have already been several promising developments tackling the issue.

Many crypto mining companies are using renewable energy to power their machines.

In Iceland and Norway, for example, where nearly 100% of all energy production is renewable, crypto miners are taking advantage of cheap hydroelectric and geothermal energy.

And last year, the University of Cambridge’s third Global Cryptoasset Benchmarking Study found that 76% of cryptocurrency miners use electricity from renewable sources in their operations. This figure was up from 60% in 2018.

A study from digital asset investing firm CoinShares in 2019 had similar findings… Even Chinese Bitcoin mining companies are using hydropower from the country’s massive dams.

But more exciting… there are cryptos tackling the problem themselves.

The altcoin Cardano (ADA) uses a different process for verifying transactions – based on the number of coins a user has instead of computing power. It claims to be 4 million times more energy-efficient than Bitcoin… and uses no more energy than a large family home.

Mr. Gates should give the crypto market a little credit… The industry is doing much the same work he set out to do.

This is yet another simple problem the free market will tackle as the industry grows. Don’t let Mr. Gates’ tunnel vision persuade you otherwise.