Thread by @DSBatten

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At our #ESG ClimateTech fund, as part of our due diligence on #bitcoinmining, we examined the 7 Most #ESG arguments against #Bitcoin.

We expected to find a mixture of some true, some false, some grey

We were surprised to find all 7 were false. No grey areas
Here's the list

#ESG Argument 1. "Bitcoin competes with other users like hospitals, industry, residential users"

We found this to be unlikely in theory and practice because more users on the grid means more expensive wholesale electricity: which quickly makes #bitcoin mining unprofitable...

... What we did find evidence for was that when demand spiked, Bitcoin miners either voluntarily stop mining to preserve profitability, or executed pre-agreements with grid operators that taper power consumption down 99%.

#ESG Argument 2 “That’s the theory but there’s no evidence of that happening in practice”
There is evidence of this working. For example, in Feb 2022, Bitcoin miners helped Texas avoid the rolling blackouts of Feb ‘21, receiving praise for their actions
cnbc.com/2022/02/03/win…

#ESG Argument 3. "Bitcoin uses large, exponentially growing energy per transaction"
This is false, as Bitcoin's energy usage does not come from its transactions. The layer2 lightening network handles millions of transactions per second and can scale without additional energy

#ESG Argument 4. “Bitcoin loves fossil fuels”
Benchmarked against other industries, Bitcoin mining was more progressed both in current renewable composition and growth rate
- net renewable energy used (58.4%) and
- renewable energy growth rate (up 59% from Q1 ‘21)...

...We found 2 large legacy mining companies who still rely on fossil fuels in the USA. However they are increasingly the exception. New Bitcoin mining entrants are mining leaking methane. This is a positive #ESG story, removing a GHG that is tens of times more warming than CO2.

5. “No bitcoin miners are using 100% renewable”

We found 8 using 100% renewables, growing at 1 per month (@GridShare, @CyberianMine, @Lancium, @Blockstream/ @block / @Tesla, @_dametech, @SolunaHoldings, @Bitfarms_io, @GryphonMining). Many are now becoming carbon negative

#ESG Argument 6. “Using more energy is bad, we need to use less energy”.

This is actually false. The growing consensus espoused in Saul Griffith’s book “Electrify Everything” is that we need to
1. Clean up electricity (supply)
2. Electrify everything (demand)

The more nuanced truth is that we must use less fossil-fuel energy, but more electrical energy (and combusting leaking methane), otherwise supply-demand dynamics will mean that new renewables projects wont be build, and old fossil fuel plants won't be retired.

7. “I have never heard how Bitcoin can help build out the renewable grid”
Here’s the summary: We found that the largest bottleneck to exponential VRE (variable renewables – solar & wind) growth is that grid operators only approve 17% of VRE applications.

That’s because

a.The VRE projects haven’t found a committed financier. Financiers haven’t backed them because they can’t make money without a grid connection, only get profitable in year3 and don’t have a first customer.

#BTC Mining solves all three issues: providing a first customer that doesn’t need a grid connection, and starts paying immediately (not after a months->years long grid interconnection wait)

assets.ctfassets.net/2d5q1td6cyxq/5…

b. they don’t get approves is that variable renewable energy adds load balancing headaches for grid operators. Bitcoin mining together with battery technology solves much of this load balancing headache.

Here’s a description of how that works
wintonark.medium.com/bitcoin-mining…

We’ve also concluded that #ESG cost accounting must look at both environmental cost and environmental benefit. That has caused us look in some detail at the “methane story”. We’ll be publishing that report soon.