Screenshot the from “Bitcoin Clean Energy Initiative Memorandum”

You have probably heard it said that bitcoin is really bad for the environment. You might have heard it said that mining it — ie the computer processing that is required to produce new “coins” — is more energy-intensive than [insert increasingly large nation state]. It’s one of the major issues that crypto sceptics — crypto FUDsters, if you will — have with it in fact.

In our kayfabe world, in which it is important to make sure the lines between truth and falsehood are never clearly defined, the best way of fighting back against such FUD is of course to produce utter nonsense material to counter the prevailing thinking. Whether or not you believe it to be true is irrelevant — just like in the world of professional wrestling, everyone is in on the fact that this is all essentially pantomime. Lies and truths aren’t diametrically opposed; they are interchangeable. The ones you choose simply depend on which side of the argument you’re on.

It is in this context that we should consider the latest “research” from the good folks at ETF-house-come-fund manager ARK Invest and $113bn payment company Square.

Titled “Bitcoin is Key to an Abundant, Clean Energy Future”, it does exactly what you’d expect it to. Which is to try justify, after the fact, bitcoin’s insane energy use. Why? Because both entities are deeply involved in this “space” and now need to a) feel better about themselves and b) guard against people going off crypto on the grounds that it is actually a Very Bad Thing.

Square, which is founded by crypto-Rasputin Jack Dorsey, has invested $220m in bitcoin according its latest 10-K. It also offers bitcoin trading, which made up almost half of its $9.5bn in revenue in 2020. ARK Invest, meanwhile, has been predicting that blockchain’s economic impact could be as significant as that of electricity since 2019 and offers cryptocurrency investing as one of its alternative strategies. So both parties, it’s fair to say, have skin in the game.

So let’s allow these guys to answer for us: why is bitcoin key to a clean energy future?


Bitcoin miners are unique energy buyers in that they offer highly flexible and easily interruptible load, provide payout in a globally liquid cryptocurrency, and are completely location agnostic, requiring only an internet connection. These combined qualities constitute an extraordinary asset, an energy buyer of last resort that can be turned on or off at a moment’s notice anywhere in the world.

Here’s the rough argument: solar and wind create more energy during the day than at night, when it’s needed. That energy needs to go somewhere, so bitcoin miners could help to be a buyer last of resort when it has no other useful place to go. (The authors call this the intermittency problem.)

The white paper imagines bitcoin mining being a solution, alongside battery storage, for excess energy. It also imagines that if solar and wind prices continue to collapse, bitcoin could eventually transition to being completely renewable-powered in the future.

“Imagines” is the key word here. Because in reality, bitcoin mining is quite the polluter. It’s estimated that 72 per cent of bitcoin mining is concentrated in China, where nearly two-thirds of all electricity is generated by coal power, according to a recent Bank of America report. In fact, mining uses coal power so aggressively that when one coal mine flooded and shut down in Xianjiang province over the weekend, one-third of all bitcoin’s computing power went offline.

ARK Invest and Square fail to understand the basic issue with its chosen renewables also. The intermittency problem is a problem not because of a lack of demand for excess energy, but because of the cost of transferring that excess energy to time periods when it is actually needed. Just adding bitcoin miners into the equation to absorb excess energy doesn’t solve the problem at hand: the dearth of energy at the time point it is actually needed.

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The problem with trying to unpick this sort of “research”, as we have noted before, is that there are so many bizarre and unfounded assertions that pretty much every sentence requires dealing with individually. You end up having to write reams in order to show it’s wrong. (There’s no better example of this than investor Christopher Bloomstran’s tweets on ARK Invest’s “valuation” of Tesla’s nascent insurance business.)

Like, where to even start with ARK’s assertion in the paper that “energy management companies that specialise in both storage and mining could build software to decide in real-time the best use for a newly created electron: whether to use it, store it, or mine it”? Which energy management companies who mine bitcoin? Who would provide them with the capital to fund it? Would the returns be adequate for the investors? Would it fit within their ESG mandates? And that’s just one line!

So, best to just accept this “white paper” for what it is: a bunch of people who have attached their names to a destructive asset class desperately trying to reverse ferret without actually reverse ferreting. Or, as it’s known in the industry, “greenwashing”.

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