The world of digital currency has recently been under attack regarding its sustainability and excessive use of energy. It all started when Tesla CEO Elon Musk tweeted that his company will no longer be accepting BTC as payment for car purchases because of the digital currency’s “rapidly increasing use of fossil fuels for Bitcoin mining and transactions.” This was shortly followed by a breakup tweet that led to the price of BTC dropping by more than 40%, which resulted in the cryptocurrency market losing a total of over $365 billion, and the world suspecting all Proof-of-Work blockchains—not just BTC—of energy wastage.
<p lang="en" dir="ltr">Tesla & Bitcoin <a href="https://t.co/YSswJmVZhP">pic.twitter.com/YSswJmVZhP</a></p>— Elon Musk (@elonmusk) <a href="https://twitter.com/elonmusk/status/1392602041025843203?ref_src=twsrc%5Etfw">May 12, 2021</a>
Proof of Work (PoW) is integral to Bitcoin mining, which is at the core of what Bitcoin is, which is the pioneer digital currency and the first functional application of blockchain technology. PoW uses an incredible amount of electricity in order to provide the computational power needed to solve a complex hashing algorithm that will allow them to win the right to add a new block of data on the blockchain. This is where Musk is coming from, and he certainly got it right that BTC is just wasting all that electricity just to process five to seven transactions per second (tps) with a tiny block size cap of just 1MB.
“The topic of sustainability, I suppose, is a question of the balance between the cost of something and the benefit it provides. And the fundamental unit of utility and benefit in Bitcoin, I guess, is the transaction. So, there’s a lot of talk about the energy cost of Bitcoin per transaction,” nChain CTO Steve Shadders explained during a panel discussion at the most recently held CoinGeek Conference in Zurich, Switzerland.
“They’ll never actually drop their per transaction cost without the BTC price itself dropping because there’s this pretty much one-to-one relationship between price and hash rate, which is also related to the amount of energy that’s fed into the mining ecosystem. But that’s not actually strictly true that the hash rate is a function of price, it’s actually a function of revenue. And when they rely entirely on block rewards, then the revenue kind of just stays static. It becomes a proxy for price, so I don’t really see a pathway where competitiveness will drive energy cost in one direction or the other. With BTC, it’s purely a function of price,” Shadders added.
However, while Musk may be right about BTC, he is not entirely correct when it comes to PoW being inefficient due to energy wastage. Electricity consumption should not be the only basis for sustainability or green technology. The benefits and utility of PoW should be weighed in against its consumption.
As opposed to BTC not having any real utility except as a pseudo digital gold, BSV continues to scale its network and improve its technology in order for it to be used across different platforms and industries. The upcoming release of the Teranode project will increase its capacity to over 50,000 tps, which is comparable to the VISA network. Because of limitless scaling, transaction fees are the lowest in the market, making it more efficient for global enterprise adoption. And this is why BSV is sustainable and BTC is not.
“It’s explaining how integral Proof of Work is to the utility of BSV that is probably going to be our challenge. I think you’d be hard-pressed to find people who would argue that it is bad to use energy to run a hospital or to run agriculture and produce crops. I don’t think it’s very difficult for us to construct or to make the argument that the utility of BSV is in the same ballpark. I think the problem that people have with proof of work is that they don’t understand that it is actually integral to BSV. Why can’t we provide that utility without using proof of work? Why should we use Proof of Stake? Why can’t we run hospitals without using energy? We could, but we would be doing operations in the dark… And that’s where BTC falls down because no one actually sees any utility there,” Shadders pointed out.
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