Here are five ways Bitcoin could be a force for good in the fight against climate change...

Bitcoin (BTC), the world's first cryptocurrency, may actually be a force for good in resolving climate change. At least, that is the case being made by an industry veteran.

Bitcoin has developed a bad reputation in recent years due to its high energy consumption. The majority of us have seen headlines comparing Bitcoin's network energy consumption to that of entire countries. The depressing comparisons have enraged a number of climate activists at a time when emission reductions are critical.

However, crypto veteran and founder of crypto research firm Messari, Ryan Selkis, takes a diametrically opposed position.

Calculating the numbers

Selkis discusses how Bitcoin has become a focal point of political and climate debate in his annual Crypto Theses for 2022 report. The level of anti-crypto sentiment generated by perceived environmental costs was "as if Bitcoin were a genuine toxin," as Selkis put it.

By contrast, the long-time cryptocurrency investor outlined several reasons why Bitcoin is critical to our transition to a clean energy future. These include the following:

* The environmental impact of Bitcoin should be proportional to its economic impact.

* Bitcoin is an energy recycler.

* Stimulus for green energy.

The first section discusses the elephant in the room: the amount of energy that Bitcoin may consume as it scales. The Proof of Work (PoW) consensus model of the cryptocurrency necessitates the expenditure of energy during the consensus process.

As Selkis points out, if Bitcoin grows to a $20 trillion asset, it could consume up to 1% of the world's energy. While this may appear diabolical, the opportunity is for crypto to automate the global financial services industry, which accounts for 3% of global emissions according to Selkis.

Recycling champions

Another way in which it could be considered environmentally beneficial is through the incentive structure for cheap (often wasted) energy.

According to Selkis, Bitcoin miners are frequently drawn to stranded energy sources that would otherwise go unused. To emphasise this point, the Messari founder cited Lyn Alden's research:

According to the University of Cambridge, the global potential for flare gas recovery is eight times greater than the bitcoin network's energy consumption in 2021. In other words, virtually the entire Bitcoin network in its peak form in 2021 could theoretically be powered entirely by stranded natural gas in the United States, let alone the rest of the world. Lyn Alden, Lyn Alden Investment Strategy, www.lynalden.com.

Bitcoin advances the cause of a greener future

Finally, the report emphasises the potential for cryptocurrency to "power clean energy investments." Notably, Bitcoin miners' profitability is largely determined by a single variable — the cost of energy on a KWh basis.

As a result, the network could help balance demand for early-stage renewable energy development. In exchange for energy rights, Bitcoin miners could subsidise capital expenditure for renewable energy development in low-income areas.

In conclusion, Selkis argues that Bitcoin may be a hero rather than a zero in the fight against climate change. At the time of press, the original cryptocurrency is trading at A$67,526.

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