<p>No, bitcoin is inherently not an investment.  There are three distinct concepts, but any one instrument could be more than one of these:</p>
<ol>
<li>Saving, or Store of Value
<ul>
<li>Bitcoin may well be this, at least in the medium term</li>
</ul>
</li>
<li>Speculation, or betting on the change in value of something
<ul>
<li>Bitcoin is principally this</li>
</ul>
</li>
<li>Investment, or spending money to increase productive capacity
<ul>
<li>Bitcoin is very much not this.  In fact, on a global scale, it is the opposite.  By using so much of our carbon buffer, productive capacity and waste disposal capacity it is literally reducing our useful productive capacity.</li>
</ul>
</li>
</ol>
<p>By buying bitcoin, you are providing price support for the mining operations that you detail.  If you invest, you help everyone have more stuff. If you buy bitcoin you help everyone have less stuff.</p>

CC BY-SA 4.0
2021-04-18T20:27:25.800Z
I agree with your investing vs saving distinction, but I don’t think buying bitcoin *necessarily* leads to a net reduction in useful capacity: the lower friction and less censorship when compared to legacy financial networks might make for a net increase of throughput of economic activity, as new forms of economic interaction become possible using bitcoin. The effect you described may well exist, but it is also possible it could be outpaced by the gains of these new avenues of economic interaction.
chytrik
CC BY-SA 4.0
2021-04-18T20:58:18.693Z
@chytrik with current transaction fees, where do you see this low friction?  We are talking about 1% of our CO2 production, it should be demonstrable on that scale.
Dave
CC BY-SA 4.0
2021-04-18T21:10:53.300Z
tx fees are only one factor relevant in quantifying ‘friction’, but in any case, as example, lightning payments allow on-chain fees to be amortized across a potentially unlimited number of payments. The tech is still young but the potential of it is mind-blowing in terms of facilitating low-friction payments.
chytrik
CC BY-SA 4.0
2021-04-18T22:08:10.887Z
The friction of bitcoin investment is 1% of current CO2 production.  What is this lower than?
Dave
CC BY-SA 4.0
2021-04-18T22:33:32.247Z
there is no other network which provides the same utility (censorship resistance, over-the-wire transfers, independently verifiable, etc), so I’m not sure it is relevant to compare it to a legacy system in the way you’re suggesting. However, I also think the real measuring stick here is ultimately opportunity cost, not energy. I think that legacy systems do incur a higher opportunity cost per unit of security, though an exact quantification of this is cost extremely difficult for certain (what is the opportunity cost of running the legacy financial system?).
chytrik
CC BY-SA 4.0
2021-04-18T22:40:50.557Z
I am specifically questioning the "lower friction" claim made in the first comment to my answer.  That requires a comparable investment that has lower friction than bitcoin, and I am not aware of one.
Dave
CC BY-SA 4.0
2021-04-18T22:52:10.890Z
Ah, I understand your point better now. As example then: If I want to send ~$1 worth of value to someone in a far-off country, then a lightning network payment is lower friction than any other method I can think of. It is as simple as communicating a number to the counter-party privately.  Much lower friction than any other payment method (wire transfer? PayPal? Dollar bills sent in an envelope??). Bitcoin does for money what the internet is doing for information: ease of transaction! And so people will transact more, and in new ways (again, similar to the change the internet is effecting).
chytrik
CC BY-SA 4.0
2021-04-19T13:48:54.280Z
> The friction of bitcoin investment is 1% of current CO2 production. < You are off by quite a bit here. Global energy-related CO2 emissions were 31.5 Gt in 2020 (https://www.iea.org/articles/global-energy-review-co2-emissions-in-2020). Bitcoin mining caused at most 35.89 Mt (https://netpositive.money/calculator/) That's about 0.1 % of JUST the energy-related CO2 emissions.
stefanwouldgo
CC BY-SA 4.0
2021-04-18T18:38:10.717Z
2021-04-18T18:44:06.413Z
2021-04-18T18:44:06.413Z
Dave
<p>Bitcoin's energy consumption is not a long-term problem.  It is a short-term red herring being used by those afraid of Bitcoin's eventual sweeping adoption.</p>
<p>There are already plans being developed to make Bitcoin's mining inefficiencies (energy consumption) independent of terrestrial sources of energy.</p>

CC BY-SA 4.0
2021-04-18T13:29:06.793Z
2021-04-18T13:29:06.793Z
minutiae
<h2>I have read somewhere that every Bitcoin transaction is <a href="https://digiconomist.net/bitcoin-energy-consumption" rel="nofollow noreferrer">&quot;equivalent to the power consumption of an average U.S. household over 22.86 days.&quot;</a>. Is that true? Isn't that horrible?</h2>
<p>tl;dr: Most people don't value Bitcoin as a payment mechanism, and even if they
were, most payments are not recorded on-chain. So calculating the energy cost of
a transaction is as impossible and nonsensical as it would be for gold.</p>
<p>It's true in a similar way that <a href="https://www.forbes.com/sites/erikaandersen/2012/03/23/true-fact-the-lack-of-pirates-is-causing-global-warming/?sh=508707043a67" rel="nofollow noreferrer">the lack of pirates is causing global
warming</a>.
Yes, this is a valid estimation of Bitcoin mining's energy use divided by a
valid estimation of on-chain transactions, compared to a probably valid
estimation of household electricity use.</p>
<p>However, connecting these three figures in this way doesn't yield any insight
beyond shock and awe. That's because Bitcoin's primary value is not as a payment
network, so the number of on-chain transactions is not an interesting metric for
it. This can be seen easily: On one hand the <a href="https://bitinfocharts.com/comparison/bitcoin-transactions.html" rel="nofollow noreferrer">number of onchain
transactions</a>
has always been limited — and that limit has been pretty much hit constantly
since at least 2019. On the other hand, the value of Bitcoin, as well as the
estimated number of its users, has been rising over many orders of magnitude
since 2009. How can this be possible?</p>
<ul>
<li><p>In recent years, long term store of value has become Bitcoin's main use case. That is, people use it more for storing their savings than for paying for goods and services.</p>
</li>
<li><p>Its current usage is thus more comparable to gold, which is also rarely used in transactions. I have never seen anybody calculate the energy cost of gold mining plus handling divided by the number of physical gold shipments. Probably because that's as misleading a number as the equivalent in Bitcoin.</p>
</li>
<li><p>Just as with gold, there are ways to make even small transactions quickly and cheaply with Bitcoin. Most real-world transactions use one of these off-chain methods. Probably the most popular today are custodial services like exchanges. Sending bitcoin from one customer to another on a service like this just requires changing two numbers in their database and is the equivalent of gold in a bank changing owners. It's hard to say how many such transactions there are, since there are many &quot;bitcoin banks&quot; and their numbers are proprietary, but it's safe to say they dwarf on-chain transactions by orders of magnitude.</p>
</li>
<li><p>Unlike gold, there are methods of transacting Bitcoin off-chain that require less trust in intermediaries, such as the Lightning Network or Blockstream's Liquid federation. With a growing demand in transactions, such alternatives are refined and gain popularity, without this being reflected in the above numbers. With the Lightning Network, it's even difficult to estimate how many transactions are being performed, since there is no central ledger recording them all.</p>
</li>
</ul>
<h2>But I have read that Visa transactions are much more economical!</h2>
<p>That's because these are very different things. Visa transactions are just a few
companies changing a few numbers in their databases. It's basically just a fancy
way of signalling an intent to spend something. It's not final. There might not
be a real transfer of value happening at all (all the &quot;money&quot; is still debt in
the same bank, just on another account).</p>
<p>On the other hand, a Bitcoin onchain transaction is a real transfer of a bearer
instrument, comparable to a gold shipment from one central bank to another.
Those are also quite expensive, I imagine. It's total overkill if you want to
buy a coffee. For that, it might be enough to just update some numbers in a
(Bitcoin) bank. Or use the Lightning Network.</p>
<p>If you have a little time, Nic Carter has <a href="https://www.coindesk.com/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint" rel="nofollow noreferrer">explained it much better than me</a>.</p>
<p>If you have more questions regarding Bitcoin's carbon footprint, I recommend <a href="https://netpositive.money/faq" rel="nofollow noreferrer">the FAQ at netpositive.money</a></p>

CC BY-SA 4.0
2021-04-18T08:50:42.687Z
interesting, if the real value is store of value, why are they trying to create Lightning network? seems like an additional benefit they want
mattsmith5
CC BY-SA 4.0
2021-04-18T18:28:35.970Z
Blockchains don't scale. Lightning is a technology for enabling trustless payments/transactions that needs the Bitcoin blockchain as a base layer, but can scale much further. Other benefits include potentially better privacy and immediate finality. This will enhance Bitcoin's functioning as a medium of exchange. Beside the technical complexity, however, this is limited by economic problems, ATM, mostly volatility. So SoV comes first, MoE is still developing.
stefanwouldgo
CC BY-SA 4.0
2021-04-21T22:01:15.070Z
just accepted answer and gave points, feel free to thumbs up question also, thanks
mattsmith5
CC BY-SA 4.0
2021-04-18T08:43:50.673Z
2021-04-18T08:43:50.673Z
stefanwouldgo
<p>How can Bitcoin a good long term investment, given one transaction is equivalent to carbon footprint of 986,125 VISA transactions?</p>
<p>If they use the Lightning network which takes transactions Off the Blockchain, wouldn't that defeat whole purpose of having ledger transaction?</p>
<p><a href="https://digiconomist.net/bitcoin-energy-consumption/" rel="nofollow noreferrer">https://digiconomist.net/bitcoin-energy-consumption/</a></p>
<p><a href="https://i.sstatic.net/PFLLq.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/PFLLq.png" alt="enter image description here" /></a></p>

CC BY-SA 4.0
2021-04-17T20:09:12.377Z
why is this voted down? I am trying to learn
mattsmith5
<lightning-network><energy-consumption>
Bitcoin Energy Consumption and Carbon Footprint a good long term investment?
mattsmith5
# Bitcoin Energy Consumption and Carbon Footprint a good long term investment?

(Asked by: username_0 on 2021-04-17)

How can Bitcoin a good long term investment, given one transaction is equivalent to carbon footprint of 986,125 VISA transactions?

If they use the Lightning network which takes transactions Off the Blockchain, wouldn't that defeat whole purpose of having ledger transaction?

<https://digiconomist.net/bitcoin-energy-consumption/>

[![enter image description here](https://i.sstatic.net/PFLLq.png)](https://i.sstatic.net/PFLLq.png)

**Tags:** lightning-network, energy-consumption

> **Comments:**
> **username_0**: why is this voted down? I am trying to learn  

---

## 3 answers

### Answer by username_3 on 2021-04-18. Score: 4 | Accepted answer

## I have read somewhere that every Bitcoin transaction is ["equivalent to the power consumption of an average U.S. household over 22.86 days."](https://digiconomist.net/bitcoin-energy-consumption). Is that true? Isn't that horrible?

tl;dr: Most people don't value Bitcoin as a payment mechanism, and even if they
were, most payments are not recorded on-chain. So calculating the energy cost of
a transaction is as impossible and nonsensical as it would be for gold.

It's true in a similar way that [the lack of pirates is causing global
warming](https://www.forbes.com/sites/erikaandersen/2012/03/23/true-fact-the-lack-of-pirates-is-causing-global-warming/?sh=508707043a67).
Yes, this is a valid estimation of Bitcoin mining's energy use divided by a
valid estimation of on-chain transactions, compared to a probably valid
estimation of household electricity use.

However, connecting these three figures in this way doesn't yield any insight
beyond shock and awe. That's because Bitcoin's primary value is not as a payment
network, so the number of on-chain transactions is not an interesting metric for
it. This can be seen easily: On one hand the [number of onchain
transactions](https://bitinfocharts.com/comparison/bitcoin-transactions.html)
has always been limited — and that limit has been pretty much hit constantly
since at least 2019. On the other hand, the value of Bitcoin, as well as the
estimated number of its users, has been rising over many orders of magnitude
since 2009. How can this be possible?

* In recent years, long term store of value has become Bitcoin's main use case. That is, people use it more for storing their savings than for paying for goods and services.
* Its current usage is thus more comparable to gold, which is also rarely used in transactions. I have never seen anybody calculate the energy cost of gold mining plus handling divided by the number of physical gold shipments. Probably because that's as misleading a number as the equivalent in Bitcoin.
* Just as with gold, there are ways to make even small transactions quickly and cheaply with Bitcoin. Most real-world transactions use one of these off-chain methods. Probably the most popular today are custodial services like exchanges. Sending bitcoin from one customer to another on a service like this just requires changing two numbers in their database and is the equivalent of gold in a bank changing owners. It's hard to say how many such transactions there are, since there are many "bitcoin banks" and their numbers are proprietary, but it's safe to say they dwarf on-chain transactions by orders of magnitude.
* Unlike gold, there are methods of transacting Bitcoin off-chain that require less trust in intermediaries, such as the Lightning Network or Blockstream's Liquid federation. With a growing demand in transactions, such alternatives are refined and gain popularity, without this being reflected in the above numbers. With the Lightning Network, it's even difficult to estimate how many transactions are being performed, since there is no central ledger recording them all.

## But I have read that Visa transactions are much more economical!

That's because these are very different things. Visa transactions are just a few
companies changing a few numbers in their databases. It's basically just a fancy
way of signalling an intent to spend something. It's not final. There might not
be a real transfer of value happening at all (all the "money" is still debt in
the same bank, just on another account).

On the other hand, a Bitcoin onchain transaction is a real transfer of a bearer
instrument, comparable to a gold shipment from one central bank to another.
Those are also quite expensive, I imagine. It's total overkill if you want to
buy a coffee. For that, it might be enough to just update some numbers in a
(Bitcoin) bank. Or use the Lightning Network.

If you have a little time, Nic Carter has [explained it much better than me](https://www.coindesk.com/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint).

If you have more questions regarding Bitcoin's carbon footprint, I recommend [the FAQ at netpositive.money](https://netpositive.money/faq)

> **Comments:**
> **username_0**: interesting, if the real value is store of value, why are they trying to create Lightning network? seems like an additional benefit they want  
> **username_3**: Blockchains don't scale. Lightning is a technology for enabling trustless payments/transactions that needs the Bitcoin blockchain as a base layer, but can scale much further. Other benefits include potentially better privacy and immediate finality. This will enhance Bitcoin's functioning as a medium of exchange. Beside the technical complexity, however, this is limited by economic problems, ATM, mostly volatility. So SoV comes first, MoE is still developing.  
> **username_0**: just accepted answer and gave points, feel free to thumbs up question also, thanks  

---

### Answer by username_1 on 2021-04-18. Score: 0

No, bitcoin is inherently not an investment. There are three distinct concepts, but any one instrument could be more than one of these:

1. Saving, or Store of Value
   * Bitcoin may well be this, at least in the medium term
2. Speculation, or betting on the change in value of something
   * Bitcoin is principally this
3. Investment, or spending money to increase productive capacity
   * Bitcoin is very much not this. In fact, on a global scale, it is the opposite. By using so much of our carbon buffer, productive capacity and waste disposal capacity it is literally reducing our useful productive capacity.

By buying bitcoin, you are providing price support for the mining operations that you detail. If you invest, you help everyone have more stuff. If you buy bitcoin you help everyone have less stuff.

> **Comments:**
> **username_2**: I agree with your investing vs saving distinction, but I don’t think buying bitcoin *necessarily* leads to a net reduction in useful capacity: the lower friction and less censorship when compared to legacy financial networks might make for a net increase of throughput of economic activity, as new forms of economic interaction become possible using bitcoin. The effect you described may well exist, but it is also possible it could be outpaced by the gains of these new avenues of economic interaction.  
> **username_1**: @username_2 with current transaction fees, where do you see this low friction?  We are talking about 1% of our CO2 production, it should be demonstrable on that scale.  
> **username_2**: tx fees are only one factor relevant in quantifying ‘friction’, but in any case, as example, lightning payments allow on-chain fees to be amortized across a potentially unlimited number of payments. The tech is still young but the potential of it is mind-blowing in terms of facilitating low-friction payments.  
> **username_1**: The friction of bitcoin investment is 1% of current CO2 production.  What is this lower than?  
> **username_2**: there is no other network which provides the same utility (censorship resistance, over-the-wire transfers, independently verifiable, etc), so I’m not sure it is relevant to compare it to a legacy system in the way you’re suggesting. However, I also think the real measuring stick here is ultimately opportunity cost, not energy. I think that legacy systems do incur a higher opportunity cost per unit of security, though an exact quantification of this is cost extremely difficult for certain (what is the opportunity cost of running the legacy financial system?).  
> **username_1**: I am specifically questioning the "lower friction" claim made in the first comment to my answer.  That requires a comparable investment that has lower friction than bitcoin, and I am not aware of one.  
> **username_2**: Ah, I understand your point better now. As example then: If I want to send ~$1 worth of value to someone in a far-off country, then a lightning network payment is lower friction than any other method I can think of. It is as simple as communicating a number to the counter-party privately.  Much lower friction than any other payment method (wire transfer? PayPal? Dollar bills sent in an envelope??). Bitcoin does for money what the internet is doing for information: ease of transaction! And so people will transact more, and in new ways (again, similar to the change the internet is effecting).  
> **username_3**: > The friction of bitcoin investment is 1% of current CO2 production. < You are off by quite a bit here. Global energy-related CO2 emissions were 31.5 Gt in 2020 (https://www.iea.org/articles/global-energy-review-co2-emissions-in-2020). Bitcoin mining caused at most 35.89 Mt (https://netpositive.money/calculator/) That's about 0.1 % of JUST the energy-related CO2 emissions.  

---

### Answer by username_4 on 2021-04-18. Score: -3

Bitcoin's energy consumption is not a long-term problem. It is a short-term red herring being used by those afraid of Bitcoin's eventual sweeping adoption.

There are already plans being developed to make Bitcoin's mining inefficiencies (energy consumption) independent of terrestrial sources of energy.


---

