Over the years, Bitcoin has overcome its adversaries by frequently reinventing its narrative. Since Bitcoin (BTC) is multi-faceted, it can change quickly in the face of new criticism.
We have seen that over the years. Bitcoin, for example, has been widely criticized in the media for its volatility – many articles have argued that Bitcoin is too volatile to be successful as a currency. We don’t hear too much about Bitcoin’s volatility today, partly because observers are used to its frequent fluctuations in price, but mostly because “bitcoiners” have bounced back. The Bitcoin concept is an investment, especially digital gold. They argue that the only reason BTC is experiencing such drastic price volatility is because it has not yet fully matured with a market cap that can weaken this type of volatility like gold. Hence, the prevailing narrative surrounding Bitcoin today is that despite constant volatility, it is a store of value and a hedge against inflation.
Recently, Bitcoin has faced new barriers, namely environmental, social and governance (ESG) concerns related to mining, ransomware and regulatory scrutiny. The bitcoin community quickly turned to address these concerns while the seeds were planted beneath the surface years ago. The Bitcoin community is so large that its members are now active in almost all industries and even in the political field. Hence, her work extends to areas that have received limited attention in the past, such as BTC renewable mining.
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So when new challenges arise to the current narrative, suddenly attention turns to the areas where Bitcoiners work behind the scenes. The community then bonded around these to develop a new narrative that became the predominant perception of Bitcoin.
ESG attacks against Bitcoin surfaced in spring 2021. Overall, they make the following points:
- Bitcoin uses too much energy (more energy than small countries use).
- Bitcoin mining doesn’t run on enough clean energy.
- Most of Bitcoin mining takes place in countries like China, which are not particularly known for being transparent or ESG-friendly.
Bitcoins began to crack down on these notions almost immediately. They said Bitcoin encourages the use of green energy because it is often one of the cheapest and most efficient types of energy available for mining. Bitcoin miners who use inexpensive renewable energy will be able to make more money than those who use more expensive renewable energy. As a result, over time, the BTC mining industry will be driven to use entirely renewable energy.
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They also rushed to gather resources and information on how Bitcoin went green. Research by investment manager VanEck and the Cambridge Center for Alternative Finance shows that 39% of total energy consumption by BTC miners comes from renewable energies and 76% of Bitcoin miners use renewable energies. . This makes Bitcoin greener than many other industries – some of which get the same test for their green energy use.
Bitcoin miners also make it clear that the energy consumption of Bitcoin serves network security, which benefits all network participants. This security helps ensure that the Bitcoin network never goes offline, unlike older financial networks that have had disruptions and power outages in the past. While Bitcoin’s energy consumption can be significant in absolute terms, the service miners provide from that energy is a net benefit to society. If people are content to ignore the consequences of the energy required to run the global financial system, then why should they care about Bitcoin’s relatively cheap energy usage, which promises to … create a better and more open financial system ?
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We’ve also seen outspoken bitcoiners like Michael Saylor stepping up to unite the bitcoin community and miners to tackle misunderstandings regarding bitcoin’s energy use by the incumbent Bitcoin Mining Council. BTC miners were encouraged to be more transparent and progressive with their energy sources. This coordination proves that bitcoiners are banding together to make the network greener.
Attention has also been drawn to BTC miners who use significant renewable energy in their operations. Additionally, I expect the general public will be familiar with the headlines from 99% hydroelectric bitcoin mining company Bitfarms to the stock market about how green BTC mining really is. In addition to promoting the above promotions and training, Bitcoiners are reinventing the history of ESG. If they are successful – and I have no doubt – Bitcoin’s potential ESG issues are unlikely to dominate future headlines.
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The story of money and scale
Bitcoin as a currency has largely been dropped and attention has turned to BTC as an investment. But in the background there are Bitcoiners who are working hard to drive the adoption of BTC around the world and develop the Lightning Network.
The recent development in El Salvador – the passage of the “Bitcoin Law” which dictates the legal tender for BTC in the country – is groundbreaking for the cryptocurrency, although this seems unlikely to many. If you take a closer look at the situation, it becomes clear that the cornerstone was laid by Bitcoiners a few years ago. Bitcoin Beach, a project to create a sustainable Bitcoin ecosystem in El Salvador, has done a lot of groundwork in the country. In an attempt to increase financial inclusion through the use of Bitcoin, work has also been done to address the narrative that Bitcoin is not used as a currency. And it was successful. The divide in Bitcoin’s adoption around the world could be profound if there is a domino effect of countries willing to accept BTC as legal tender.
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To address the argument that Bitcoin cannot be sufficiently scaled for use as a currency, many Bitcoiners have been quietly working on building the Lightning Network over the past few years. While far from perfect, the network’s usage and capacity are growing, showing that it holds great promise as a solution to scale. Overall, it received surprisingly little attention. I suspect that the “sudden” success of scaling solutions will change the history of Bitcoin again at some point in the future: from investment to currency.
Bitcoin can remain defragmented thanks to the diligence of the bitcoiners working together to expand the adoption of bitcoin. So far it has been able to overcome all major obstacles, not least because Bitcoiners were able to shape its new story.
Martin Gaspar is a research analyst at the digital asset capital markets company CrossTower and has background knowledge in conducting basic research and cryptanalysis. Martin was previously a fixed income research analyst at Wells Fargo Securities, where he provided helpful investment advice to traders, sellers and buyers. He has a passion for cryptocurrencies and has followed the field intensively since 2012. Martin holds a bachelor’s degree from Colorado College where he graduated with honors in economics.