Riposte From Satoshi Nakamoto On Energy Consumption Resurfaces

A riposte from Satoshi Nakamoto, Bitcoin’s creator on the cryptocurrency’s energy consumption has resurfaced after BTC faced plenty of criticism over the high energy consumption that is involved in mining the cryptocurrency so let’s read more in our latest Bitcoin news.

A 2010 riposte from Satoshi Nakamoto justifying the energy expenditure resurfaced recently. With the price of BTC soaring over the past year, it attracted criticism for energy consumption which eh critics noticing the eye-popping sums of energy per transaction. However, there could have been a justification for the crypto’s energy consumption all these years. Satoshi Nakamoto who vanished in 2020, already had an explanation that resurfaced on Reddit this weekend almost a decade after it was initially made:

 “The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin is a net waste.”

Bitcoin uses a consensus mechanism that is known as the proof of work where miners compete to solve cryptographic puzzles to complete a block first and in exchange for a reward in BTC. In order to remain competitive, the miners are forced into a hardware race and use powerful computers that spend plenty of electricity. Before BTC, other digital currency distribution methods were attempted but to no avail. Nakamoto reasoned that BTC issuance had to involve burning energy because there wasn’t a way to distribute the units of value to the world in a decentralized manner.
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In the forum post, he said that the situation is similar to the one of gold:

 “Gold mining is a waste, but that wasted is far less than the utility of having gold available as a medium of exchange, I think the case will be the same for Bitcoin.”

Gold mining is very energy-intensive because it takes a lot of work to extract the metal from the earth and also involves plenty of capital expenditure. At the same time, mining is a free market so the miner margins are slim most of the time with no-bid advantages for the ones that are doing the hard work which is the same for BTC as well according to Nakamoto. He also added that the proof-of-work concept has nice properties that can be relayed through “untrusted middlemen.”

The paper also suggests that developers will build the so-called Layer-2 solutions on BTC to improve energy efficiency and transaction speed without having to compromise transparency.