Does energy consumption undermine Bitcoin's value proposition?

This is an excellent question because it touches upon one of Bitcoin's most fundamental and paradoxical aspects. I'll try to explain it in simple terms.

First, we need to understand where Bitcoin's "electricity" is actually spent.

It's spent on a mechanism called "Proof-of-Work." You can imagine it as a global, incredibly difficult "number guessing" competition.

Countless computers (mining rigs) worldwide are furiously computing, trying to guess a correct number. Whoever guesses it first gets the right to record a new page in Bitcoin's public ledger (the blockchain) and receives some Bitcoin as a reward. This process is called "mining."

The "number guessing" itself isn't inherently meaningful, but the act of "guessing" – the process of consuming massive computing power and electricity – is profoundly significant. It guarantees two crucial things:

1. Security: Because guessing correctly is extremely difficult and requires immense electricity and cost. So, if a malicious actor wanted to tamper with the ledger, for example, to reverse a transaction they made, they would not only have to guess correctly once again but also re-guess all the numbers that all miners worldwide have already guessed after the page they want to alter, and they would have to do it faster than everyone else. The energy required for this would be astronomical, making it virtually impossible. Therefore, this massive energy consumption acts like an insurmountable wall, protecting the security of the Bitcoin ledger and making it almost impossible to tamper with.

2. Fair Issuance: Bitcoin isn't printed by any central bank; it's "mined" bit by bit through this process, rewarded to those who contribute labor (electricity and computing power) to the network's security. This ensures that the issuance of new coins is decentralized and costly, rather than being created out of thin air.

Now, with that understanding, let's return to your question: Does energy consumption undermine Bitcoin's value proposition?

This needs to be looked at from two perspectives.

On one hand, it is the value proposition itself.

You can think of Bitcoin as "digital gold." Why is gold valuable? Besides its luster, a crucial reason is its "scarcity" and "difficulty to extract." You need to invest significant human resources, materials, and equipment for exploration, mining, and refining, and this high extraction cost is part of gold's value.

The same applies to Bitcoin. Its massive electricity consumption is its "mining cost." Precisely because it costs so much (electricity bills, mining rig expenses) to "mine" a Bitcoin, it's not just hot air; it's backed by tangible real-world costs. The higher this cost, the higher the cost to attack it, and thus the more secure it becomes. Therefore, from this perspective, energy consumption does not weaken its value; rather, it's an indispensable part of its value system. Without this consumption, the security of the Bitcoin ledger would be non-existent, and it would truly be worthless.

However, on the other hand, it does bring significant problems and challenges, which could indirectly undermine its value.

1. Public Opinion and Policy Pressure: This is the most direct impact. The world is now focused on environmental protection and carbon neutrality, and "Bitcoin's electricity consumption" has become a major negative label. This deters many mainstream investment institutions and environmentally conscious companies (like Tesla, which initially said it would accept Bitcoin payments but later reversed course). Regulatory bodies in various countries might also use this as a reason to introduce restrictive policies. Such external pressure will undoubtedly affect its price and adoption.

2. Ongoing Operational Costs: Miners are not philanthropists; they mine to make a profit. If Bitcoin's price remains low for an extended period, failing to cover electricity costs and mining rig depreciation, some miners will shut down. If a large number of miners leave, the overall network security will indeed decrease. Therefore, Bitcoin needs to maintain a certain price to sustain this "high-energy-consuming" security system, much like a machine that requires constant funding to operate.

To summarize:

You can understand it this way: energy consumption is like the power plant supplying electricity to Bitcoin, the "digital safe."

• From an internal perspective: The more fuel (electricity) this power plant consumes, the more complex and robust the safe's lock becomes, making the assets inside more secure and strengthening its value proposition.
• From an external perspective: The thick smoke (carbon emissions) from this power plant's chimney is too choking, drawing complaints and restrictions from neighbors (public opinion and regulators), which might force the power plant to scale down or even shut down, thereby threatening the safe's security.

Therefore, energy consumption is both the cost of Bitcoin's value and the cornerstone of its security. It is both a source of value and a Sword of Damocles hanging overhead. To say it "undermines" its value proposition is inaccurate; however, to say it brings significant "challenges and risks" to its value is entirely correct.

Currently, the entire industry is trying to address this, for example, by building mining farms in areas with surplus clean energy (hydroelectric, thermal power) or exploring more energy-efficient technologies, but this will be a long-term process of contention.