What are the political and environmental implications of growing Bitcoin electricity consumption?

Question

I have found lots of articles talking about how bitcoin works, and quite a few that analyze the growing industry around it. Relatively little though speaks to the potential political implications of Bitcoin's growing electricity consumption.

It seems to me that since block reward and mining industry gross margins are reasonably steady in the short term, that if Bitcoin were to (say) rise ten fold in price similar to previous rises eg. at the end of 2013, this would encourage a near-proportionate rise in the hash rate and electricity consumption.

Already I read that Bitcoin consumes as much electricity as a small country. Can the world cope with the environmental consequences of a short-term 10x or 100x jump in the Bitcoin price? What might the reaction of major powers (especially China) be?

Am I wrong in concluding that a massive short term jump in the price simply won't be politically or environmentally feasible?

Answer 1

It seems to me that since block reward and mining industry gross margins are reasonably steady in the short term, that if Bitcoin were to (say) rise ten fold in price similar to previous rises eg. at the end of 2013, this would encourage a near-proportionate rise in the hash rate and electricity consumption.

Essentially. However, that rise wouldn't happen immediately. There would probably be an immediate rise of ten to twenty percent, as previously marginal or unprofitable mining devices get switched on. A rise higher than that would have to wait for new mining chips to be fabricated, unless someone happens to be sitting on a hoard of mining ASICs.

Am I wrong in concluding that a massive short term jump in the price simply won't be politically or environmentally feasible?

I don't think that's true. Let's say that the price rises. The various governments agree to limit Bitcoin mining, either by preventing any new miners from being switched on, or by implementing a cap-and-trade system for electricity used for Bitcoin mining. That doesn't reduce the price - it just means that there's less mining capacity securing the system, in terms of hashes per second per unit of total value. A change in hashrate doesn't cause a change in price - it's the other way around.