As someone who chose to build my technology businesses and raised my family in Alberta, it’s almost impossible to feel detached from our oil and gas industry – or not impacted by its vocal critics. As one of the biggest economic drivers in Canada, our petroleum countries have helped make us one of the best places to live in the world, but this key sector has been under attack for years.
From Greta Thunberg and David Suzuki to many of our own political leaders, there is no shortage of critics, all petroleum consumers themselves, willing to point fingers at the energy industry. Despite the fact that oil and its derivatives are essential to most of the products we use every day, including the smartphone you might be reading this on, there’s a widespread belief that it would be better if oil & gas disappeared – regardless of the cost to our civilization.
It’s interesting to me to see the parallels between detractors of oil and gas and Bitcoin, the world’s most successful cryptocurrency and a longstanding passion and business of mine. When I was first introduced to Bitcoin about 5 years ago, I was so impressed by its potential to transform our financial system and help empower people over their own economic destinies that I moved much of my savings, including college funds for my small children, into BTC.
At the time, people told me that I was a terrible mother, and taking a risk on their future that was sure to fail. I had a conviction, however, that I was truly taking steps to give them a better life, and believed with all my heart that was the right move. Now, with the price of Bitcoin over $40K, no one could ever say that it was a bad financial move – instead, after Elon Musk’s notorious tweet about banning BTC as payment for Teslas, I get critiqued for its carbon footprint.
Bitcoin’s detractors say that the mechanism behind its security and effectiveness as a digital currency – proof-of-work – is wasteful and has too high a cost to the environment. Proof-of-work does require networks of powerful computers to race to solve difficult algorithms, which takes a significant amount of energy.
However, there is a good argument to be made that the environmental criticisms BTC is receiving are in many cases unwarranted. Just like oil and gas detractors choose to ignore the massive carbon footprint of the many industries that use its products, Bitcoin is targeted are uniquely wasteful when so many human activities use a tremendous amount of energy.
For example, each year, Christmas lights in the USA use enough energy to power a small country for a year – yet this goes completely under the radar of environmental activists. Something as simple as wasted outdoor lighting, such as unneeded or overly strong lights, uses an astonishing 40 terrawatt hours (TWh) a year. We waste energy all the time – but choose targets to point fingers at carefully.
Bitcoin’s power consumption is estimated at 70-110 TWh a year, compared to the conventional financial services industry’s approximately 650 TWh. However, Bitcoin is replacing many of the expensive, outdated and inaccessible functions of financial services, and allowing people to store their own wealth and make peer-to-peer transactions without the need for massive banking infrastructure.
This perspective makes BTC’s global footprint more understandable, and as it gains more adoption, I believe this will overall reduce the costs and energy required for our economic systems. We currently live in a world where giant companies with vast amounts of staff and physical office spaces are needed to move money and process transactions – proof-of-work’s energy use is small in comparison.
“At its core, bitcoin is a smart currency, designed by very forward-thinking engineers. It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transitions… all good things.”
– Peter Diamandis, Entrepreneur & innovator
And just like the unrecognized efforts that the oil and gas industry has made to reduce emissions and become more sustainable, few critics credit the fact that a substantial amount of the energy used to power BTC mining – by some estimates anywhere from 40-74% – already comes from renewable sources, far more than the 25% renewable share of all electricity generated. Mining algorithms are also becoming more efficient, using less energy, as technological advancement, as in oil and gas, makes the industry more sustainable.
These are just some of the ways that oil and gas and crypto mining are fighting the same battle. So, here’s how Bitcoin and Canada’s energy industry can join forces and help each other. Energy producers should look at Bitcoin mining as a way to fund their operations and growth, through using creative sources of stranded and waste gas.
This is an idea that has been around for years, and I think its time has finally come. The price of BTC is high enough to justify the expenses associated with buying miners and infrastructure, and by using mobile data centers, producers can move their mining to areas where gas would otherwise go to waste. Partnerships with miners, who all require inexpensive energy input, are another great opportunity.
In the US, crypto miners and energy producers are increasingly making deals to partner on sites with excess or difficult to market gas, and by using flare gas or other sources, it makes both industries more sustainable. These new partnerships also help shift the balance of power in Bitcoin mining away from Asia and Russia, which use a much higher amount of coal-generated electricity.
Mark Le Dain, VP of Strategy at oil and gas software company Validere Technologies, believes that these arrangements have big advantages for both sides. “It helps cut emissions at (an oil) producer level, but also globally by reducing mining in parts of the world where coal is likely the power source,” he said in a recent Reuters article.
Innovation is finding opportunities in challenges, and for smaller energy producers, any new source of revenue can help companies survive in a challenging market. I believe Bitcoin and oil & gas, facing the same criticisms, now need each other – and both will benefit greatly from strategically aligning in Canada.