Global Energy Inequality Goes Deeper Than Bitcoin
Californians alone use more power playing games and heating their pools than entire countries in Africa. That has to change.
Co-written with Jake Kincer
Modern life is amazingly energy intensive. All those computers, data servers, and air conditioners devour a lot of electricity. In fact, virtually everything about how we live, move around, communicate, and work is embedded with immense quantities of energy.
It’s now even in our money. Bitcoin is so energy-hungry that people are seriously starting to worry that it might cook the planet. But such concerns are missing the bigger picture — that while we’ve created a new currency powered by electricity, billions of people still can’t get access to enough energy for the simple things in life, like the power to run a refrigerator, start a business, or create a decent job.
The real story — the one about real people — is the mind-blowing chasm of global energy inequality.
The debate over bitcoin’s energy use heated up this summer. A German research team calculated the total energy consumption for bitcoin at about 48 terawatt-hours (TWh) per year — or more power than what 3 million Americans use on average. This total was more or less in line with estimates from the International Energy Agency, a Paris-based intergovernmental group considered an authority on energy policy. However, the popular Bitcoin Energy Consumption Index from Digiconomist has pegged bitcoin-related electricity use at a whopping 73 TWh last year. And, if cryptocurrencies become more popular, their energy consumption will rise too.
Whatever the right figure, we can thank Ben Geman in Axios for providing some eye-opening context. He argued that carbon emissions from bitcoin mining aren’t likely to matter much since global electricity consumption growth was 900 TWh in 2018 alone. So even if bitcoin is of questionable social and economic value, it’s not a major climate change worry, right?
The mind-blowing chasm between energy consumption in the West and elsewhere
The controversy over the impact of cryptocurrencies, however, highlights a bigger issue around the disparity in the availability of energy between wealthy countries and the rest of the world. According to the California Energy Commission, that state’s residents use about 5 TWh each year just to power their TVs, and another 5 TWh running hot tubs and pools. Using that same report, the New Scientist reported recently that energy consumption for online gaming in California is already at 5 TWh and is expected to spike to 11 TWh by 2021. That’s just for gaming, and just in California.
According to the California Energy Commission, that state’s residents use about 5 TWh each year just to power their TVs, and another 5 TWh running hot tubs and pools.
The usual way to think about all of these fun activities is that they’re just a rounding error in a vast, modern, energy-intensive economy, which is true. A different takeaway could be that Californians’ pools and video games actually consume more electricity than many entire countries. Here’s a small sample.
The real story — the one about real people — is the mind-blowing chasm of global energy inequality. California gamers will soon use more electricity than 100 million people in Ethiopia. Bitcoin already consumes more power than 200 million people in Nigeria. Pools and hot tubs in California use more energy than the entire island of Jamaica.
The right lesson here is not that we should boycott bitcoin or that Californians should turn off their Xboxes and drain their hot tubs. No one wants to take away your festive holiday lights, either. The bigger question is: Why don’t Nigerians and Jamaicans have access to the same energy as Americans? And, more to the point, what can be done to solve this problem?
All growing economies need abundant energy — and small-scale solutions won’t deliver it
The sad fact that Ghana, El Salvador, or Nepal will have to run their entire economies on less electricity than online gamers in California is both unjust and untenable. That’s because energy plays just as important a role in these economies as it does in ours. Abundant, reliable electricity is what’s needed to enable manufacturing in Ethiopia, grow the budding tech sector in Kenya, and drive further expansion in the dynamic film and music industries in Nigeria. Yet, data from the World Bank shows very clearly that the cost and reliability of electricity are still one of the leading constraints to economic growth and job creation.
That’s why the international community needs to step up in a far bigger way. The U.S. government’s Power Africa initiative, launched in 2013 to boost electrification on the continent, is a great start. But the UN and other donors are overly fixated on romantic small-scale solutions, like solar lanterns, which can deliver basic lighting but can’t run a typical American family fridge, much less power a business. The philanthropic and technology communities have also started to notice that energy poverty harms health, education, women’s empowerment, and economic opportunity. But they too are mostly enamored with gadgets and financing small solutions that mitigate the worst effects of extreme poverty but are very far from the scale necessary to create jobs or power a modern competitive economy.
The shocking gaps in global energy consumption underscore why every country needs a high-energy future so it can provide opportunity and prosperity for all people. At least 3 billion people (yes, 3 billion) live in a place where a deficient power system is a first-order barrier to fulfilling their potential or finding a job. If we want a better, fairer, and safer world, energy poverty is a problem that has to be solved — and solved at scale. The climate versus bitcoin debate is a distraction. The real challenge is to make it as easy for an entrepreneur to power her business in Burundi as it is for a kid to play Minecraft in Mendocino.