Bitcoin Policy UK have released the statement below to the UK's media, following the publication of certain opinion pieces on the subject that were regrettably reported as science. Credit: Daniel Batten at CH4 Capital (https://www.ch4capital.com/ - CH4 have found that onsite power stations, edge data-centers and Bitcoin mobile mining are the lead candidates to mitigate methane economically. )
Swimming against the tide - Central Bank opinion or science?
Bitcoin Policy UK are extremely concerned at the recent flood of misleading stories around Bitcoin’s water usage, emanating from what seems to be a single source - a Dutch central bank employee named Alex DeVries who appears to have contacted a very large number of media outlets last week (see https://www.bbc.co.uk/news/technology-67564205). This is concerning for any number of reasons.
Firstly, neither the BBC nor many of the other publications which ran the story noted for context that Mr. DeVries is not an engineer or an energy and infrastructure scientist but is an employee of the Dutch Central Bank (an institution with a vested interest in undermining a free and open source neutral protocol for money on the internet, that cannot be manipulated by either governments or central banks.) This is important context for the reader to know in assessing the accuracy of his claims.
Secondly, the publications fail to have noted that Mr DeVries has a track record of similarly outlandish and ultimately incorrect claims. In 2017 his inaccurate modelling of Bitcoin energy consumption was one of the two inputs which formed the basis of the prediction that “Bitcoin will use all the world’s power by 2020”. This claim has been proven demonstrably, if not laughably, incorrect.
Finally, at no point did any of the publications reach out to those who have actually studied the subject of Bitcoin mining in depth before these stories were published. The BBC in particular has a duty of journalistic balance and integrity, which in this case it has sadly failed to uphold. We include below a detailed consideration of the BBC’s reportage of Mr DeVries, drafted by Daniel Batten of CH4 Capital. References are to the BBC’s article quoted above.
Freddie New, Head of Policy at Bitcoin Policy UK, said “Bitcoin mining is a very complex topic, at the intersection of the energy industry, grid stability, methane mitigation technologies, and the build out and maintenance of renewable grids. Since a minimal proportion of the Bitcoin mining industry uses any water as coolant at all, DeVries’ opinion piece seems really to be concerned with the amount of water that is used in electricity generation itself. Ironically, mining as an industry is uniquely placed to accelerate the transition to renewable energy sources, and it’s a great disappointment that reputable news publications don’t focus on this topic, and instead unthinkingly publish what are effectively opinion pieces without first verifying the science - if any - that is behind them”.
Susie Violet Ward, the Head of Mining and Sustainability at Bitcoin Policy UK, stated, “I want to affirm our unwavering commitment to environmental sustainability. We are actively engaged in researching the latest advancements in renewable energy and demand response techniques. Our thorough investigations and expertise in this field allow us to confidently state that there is no scientific basis for the claims presented in this article regarding Bitcoin's environmental impact. At Bitcoin Policy UK, we hold ourselves to the highest standards of accuracy and factual precision, and it is clear that this article does not meet these criteria. We are dedicated to providing well-researched and truthful information, especially on topics as significant as environmental sustainability in the context of Bitcoin mining.”
Problems and errors of fact in the BBC’s article (Credit: Daniel Batten of CH4 Capital- https://www.ch4capital.com/):
The headline of the article contains a significant factual inaccuracy, which has the impact of misleading readers. Simply put: it is misinformation. The author of the study cited by BBC News never claims that Bitcoin uses water per payment, he claims that it uses a large amount of water per transaction. This makes a material difference because in the world of blockchain technology, a transaction and a payment mean very different things. A single blockchain transaction can contain “many thousands of payments” (Source: Cambridge University)
The second problem is that having made a factual error in the headline of the article, the BBC News continues to use the two terms “payment” and “transaction” as though they are interchangeable. This suggests a fundamental lack of understanding of how the Blockchain, and Bitcoin, works.
We have not yet made it to the body of the article, and already there are two fundamental problems: one with factual accuracy, and a fundamental question over whether the journalist understands their domain sufficiently well to be qualified to write the article. Let’s also be clear, we are not talking about a minor factual error, we are talking about an error of fact that leads to a minimum overstatement by a factor of 1000x.
The third problem is in the second line of the body of the article: the study author. Firstly, BBC News does not acknowledge his main affiliation, which is “data scientist at DNB”. This would not have taken too much investigation to discover: it is the first line on his own LinkedIn profile. This primary affiliation matters because DNB (De Nederlandsche Bank) is a Central Bank, which in turn is important because “Bitcoin’s peer-to-peer technology and decentralised system have the potential to upend the role of central banks in modern financial infrastructure.”
While his affiliation does not mean that his article is void, it is a clear conflict of interest, and should be disclosed so that readers are informed about the opportunity for potential bias.
The second issue with de Vries is more damning, as it invalidates the logical basis upon which both the study and the BBC article are based. The methodology of measuring Bitcoin resource consumption “per transaction” is fundamentally flawed, and was debunked by Cambridge University as early as 2018, when de Vries first started claiming that Bitcoin energy consumption could be measured per transaction.
The issue here is not directly with the BBCNews, but with their source: the study. The study has employed hidden semantics, a technique which can and has be used to spread misinformation online (Castaño-Pulgarín and Suárez-Betancur).
The issue is this: unless people have researched Bitcoin, it is unlikely they would know that a single transaction in the world of Bitcoin could bundle up thousands, even billions, of individual payments. However, nowhere in his study is this disclosed. This lack of disclosure of vital context makes his conclusions ripe for journalists to pick up his findings and create their own conclusions which further misinform readers and create faux-moral outrage.
Whether this was the intent of the author, or whether this was a genuine mistake is beyond the reach of this post to explore, however it is also not the point: either way – it is poor scholarship, which has resulted in widespread misinformation, and which de Vries himself was happy to celebrate and propagate on his Twitter account despite the inaccuracy in the main heading.
Important background context that BBCNews did not consider, evaluate or mention
De Vries has a history of making predictions which have proven inaccurate by an order of magnitude. For example, in 2017 his inaccurate modelling of Bitcoin energy consumption was one of the two inputs which formed the basis of the prediction that “Bitcoin will use all the World’s power by 2020”. That didn’t happen.
It was inaccurate by 2509x.
As well as being the creator of the misleading metrics “energy cost per transaction” metric, De Vries has heavily criticised Bitcoin for proliferating the use of fossil fuels for years. However recent studies from Bloomberg Intelligence have shown that unlike the Banking & Financial Services Sector, Bitcoin uses 53% sustainable energy.
Rather than acknowledge error and move on, De Vries has simply pivoted his attack into other areas. This suggests that de Vries already believes that Bitcoin can never be environmentally friendly, and is not engaging in objective science with a neutral disposition towards evidence, but rather a long-hand exercise in confirmation bias.
Indeed, his own tweets, under the handle he uses of “Digiconomist” would suggest this.
While not helped by the affiliations and methodology flaws of de Vries’ article, BBCNews still should have done better before they decided to report information which is provably incorrect by an order of magnitude between 1000x – 1,000,000,000x overstated.
A reporter with an elementary understanding of Bitcoin would have known the difference between payments and transactions, why “per transaction” is not a meaningful metric. They would also have known and disclosed de Vries’ affiliation, and past track-record of Bitcoin predictions and his core beliefs about Bitcoin which underlie his research.
On their twitter handle, BBC has described themselves as “the world’s leading public service broadcaster”. But such assessments must be continuously re-earned on merits, not assumed from past-glory. To continue to deserve this mantle, we would suggest BBCNews begin updating their Bitcoin knowledge-base by reading this year’s numerous news articles documenting the environmental benefits of Bitcoin, as well as recent scientific publications and ESG reports that suggest Bitcoin may have an important role to play in advancing renewable development and mitigating emissions. Even learning why people use Bitcoin and the difference between blockchain transactions and payments would be a very positive first step.