It seems like everyone has a strong opinion about the dangers and limitations of blockchain technology, most commonly bitcoin, while simultaneously struggling to understand the foundations of what a decentralized computer network really is. An endless stream of internet hype is matched only by unfounded levels of fear, uncertainty, and doubt (FUD) about the future impact of cryptocurrencies. Unfortunately, attacks on the technology have captured an undue share of people’s attention, and one idea, in particular, is spreading faster than its merits deserve. The myth that bitcoin—and in turn blockchain—is bad for the environment represents a challenge to the underlying motivations of the technology. This idea falls in line with several parallel arguments that portray decentralized technologies as an affront to global equity and social justice. They could not be further from the truth, and as with all disruptive technologies, they can do no more than delay the inevitable.

Nevertheless, in a moment where communities around the world are speaking out for justice, it is vital that we remove this friction so that we can start educating ourselves about how blockchain technologies can lead the way for a new status quo in a broad spectrum of applications. In dispelling this myth, I’d like to dig deeper than is entirely required, since only some simple facts are truly sufficient. For example, let us ignore the fact that a limited subset of blockchains require physical mining now, and technologies already exist to replace this mechanism. And forget the simple reality that mining’s carbon footprint will follow all industrial applications with a shift to renewable energy. Simply put, bitcoin mining is as harmful to the environment as any other daily activity until the global economy moves towards renewables. In fact, that is precisely the deeper reality for us to consider as we debunk this harmful claim, and we can take this chance to examine the unquestionably positive social and environmental consequences of blockchain through two economic concepts: malinvestments and opportunity cost.

Malinvestments are the central economic problem that Bitcoin was created to combat and are almost exactly what they sound like. These are investments made without considering real costs, ultimately bad investments that take advantage of artificial rates set by a central bank. In other words, people are putting their money into nonproductive investment, even making a short-term profit for themselves, but ultimately leaving someone else with the bill. Malinvestment are unavoidable consequences of any central bank activities, and they can make some of the most hazardous investments appear far more profitable than they really are.

Major oil and gas projects have been first in line to benefit from artificial interest rates. Worse yet, they also have spent the last 50 years making the rest of us pay for negative externalities: additional costs that are not paid by the investor. In this case, the planet has paid for the double jeopardy of malinvestments and negative externalities.

Of course, the positive social consequences of blockchain—even bitcoin by itself—go far beyond the environment. No fewer than 100 million people died in 20th century wars, and many historians point to the ease with which governments printed money to fund their militaries as a major factor in those astronomical death tolls. As modern social movements attempt to redirect our common investments away from the military and into public infrastructure, it is critical that people understand the role that mathematically scarce money can play.

A more peaceful earth is a more connected earth, and history has shown that the converse is also true. Global trade should play an important role in unifying people, but we see a resurgence in trade wars with no end in sight as a result of central bank authority. Fluctuating exchange rates also make insurmountable cost barriers for entrepreneurs, leaving only behemoths multinational monopolies like Amazon with the ability to operate on a global scale.

The scale of global malinvestments and nonproductive economic activity is well described in Saifedean Ammous’s book, "The Bitcoin Standard." He notes the astonishing fact that the foreign exchange market is about 25 times larger than all the rest of planet earth’s production. Any movement for wealth equity, for environmental justice, and for global peace must examine the well-documented motivations that are central to the creation of blockchain technologies: to help bring peace and prosperity for citizens of earth.
That is where we must consider the concept of opportunity cost: the price paid for an alternative. The opportunity cost of blockchain is our present status quo. It is the facilitation of investments that only serve the short-term interest of a few. It is the fuel to the flames of endless war. It is an insurmountable advantage given to those born into power, rather than an opportunity for those hungry to reclaim dignity.

Bitcoin is not bad for the environment, and blockchain technologies are not a conspiracy to undermine our rights. On the contrary, these waves of innovations should inspire us to reorganize our own social lives in a more equitable—simultaneously more prosperous—manner.

About the Author

Yan Digilov graduated from Rice University in 2011, where he studied mathematics and economics. As a student at Rice, he founded Amir, a nonprofit that uses garden education as a tool to teach social justice to youth across the US and Canada. After a brief stint in financial services, Mr. Digilov joined Firestarter, a firm that manages charitable giving portfolios for philanthropists and foundations. While working on a project in Somaliland, he first came across bitcoin as a tool to transfer money in regions without formal banking. He then published "Refugee Realities: Between National Challenges and Local Responsibilities in Houston, TX" through the Kinder Institute in 2018. Having come to Houston as a refugee from Russia, he worked with a diversity of immigrant communities to establish The Opportunity Fund, an interest-free loan portfolio for immigrant access to education.

Currently, Mr. Digilov has embraced the blockchain revolution and is exploring how it can impact the US labor movement. He also works as a smart contract architect for PandiFi, a startup working to revolutionize the mortgage asset industry.

Mr. Digilov is a professional mixed martial artist and Brazilian Jiu Jitsu competitor for Paradigm Fight Team, which was founded by another Rice MBA alumnus. He also works as a film and media producer, having made three films since 2016. At present, he believes that the common needs of our communities necessitate dramatic change and sees immense potential for blockchain technologies to lead the way.