An optimist says the glass is half full. A pessimist says the glass if half empty. And a Vox writer says if you drink 60 glasses of that stuff in the next hour, it’ll kill you.

A case in point is the recent Vox column by Umair Irfan, warning that the Bitcoin network has caused a huge surge in energy consumption. And yet, Irfan’s own article admits that even the largest estimate—which could be double the actual figure—suggests Bitcoin only uses about 0.14 percent of global electricity. It seems somewhat unfair to single out Bitcoin and ignore the other 99.86 percent of the activities that use electricity.

Snark aside, Bitcoin admittedly does use a surprising amount of electricity. Although the estimates are uncertain, Irfan quotes figures suggesting that (in early December) it took some 250 kilowatt-hours of energy to process a single transaction. (For a frame of reference, that’s enough energy to support a typical U.S. household for eight days.) Other statistics show that—assuming the figures on Bitcoin’s usage are correct—the network consumes more electricity than the country of Serbia, and the electricity used to run the Bitcoin network is enough to provide for almost 3 million U.S. households.

Yet how meaningful are these types of stats? Wikipedia reports that in June 2015, the website had 54 million unique visitors. If those people had spent their time volunteering, rather than reading Vox, can you imagine how much litter could have been picked up? How many trees planted? How many stories could have been read to children?

When the price of Bitcoin surges—as it was doing when the Vox story ran, though as of this writing it is crashing once again—it ramps up electricity usage. By design, a new “block” (which is 1MB in size) gets added to the “blockchain”—which is the public ledger recording all Bitcoin transactions going back to the launch in 2009—every ten minutes. If the Bitcoin price is high enough to entice more people to enter the industry with their computers to “mine” bitcoins, then the protocol automatically adjusts the difficulty of the computational problems necessary in order to “solve” a new block and be rewarded bitcoins accordingly. (For more information on how Bitcoin and “mining” works, see the free guide I co-authored.)

Now if we ask: “Is it ‘worth it’ to have Bitcoin use so much electricity?” the answer is, “It depends on whether you think the Bitcoin network is valuable.” Yes, it takes a lot of electricity to power the computers running through so many calculations, but it’s this very system that ensures the integrity of the Bitcoin protocol. When the price skyrockets, you don’t want some rich investors to be able to stroll in with powerful computers and take over the whole network. So yes, there’s a sense in which all this computer processing (and implied electricity consumption) is “wasteful,” but only in the same way that it was such a “waste” that humans put so much steel and concrete into early bank vaults.

In a free society, there is a general presumption that market price signals guide entrepreneurs to steer resources into the correct lines. So if it’s profitable to be using so much computing power to mine new bitcoins, we have prima facie evidence that the activity is “worth it.” Yet there are two caveats to this general principle.

First, we might worry that Bitcoin is in a bubble. And indeed, as of this writing, the price is down some 50% from its all-time (and recent) high. The introduction of futures markets in Bitcoin should help coordinate these activities over the long-term, but still, the volatile price of Bitcoin should make us more reserved when we comment on what “the market price” is telling us about the cryptocurrency. But when it comes down to it, ultimately the people investing their own money in buying new mining rigs (and paying exorbitant electric bills) are the ones with the most to lose, if the Bitcoin price crashes and renders their operations unprofitable.

Second, critics such as our Vox author worry that electricity consumption contributes to climate change, because we lack a “carbon tax” and hence Bitcoin miners aren’t internalizing the true social costs of their activities.

Elsewhere I have critiqued the case for a carbon tax, on both conceptual and pragmatic grounds (see, e.g., my Cato article co-authored with two climate scientists). So I simply dispute the claim that energy in general, and electricity in particular, is “underpriced” because of climate change concerns.

However, where the Vox author and I should be able to agree is on the harm of government subsidies for electricity. For example, apparently there is a cottage industry in Bitcoin mining in Venezuela, because (a) the government-issued currency is in hyperinflation while (b) the government subsidizes electricity so that it is almost free.

We at the Institute for Energy Research champion the benefits of free energy markets, and that includes the elimination of subsidies that distort consumption patterns. So if the writers at Vox and other outlets want to join us in calling for smaller government (in this dimension), we welcome their support.

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