Why BBCNews' latest article on Bitcoin and Water is a monument to journalistic laziness.
Problems and errors of fact in the article:
1. The headline of the article contains a significant factual inaccuracy, which has the impact of misleading readers. Simply put: it's misinformation. The author of the study cited by BBCNews 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 payment mean very different things. A single blockchain transaction can contain "many thousands of payments" (Source: Cambridge University)
2. The second problem is that having made a factual error in the headline of the article, the BBCNews 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.
So let's summarize, 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.
3. The third problem is in the second line of the body of the article: the study author. Firstly, BBCNews 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 is a Central Bank, which in turn is important because "Bitcoin’s peer-to-peer technology and decentralized 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.
4. 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.
Cambridge University states that measuring energy, and by extension any resource use, per transaction is "not a meaningful metric in the context of PoW blockchains" (PoW blockchains include Bitcoin, Dogecoin and Litecoin)
Cambridge give three reasons why this metric is invalid, but the second reason is the most damning: Hidden Semantics. "A single blockchain transaction can include thousands of payments" and "..."layer-2 transactions (eg: Lightning network) represent potentially billions of timestamped data points".
Yes, a single transaction can contain billions of Bitcoin payments, because the layer-2 protocol allows you to bundle an almost limitless supply of payments into a single transaction ledger entry on the blockchain. For example, I have made and received 412 Lightning Wallet bitcoin payments this year (because it is faster, involves fewer fees, and has a much smaller carbon footprint than Visa), yet these payments did not in themselves result in a single line-item entry on the blockchain. Let's remind ourselves of what the BBCNews headline implies: that each of the 412 times I made a Bitcoin payment using my lightning wallet this year, I was responsible for using a swimming pool's worth of water. Again, this is both probably and absurdly, false.
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 be used to spread misinformation (Castaño-Pulgarín and Suárez-Betancur).
Simply put, 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 has 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 suggesting 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.
Further resources:
Since this post was written, a second rebuttal say appeared. This one is by Magdalena (Mags) Gronowska who is knowledgeable in water resource management (provided input into Canada's multijurisdictional water strategy, and on water tipping fees for large consumers). In this rebuttal, Gronowska points out that de Vries analysis presents to his audience the idea that his study addresses the direct "scope 1" use of water, whereas in fact, he measures the indirect "scope 2" water usage from water used during the generation process. Obfuscation about the type of water use being measured is misleading to say the least. She also points out that de Vries has not actually analyzed Bitcoin water use, but looked at national US aggregated figures for emissions and water use by generation type and divided one by the other to create another frankly faux-metric. The third issue is that de Vries' study is in fact not a study as it is presented in news sources, but a commentary that appears not to have gone through a peer-review process. Good quality work can still exist that has not been peer reviewed, but it should not be presented as a formal academic study.
