Although Bitcoin is a digital currency, its impact on the environment creates real-world harm.
Numbers don’t lie. A single Bitcoin transaction requires 2,167.44 kWh of electricity and emits 1,029.54 kg of CO2. To put that in perspective, according to Digiconomist, that’s enough energy to power the average U.S. household for 74.29 days and the carbon emissions equivalent of watching more than 19 years of YouTube or using your Visa credit card 2,281,808 times. Multiply those numbers by 400,000 — the approximate number of daily Bitcoin transactions that took place in January 2021 — and it’s no wonder scientists are concerned that Bitcoin mining will push us past 2 degrees warming (the point of no return for climate change) in less than three decades.
Bitcoin is just one of more than 15,000 cryptocurrencies, but it is the most widely mined and the most damaging. For example, compared to Bitcoin, Ethereum, another popular cryptocurrency, consumes 242.52 kWh of electricity and produces 115.5 kg of CO2 per transaction.
So, how, exactly, does a currency that doesn’t exist in physical form have such a harmful environmental impact? It all has to do with the method of mining and the energy required to power it.
Bitcoin runs on a mechanism known as a Proof of Work blockchain. Because of the decentralized nature of the digital cryptocurrency network (there’s no central bank to ensure transactions are legitimate and secure), this publicly available blockchain serves as a record of Bitcoin transactions — or blocks of information — to prevent mining and transaction fraud.
Proof of Work (PoW) is an energy-intensive mining method that goes something like this: Miners compete against each other and leverage sophisticated hardware to solve a random and very complicated math problem. The computational power it takes — computers generate trillions of guesses per second — requires huge amounts of energy, which increases as more miners join the network.
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“Back in the day, any computer would do the job for you. In fact, there are multiple examples of people figuring out cryptocurrencies working from their dormitories at universities,” says Dr. Camilo Mora, a professor for the Department of Geography and Environment at the University of Hawai’i at Mānoa and co-author of a research study on Bitcoin’s effect on global warming. “Nowadays, computers can’t do it by themselves, so you have these things called rigs that are tons of computers connected in series or parallels that come together and decipher these algorithms.”
And the energy that’s expended during the mining and the transaction process is largely powered by fossil fuels that are accelerating the climate crisis. As it stands, Bitcoin mining has become dominated by mining pools — or a group of cryptocurrency miners who combine their computational resources over a network to improve their odds of finding and mining new Bitcoin — and expansive mining equipment farms. The miners in these pools are referred to as “hashers.” According to a 2021 global crypoasset benchmarking study, the total share of renewables in hashers’ total energy consumption is only 39 percent.
The problem is that even if cryptocurrency mining requires so much energy that relying entirely on renewable energy isn’t realistic. “The electricity demand of this is brutal. If you accumulate the amount of electricity that is used by Bitcoin, it’s equal to the electricity used by entire countries,” says Dr. Mora. It’s become such an issue that miners in countries and cities all over the world have been caught stealing electricity from nearby businesses to support their cryptocurrency endeavors. This is the case in Malaysia, England, Ukraine, China, and Canada.
“This idea that we are going to produce enough sustainable electricity to sustain Bitcoin — that’s not going to happen,” says Dr. Mora. “To make matters worse, the investment in renewables is so slow, that producing a lot of electricity from renewables is still miles away.”
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That’s to say nothing of the waste associated with Bitcoin. Annually, Bitcoin generates 30.7 metric kilotons, or 272 grams per transaction on average, of electronic waste, a number that’s comparable to the amount of small IT and telecommunications equipment waste produced by The Netherlands. This waste results from short-lived hardware used for mining and cryptocurrency transactions. When not recycled properly, there’s the potential for this e-waste to leech heavy metals and toxic chemicals into our soil, waterways, and air. If Bitcoin prices rise, the annual e-waste generated is projected to reach 64.4 metric kilotons.
The upside is cryptocurrencies like Ethereum are transitioning from a PoW mining method to a less energy-intensive process known as Proof-of-Stake (PoS), eventually reducing its current energy consumption by 99 percent, according to Tim Beiko, Ethereum’s Coordinator of Protocol Developers. The full transition to PoS isn’t expected to be complete until some time in 2022.
With Bitcoin, however, the code cannot be modified.
“Nobody knows who invented Bitcoin, so modifying the code is not possible,” says Dr. Mora. “We’re stuck with the electrical demand from Bitcoin.
“The thing is, why do we need cryptocurrency? When you look at the incorporation of technologies that have been implemented everywhere around society, those technologies have been good for something: helping humanity, providing jobs. But when it comes to Bitcoin, there is nothing that you can point out that Bitcoin makes things better. For me, there is no sense in developing Bitcoin knowing the significant consequences for the environment.”
Currently, China, Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, Kazakhstan, and Kosovo have banned Bitcoin mining. An additional 42 countries, including Bahrain, Burundi, Cameroon, Ecuador, Indonesia, Bolivia, and more have effectively banned cryptocurrencies by prohibiting exchanges and restricting banks from being involved in transactions.
On an individual level, consumers can join the Crypto Climate Accord, a private sector-led initiative inspired by the Paris Climate Agreement that is working to decarbonize the cryptocurrency and blockchain industry. Their goal is to make the industry net-zero by 2030 by powering cryptocurrency networks with 100 percent renewables. According to their website, more than 200 companies and individuals have signed on as supporters.
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