Bitcoin is a hot topic right now. Some people see it as the future of money, while others think it's a bubble that will eventually burst.
But one thing that is often overlooked when discussing Bitcoin is its environmental impact.
Bitcoin is responsible for an enormous volume of carbon emissions, and this could have serious consequences for the environment in the long run.
In this article, we will take a closer look at the reasons behind Bitcoin's carbon footprint, and explore the data and statistics that demonstrate its impact on climate change.
Bitcoin is often criticized for its high carbon footprint, and rightly so.
This is because the process of "mining" Bitcoin requires a massive amount of energy, and much of it goes to waste.
Bitcoin mining is the process of verifying and adding transaction records to the public ledger (blockchain).
Mining is how new Bitcoins are created. Miners are rewarded with Bitcoins for their work, meaning it can potentially be a lucrative business.
That means that whenever a new Bitcoin transaction is needed, computers from around the world compete to solve the mathematical problem needed to create that "block" in order to earn the reward.
But this process uses a lot of energy. Bitcoin mining is estimated to use more electricity than most countries. In fact, if Bitcoin were a country, it would rank as the 23rd highest in the world in terms of its energy consumption.
This is because miners need to solve complex mathematical problems in order to verify transactions, which can take up a lot of processing power.
Remember that only one miner will actually win the race to create the new blocks each time, and thus earn the reward. The rest will have expended all that energy for nothing.
And the more Bitcoins that are mined, the more difficult these problems become.
Which of course uses more and more energy.
The main problem is that the majority of Bitcoin mining is powered not by renewables, but by burning fossil fuels.
In order to understand this, we need to look at where most of the Bitcoin mining takes place.
Until 2021, more than half of global Bitcoin mining took place in China where (for at least part of the year) it was powered by hydroelectricity.
But then the Chinese government crackdown ordered these operations to be closed, considering it a financial risk.
Now, the majority of activity has switched to the US and Kazakhstan. Both these countries get the majority of their electricity from coal and gas-fired power stations, which means the carbon footprint of Bitcoin has skyrocketed.
But Bitcoin's impact is not just confined to its energy consumption.
Many mining machines are developed specifically for that purpose, which means there is no other use for them once their lifespan is over. Inevitably, they are discarded and become part of the huge global e-waste problem.
It's not just the machines themselves. Additional hardware such as cooling equipment and network routers are also going to waste as part of Bitcoin's environmental impact.
Bitcoin is responsible for a huge volume of carbon emissions.
It is not possible to know exactly how much electricity Bitcoin uses, because we cannot know just how many computers are actively involved in competing for Bitcoin mining.
But scientists have managed to produce estimates, and the numbers are staggering.
The statistics below show us the staggering amount of consumption, emissions, and electronic waste associated with Bitcoin.
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Each year, Bitcoin mining is responsible for the following co2 emissions, electrical consumption and electronic waste:
It brings these figures into even greater perspective when we look at the resources consumed by a single Bitcoin transaction:
Remember the above statistics are for every single individual Bitcoin transaction. There are currently around 300,000 transactions every day.
It has been suggested that there are some ways in which Bitcoin can be made more environmentally friendly.
For example, in theory, miners could use sustainable energy sources like solar, hydroelectric, or wind power to mine Bitcoins.
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However, it's not quite that simple. In order for Bitcoin to be sustainable, it would need to generate additional sustainable or renewable power specifically for its own purpose. It cannot simply draw sustainable energy away from other uses.
Given that in most regions of the world, we don't have enough renewable energy to satisfy all of our existing electricity needs, the extra demand imposed by Bitcoin mining will have to be satisfied by other energy methods - likely fossil fuels.
Bitcoin miners could use energy-efficient processors to reduce the amount of electricity they use. However, any sensible mining operation will already be doing this.
The profitability of their operation relies upon being able to generate the blocks as cheaply as possible, and since energy is their primary overhead, it makes sense for this to already have been considered.
Bitcoin also has the potential to be used in carbon trading schemes. This would allow people and businesses to buy and sell carbon credits, which could help to reduce Bitcoin's carbon footprint.
However, it is widely recognized that Carbon offsets are not the solution to climate change. They should only be used when all other options to reduce emissions have been exhausted.
Furthermore, even the best carbon offset schemes can only reduce the amount of carbon in the atmosphere in the future. If we are to avoid catastrophic climate change, we need solutions that will work now.
And in any case, there is no evidence to suggest that Bitcoin miners are even attempting to offset their activity.
Using the data available, in this article we have only been able to look at the environmental impact of Bitcoin mining.
The data does not consider the other energy uses that are a direct result of Bitcoin, such as Bitcoin ATMs, wallets, exchanges, and other third-party services.
It is therefore inevitable that Bitcoin's climate impact is much higher than we are able to quantify.
Bitcoin is a controversial topic, and its environmental impact is no exception.
There are pros and cons to Bitcoin and the same goes for its carbon footprint. On one hand, Bitcoin mining is certainly harmful to the environment due to the high amount of CO2 emitted, plus the huge volumes of e-waste produced.
On the other hand, there are ways that Bitcoin can (in theory) be made more environmentally friendly, such as using renewable energy sources or carbon trading schemes.
But how likely is that to happen, and even if it did, would it happen in time?
The decision of whether or not to invest in Bitcoin is a personal one. But it's important to be aware of the environmental impact of this digital currency before making a decision.
What do you think? Is Bitcoin bad for the environment? Or do the benefits of this digital currency outweigh the costs? Get in touch and let us know.