Many people are bullish on cryptocurrencies like Bitcoin, but naysayers point out one major flaw: mining cryptocurrencies consumes a lot of energy. While mining is the only method available to validate cryptocurrency transactions and mint new cryptocurrencies, it is the method used by Bitcoin and Ethereum, the two leading cryptocurrencies.
The spectacular rise of cryptocurrencies has created millionaires, reinvented money, and launched a multi-billion dollar industry inspired by its revolutionary decentralized technology. But it has also brought with it some unwanted side effects.
A recent study by Nature has concluded that bitcoin operations in China alone will produce 130 million tons of GHG in 2024, more than the entire economy of the Czech Republic generates in one year. Another study by the University of Cambridge has concluded that the annual energy needed to produce bitcoins already exceeds that consumed by Argentina. If bitcoin were a country, it would consume more electricity per year than Finland and Switzerland.
All of this happens because the production of bitcoins requires hundreds of thousands of computers to run non-stop at full capacity, which is a huge energy drain. And it is that the ‘mining’ of this cryptocurrency is based on the constant verification of transactions through extremely complicated mathematical calculations, puzzles that guarantee that no one fraudulently edits the global record of all those transactions.
The study by the University of Cambridge has concluded that the consumption of electricity to ‘mine’ bitcoins is currently equivalent to 121.36 terawatt-hours (TWh) per year, which is already above those of Argentina (121 TWh), the Netherlands (108.8 TWh) and the United Arab Emirates (113.20 TWh), and will soon surpass that of Norway (122.20 TWh).
In Iceland, the electricity demanded by the bitcoin ‘mines’ is already about to exceed the consumption of all the homes on the island. Those responsible for an Icelandic electricity company have already issued a stern warning: if the demand to ‘mine’ cryptocurrencies continues to increase, there will not be enough energy to supply the population.
Bank of America analysts have pointed out, in the same sense as the aforementioned studies, that an investment of 1,000 million dollars in bitcoins (Musk invested 1,250 million at the time) generates the same carbon emissions as 1.2 million vehicles of gasoline in a year.
In addition, the increasing complexity of the system (the puzzles to verify transactions are becoming more complex) generates a vicious circle for the environment: increase in the price of the cryptocurrency, increase in the power needed to mine, increase in energy consumption and , finally, increased carbon dioxide emissions.
Environmental Impacts of Cryptocurrency
The problem with cryptocurrencies is their energy consumption. Most of that consumption comes from crypto mining, which is the use of computers to solve increasingly difficult 64-digit strings of random numbers and letters.
After explaining the complex process of obtaining cryptocurrencies, we understand that cryptocurrencies use an immense amount of energy. The energy usage required for online currencies has negative effects on our Earth.
Proponents of the cryptocurrency point out that the manufacture of ‘ordinary’ coins and banknotes also generates GHG, and that a high percentage of the ‘manufacturing’ of bitcoins, between 40 and 75 per cent, uses renewable energy.
In general, bitcoin mining is known to use as much energy as entire countries. Sweden, Argentina, Norway and other small countries use the same amount of energy as the bitcoin mining process. The more bitcoin’s value rises, the more people are motivated to mine it, consuming energy and creating electronic waste. It’s not just solving the math problem and receiving an energy-consuming Bitcoin blockchain. Also, mining computers use a lot of power to cool down during the long mining procedure.
Some have noted the drastic amount of energy that earning cryptocurrencies consumes and have looked for green alternatives. Ethical alternatives include the use of renewable energy sources to power mining hard drives. Apparently, in the US, 39% of the energy used in Bitcoin mining is renewable, such as hydroelectricity. While this figure looks promising, there is much more to the cryptocurrency that is harming our planet.
- Sarbal Village: A hamlet in Kashmir waiting for development
- Farmers in MP face crop failure every year due to climate change
- Climate Change: Kishanganga Dam causes water concerns