If you’re drawn to innovation or seeking fresh avenues for financial gain, cryptocurrencies like Bitcoin might appear as a thrilling yet harmless addition to the tech landscape. However, for those delving into the environmental implications of cryptocurrencies, it becomes evident that these technologies are anything but kind.
Certainly, the mining of Bitcoin and other cryptocurrencies runs counter to the goals of climate progress. The high energy requirements and the subsequent pollution from these technologies are at the core of the problem. Grasping these challenges and understanding the reasons behind the advocacy and legislative efforts for change is crucial for anyone who cares about safeguarding the planet.
As of September 2023, CNBC reports that only 4.2% of the global population, which translates to circa 420 million people, are Bitcoin owners. Despite this seemingly modest ownership percentage, the environmental footprint of the currency is disproportionately large.
What is the Process of Bitcoin Mining and How Does it Work?
To grasp the environmental impact of cryptocurrency mining, particularly for Bitcoin, it’s essential first to comprehend what cryptocurrency is and how it operates.
As exemplified by Bitcoin, cryptocurrency is a decentralized digital currency facilitating international transactions, micropayments, and peer-to-peer transactions. Some businesses and individuals accept cryptocurrency as a payment method for goods and services, presenting various benefits and challenges. The technology underpinning cryptocurrencies relies on blockchain, a digital record-keeping system accessible across multiple locations or nodes within the network.
As for Bitcoin’s PoW system, miners compete to solve an encrypted puzzle within each block. Using specialized software, miners engage in a trial-and-error process, attempting to guess the correct solution. Miners receive a specific amount of bitcoin as a reward for successfully solving these puzzles, essentially earning payment for the validation work crucial to the entire system.
The PoW structure incentivizes miners with the most powerful computers, as their capabilities enable them to make more attempts in a shorter timeframe, increasing their likelihood of solving the puzzle and earning Bitcoin rewards.
An alternative but less commonly used crypto-mining approach is Proof of Stake, which demands significantly less energy and computing power compared to PoW. Typically, PoS limits participants by requiring miners to provide a minimum deposit, or stake, to confirm transactions.
How does Bitcoin Mining Affect the Environment?
Crypto mining is catching some heat from folks who care about sustainability, along with governments and business leaders who would prefer the tech’s extravagant energy demands, emissions, and the hefty hardware it craves. Cryptocurrencies spew emissions and leave their mark on the environment from production to disposal, contributing to e-waste.
According to Marc Lijour, a member of the IEEE, “Proof of work turns computers into real competitors, and that power-hungry race to crack the code is just not cool. It’s like burning money for no good reason.”
But again, the environmental fallout doesn’t stick within UK borders alone. The Cambridge Bitcoin Electricity Consumption Index (CBECI) throws some shade by revealing that Bitcoin’s energy needs are almost similar to powering up all the lights and TVs across the United States. And guess what? Bitcoin mining is throwing its weight upwards of 50 countries, with the US taking the lead at 37.84% in energy-hungry mining.
A study in Earth’s Future shows that the US Bitcoin’s global electricity binge from 2020 to 2021, hitting 173.42 TWh, outpaces certain countries. Think about it – it’s more juice than what Argentina and the Philippines together chug down.
All this power play translates into a big carbon footprint.
The study drops the bomb that bitcoin mining belched out 85.89 MTCO2E (metric tons of carbon dioxide equivalent) from 2020 to 2021. In simple terms, that’s like the environmental impact of burning through 36,586 litres of fuel in your car or torching 43,640kgs of coal in a year according to the US Environmental Protection Agency’s Greenhouse Gas Equivalencies.
The environmental ruckus around Bitcoin mining has got activists, governments, and business bigwigs raising eyebrows and wondering how to put the brakes on this runaway train.
A 2021 report from the crypto hotshots at Gemini depicts with over 10,000 cryptocurrencies out there, bitcoin steals the spotlight, with 95% of crypto enthusiasts knowing the drill.
All in all, the growth of Bitcoin is not halted due to crypto mining.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
