Bitcoin continues to enjoying its ever-increasing popularity across the world, and while I’m a big fan, it’s important to not ignore the negative aspects. The fact is bitcoin mining consumes a ton of electricity and this consumption is becoming a big concern for governments and environmentalists across the world.
I’d like to take the time today and show you what I’ve found concerning Bitcoin’s effect on the environment and start a discussion.
How Bitcoin is Made
Let’s take a refresher course on how bitcoin is mined because it plays a pretty role in how much electricity is consumed. To oversimplify, Bitcoin is mined by using high-powered computers to solve complex equations which correspond to a group of transactions, and once that equation is solved, 12.5 tokens of Bitcoin are made.
The sum of these equations or “hashes” can count in the billions; in fact, in early 2020, computers on the bitcoin network were cranking out close to quintillions of hashes.
Several studies and investigations have been done to find out how much electricity is being consumed during the creation of hashes and the numbers are staggering. Data scientist Alex de Vries created the Bitcoin Energy Consumption Index to find this out, and it was discovered that Bitcoin consumes around 77.78 TWh (terrawat hours) in a year, as much power as the country of Chile.
At the time of this writing, researchers at Cambridge University found a larger figure with their model, and they discovered that Bitcoin mining used up 130 TWh, an amount that Charles Hoskinson, co-founder of Ethereum, said was “an unfathomable amount of electricity.”
Environmentalists have said that bitcoin miners typically go where electricity is cheapest and that usually means coal. Because of this, China accounts for 65% for all global bitcoin mining as two-thirds of China’s electricity comes from coal plants.
Credit where credit is due, China is currently making strides to achieve carbon neutrality within four decades and even shutting down mining projects.
Advocates have said that the environmental issues are well worth the impacts Bitcoin could have on society at large. Crypto investor Tyler Winklevoss said “Computer and smartphones have much larger carbon footprints… sometimes a technology is revolutionary and important for humanity that society accepts the tradeoffs.”
Computers and smartphones have much larger carbon footprints than typewriters and telegraphs. Sometimes a technology is so revolutionary and important for humanity that society accepts the tradeoffs. #Bitcoin is such a technology https://t.co/zD6Nad3YER
— Tyler Winklevoss (@tyler) February 10, 2021
Some strongly disagree with the creators of Ethereum vowing to change the currency’s algorithm to make it more environmentally friendly.
In China’s Inner Mongolia region, the government plans to ban any new cryptocurrency mining projects and shut down any existing ones to cut down on energy consumption. The Australian Bitcoin mining firm Iris Energy, who emphasis its use of renewable energy, so there do exist mindful Bitcoin mining companies.
Vitalik Buterin, a co-founder of Ethereum, admitted that mining cryptocurrency can be “a huge waste of resources [and there are people] who need for electricity is being displaced by this stuff.”
The continued Bitcoin endorsement from investment banks and notable established companies will only exasperate the environmental problem, plus people continue buying into the hype. However, I can at least be happy to see that there are people out there who are willing to work on tackling this problem.