The environmental impact of cryptocurrencies is a hot topic of debate. While most people know it as bitcoin mining, many forms of cryptocurrency rely on mining. But since the launch of Bitcoin, it has become increasingly difficult to mint new units of currency through mining. This was by design, since the coin was limited to 21 million units, so the more units minted, the fewer units available for mining and the more computational power needed to create new ones.
All things being equal, bitcoin operations that co-locate and use fossil fuels that would otherwise have stayed in the ground will increase emissions. The computing power needed to support Bitcoin's underlying network now requires almost as much energy as the entire country of Argentina, drawing criticism of its environmental footprint. However, co-locating bitcoin mining operations with zero-carbon resources, such as nuclear, hydro, wind and solar, could help reduce the carbon emissions associated with mining itself. In just over a decade, Bitcoin has gone from being a marginal technology popular with cryptographers to becoming the ninth most valuable asset in the world by market capitalization. To understand why this cryptocurrency is so bad for the environment, here are 8 facts about Bitcoin that you should know.
Because “rig” farms, which are essentially like server farms, consume a lot of energy, bitcoin mining operations tend to chase cheap electricity. Since mining can provide a solid stream of revenue, the number of people, also known as miners, willing to use energy-hungry machines to make a small profit from every Bitcoin transaction they help approve has skyrocketed. According to estimates, Bitcoin emits about 57 million tons of carbon dioxide annually, almost half a ton of CO2 per transaction. The Cambridge Bitcoin Electricity Consumption Index estimates that Bitcoin mining uses more energy globally (opens new window) per year than some countries, including the Netherlands and Pakistan. To make matters worse, as competition for bitcoin mining grew over time, mathematical puzzles became more difficult to solve.
This makes Bitcoin's impact on the environment equivalent to that of a country like Sweden and its annual electricity consumption of 131.80 TWh. Even bitcoin transactions consume a lot of energy, with an average transaction consuming more than 1,700 kWh of electricity, which is almost double the monthly amount used by the U. S.It is clear that Bitcoin has a significant environmental impact and it is important to be aware of this when considering investing in or using cryptocurrencies. While there are some efforts being made to reduce this impact through co-locating bitcoin mining operations with zero-carbon resources such as nuclear and solar power, it is still important to be mindful of how much energy is being consumed when using cryptocurrencies.
