With a market cap of around $1.75 trillion (around the same as the GDP of Italy, the world’s eighth-largest economy), the impact of crypto on world markets is undeniable.
But the crypto world hides a concerning secret – crypto mining, especially Bitcoin mining, uses an immense amount of energy. Bitcoin alone consumes an estimated around 122 Terawatt-hours of electricity annually, more than Argentina's entire 45 million population.
So what are the environmental consequences of this massive energy consumption? Why does Bitcoin mining consume so much energy? Can Bitcoin ever go green?
We’ve explored these questions in detail below.
Bitcoin’s Environmental Impact
The Bitcoin mining process is one of trial and error, with hundreds of thousands of computers churning out guesses until one meets the mark. This complex process is said to consume around 707 kWH per transaction.
As the crypto industry expands further, its thirst for energy is only growing. Miners are continually looking to increase their computing power and build larger facilities to compete with other miners.
And as rewards are cut in half, miners are propelled to seek out the cheapest electricity source and upgrade to faster, more energy-intensive computers.
Fortunately, trading crypto on exchanges like bitcoin.com.au consumes far less energy than mining, so you’re good to go if you operate in that domain.
Energy Consumption & Greenhouse Gas Emissions
While it’s impossible to know precisely how much electricity Bitcoin uses, a University of Cambridge analysis estimated that Bitcoin mining consumes 121.36 terawatt hours a year. To put things into perspective, this is more than the combined consumption of Facebook, Microsoft, Google, and Apple.
Producing that energy emits about 65 megatons of carbon dioxide into the atmosphere annually. This means that Bitcoin’s carbon footprint is equivalent to the entire country of Greece, making it a significant contributor to global warming. One study estimated that bitcoin mining in China alone could generate 130 million metric tons of carbon dioxide by 2024. Another warned that Bitcoin could push global warming beyond 2°C. And as the industry keeps expanding, these numbers could go even higher unless there is a massive industry-wide shift to renewable energy.
It is also estimated that as more and more industries embraced cryptocurrency, Bitcoin energy consumption multiplied by a whopping 62-fold between 2015 and 2021. To make matters worse, the University of Cambridge has estimated that only 39% of this energy comes from renewable sources. The most common of these sources is hydropower, which can also have harmful impacts on biodiversity and ecosystems.
Water Issues & E-waste
One aspect of Bitcoin’s environmental impact that often goes under-researched is water issues and the increasing e-waste problem.
Researchers have pointed out how power plants like Greenidge consume immense amounts of water. Greenidge draws approximately 139 million gallons of fresh water out of Seneca Lake each day to cool the plant and discharges it back into the lake around 30 to 50° F hotter than the lake’s average temperature. This temperature change can affect the lake’s ecosystem.
The e-waste problem is also essential to consider. The competitive mining process means miners are always on the lookout for the most efficient hardware that processes the most computations per unit of energy.
This complex, specialized hardware becomes obsolete every 1.5 years and cannot be re-programmed for a different purpose. As this hardware is discarded in the thirst for speed and efficiency, Bitcoin generates around 11.5 kilotons of e-waste each year, adding massively to the e-waste problem. Unfortunately, even if Bitcoin mining runs purely on renewable energy one day, the e-waste problem will probably remain.
Sustainability Efforts – Can Bitcoin Ever Go Green?
There is increasing debate over Bitcoin’s future and whether the cryptocurrency can ever truly go green.
One side argues that as the entire Bitcoin network has invested millions of dollars in infrastructure and hardware, transitioning to a more energy-efficient system will be very difficult, especially without a central governing body.
On the other hand, certain groups are more optimistic about Bitcoin’s future. With increasing concern about climate change, a number of projects have been kickstarted to reduce the carbon footprint of Bitcoin and the crypto industry at large.
One example is Tesla CEO Elon Musk meeting with the CEOs of the top North American crypto mining companies, which resulted in the creation of a new Bitcoin Mining Council to promote energy transparency.
Another large-scale initiative is the Crypto Climate Accord, which aims to make blockchains run on 100% renewable energy by 2025. It also aims to achieve net zero emissions by 2040.
There has also been a positive change by specific currencies. For example, Ethereum has announced its aim to reduce its energy use by 99.95 percent by transitioning to a proof of stake system similar to other smaller cryptocurrencies.
What The Future Holds
The crypto industry will certainly face many challenges in its attempts to go green. It will begin by fully acknowledging its environmental impact, integrating truly sustainable practices, and ultimately prioritizing green energy over pursuing profit at any cost.
Only if the crypto community is willing to embrace these challenges can a truly green future be envisioned for Bitcoin. For the time being, however, the climate impact of mining these coins remains disastrously high.
