Compared to conventional currencies, Bitcoin and Ethereum use a significant amount of electricity. The carbon footprint of Bitcoin is a staggering ten times larger than that of Ethereum.
Unlike traditional sources of energy consumption data, cryptocurrencies like Bitcoin use a lot less energy than everyday household appliances that are left plugged in. By comparing energy use to household appliances, we can raise public awareness of these habits and encourage them to be more energy-efficient.
The amount of energy used by Bitcoin mining is unpredictable and depends on the cryptocurrency’s price. However, the creation rate is designed to halve every four years, so energy consumption will likely increase. Although it’s difficult to track energy use and electricity bills, we can estimate the amount of electricity used by mining bitcoin. However, the exact amount is difficult to follow because of the lack of transparency around its production process.
In addition, Bitcoin’s energy usage is not capped, which is a significant problem because it is unavoidable in everyday life. As a result, energy use on the network is determined mainly by the cryptocurrency’s price.
However, even though its carbon footprint is limited, Bitcoin’s energy consumption is disproportionate to its technical performance. The mining pool in China alone is responsible for around 46% of all Bitcoin transactions, and this is not sustainable because the Chinese economy is dependent on fossil fuels. Furthermore, a single mining pool can generate over 130 MtCO2 if it continues to operate at its current rate. In such a scenario, China will not be able to meet its carbon-saving goals.
The Bitcoin network emits 22 to 29 million tons of carbon per year, equivalent to the carbon emissions of a large Western city or an entire developing country like Sri Lanka. For comparison, last year, the world produced 37 billion tons of CO2. However, the computing power used in mining bitcoin was concentrated in Asia, Europe, and North America, where most of the bitcoin network is located.
The rapid development of Bitcoin mining hardware has led to a massive energy consumption volume. Previous literature estimated that the Bitcoin blockchain consumes the equivalent energy of a small or medium-sized country. This immense energy consumption has led to significant carbon emissions, estimated at 13 million metric tons per year. By 2030, the carbon emissions of Bitcoin mining could be equivalent to a small or medium-sized country.
Impacts on climate change
Bitcoin mining has several negative impacts on climate change, namely the increased carbon emissions. According to recent studies, bitcoin mining consumes 120 terawatt-hours of energy a year, equal to Sweden’s electricity consumption every year. The Digiconomist estimates that a single bitcoin transaction emits more carbon than a Visa transaction. These high emissions are particularly problematic when the world desperately needs ways to reduce carbon emissions.
Some researchers have warned that the mining of bitcoins may push global warming beyond 2oC. In addition to the negative impacts of Bitcoin mining, the energy needed for bitcoin mining is a finite resource.
Crypto-mining is one of the biggest concerns for addressing climate change. Some experts are looking into ways to reduce energy consumption to combat this. They recommend switching to a proof-of-stake (POS) model, although even this model has energy issues.
Impacts on renewable energy
A new initiative backed by 40 projects aims to run blockchains on 100 percent renewable energy by 2025 and decarbonize the entire cryptocurrency industry by 2040. Cryptocurrency users can purchase certificates supporting renewable energy generators, much like carbon offsets, to achieve this goal.
The Bitcoin network has spent millions of dollars on infrastructure and hardware. Despite the lack of a central oversight body, several projects have emerged that aim to reduce the carbon footprint of the bitcoin mining industry. Elon Musk, the CEO of Tesla, recently met with the CEOs of the largest crypto mining companies in North America and created the Bitcoin Mining Council. This council will monitor energy use and other aspects of bitcoin mining. However, the Bitcoin mining industry still needs to take time to develop its green credentials.
Impacts on e-waste
The booming popularity of cryptocurrency has led to increased production of electronic waste. This waste contains toxic materials and can leach into groundwater. In some cases, it can be burned, releasing pollutants into the atmosphere. The overwhelming majority of e-waste pollution is harmful to people who do not make money from cryptocurrency mining. Bitcoin’s increasing demand for new hardware also creates a global shortage of semiconductor chips.
However, cryptocurrency has also been criticized for its environmental impact. A recent study compared the e-waste produced by Bitcoin to that of the Netherlands every year. This study found that each Bitcoin transaction generates 272 grams of e-waste, equivalent to two iPhone 12 Mini devices or half an iPad. Nevertheless, the impact of bitcoin mining on e-waste is far from trivial.
In 2003, over 90% of the e-waste produced worldwide went to landfills. However, due to the rapid changes in technology and media, a global surplus of e-waste has grown. While technological solutions are available to reduce or prevent this waste, some countries still do not follow these regulations. Bitcoin’s popularity has led some countries to implement stricter rules for electronic waste exports. However, these regulations have led to a more significant economic disincentive for the disposal of toxic electronic waste.
In addition to its environmental impact, bitcoin mining is also a significant cause of e-waste. Besides creating waste, mining equipment has a limited lifespan and is subject to obsolescence. This means that older machines will soon be thrown out, creating additional e-waste. With the growth of bitcoin mining, the world will continue to experience environmental issues.