Bitcoin - Boom Or Bust For The Planet? Unveiling The Bitcoin Mining Environmental Impacts
Is Bitcoin's future sustainable? Explore the shocking bitcoin mining environmental impacts and potential solutions for a greener tomorrow. Learn more here!
Author:Stefano MclaughlinReviewer:Camilo WoodFeb 14, 20244.9K Shares87.5K Views
For individuals pursuing innovation or seeking novel avenues for financial gain, cryptocurrencies like bitcoinmay appear as thrilling and harmless advancements in technology. Yet, for those evaluating the environmental footprint of these digital currencies, the reality is that their impact is anything but harmless. Grasping these concerns about bitcoin mining environmental impactsand the reasons behind activists and lawmakers advocating for reform is crucial for anyone dedicated to maintaining a habitable planet.
Mechanics Of The Mining Process
To comprehend the environmental effects of mining cryptocurrencies, especially bitcoin, it's essential first to grasp what cryptocurrency entails and how the mining process works.
Cryptocurrency, like bitcoin, represents a form of digital currency that is decentralized and facilitates international transfers, small payments, and transactions between peers. It is accepted by certain businesses and individuals as payment for goods and services, presenting various advantages and challenges.
The foundational technology is based on blockchain, a digital ledger system that exists concurrently across various sites, known as nodes, within the network.
Cryptocurrencies, such as Bitcoin, operate without a centralized institution to manage or govern transactions. Rather, they employ sophisticated cryptographic methods known as cryptomining for transaction security and validation, as well as to regulate the generation of new currency units.
Proof Of Work (PoW)
The environmental toll of mining cryptocurrencies, especially Bitcoin, is primarily attributed to the prevalent cryptomining method known as proof of work (PoW).
This procedure demands an enormous quantity of computational resources, with miners utilizing intricate algorithms and hardware and software that consume a lot of energy to authenticate transactions.
In bitcoin's proof of work (PoW) system, miners vie to decrypt a puzzle contained in each block. They employ specific software to attempt various solutions to the mathematical puzzle through a process of trial and error until they find the correct answer.
For solving these puzzles, bitcoin miners receive a predefined amount of bitcoin, essentially earning compensation for performing the validation tasks that keep the system operational.
Proof Of Stake (PoS)
Another cryptomining method that is not as commonly utilized is proof of stake (PoS). This approach demands considerably less energy and computational power compared to the proof of work (PoW) method, primarily due to its restriction on the number of participants.
In PoS, miners are required to place a minimum deposit, or stake, as a prerequisite for transaction verification.
Bitcoin Mining Environmental Impacts
The process of cryptomining has attracted criticism from those advocating for sustainability, alongside certain government officials and business leaders, who criticize the technology for its high energy consumption, emissions of greenhouse gases, and substantial demands for hardware.
Cryptocurrencies contribute to emissions and other environmental effects throughout their production supply chain and at the disposal stage, resulting in electronic waste when they reach the end of their lifecycle.
"Proof of work is a huge competition across computers, and that race to find a solution takes a lot of power," explained Marc Lijour, an IEEE member and CEO of Creative Emergy. "It's highly inefficient."
Energy Demands
The Cambridge Bitcoin Electricity Consumption Index (CBECI) draws comparisons between the energy demands of bitcoin and other activities, highlighting that bitcoin's energy consumption is nearly equivalent to the energy used to power all the lights and televisions in the U.S.
Bitcoin mining is active in 58 countries, with the majority of miners located in the U.S. Holding 37.84% of the world's most energy-demanding bitcoin mining operations, the U.S. leads globally, based on information from the CBECI.
However, the environmental footprint of this technology extends well beyond the confines of the U.S.
Electricity Usage
Globally, Bitcoin's electricity usage, totaling 173.42 terawatt-hours (TWh) between 2020 and 2021, surpasses the energy consumption of certain nations, as reported in a study by the journal Earth's Future. To put it in perspective, this level of energy use is greater than the combined electricity usage of Argentina and the Philippines.
This significant energy consumption leads to substantial greenhouse gas emissions.
According to the study, the activities involved in Bitcoin mining generated 85.89 million metric tons of carbon dioxide equivalent (MTCO2E) from 2020 to 2021.
This amount is equivalent to the emissions from consuming 9,665 gallons of gasoline by passenger vehicles or burning 96,210 pounds of coal in a single year, based on comparisons made using the U.S. Environmental Protection Agency's Greenhouse Gas Equivalencies Calculator.
Despite the existence of more than 10,000 cryptocurrencies, bitcoin stands out as the most recognized. A 2021 report from the cryptocurrency exchange Geminireveals that 95% of cryptocurrency holders and those interested in acquiring it are aware of bitcoin.
Bitcoin As A Significant Environmental Culprit
Bitcoin is identified as the most significant environmental culprit, with the White House highlighting that it consumes more energy than all other cryptocurrencies put together. This is according to the "Climate and Energy Implications of Crypto-Assets in the United States" report from September 2022, released by the White House Office of Science and Technology Policy.
Usage Of Non-renewable Energy Resources
According to the report, Bitcoin was responsible for 60% to 77% of the world's total electricity consumption for crypto-assets as of 2022. The Ethereumnetwork, the next largest consumer, accounted for 20% to 39%.
The energy used by Bitcoin predominantly comes from non-renewable sources.
According to data from the CBECI, researchers have determined that in 2022, 62% of the global electricity consumption for bitcoin mining originated from fossil fuels, with coal being the predominant source.
The contribution of renewable energy sources to meeting bitcoin's energy requirements remains minimal.
Data from the CBECI suggest that renewables accounted for 26% of the electricity used in bitcoin mining, with the remaining 12% coming from nuclear energy.
According to data from the CBECI, researchers have determined that in 2022, 62% of the global electricity consumption for bitcoin mining originated from fossil fuels, with coal being the predominant source.
The contribution of renewable energy sources to meeting bitcoin's energy requirements remains minimal.
Greenhouse Gas Emissions
Data from the CBECI suggest that renewables accounted for 26% of the electricity used in bitcoin mining, with the remaining 12% coming from nuclear energy.
Consequently, the electricity demands of bitcoin lead to substantial greenhouse gas emissions.
In 2022, bitcoin was estimated to have emitted approximately 68.02 million metric tons of carbon dioxide equivalent (MTCO2E), based on data from Climate Watch, an online platform overseen by the World Resources Institute, a nonprofit organization headquartered in Washington, D.C.
For context, the greenhouse gas emissions of Singapore were roughly estimated at 67.3 MTCO2E in 2022, as per Climate Watch, while those of Belarus were around 65.3 MTCO2E in the same year.
According to de Vries and Stoll, Bitcoin's electronic waste amounts to 30.7 metric kilotons each year, a figure that is on par with the electronic waste from IT and telecommunications equipment generated by the Netherlands.
The electronic waste resulting from Bitcoin mining could exceed existing worldwide projections.
De Vries and Stoll also note that Bitcoin's yearly e-waste production "could exceed 64.4 metric kilotons," while the total global electronic waste is anticipated to increase by 70% between 2016 and 2050.
Growth In Cryptocurrency Continues Unabated
The reaction of the U.S. government to bitcoin mining varies considerably across the board.
Certain states are promoting bitcoin mining via legislative measures.
For instance, North Dakota and Wyoming have enacted legislation that provides tax incentives to oil producers that supply bitcoin mining operations and data centers with fuel, as an alternative to gas flaring.
This move favors blockchain entrepreneurs who are open to collaborating with major oil corporations. This is outlined in the "Web3 and Sustainability: How We Can Reduce the Climate Impact of Blockchains, How Blockchains Can Help Reduce Our Own" report from February 2023 by the Linux Foundation.
Conversely, a coalition of Democratic senators and representatives has urged the U.S. Environmental Protection Agency and the U.S. Department of Energy to mandate that cryptocurrency mining businesses report their energy consumption and greenhouse gas emissions.
In response, cryptominers have resisted these disclosure requirements through a series of letters.
On a national scale, the adverse environmental effects of cryptocurrency have also captured attention.
In March 2022, President Biden signed Executive Order 14067: Ensuring Responsible Development of Digital Assets. This executive order sets forth five objectives aimed at guiding the U.S. toward the responsible advancement of digital assets, such as cryptocurrencies.
These objectives encompass safeguarding consumers and investors, maintaining monetary stability, minimizing risks, bolstering economic competitiveness, and fostering responsible innovation.
Frequently Asked Questions - Bitcoin Mining Environmental Impacts
Does Bitcoin Mining Use Water?
In a study conducted for the U.N. and published in October, Madani investigated the environmental consequences of bitcoin mining, discovering that in 2021, the activity was responsible for a worldwide water footprint amounting to 255 billion gallons.
Which Crypto Has The Biggest Ecosystem?
It can be argued that Ethereum boasts the most formidable blockchain ecosystem. As the pioneering platform for smart contracts, it gained a significant competitive edge, attracting a robust community of developers. Additionally, it is recognized for its developer-friendly environment.
Can A Normal Person Mine Bitcoin?
Bitcoin mining is open to everyone, yet without specialized hardware known as ASICs (application-specific integrated circuits), the likelihood of earning Bitcoin rewards is quite slim for the average person.
Conclusion
The bitcoin mining environmental impacts is a significant concern that merits attention from both the public and policymakers. As we've explored, the process consumes vast amounts of electricity, contributes to greenhouse gas emissions, and generates considerable e-waste, challenging global sustainability goals. Addressing the environmental footprint of Bitcoin mining requires collaborative efforts to adopt more sustainable practices and technologies, such as renewable energy sources and more efficient mining protocols.
Stefano Mclaughlin
Author
Camilo Wood
Reviewer
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