Over the past year, not only has the value of bitcoin grown, but the amount of energy it consumes has also increased.
At the end of February, the first cryptocurrency hit its all-time high above $ 58,000. Since then, the bitcoin rate has corrected to $ 47,800, but the amount of energy used to create it continues. According to researchers from the University of Cambridge, the Bitcoin Electricity Consumption Index has reached a level equivalent to Argentina’s annual carbon footprint.
Recent interest from large Wall Street institutions such as JPMorgan and Goldman Sachs has likely contributed to the currency’s rise in popularity, and support from Tesla CEO Elon Musk has helped lift it to a recent high as investors look to the cryptocurrency to gain wider adoption soon.
There are still mining farms in China that rely on coal for mining. Separate data shows that the Bitcoin network leaves a Carbon Footprint equivalent to that of New Zealand. Also, what happens when each miner consumes an unreasonable amount of power?, says – Bohdan Prylepa CTO of Prof-it Blockchain Ltd and COO in Bitcoin Ultimatum
On the one hand, the downward correction that followed the climb to historic highs reduced Musk’s fortune, and on the other hand, bitcoin threatens the company’s mission to achieve “zero emissions in the future” and poses serious questions for governments and corporations seeking to reduce their carbon footprint.
Mining involves solving complex mathematical problems. When the problem is solved, the miner receives bitcoins in quality. However, this is a very energy-intensive process.
Energy consumption is increasing
Previously, bitcoin – the currency was created in 2009 – could be mined on a regular computer. However, according to the idea of the creator of the cryptocurrency (or the creators – no one knows exactly who created it), in total, no more than 21 million coins can be mined. The more bitcoins are mined, the more complex the algorithms that need to be solved in order to get bitcoin become.
Now that more than 18.5 million bitcoins have been mined, an ordinary computer can no longer cope with mining. Now this requires special computer technology with enormous computing power. These special computers require a lot of electricity to operate.
As Benjamin Jones, a professor of economics at the University of New Mexico who has researched the environmental impact of bitcoin, noted, the amount of electricity used to mine bitcoin can be compared to the consumption of entire countries such as Ireland.
“We are talking about terawatts, tens of terawatts of electricity per year just for bitcoin … This is a lot,” he added.
Bitcoin proponents argue that renewable electricity is increasingly being used for mining, as this type of energy becomes cheaper and much less energy is used than other sources. According to the Cambridge Bitcoin Electricity Consumption Index, the energy consumed by connected but inactive appliances in the US alone can power Bitcoin mining for 1.8 years.
Environmentalists are on the lookout
Environmentalists say mining continues to be a concern, in part because miners prefer places with the cheapest electricity, which could be regions where coal is used. More bitcoins are mined in China than in any other country. And while the country is slowly transitioning to renewable energy sources, about two-thirds of its electricity comes from coal.
Since no government agency or organization officially tracks where bitcoin is mined and what type of electricity miners use, it is impossible to know if they are using electricity from renewable sources or from fossil fuels. Mining farms can move from place to place depending on where the cheapest energy is, which makes it even more difficult to track mining.
“You can change where [bitcoin] is mined, and in some cases it’s not even possible to figure out where they are,” said Camilo Mora, professor of geography and environment at the University of Hawaii.
The Cambridge Center for Alternative Finance estimates that bitcoin consumes just over 115 terawatt hours (TWh) a year, while the Digiconomist index points to 80 TWh.
According to the site, a single Bitcoin transaction has the same carbon footprint as Visa’s 680,000 transactions or 51,210 YouTube hours.
A 2018 article published by the Oak Ridge Institute in Ohio states that a $ 1 bitcoin consumes 17 megajoules of energy, more than double the energy required to mine $ 1 worth of copper, gold and platinum. Another UK study published last year found that the computing power needed to mine bitcoin quadrupled in 2019 from the previous year, and that mining has affected prices in some electricity and utility markets.
Will you be able to find a compromise?
Bitcoin proponents have made it clear that they believe any environmental impact associated with Bitcoin mining is offset by the broader impact it can have on society.
“Bitcoin will not be able to fulfill the role of a secure global system for transferring and storing savings without high maintenance costs,” Ria Bhutoria, director of research at Fidelity Digital Assets, said in defense of Bitcoin.
“Computers and smartphones have a much larger carbon footprint than typewriters and telegraphs. Sometimes technology is so revolutionary and important to humanity that society makes compromises, “- wrote investor Tyler Winklevoss on Twitter.
Some point out that there should be no trade-offs between cryptocurrency and the environment. The creators of ethereum, considered the second most popular cryptocurrency after bitcoin, have promised to change the algorithm of the currency to make mining more environmentally friendly.
Vitalik Buterin, a programmer and creator of ethereum, told IEEE Spectrum that mining cryptocurrency can be associated with “a huge waste of resources, even if you don’t believe pollution and carbon dioxide are a problem.”
“There are real consumers – real people whose need for electricity suffers because of all this,” he said.
Ethereum is currently mining similar to bitcoin, with the most powerful computers receiving the most bitcoins as computers compete to complete the transaction first. Ethereum developers are working on changing this system so that miners enter the pool and are randomly selected to complete the transaction and receive ether. This proof-of-stake protection ensures that less electricity is used to mine the currency.
But given that Bitcoin remains the leading cryptocurrency and has support from established companies and investment banks, the environmental impact of this currency is likely to intensify.
When it comes to electricity, “the computer doesn’t care. The computer just gets electricity to work, but where it comes from is of great importance [for the environment], ”said Mora.