The Environmental Impact of Bitcoin Mining
Bitcoin, the very first and arguably the most well-known of the more than 17,000 cryptocurrencies in existence today, has changed the way we think about money and commerce ever since it was created in 2009. It’s growing in prominence but, along the way, worries about its impact on our environment, especially the carbon footprint associated with the process of ‘mining’ for Bitcoins, have also grown. In this article, we consider the environmental impacts of Bitcoin mining, including just how much energy it uses and what this means for our world.
Understanding Bitcoin Mining
As part of the process of Bitcoin mining — verifying transactions and adding them to the blockchain, a decentralised ledger — miners use computers to solve complicated mathematical problems. The first one who does so wins the right to add the next block of transactions to the blockchain, and earns some new bitcoins as a reward. With some periods of feverish activity, hugely expensive computational power is already being devoted to the task, and huge amounts of electricity are being spent as well.
Energy Consumption of Bitcoin Mining
Bitcoin mining now consumes as much energy as small countries: the Cambridge Bitcoin Electricity Consumption Index estimates that Bitcoin mining consumes more electricity per year than Sweden or Malaysia – energy that largely goes to air conditioning and running the special-purpose computers, or ASICs, necessary for the process.
Sources of Energy
Bitcoin mining incurs different amounts of electricity depending on where it is done, which affects its overall environmental impact. While some operations use renewable energy such as hydroelectric, solar or wind power, many still depend on fossil fuels, particularly in countries where coal-based electricity is cheap and abundant. The energy generated through non-renewable sources emit significant levels of carbon dioxide into the atmosphere and thus contribute to global warming and climate change.
Electronic Waste
Bitcoin mining uses a lot of electricity and produces a lot of electronic waste. Mining equipment also has a short half-life – typically 1.5 years – and gets replaced by more efficient technology. All of this waste is electronic waste, and has to be contained and disposed of in ways that limit its environmental impact.
Efforts to Mitigate Environmental Impact
In response to increasing environmental concerns, parts of the Bitcoin community and beyond are experimenting to make mining as green as possible. This includes moving to greener forms of energy, making mining hardware more energy-efficient, and shifting the protocol to make mining verification processes less energy-intensive.
Furthermore, increased development on other blockchains based on proof-of-stake (PoS) algorithms, which are far more energy-efficient than the proof-of-work (PoW) system that underpins Bitcoin, point towards possible roads to mitigating the environmental impacts of cryptocurrencies in general.
Conclusion
What gets magnified here is the fundamental quandary that the environmental cost of Bitcoin mining represents for our planet writ large. As Bitcoin evolves, so too must its energy-hungry legacy. The global respiration of our ‘computers first’ economy will not be solved by finding a solution to Bitcoin. But what the question of how we can square this revolutionary financial paradigm with the finite capacity of our climate highlights is that what’s at stake here is ultimately not so different from the quandary of a decentralised financial system that appears to have been conjured out of nothing.
With enough continued innovation and responsible practice, such approaches to Bitcoin mining could eventually help to bring its digital currency revolution more in line with the global imperative to combat climate change.
