In recent years, cryptocurrencies have witnessed a rapid extension, in fact the market is expected to reach 5.2 billion by 2026. Bitcoins is the name of the best known cryptocurrency, the one for which the blockchain technology was invented.
Nowadays several leading businesses are adopting the currency, for example, companies like Starbucks, Tesla and Microsoft now accept bitcoin payments.
This increase in the consumption of cryptocurrencies doesn’t come without a price for the environment. Therefore, in this article we will highlight what is the environmental impact of cryptocurrencies and why they have such a big impact.
According to a study conducted by Digiconomist a single Bitcoin transaction is estimated to burn more than 2000 Kilowatt hours of electricity enough to power a typical American household for 78 days. Moreover, the electronic waste that a single bitcoin creates is estimated to be 292.40 grams which is more than the weight of an iPhone.
This huge environmental impact is due to the way Bitcoins are mined and created. Bitcoin transactions are tracker with a network of computers around the world called “the blockchain”. The process of “Mining” relies on people to solve complex equations to mine new coins and verify transactions between users. Overall, this process is a very energy-intensive process.
The problem with this highly energy consuming process is that the more people consume bitcoins, the more expensive it will get, the more energy will be needed to mine it.
Another problem besides the big amount of energy used is where the energy comes from. According to a study conducted by the University of Cambridge only 39% of bitcoin’s electricity comes from renewable energy. Adding to that the source of this energy is also an important factor in determining its environmental impact. For instance, in 2020 it was estimated that more than half of the electricity used to mine bitcoins comes from China, due to its cheap electricity.
Another problem, is that the power plants used for crypto mining can be very harmful for the ecosystem around them.
Despite all those negative impacts on the environment, some alternatives can be considered for the future of the cryptocurrencies like using methane gas from fossil fuel and putting up plants in areas where wind power is more abundant. Other technical advancements like the development of new mining processes are starting to arise in the wake of a hopefully “greener” cryptocurrency area in the long term.
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References
- https://www.pcmag.com/how-to/what-is-the-environmental-impact-of-cryptocurrency#:~:text=The%20most%20obvious%20environmental%20impact,new%20digital%20coins%20are%20created.&text=Electricity%20may%20seem%20like%20a,atmosphere%20and%20worsens%20climate%20change.
- https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume
- https://www.downtoearth.org.in/blog/environment/as-cryptocurrency-becomes-mainstream-its-carbon-footprint-can-t-be-ignored-81118#:~:text=Based%20on%20data%20from%20the,dioxide%20into%20the%20atmosphere%20every
- https://ccaf.io/cbeci/mining_map
- https://www.jbs.cam.ac.uk/wp-content/uploads/2021/01/2021-ccaf-3rd-global-cryptoasset-benchmarking-study.pdf
- https://www.forbes.com/sites/joshuarhodes/2021/10/08/is-bitcoin-inherently-bad-for-the-environment/?sh=7a4defc13033